UNITED
  STATES
  SECURITIES AND EXCHANGE COMMISSIONWashington,
  D.C. 20549

FORM
  20-F

|/ / | REGISTRATION
      STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
      OF 1934OR                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|/x/ | ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For the fiscal year ended December 31, 2002OR 
|/ / | TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
      For the transition period 
      to

Commission
  file number:1-10905

Vitro,
  S.A. de C.V.(Exact name of
  Registrant as specified in its charter)

|Vitro
        Corporation(Translation of Registrant's name into English) | United
        Mexican States(Jurisdiction of incorporation or organization)
|------------------------------------------------------------------------ | ----------------------------------------------------------------------------

Ave.
  Ricardo Margain Zozaya 400 Col. Valle del Campestre,
  Garza Garcia, Nuevo Leon, 66265 Mexico(Address of principal executive offices)

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

|Title
        of each class:                                                                     |  | Name
        of each exchange on which registered:
|------------------------------------------------------------------------------------------------ |  | --------------------------------------------------
|Ordinary
        Shares, no par value                                                            |  | New
        York Stock Exchange*                  
|Ordinary
        Participation Certificates                                                      |  | New
        York Stock Exchange*                  
|American
        Depositary Shares, evidenced by                                                 |  | New
        York Stock Exchange                   
|American
        Depositary Receipts each representing three Ordinary Participation Certificates |  |                                                   

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


Securities
  registered or to be registered pursuant to Section 12(g) of the Act. None

Securities
  for which there is a reporting obligation pursuant to Section 15(d) of the Act.11 3/8% Guaranteed
  Senior Notes Due 2007

Indicate
  the number of outstanding shares of each of the issuer's classes of capital
  or common stock as of the close of the period covered by this annual report:
  300,646,810 shares of Series "A" common stock, no par value

Indicate
  by check mark whether the registrant (1) has filed all reports required to be
  filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
  preceding 12 months (or for such shorter period that the registrant was required
  to file such reports), and (2) has been subject to such filing requirements
  for the past 90 days.Yes /x/No / /

Indicate
  by check mark which financial statement item the registrant has elected to follow./ / Item 17/x/ Item 18



PRESENTATION OF CERTAIN INFORMATION

Vitro, S.A. de C.V. is a corporation with variable
  capital (sociedad anonima de capital variable) organized under the laws of the
  United Mexican States, or "Mexico," and is a holding company that conducts substantially
  all of its operations through subsidiaries. In this annual report, except when
  indicated or the context otherwise requires, the words "Vitro," "we," "us,"
  "our" and "ours" refer to Vitro, S.A. de C.V. together with its consolidated
  subsidiaries. However, it should always be understood that each subsidiary of
  Vitro is an independent legal entity with its own accounting, corporate structure
  and records, executives and employees. References in this annual report to business
  units are to combinations of various subsidiaries that have been grouped together
  for management and presentation purposes. We use the term "joint venture" to
  refer to companies which are not wholly-owned subsidiaries of Vitro or in which
  Vitro, directly or indirectly, either has management control or shares management
  control with one or more third parties. We believe that our use of the term
  "joint venture" is consistent with international business practices. However,
  our "joint ventures" are not necessarily "Joint Ventures" as defined in International
  Financial Reporting Standards. References in this annual report to "pesos" or
  "Ps." are to the lawful currency of Mexico. References to "U.S. dollars," "dollars"
  or "$" are to the United States of America, which we refer to as the "United
  States," dollars.

This annual report contains translations of certain
  constant peso amounts into U.S. dollars at specified rates solely for the convenience
  of the reader. These convenience translations should not be construed as representations
  that the constant peso amounts actually represent such U.S. dollar amounts or
  could be converted into U.S. dollars at the rate indicated or at all. The exchange
  rate used in preparing our consolidated financial statements and in preparing
  convenience translations of such information into U.S. dollars is the exchange
  rate calculated and published by the Banco de Mexico, Mexico's central bank,
  in the Diario Oficial de la Federacion for the conversion of U.S. dollar-denominated
  amounts into pesos, which we refer to as the "Free Exchange Rate." As of December
  31, 2002, the Free Exchange Rate was 10.4393 pesos per U.S. dollar.
  As of December 31, 2002,
  the noon buying rate for Mexican pesos
  reported by the Federal Reserve Bank of New York,
  which we refer to as the "Noon Buying Rate," was 10.4250 pesos per U.S. dollar.

All the peso amounts contained in this annual report
  are restated in constant pesos as of December
  31, 2002, except where otherwise indicated.

For purposes of this annual report, we consider
  our "export sales" to be (i) sales of products by our Mexican subsidiaries to
  third parties outside Mexico, (ii) sales of products by our Mexican subsidiaries
  to our foreign subsidiaries that do not act as distributors (principally, Vitro
  America, Inc., which was formerly known as VVP America, Inc. and which we refer
  to as "Vitro America") and (iii) sales of products by our foreign distribution
  subsidiaries (principally Vitro Packaging, Inc., which we refer to as "Vitro
  Packaging," Crisa Corporation and Crisa Ltd.) to third parties outside Mexico.
  Sales of products manufactured or processed by our subsidiaries outside Mexico
  (principally by Vitro America, Empresas Comegua, S.A., which we refer to as
  "Comegua," and Vitro Cristalglass, S.A., which was formerly known as Cristalglass
  Vidrio Aislante S.A. and which we refer to as "Cristalglass") are not considered
  to be "export sales."

On July 3, 2002, we sold our controlling 51% interest
  in Vitromatic, S.A. de C.V., which together with its subsidiaries we refer to
  as "Vitromatic" or the "Acros-Whirlpool business unit," our joint venture with
  Whirlpool Corporation, which we refer to as "Whirlpool," that engaged in the
  production and distribution of household appliances, to Whirlpool for $148.3
  million in cash ($10 million of which was paid into escrow in support of certain
  indemnification obligations to Whirlpool). At the time of the transaction, approximately
  $67 million of our consolidated debt and approximately $97 million of our consolidated
  off-balance sheet financings were obligations of Vitromatic. Consequently, upon
  the consummation of the sale of our interest in Vitromatic, our consolidated
  debt and off-balance sheet financings were reduced by approximately $67 million
  and approximately $97 million, respectively. Our consolidated financial statements
  and all other financial and statistical data included in this annual report
  have been restated to reflect Vitromatic as a discontinued operation for all
  periods presented in this annual report, unless otherwise indicated. Therefore,
  Vitromatic's results are reflected in the line item entitled "Net income (loss)
  from discontinued operations" in our consolidated statement of operations. Our
  consolidated balance sheet has been restated to present as a discontinued operation
  the assets of Vitromatic in the line items entitled "Current assets of discontinued
  operations" and "Non-current assets of discontinued operations" and the liabilities
  of Vitromatic in the line items entitled "Current liabilities of discontinued
  operations" and "Long-term liabilities of discontinued operations."

Certain amounts included in this annual report may
  not sum due to rounding.





FORWARD-LOOKING STATEMENTS

This annual report includes forward-looking statements
  within the meaning of the Private Securities Litigation Reform Act of 1995.
  These statements relate to our future prospects, developments and business strategies.

These forward-looking statements are identified
  by our use of terms and phrases such as "anticipate," "believe," "could," "estimate,"
  "expect," "intend," "may," "plan," "predict," "project," "will," "goals," "target,"
  "strategy" and similar terms and phrases, and may include references to assumptions.
  These statements are contained in the sections entitled "Risk Factors," "Operating
  and Financial Review and Prospects," "Information on the Company" and other
  sections of this annual report.

These forward-looking statements reflect our best
  assessment at the time and thus involve uncertainty and risk. Therefore, these
  forward-looking statements are qualified by reference to the cautionary statements
  set forth in this annual report. It is possible that our future financial performance
  may differ materially from our expectations due to a variety of factors, some
  of which include, without limitation, the following:

* foreign currency exchange fluctuations relative to the U.S. dollar or the
  Mexican peso;
  * changes in capital availability or cost, including interest rate or foreign
  currency exchange rate fluctuations;
  * the general political, economic and competitive conditions in markets and
  countries where we have operations, including competitive pricing pressures,
  inflation or deflation and changes in tax rates;* consumer preferences for forms
  of packaging that are alternatives to glass packaging;* fluctuations in raw
  material and labor costs;* availability of raw materials;* cost and availability
  of energy;* transportation costs;* consolidation among competitors and customers;*
  lifting of trade barriers and enforcement of measures against unfair trade practices;*
  the ability to integrate operations of acquired businesses;* the ability to
  hire and retain experienced management;* the performance by customers of their
  obligations under purchase agreements; and* the timing and occurrence of events
  which are beyond our control.

Any forward-looking statements in this annual report
  are based on certain assumptions and analysis made by us in light of our experience
  and perception of historical trends, current conditions, expected future developments
  and other factors we believe are appropriate under the current circumstances.
  Forward-looking statements are not a guarantee of future performance and actual
  results or developments may differ materially from expectations. You are therefore
  cautioned not to place undue reliance on such forward-looking statements. While
  we continually review trends and uncertainties affecting our results of operations
  and financial condition, we do not intend to update any particular forward-looking
  statements contained in this document.



WHERE YOU CAN FIND MORE INFORMATION

Vitro is subject to the informational reporting
  requirements of the Securities Exchange Act of 1934, as amended, which we refer
  to as the "Exchange Act," and files the following with the Securities and Exchange
  Commission, which we refer to as the "SEC":

*  annual reports;

*  certain other reports or information
  that it makes public under Mexican law, files with the Comision Nacional Bancaria
  y de Valores, which we refer to as "CNBV," and the Mexican Stock Exchange or
  distributes to shareholders; and

*  other information.

You may access and read Vitro's SEC filings through
  the SEC's Internet site at www.sec.gov. This site contains reports and other
  information that Vitro files electronically with the SEC.

You may also read and copy any reports or other
  information that Vitro files with the SEC at the SEC's public reference room
  at 450 Fifth Street, N.W., Washington,
  D.C. 20549.
  Please call the SEC at 1 800-SEC 0330 for further information on the public
  reference room. In addition, materials filed by Vitro may also be inspected
  at the offices of the New York Stock Exchange, which we refer to as the "NYSE,"
  at 20 Broad Street, New York,
  New York 10005.

As a foreign private issuer, Vitro is exempt from
  the rules under the Exchange Act prescribing the furnishing and content of proxy
  statements and is not required to file proxy statements with the SEC. In addition,
  Vitro's officers, directors and principal shareholders are exempt from the reporting
  and "short swing" profit recovery provisions contained in Section 16 of the
  Exchange Act.

You may obtain copies of any of our SEC filings
  or any other document described in this annual report by requesting them in
  writing or by telephone at the following address and phone number:

Vitro, S.A. de C.V.Ave. Ricardo Margain Zozaya 400,Col.
  Valle del Campestre, San Pedro Garza Garcia,Nuevo Leon, 66265 MexicoAttention:
  Investor Relations DepartmentTelephone number: (52-81) 8863-1200

You may obtain additional information about Vitro
  through our web site at www.vitro.com. The information contained therein is
  not part of this annual report.





TABLE OF CONTENTS

|                   | Item
        No. | Title                                                                             
|------------------ | ---------------- | ----------------------------------------------------------------------------------
|                   |                  | Presentation
        of Certain Information                                       
|                   |                  | Forward-Looking
        Statements                                                
|                   |                  | Organizational
        Structure                                                  
|Part
        I     |                  |                                                                                   
|                   | Item
        1   | Identity
      of Directors, Senior Management and Advisers                       
|                   | Item
        1   | Offer
      Statistics and Expected Timetable                                     
|                   | Item
        3   | Key
      Information                                                             
|                   | Item
        4   | Information
      on the Company                                                  
|                   | Item
        5   | Directors,
      Senior Management and Employees                                  
|                   | Item
        6   | Operating
      and Financial Review and Prospects                                
|                   | Item
        7   | Major
      Shareholders and Related Party Transactions                           
|                   | Item
        8   | Financial
      Information                                                       
|                   | Item
        9   | The
      Offer and Listing                                                       
|                   | Item
      10    | Additional
      Information                                                      
|                   | Item
      11    | Quantitative
      and Qualitative Disclosures About Market Risk                  
|                   | Item
        12  | Description
      of Securities Other than Equity Securities                      
|                   |                  |                                                                                   
|Part
          II  |                  |                                                                                   
|                   | Item
        13  | Defaults,
      Dividend Arrearages and Delinquencies                             
|                   | Item
        14  | Material
      Modifications to the Rights of Security Holders and Use of Proceeds
|                   | Item
        15  | Controls
      and Procedures                                                     
|                   | Item
        16  | Reserved                                                                          
|                   | Item
        16A | Audit Committee Financial Expert                                                  
|                   |                  |                                                                                   
|Part
          III |                  |                                                                                   
|                   | Item
        17  | Financial Statements                                                              
|                   | Item
        18  | Financial Statements                                                              
|                   | Item
        19  | Exhibits                                                                          





PART I

Item 1. IDENTITY OF DIRECTORS,
  SENIOR MANAGEMENT AND ADVISERS

Not applicable

Item 2. OFFER STATISTICS AND
  EXPECTED TIMETABLE

Not applicable

Item 3. KEY INFORMATION

RISK FACTORS

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.

The risks described below are intended to highlight
  risks that are specific to us, but are not the only risks that we face. Additional
  risks and uncertainties, including those generally affecting the industries
  in which we operate, the countries where we have a presence, risks that we currently
  deem immaterial or other unforeseeable risks, may also impair our business.

The information in this annual report includes forward-looking
  statements that involve risks and uncertainties. Our actual results could differ
  materially from those anticipated in these forward-looking statements as a result
  of numerous factors, including, without limitation, those described in this
  section and under the sections entitled "Item 4. Information on the Company"
  and "Item 5. Operating and Financial Review and Prospects" and elsewhere in
  this annual report. Please see "Forward-Looking Statements."

Factors Relating to Vitro

We face increasing competition which could
  result in lower operating margins and decreased profitability.

The gradual reduction by the Mexican government
  over the past few years of import duties and tariffs for glass and glass packaging
  products to historically low levels and the investment by our competitors and
  vertically-integrated customers in glass manufacturing facilities in Mexico
  have created severe competitive challenges for us. These events have caused
  an adverse effect on us by driving down our prices and decreasing our operating
  margins and profitability. The key competitive factors in these industries are
  price, quality and service with varying emphasis on these factors depending
  on the product line. As market conditions continue to deteriorate, we are faced
  with tough competitors that are better positioned financially to withstand the
  on-going and challenging economic conditions. Loss of existing or future market
  share to competitors may adversely affect our performance and, to the extent
  that one or more of our competitors becomes more successful than us with respect
  to any key competitive factor, our operating margins and profitability could
  be adversely affected.

We may be unable to repay our debt, access
  credit or pursue business opportunities because of our leverage and debt service
  requirements.

As of December
  31, 2002, our total consolidated indebtedness was Ps. 15,191 million
  ($1,455 million), Ps. 4,778 million ($458 million) of which is considered short-term
  indebtedness because it is due within one year. As of such date, our consolidated
  off-balance sheet financings were approximately Ps. 1,033 million ($99 million).
  Our net interest expense in 2002 was Ps. 1,493 million ($143 million) while
  our operating income was Ps. 1,986 million ($190 million). The degree to which
  we are leveraged may adversely affect our ability to (i) service our indebtedness,
  (ii) finance future operations, acquisitions and capital expenditures, (iii)
  compete effectively against better-capitalized competitors and (iv) withstand
  downturns in our business.

Our level of indebtedness could increase our vulnerability
  to adverse general economic and industry conditions, including increases in
  interest rates, foreign currency exchange rate fluctuations and market volatility.
  Our ability to make scheduled payments on and refinance our indebtedness when
  due depends on, and is subject to, our financial and operating performance,
  which is subject to prevailing economic conditions and financial, business and
  other factors, including the availability of financing in the Mexican and international
  capital markets. We cannot assure you that our results of operations will be
  sufficient for the payment or refinancing of our indebtedness or that prevailing
  economic conditions will permit such refinancing, particularly on terms favorable
  to us.

In addition, we operate in capital-intensive industries
  and require ongoing investments in our capital assets and technology improvements.
  Over the past years, funds for such investments and for working capital needs,
  joint venture transactions, acquisitions and dividends have been provided by
  a combination of cash generated from operations, the incurrence of short- and
  long-term debt and, to a lesser extent, divestitures. To the extent that cash
  generated from operations and divestitures is insufficient, we may need to incur
  further indebtedness for similar uses in the future. We cannot assure you that
  we will be able to incur indebtedness on favorable terms to us or at all, which
  could impair our ability to take advantage of significant business opportunities
  that may arise.

Debt instruments governing a substantial portion
  of our indebtedness contain various covenants that require us to maintain financial
  ratios, restrict dividends and asset sales and dictate the use of proceeds from
  the sale of assets.

If we experience a significant deterioration in
  our results of operations, it may be difficult for us to maintain the financial
  ratios required by, and comply with various of our other covenants under, certain
  of our debt instruments. Moreover, our debt instruments generally contain cross-acceleration
  or cross-default provisions. In those instances, a declaration of acceleration
  of the maturity of the indebtedness under one debt instrument, or our failure
  to make a payment as required by one debt instrument, may also constitute an
  event of default under one or more other debt instruments and may permit the
  acceleration of the maturity of such other indebtedness. The acceleration of
  the maturity of a material portion of our indebtedness would have an adverse
  effect on us.

In addition, the agreements and debt instruments
  governing a substantial portion of our indebtedness contain various restrictive
  covenants including limitations on our ability to pay dividends, sell assets
  and incur additional indebtedness. The restrictions on our debt instruments
  could:

* limit our flexibility in planning for, or reacting
  to, changes in our business and the industries in which we operate;* limit our
  ability to access cash from our subsidiaries and, thus, repay our debt or satisfy
  other holding company obligations; and* limit our ability to fund future operations,
  acquisitions or meet extraordinary capital needs.

At our holding company level, we depend on
  advances, fees, interest and dividends paid by our subsidiaries.

We derive substantially all of our operating income
  from advances, fees, interest and dividends paid to us by our subsidiaries.
  Accordingly, in paying the principal of, premium, if any, interest on, and additional
  amounts, if any, with respect to our indebtedness, we will rely on income from
  advances, fees, interest and dividends from our subsidiaries, as well as income
  from the disposition of one or more of our subsidiaries, interests therein or
  assets thereof. Our subsidiaries' ability to pay such dividends or make such
  distributions will be subject to (i) such subsidiaries having net income and
  the requisite amount of paid-in capital under Mexican law and our estatutos
  sociales, which we refer to as our "by-laws," (ii) such subsidiaries' shareholders
  (including our joint venture partners, when appropriate) having approved the
  payment of such dividends at their annual general shareholders' meeting, (iii)
  applicable laws and (iv) in certain circumstances, restrictions contained in
  our joint venture agreements and debt agreements and instruments. Certain of
  our joint venture agreements require the consent of all joint venture participants
  for certain significant operating and management decisions, including the payment
  of dividends. For additional information with respect to dividend payment limitations
  under our debt agreements and instruments, please see "Item 5. Operating and
  Financial Review and Prospects-Liquidity and Capital Resources-Description of
  our Indebtedness."

Downturns in the economies in which we operate
  may negatively affect the demand for our products and our results of operations.

Demand for our flat glass, glass container and glassware
  products is affected by general economic conditions in the markets in which
  we operate. As a result, demand for our products and, consequently, our results
  of operations have been and may be negatively affected by the downturn in the
  economies in which we operate, including Mexico,
  the United States
  and Europe.

A downturn in the Mexican economy, from which we
  derived approximately 47% of our consolidated net sales in 2002, may reduce
  the demand for our products and negatively impact our results of operations.
  Similarly, a prolonged economic downturn in the United
  States, from which we derived approximately
  43% of our consolidated net sales, may have an adverse impact on the export
  and foreign subsidiary sales of our Flat Glass, Glassware, and to a lesser extent,
  Glass Containers business units.

Economic downturns in the U.S.
  and Mexico may
  also subject us to increased foreign currency exchange rate and interest rate
  risks and impair our results of operations and our ability to raise capital
  or service our debt. These downturns could also affect our ability to continue
  growing our business.

We may face cost increases in some of our
  feed stocks and other inputs required for the production of glass.

Glass is manufactured out of silic sand and soda
  ash, each of which is generally available in enough quantities to meet our needs
  and which we are currently sourcing on a long-term contract basis at relatively
  stable prices. However, some of the other components of our cost structure are
  exposed to significant market price variations. For instance, market prices
  of natural gas, which is an important input for our glass melting operations,
  have been exposed to significant price volatility since 2000, after several
  years of stability. Since the price of natural gas in Mexico is tied to the
  price of natural gas in the southern Texas gas market, which in turn is fully
  exposed to market factors, such as weather in the United States or the amount
  of available reserves, we may be fully exposed to such price variations and
  we cannot assure you that proper market hedges will be available or that we
  will fix our natural gas costs in the most efficient or timely manner. Other
  potential sources of significant variations in our costs are electric power,
  labor, packaging and freight.

Our results of operations, operating margins
  and total financing costs are significantly affected by changes in the relative
  value of the peso to the U.S. dollar.

Changes in the relative value of the peso to the
  U.S. dollar have a significant effect on our results of operations. In general,
  a real devaluation of the peso will result in higher operating margins and a
  real appreciation of the peso will result in lower operating margins, in each
  case, when measured in pesos.

A substantial portion of the sales generated by
  our Mexican and U.S.
  subsidiaries are either denominated in or sensitive to the value of the U.S.
  dollar. The prices of a significant number of the products we sell in Mexico,
  in particular those of flat glass for automotive uses, capital goods, certain
  glassware products and most chemical and packaging products, are linked to the
  U.S. dollar. In addition, substantially all of our export sales are invoiced
  in U.S. dollars and subsequently translated into pesos using the exchange rate
  in effect at the time of the sale. The translated U.S. dollar sales of our Mexican
  subsidiaries are then restated into constant pesos using the Mexican Consumer
  Price Index, which we refer to as "INPC," as of the date of the most recent
  balance sheet included in those financial statements. As a result, when the
  peso devalues in real terms against the U.S. dollar, as was the case in the
  second half of 1998 and 2002, the same level of U.S. dollar sales as in a prior
  period will result in higher constant peso revenues in the more recent period.
  Conversely, when the peso appreciates in real terms against the U.S. dollar,
  as was the case in 1999, 2000 and 2001, the same level of U.S. dollar sales
  as in a prior period will result in lower constant peso revenues in the more
  recent period. Moreover, because a material portion of our cost of goods sold,
  including labor costs, and general, selling and administrative expenses are
  invoiced in pesos and not directly sensitive to the relative value of the peso
  to the U.S. dollar, the real appreciation or devaluation of the peso relative
  to the U.S. dollar has a significant effect on our operating margins at least
  in the short term.

Further, a strong peso relative to the U.S. dollar
  makes the Mexican market more attractive for importers and competitors that
  might not otherwise sell in the Mexican market. During the last two years, sales
  of imported products into Mexico
  at prices that, in some cases, were below our fully allocated cost of producing
  and distributing similar products have had an impact in the Mexican market and
  have adversely affected our results of operations. A strong peso relative to
  the U.S. dollar also makes those of our products whose prices are denominated
  in or sensitive to the value of the U.S. dollar less competitive or profitable.
  When the peso appreciates in real terms, with respect to such products, we must
  either increase our prices in U.S. dollars, which makes our products less price-competitive,
  or bear reduced operating margins when measured in pesos. Given the competitive
  nature of the industries in which we operate, we have chosen to reduce our operating
  margins for such products in response to the recent appreciation of the peso
  relative to the U.S. dollar. This has adversely affected our results of operations
  and may continue to do so in the future.

In addition, our total financing cost is impacted
  by changes in the nominal value of the peso relative to the U.S. dollar. Foreign
  currency exchange gains or losses included in total financing cost result primarily
  from the impact of nominal changes in the U.S. dollar-peso exchange rate on
  our Mexican subsidiaries' U.S. dollar denominated monetary liabilities (such
  as U.S. dollar denominated debt and accounts payable arising from imports of
  raw materials and equipment) and assets (such as U.S. dollar denominated cash,
  cash equivalents and accounts receivable from exports). Because our U.S. dollar
  denominated monetary liabilities have historically been significantly in excess
  of our U.S. dollar denominated monetary assets, the nominal devaluation of the
  peso relative to the U.S. dollar resulted in foreign currency exchange losses.
  Accordingly, in 1998, 2000 and 2002, the nominal devaluation of the peso relative
  to the U.S. dollar resulted in foreign currency exchange losses. On the other
  hand, in 1999 and 2001, the nominal appreciation of the peso relative to the
  U.S. dollar resulted in foreign exchange gains.

Substitution trends in the glass container
  industry may continue to adversely affect our business.

Glass containers have been, and continue to be,
  subject to competition from alternate forms of packaging, including plastic
  containers, aluminum cans and laminated paper containers. In mature glass container
  markets, such as in the United States,
  demand for glass containers began a sustained long-term decline in the 1970s.
  In connection with such decline, the glass container industry experienced a
  reduction in capacity and consolidation among glass container producers. The
  remaining glass container producers in mature markets have faced, and continue
  to face, pricing pressures as a result of competition from other forms of packaging.
  In Mexico, which is becoming a mature market, increased competition from alternate
  forms of packaging, particularly plastic, aluminum cans and laminated paper
  containers, has adversely affected, and may continue to adversely affect, our
  prices and operating margins, principally with respect to glass containers for
  the beer, soft drinks and food industries. The Glass Containers business unit
  represented 42% of our consolidated net sales in 2002.

Certain of our subsidiaries conduct all or
  a portion of their business through joint ventures and, as such, loss of joint
  venture agreements may adversely affect our business.

Sales attributable to our joint ventures represented
  approximately 61% of our consolidated net sales in 2002. In the future, certain
  of our partners may prefer to conduct business in Mexico directly and to terminate
  their relationships with us. In particular, the easing of limitations on foreign
  investment in Mexico and the reduction of import duties and tariffs by the Mexican
  government have reduced barriers to entry for non-Mexican companies.

Although a number of our joint venture agreements
  contain non-competition provisions that restrict, subject to certain exceptions
  and limitations, our joint venture partners from engaging in the production
  and distribution of the joint venture's products in specific markets during
  the term of the agreement and for a limited period following the termination
  of such agreement (other than through the joint venture vehicle), our joint
  venture agreements generally contain provisions for termination under certain
  circumstances. If a termination were to occur, we cannot assure you we could
  find an equivalent partner or achieve the affected joint venture's objective
  on our own. Such events could have an adverse effect on us.

Additionally, notwithstanding that our business
  units conduct certain limited research and development activities, we generally
  do not develop our own proprietary technology. Although our business units'
  products and manufacturing processes are not in constant need of technological
  improvements and innovations, they do, from time to time, require access to
  new technology necessary to improve their manufacturing processes and product
  lines to more effectively compete in both the Mexican and the international
  markets. The main portion of such technological needs is satisfied through the
  acquisition of technology from third parties through joint ventures, technology
  licenses, technology transfers, technical assistance or similar arrangements.

We could be unsuccessful in renewing our joint ventures,
  technology licenses or other agreements or arrangements upon their expiration
  on terms equivalent to the existing ones, in forming similar alliances with
  other partners or in developing equivalent technologies independently. The failure
  to continue some of our joint ventures or to acquire technology from third parties
  may have an adverse effect on us.

Pricing pressures by OEMs may affect our operating
  margins and results of operations.

Certain of our flat glass products sold to original
  equipment manufacturers, which we refer to as "OEMs," in the automotive industry
  are sold under global purchase agreements, which are entered into after completion
  of a bidding process. Such automotive OEMs have significant buying power which,
  coupled with substantial competition, puts pressure on prices and margins relating
  to products supplied under the global purchase agreements. As a result, even
  if we were awarded the right to sell to an automotive OEM under a global purchase
  agreement, we may sell at operating margins that are lower than margins generally
  achievable from sales to other flat glass customers. This may have an impact
  on our results of operations.

We may make significant acquisitions in the
  future, which, if unsuccessful, may adversely affect our results of operations.

We have made significant acquisitions in the past
  and may make significant acquisitions in the future to support our growth. Acquisitions
  involve a number of risks, including:

* failure of the acquired businesses to achieve
  the results we expect;* our inability to hire or retain key personnel for the
  acquired businesses;* our inability to reduce financial inefficiencies affecting
  the acquired businesses;
  * our inability to efficiently or effectively integrate the acquired operations
  into our current businesses;
  * risks associated with unanticipated events or liabilities;
  * the potential disruption of our current business; and
  * customer dissatisfaction or performance problems at the acquired businesses.

If we are unable to integrate or successfully manage
  the companies we have acquired, or the businesses that we may acquire in the
  future, we may not realize anticipated cost savings, revenue growth and levels
  of integration, which may result in reduced profitability or operating losses.

Factors Relating to Mexico and the Global Economy

Economic developments in Mexico affect our
  business.

Beginning in December 1994 and continuing through
  1995, Mexico
  experienced an economic crisis characterized by a sharp devaluation of the peso,
  high inflation, foreign currency exchange rate instability, high domestic interest
  rates, a strong contraction in consumer demand for many products and services,
  reduced availability of credit, high unemployment and diminished international
  investor confidence in Mexico.
  Mexico's GDP,
  which grew at a real annual rate of 3.5% during 1994, declined by 6.2% in real
  terms during 1995.

In response to these developments, beginning in
  February 1995, the Mexican government implemented a variety of economic programs
  designed to promote economic recovery, stabilize foreign currency exchange rates
  and reduce inflation. Economic conditions in Mexico
  improved moderately in 1996 and 1997. However, a combination of factors led
  to a slowdown in Mexico's
  economic growth in 1998. Notably, the decline in the international price of
  oil resulted in a reduction of federal revenues, approximately one-third of
  which are derived from petroleum taxes and duties. In addition, the economic
  crises in Asia and Russia,
  as well as the financial turmoil in Brazil,
  Venezuela and
  elsewhere, produced greater volatility in the international financial markets,
  which further slowed Mexico's
  economic growth. In 1998, the inflation rate in Mexico
  was 18.6%, interest rates on 28 day Mexican government treasury securities,
  which we refer to as "CETES," averaged 24.8% and the peso lost 22.7% of its
  value (in nominal terms) relative to the U.S. dollar.

During 1999 conditions improved with inflation in
  Mexico at 12.3%,
  interest rates on 28 day CETES averaging 21.4% and the peso appreciating 4.0%
  in value (in nominal terms) relative to the U.S. dollar. Throughout 2000, the
  improvement shown in 1999 continued. In 2000 the inflation rate was 9.0%, interest
  rates on 28 day CETES averaged 15.3% and the peso devalued 1.2% in value (in
  nominal terms) relative to the U.S. dollar. The Mexican government estimated
  that Mexico's
  real GDP grew by 4.8% in 1998, 3.7% in 1999 and 6.9% in 2000.

Beginning in January 2001, however, and increasing
  in the fourth quarter of 2001, amid concerns of a global economic slowdown and
  a recession in the United States,
  Mexico began
  to experience an economic slowdown marked by a decline in GDP. In 2001, Mexico's
  GDP shrank by 0.3% in real terms while the inflation rate was 4.4%, interest
  rates on 28-day CETES averaged 11.3% and the peso appreciated 4.6% in value
  (in nominal terms) relative to the U.S. dollar. During 2002, as the United States
  and global economic slowdown continued, the Mexican real GDP growth rate was
  0.9%, the inflation rate was 5.7%, interest rates on 28 day CETES averaged 11.3%
  and the peso devalued 13.8% (in nominal terms) relative to the U.S. dollar.

We are a company with the majority of our manufacturing
  facilities located in Mexico.
  For each of the years ended on December 31, 2000, 2001 and 2002, approximately 51%, 48%
  and 47%, respectively, of our consolidated net sales resulted from sales to
  parties located within Mexico.
  In the past, inflation has led to high interest rates and devaluations of the
  peso. During the 1980s, government control over foreign currency exchange rates
  adversely affected our net sales and margins. Inflation itself, as well as governmental
  efforts to reduce inflation, has had significant negative effects on the Mexican
  economy in general and on Mexican companies, including us. Inflation in Mexico
  decreases the real purchasing power of the Mexican population and the Mexican
  government's efforts to control inflation by tightening the monetary supply
  have historically resulted in higher financing costs, as real interest rates
  have increased. Such policies have had and could have an adverse effect on us.

The current global economic slowdown, including
  the slowdown in the United States and Mexican economies, and other future economic
  developments in or affecting Mexico could impair our business, results of operations,
  financial condition, prospects and ability to obtain financing.

We may be adversely affected by fluctuations
  in interest rates.

Interest rate risk exists primarily with respect
  to our floating rate peso- and dollar-denominated debt, which debt generally
  bears interest based on the Mexican equilibrium interbank interest rate, which
  we refer to as "TIIE," or the London interbank offered rate, which
  we refer to as "LIBOR." As of December 31, 2002, our floating rate
  peso- and dollar-denominated debt amounted to Ps. 1,670 million and $540 million,
  respectively. As of March 31, 2003, our floating rate peso-and dollar-denominated
  debt was approximately Ps. 3,587 million and $574 million, respectively. Assuming
  a hypothetical increase of 375 basis points in TIIE (a 45.4% increase on the
  average TIIE of 8.26% as of December 31, 2002) and 120 basis points in LIBOR
  (an 85% increase on the 1.41% LIBOR as of December 31, 2002), the interest expense
  for the year ended on December 31, 2002 on our floating rate peso- and dollar-
  denominated debt would have increased by Ps. 63 million and $5 million, respectively.
  If interest rates increase, our ability to service our debt will be negatively
  affected.

Political events in Mexico could affect Mexican
  economic policy and our results of operations.

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

Mexican political events may also significantly
  affect our operations and the performance of Mexican securities, including our
  securities. In the Mexican national elections held on July 2, 2000, Vicente Fox of the Partido Accion Nacional,
  which we refer to as the "PAN," won the presidency. His victory ended more than
  70 years of presidential rule by the Partido Revolucionario Institucional, which
  we refer to as the "PRI." Neither the PRI nor the PAN succeeded in securing
  a majority in either house of the Mexican Congress.

President Fox assumed office on December 1, 2000. While the transition from the previous
  administration was smooth, President Fox has encountered strong opposition to
  some of his proposed reforms from both houses of Congress, where opposition
  parties such as the PRI and the Partido de la Revolucion Democratica have frequently
  joined forces to block PAN initiatives. Such legislative gridlock could slow
  the progress of reforms in Mexico,
  which could have an adverse effect on us, including our business, financial
  condition, prospects and results of operations.

Social and political instability in Mexico
  or other adverse social or political developments in or affecting Mexico
  could adversely affect us and our ability to obtain financing. It is possible
  that political uncertainty may adversely affect financial markets.

Developments in other emerging market countries
  may adversely affect our business or the market price of our securities.

The market price of securities of Mexican companies
  is, to varying degrees, affected by economic and market conditions in other
  emerging market countries. Although economic conditions in such countries may
  differ significantly from economic conditions in Mexico,
  investors' reactions to developments in such countries may have an adverse effect
  on the market price of securities of Mexican companies, including ours. In late
  October 1997, prices of Mexican securities dropped substantially, precipitated
  by a sharp drop in the price of securities traded in Asian markets. Similarly,
  prices of Mexican securities were adversely affected by the economic crises
  in Russia and
  Brazil in the
  second half of 1998 and, to a lesser extent, the economic crisis in Argentina
  in 2002. There can be no assurance that the market price of our securities will
  not be adversely affected by future events elsewhere, especially in other emerging
  market countries.

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.

In the past, the Mexican economy has experienced
  balance of payments deficits, shortages in foreign currency reserves and other
  problems that have affected the availability of foreign currencies in Mexico.
  The Mexican government does not currently restrict or regulate the ability of
  persons or entities to convert pesos into U.S. dollars. However, it has done
  so in the past and could do so again in the future. We cannot assure you that
  the Mexican government will not institute a restrictive foreign currency exchange
  control policy in the future. Any such restrictive foreign currency exchange
  control policy could prevent or restrict access to U.S. dollars and limit our
  ability to service our U.S. dollar-denominated debt.

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

Mexican companies listed on the Mexican Stock Exchange,
  including us, must prepare their financial statements in accordance with generally
  accepted accounting principles in Mexico, which we refer to as "Mexican GAAP."
  Mexican GAAP differs in certain respects from generally accepted accounting
  principles in the United States, which we refer to as "U.S. GAAP," including
  the treatment of minority interests, workers' profit sharing, capitalization
  of pre-operating costs, capitalization of interest and consolidation of subsidiaries.
  In addition, under Mexican GAAP, the effects of inflation must be reflected
  in accounting records and in published financial statements. Moreover, the effects
  of inflation accounting under Mexican GAAP, except for the restatement of fixed
  assets purchased outside Mexico and the restatement of prior period financial
  statements as they relate to foreign subsidiaries, are not eliminated in the
  reconciliation to U.S. GAAP. For this and other reasons, the presentation of
  financial statements and reported earnings prepared in accordance with Mexican
  GAAP may differ materially from the presentation of financial statements and
  reported earnings prepared in accordance with U.S. GAAP.





EXCHANGE RATES

The following table sets forth for each year in
  the five-year period ended on December 31, 2002, the high, low, average and
  annual period end Noon Buying Rates, all expressed in nominal pesos per U.S.
  dollar. No representation is made that the peso or U.S. dollar amounts referred
  to in this annual report could have been or could be converted into U.S. dollars
  or pesos, as the case may be, at the rates indicated, at any particular rate
  or at all.

|                           | Noon Buying Rate (1)
|-------------------------- | --------------------
|Year ended on December 31, | High                
|1998                       | 10.63               
|1999                       | 10.60               
|2000                       | 9.84                
|2001                       | 9.97                
|2002                       | 10.43               

(1) Source: Federal Reserve Bank
  of New York

The following table sets forth for each month in
  the six-month period ended on May 31, 2003, the high and low Noon Buying Rates,
  all expressed in nominal pesos per U.S. dollar.

|         | Noon
        Buying Rate(1)
|-------- | ---------------------------
|         | High                       
|December | 10.43                      
|January  | 10.98                      
|February | 11.06                      
|March    | 11.24                      
|April    | 10.77                      
|May      | 10.42                      



(1) Source: Federal Reserve Bank
  of New York

On June 26, 2003, the Noon Buying Rate was Ps. 10.4580
  per one U.S. dollar.





SELECTED CONSOLIDATED FINANCIAL INFORMATION

Our consolidated financial statements have been
  prepared in accordance with Mexican GAAP, which differs in certain respects
  from U.S. GAAP. Set forth below is a brief summary of certain accounting principles
  that are part of Mexican GAAP and which differ from the analogous accounting
  principles under U.S. GAAP. This summary does not purport to be complete nor
  does it purport to describe all the differences between Mexican GAAP and U.S.
  GAAP. This summary is qualified by reference to Mexican GAAP, including the
  bulletins and other rules issued by the Mexican Institute of Public Accountants,
  which we refer to as the "IMCP," our consolidated financial statements, the
  notes to those financial statements and the information under the section entitled
  "Item 5. Operating and Financial Review and Prospects."

Inflation

Mexican GAAP requires that our financial statements
  recognize the effects of inflation. Our financial statements reflect the:

* restatement of Mexican non-monetary assets (other
  than inventories and plant, property and equipment of non-Mexican origin), non-monetary
  liabilities and shareholders' equity using the INPC;
  * restatement of inventories at current
  replacement cost;* restatement of plant, property and equipment of non-Mexican
  origin using a specific index that reflects inflation in the country of origin
  and the currency exchange rate as of the latest balance sheet date;* recognition,
  as part of income, of gains and losses in purchasing power from holding monetary
  liabilities or assets; and* restatement and presentation of all amounts in constant
  pesos as of the most recent balance sheet date.

Except for the restatement of property, plant and
  equipment of non-Mexican origin and the restatement of prior period financial
  statements of our foreign subsidiaries, the differences between inflation accounting
  under Mexican GAAP and U.S. GAAP have not been included in the reconciliation
  to U.S. GAAP. The application of Mexican GAAP represents a comprehensive measure
  of the effects of price level changes in the Mexican economy and, as such, is
  considered a more meaningful presentation than historical cost-based financial
  reporting for both Mexican and U.S.
  accounting purposes. If it were necessary in the future to include the differences
  between inflation accounting under Mexican GAAP and U.S. GAAP, a change would
  be reflected in the U.S. GAAP reconciliation in our financial statements.

Income Taxes, Workers' Profit Sharing and the
  Tax on Assets

Bulletin D-4, issued by the IMCP, became effective
  on January 1, 2000 and sets forth the accounting
  treatment for income taxes, workers' profit sharing and the tax on assets. Accordingly,
  our financial statements recognize:

* deferred income taxes for temporary differences
  between the accounting and tax bases of assets and liabilities; and* deferred
  workers' profit sharing for temporary differences between the accounting and
  tax results of any period which are expected to reverse in the future.

Additionally, our financial statements recognize
  the tax on assets paid as an asset on our balance sheet. Prior to the effectiveness
  of Bulletin D-4, deferred taxes on assets were recognized as an asset only to
  the extent of identifiable, non-recurring timing differences that were expected
  to reverse over a definite period of time. Any amount of tax on assets that
  did not meet the foregoing criteria was recognized as an expense on the statement
  of operations relating to the period during which such tax on assets was paid.
  Please see note 3(n) to our audited consolidated financial statements for more
  information.

Discontinued Operations

On July 3, 2002, we sold our controlling 51% interest
  in Vitromatic, our joint venture with Whirlpool that engaged in the production
  and distribution of household appliances, to Whirlpool for $148.3 million in
  cash ($10 million of which was paid into escrow in support of certain indemnification
  obligations to Whirlpool). At the time of the transaction, approximately $67
  million of our consolidated debt and approximately $97 million of our consolidated
  off-balance sheet financings were obligations of Vitromatic. Consequently, upon
  the consummation of the sale of our interest in Vitromatic, our consolidated
  debt and off-balance sheet financings were reduced by approximately $67 million
  and approximately $97 million, respectively. Our consolidated financial statements
  and all other financial and statistical data included in this annual report
  have been restated to reflect Vitromatic as a discontinued operation for all
  periods presented in this annual report, unless otherwise indicated. Therefore,
  Vitromatic's results are reflected in the line item entitled "Net income (loss)
  from discontinued operations" in our consolidated statement of operations. Our
  consolidated balance sheet has been restated to present as a discontinued operation
  the assets of Vitromatic in the line items entitled "Current assets of discontinued
  operations" and "Non-current assets of discontinued operations" and the liabilities
  of Vitromatic in the line items entitled "Current liabilities of discontinued
  operations" and "Long-term liabilities of discontinued operations."

Further Information

For more information regarding the differences between
  Mexican GAAP and U.S. GAAP as they relate to our financial statements, please
  see note 21 to our audited consolidated financial statements appearing elsewhere
  in this annual report.





The following table sets forth our selected consolidated
  financial information and other data for the periods indicated. Such financial
  information and data is qualified by reference to, and should be read in conjunction
  with, our consolidated financial statements, the notes to those financial statements
  and the information under the section entitled "Item 5. Operating and Financial
  Review and Prospects."

Financial data set forth in the following table
  for each year in the five year period ended on December 31, 2002 has been restated
  in constant pesos as of December 31, 2002.

|                                                                              | As
        of or for the year ended on December 31,            
|----------------------------------------------------------------------------- | ---------------------------------------------------------------
|                                                                              | 1998                                                           
|                                                                              | (Millions
        of constant pesos as of December 31, 2002)(1)
|Income Statement Data:                                                        |                                                                
|                                                                              |                                                                
|Mexican
      GAAP:                                                           |                                                                
|Net
      sales                                                               | Ps.
        26,205                                             
|Cost
      of sales                                                           | 16,869                                                         
|                                                                              |                                                                
|Gross
      profit                                                            | 9,336                                                          
|General, selling and
      administrative expenses                            | 4,424                                                          
|                                                                              |                                                                
|Operating
      income                                                        | 4,912                                                          
|Financing
      cost:                                                         |                                                                
|Interest
      expense, net                                                   | 2,800                                                          
|Exchange
      loss (gain), net                                               | 2,656                                                          
|Gain
      from monetary position                                             | 2,685                                                          
|Total
      financing cost                                                    | 2,771                                                          
|Other
      expense (income), net                                             | 259                                                            
|Share
      in net income of unconsolidated                                   | 6                                                              
|associated companies                                                         
|Loss
      in value of shares in trust(4)                                     | (1,287)                                                        
|Income before taxes
      and workers' profit sharing                         | 601                                                            
|Income
      and asset tax(5)                                                 | 1,124                                                          
|Workers'
      profit sharing                                                 | 212                                                            
|                                                                              |                                                                
|Net income (loss) from
      continuing operations                            | (735)                                                          
|Net
      income (loss) from discontinued operations(2)                       | (125)                                                          
|                                                                              |                                                                
|Income
      on disposal of discontinued operations(2) (6)                    | 350                                                            
|Extraordinary
      item(7)                                                   | 131                                                            
|Net
      income (loss) for the year                                          | (379)                                                          
|Net income (loss) of
      majority interest                                  | (1,000)                                                        
|                                                                              |                                                                
|Dividends
      declared                                                      | 383                                                            
|Dividends
      declared per share                                            | 1.07                                                           
|Diluted and basic net
      income (loss) per share                           | (2.94)                                                         
|                                                                              |                                                                
|U.S.
      GAAP:                                                              |                                                                
|Net
      sales                                                               | Ps.
        27,008                                             
|Operating
      income                                                        | 4,941                                                          
|Net income (loss) from
      continuing operations                            | 647                                                            
|Net
      income (loss) for the year                                          | (149)                                                          
|                                                                              |                                                                
|Balance Sheet Data:                                                           |                                                                
|                                                                              |                                                                
|Mexican
      GAAP:                                                           |                                                                
|Continuing
      Operations:                                                  |                                                                
|Cash
      and cash equivalents                                               | Ps.
        749                                                
|Current
      assets                                                          | 8,043                                                          
|Total
      assets                                                            | 35,799                                                         
|Current
      liabilities                                                     | 6,548                                                          
|Total
      debt                                                              | 18,855                                                         
|Minority interest in
      consolidated subsidiaries                          | 4,811                                                          
|Majority
      stockholders' equity(5)                                        | 9,386                                                          
|                                                                              |                                                                
|Discontinued
      Operations:(2)                                             |                                                                
|Total
      assets                                                            | Ps.
        5,153                                              
|Total
      liabilities                                                       | 2,877                                                          
|                                                                              |                                                                
|U.S.
      GAAP:                                                              |                                                                
|Continuing
      Operations:                                                  |                                                                
|Total
      assets                                                            | Ps.
        40,676                                             
|Total
      liabilities                                                       | 28,826                                                         
|Majority
      stockholders' equity                                           | 7,585                                                          
|                                                                              |                                                                
|Other Data:                                                                   |                                                                
|                                                                              |                                                                
|Mexican
      GAAP:                                                           |                                                                
|Capital
      expenditures                                                    | Ps.
        2,620                                              
|Depreciation
      and amortization                                           | 1,927                                                          
|Resources generated
      by continuing operations                            | 4,002                                                          
|EBITDA(8)                                                                     | 7,031                                                          
|Ratio
      of EBITDA to interest expense(8)                                  | 2.5                                                            
|Ratio
      of total debt to EBITDA(8)                                        | 2.7                                                            
|Total shares issued
      at end of period (millions of shares)               | 360                                                            
|Average
      total shares outstanding during period (millions of shares) (9) | 340.2                                                          
|Total
      shares in Stock Option Trust                                      | 15.2                                                           
|                                                                              |                                                                
|Inflation and Foreign Currency Exchange Rate Data:                            |                                                                
|                                                                              |                                                                
|Percentage
      of change in INPC                                            | 18.60%                                                         
|Peso/dollar
      exchange rate(10)                                           | Ps.
        9.8963                                             
|Average
      exchange rate(11)                                               | Ps.
        9.2414                                             

(1) Except ratios, number of shares,
  inflation and foreign currency exchange rate data.(2) On July 3, 2002, we sold our controlling 51% interest in
  Vitromatic, our joint venture with Whirlpool that engaged in the production
  and distribution of household appliances, to Whirlpool for $148.3 million in
  cash ($10 million of which was paid into escrow in support of certain indemnification
  obligations to Whirlpool). At the time of the transaction, approximately $67
  million of our consolidated debt and approximately $97 million of our consolidated
  off-balance sheet financings were obligations of Vitromatic. Consequently, upon
  the consummation of the sale of our interest in Vitromatic, our consolidated
  debt and off-balance sheet financings were reduced by approximately $67 million
  and approximately $97 million, respectively. Our consolidated financial statements
  and all other financial and statistical data included in this annual report
  have been restated to reflect Vitromatic as a discontinued operation for all
  periods presented in this annual report, unless otherwise indicated. Therefore,
  Vitromatic's results are reflected in the line item entitled "Net income (loss)
  from discontinued operations" in our consolidated statement of operations. Our
  consolidated balance sheet has been restated to present as a discontinued operation
  the assets of Vitromatic in the line items entitled "Current assets of discontinued
  operations" and "Non-current assets of discontinued operations" and the liabilities
  of Vitromatic in the line items entitled "Current liabilities of discontinued
  operations" and "Long-term liabilities of discontinued operations."
  (3) Peso amounts have been translated into U.S. dollars, solely for the convenience
  of the reader, at the rate of 10.4393 pesos per one U.S. dollar, the Free Exchange
  Rate on December 31, 2002.
  (4) In 1998, Vitro recorded a charge of Ps. 1,287 million related to a loss
  in the market value of an account receivable that Vitro received in connection
  with the sale of its 49.9% equity interest in Cydsa, S.A. de C.V.
  (5) Bulletin D-4, issued by the IMCP, became effective on January 1, 2000 and
  sets forth the accounting treatment for income taxes, workers' profit sharing
  and the tax on assets. Accordingly, our financial statements recognize (i) deferred
  income taxes for temporary differences between the accounting and tax bases
  of assets and liabilities and (ii) deferred workers' profit sharing for temporary
  differences between the accounting and tax results of any period which are expected
  to reverse in the future. Additionally, our financial statements recognize the
  tax on assets paid as an asset on our balance sheet. Prior to the effectiveness
  of Bulletin D-4, deferred taxes on assets were recognized as an asset only to
  the extent of identifiable, non-recurring timing differences that were expected
  to reverse over a definite period of time. Any amount of tax on assets that
  did not meet the foregoing criteria was recognized as an expense on the statement
  of operations relating to the period during which such tax on assets was paid.
  Please see note 3(n) to our audited consolidated financial statements for more
  information.
  (6) In September 1996, Anchor Glass Inc., which we refer to as "Anchor Glass,"
  filed for protection under Chapter 11 of the U.S. Bankruptcy Code. As a result
  of the Anchor Glass' bankruptcy filing, we wrote off our entire investment in
  Anchor Glass as of August 31, 1996. The 1998 and 1999 tax benefit in the amounts
  of Ps. 350 million and Ps. 606 million, respectively, from the corresponding
  deduction of the loss from discontinued operations recorded with respect to
  Anchor Glass in 1996 is reflected in 1998 and 1999 as "Income on disposal of
  discontinued operations."
  (7) The amounts reflected as "Extraordinary item" are the tax benefit that resulted
  from the utilization of tax loss carry forwards and the recovery of a tax on
  assets that had been previously paid.
  (8) EBITDA consists of operating income plus depreciation, amortization and
  reserves for seniority premiums and pensions. Seniority premiums and pension
  reserves for the years 1998, 1999, 2000, 2001 and 2002 were Ps. 192 million,
  Ps. 198 million, Ps. 211 million, Ps. 211 million and Ps. 187 million, respectively.
  The concept of EBITDA is presented because some of our investors have indicated
  to us that they consider it an appropriate measurement of the funds we have
  available to service our debt. EBITDA is not intended to represent cash flow
  from operations as defined by generally accepted accounting principles and should
  not be considered as an alternative to net income as an indicator of our operating
  performance or to resources generated by continuing operations as a measure
  of our liquidity. Please see "Item 5. Operating and Financial Review and Prospects-EBITDA
  Reconciliation" for a reconciliation of EBITDA to resources generated by continuing
  operations. Because not all companies calculate EBITDA identically, our presentation
  of EBITDA may not be comparable to other similarly entitled measures used by
  other companies.
  (9) For accounting purposes, the approximately 15.2 million, 23.1 million, 1.8
  million, 24.7 million and 24.7 million shares of our Series "A" common
  stock held by the Stock Option Trust as of December 31, 1998, 1999, 2000, 2001
  and 2002, respectively, are considered treasury stock and therefore not outstanding.
  (10) Based on the Free Exchange Rate at the end of the period.
  (11) Calculated using the average of free exchange rates on the last day of
  each month during the period.





Item 4. INFORMATION ON THE
  COMPANY

ORGANIZATIONAL STRUCTURE

The following chart presents the organizational
  structure of our business units, our principal subsidiaries and our direct or
  indirect percentage equity ownership in such subsidiaries as of May 30, 2003.



(1) Vitro, S.A. de C.V. is our commercial
  and legal name.
  (2) Joint venture between Vitro, S.A. de C.V. and Pilkington plc
  (3) Joint venture between Vitro Plan, S.A. de C.V. and Visteon Automotive Systems
  Inc.
  (4) Joint venture between Vitro Plan, S.A. de C.V. and Solutia, Inc.
  (5) Vitro Fibras, S.A. de C.V. is 60% owned by Vitro Envases Norteamérica,
  S.A. de C.V and 40% by Owens-Corning, Inc., but is operated by, and for segment
  reporting purposes its operating results are consolidated into, the Flat Glass
  business unit.
  (6 )Joint venture between Vitro, S.A. de C.V. and Rexam Beverage Can of the
  Americas, Inc.
  (7 )Joint venture between Vitro, S.A. de C.V. and Libbey, Inc.
  (8) Percentage owned by Vitro Plan, S.A. de C.V., the holding company for our
  Flat Glass business unit.
  (9) Percentage owned by Vitro Envases Norteamérica, S.A. de C.V., the
  holding company of our Glass Containers business unit.
  (10) Percentage owned by Vitrocrisa Holding, S. de R. L. de C.V. , the holding
  company of our Glasswares business unit.
  (11) Joint venture between Vitro, S.A. de C.V. and Cervecería Centroamericana,
  S.A. and Cervecería de Costa Rica, S.A.





HISTORY AND DEVELOPMENT OF THE COMPANY

Vitro, S.A. de C.V. is a corporation with variable
  capital (sociedad anonima de capital variable) organized under the laws of Mexico
  and is a holding company that conducts substantially all of its operations through
  subsidiaries. Our predecessor was incorporated in Mexico in 1909 as Vidriera
  Monterrey, S.A. de C.V. and, based on our consolidated net sales of Ps. 23,922
  million ($2,292 million) in 2002, we believe that our subsidiaries as a group
  comprise the largest Mexican manufacturer of flat glass, glass containers and
  glassware. Our principal executive offices are located at Ave. Ricardo Margain
  Zozaya 400, Col. Valle del Campestre, San Pedro Garza Garcia, Nuevo Leon,
  66265 Mexico,
  telephone number (52-81) 8863-1200. Our agent for service, exclusively for actions
  brought by the SEC pursuant to the requirements of the U.S.
  federal securities laws, is CT Corporation System, 111
  Eighth Avenue, New York, New York
  10011.

Our consolidated net sales for the year ended on
  December 31, 2002 totaled Ps. 23,922
  million ($2,292 million). As of December 31, 2002, our total assets were Ps. 30,016 million
  ($2,875 million). We have manufacturing facilities in eight countries, distribution
  centers throughout the Americas
  and Europe and export our products to over 70 countries.
  In 2002, 47% of our consolidated net sales were sales made in Mexico.

We have successfully established numerous joint
  ventures and technology-sharing relationships with leading United
  States and European companies including Pilkington
  plc, which we refer to as "Pilkington," and Libbey, Inc., which we refer to
  as "Libbey." Sales attributable to our joint ventures represented approximately
  61% of our consolidated net sales in 2002.

Our operations are currently organized into three
  operating business units: the Flat Glass business unit (approximately 47% of
  our consolidated net sales in 2002), the Glass Containers business unit (approximately
  42% of our consolidated net sales in 2002) and the Glassware business unit (approximately
  11% of consolidated net sales in 2002). Prior to October 2001, we organized
  our operations into five business units. On October 1, 2001, we integrated those of our subsidiaries
  that were part of our Diverse Industries business unit into our other business
  units, thus reducing the number of business units through which we conducted
  our operations to four. On July 3, 2002,
  we sold our controlling 51% interest in Vitromatic, which was our Acros-Whirlpool
  business unit, to Whirlpool. Since the sale of our interest in Vitromatic, we
  have conducted our operations through our Flat Glass, Glass Containers and Glassware
  business units.

Our Flat Glass business unit focuses on the manufacturing,
  processing and distribution of flat glass for the construction and automotive
  industries. Based on the Flat Glass business unit's consolidated net sales of
  Ps. 11,380 million ($1,090 million) in 2002, we believe the business unit is
  the largest flat glass producer in Mexico, the second largest in Latin America
  and among the largest processors and distributors of flat glass in the United
  States. Our Flat Glass business unit also includes (i) Vitro Fibras, S.A., which
  we refer to as "Vifisa," our joint venture with Owens-Corning, Inc., which we
  refer to as "Owens-Corning," that is engaged in the manufacturing and distribution
  of fiberglass products, (ii) Vitro Flex, S.A. de C.V., which we refer to as
  "Vitro Flex," our joint venture with Visteon Automotive Systems Inc., which
  we refer to as "Visteon," that is engaged in the manufacturing and distribution
  of flat glass products for the automotive industry, (iii) Cristalglass, our
  joint venture with a group of individual investors that is engaged in the manufacturing
  and distribution of flat glass products for the European construction industry
  and (iv) Quimica M, S.A. de C.V., which we refer to as "Quimica M," our joint
  venture with Solutia Inc., which we refer to as "Solutia," that is engaged in
  the manufacturing and distribution of polyvinyl butyral, which is an inner layer
  of plastic film used in the manufacture of clear and shaded windshields.

Our Glass Containers business unit produces soda
  lime glass containers for the soft drink, beer, food, liquor and wine, pharmaceutical
  and cosmetics industries and, based on its consolidated net sales of Ps. 10,012
  million ($959 million) in 2002, we believe the Glass Containers business unit
  is the largest glass container producer in Mexico and Central America. The Glass
  Containers business unit also includes (i) Empresas Comegua, S.A., which we
  refer to as "Comegua," our joint venture with Cerveceria Centroamericana, S.A.,
  which we refer to as "Cerveceria Centroamericana," and Cerveceria de Costa Rica,
  S.A., which we refer to as "Cerveceria de Costa Rica," which, based on Comegua's
  net sales of Ps. 1,207 million ($115 million) in 2002, we believe is the largest
  glass containers producer in Central America and (ii) Industria del Alcali,
  S.A. de C.V., which we refer to as "Alcali," Vitro American National Can, S.A.
  de C.V., which we refer to as "Vancan," Fabricacion de Maquinas, S.A. de C.V.,
  which we refer to as "FAMA," and Vidrio Lux, S.A., which we refer to as "Vilux."
  Alcali, Vancan and FAMA were previously part of the Diverse Industries business
  unit and manufacture, respectively, soda ash and bicarbonate, aluminum cans
  and capital goods, such as glass forming machines and molds. Alcali, Vancan
  and FAMA were integrated into the Glass Containers business unit effective October
  1, 2001. Vilux is our wholly owned Bolivian glass containers manufacturer.

Our Glassware business unit focuses on the manufacturing
  and distribution of glassware, flatware, stemware, bake ware and home decor
  products for the consumer segment, glassware and flatware for the food service
  segment and coffee carafes, blender jars, lids, meter covers, candle holders
  and lighting products for the industrial segment, in each case, of the glassware
  industry. Based on its sales of Ps. 2,618 million ($251 million) in 2002, we
  believe that the Glassware business unit is the largest producer of glassware
  in Mexico. The
  Glassware business unit also includes Plasticos Bosco, S.A. de C.V., which we
  refer to as "Bosco," and Envases Cuautitlan, S.A. de C.V., which we refer to
  as "ECSA," our wholly owned subsidiaries that engage in the manufacturing and
  distribution of plastic containers, plastic tubes and disposable thermofold
  ware and industrial products.

Divestitures

As part of our strategy, we have divested and may
  continue to divest some of our non-strategic businesses and assets. The following
  paragraphs describe the principal divestitures that we have made in the last
  three years as part of our program to sell non-core businesses and assets. During
  2000, 2001 and 2002, we received aggregate net proceeds of approximately $218
  million from divestitures and asset sales (including approximately $48 million
  from the sale of assets such as land, buildings and warehouses).

On July 3, 2002, we sold our controlling 51% interest
  in Vitromatic, our joint venture with Whirlpool that engaged in the production
  and distribution of household appliances, to Whirlpool for $148.3 million in
  cash ($10 million of which was paid into escrow in support of certain indemnification
  obligations to Whirlpool). At the time of the transaction, approximately $67
  million of our consolidated debt and approximately $97 million of our consolidated
  off-balance sheet financings were obligations of Vitromatic. Consequently, upon
  the consummation of the sale of our interest in Vitromatic, our consolidated
  debt and off-balance sheet financings were reduced by approximately $67 million
  and approximately $97 million, respectively.

On April
  15, 2002, we sold our 51% interest in Ampolletas,
  S.A., which we refer to
  as "ASA," to Gerresheimer Glass AG, which we refer to as "Gerresheimer," for
  $13.4 million in cash. At the time of the transaction, approximately $6.5 million
  of our consolidated debt were obligations of ASA. Consequently, upon the consummation
  of the sale of our interest in ASA, our consolidated debt was reduced by approximately
  $6.5 million. ASA is engaged in the manufacturing of borosilicate glass products
  for laboratory and pharmaceutical use, such as ampoules, vials and syringes.

On May 21, 2001, we sold our 50% interest in Regioplast,
  S.A. de C.V., which we refer to as "Regioplast," our joint venture with Owens-Illinois,
  Inc., which we refer to as "Owens-Illinois," that engaged in the production
  and distribution of plastic bottles and caps, including non-refillable closures,
  for $8 million in cash. Since its inception in 1993, Regioplast has been managed
  by Owens-Illinois.

New Ventures

On December
  27, 2002, through our Spanish subsidiary Cristalglass, we acquired
  60% of the outstanding shares of common stock of Vidraria Chaves Lda., which
  we refer to as "Vidraria Chaves," for $1 million in cash. Vidraria Chaves is
  a Portuguese processor and distributor of glass and glazing products for the
  European construction industry. We believe that this addition will allow Cristalglass
  to continue to penetrate the European market and to satisfy its customers' needs
  for laminated glass and double glazing products in Europe,
  particularly in Spain
  and Portugal.
  Moreover, we believe that Vidraria Chaves and Cristalglass will reap significant
  synergies in the processing and distribution of laminated glass for the European
  construction industry due to an improved distribution network and expanded geographic
  presence. With the addition of Vidraria Chaves, Cristalglass also intends to
  increase its presence in the facade business in Portugal
  and the rest of Europe.

On June 19, 2002, through our subsidiary Vitro AFG,
  S.A. de C.V., which we refer to a "Vitro AFG," we entered into an agreement
  with AFG Industries, Inc., which we refer to as "AFG Industries," a subsidiary
  of Asahi Glass Corporation, which we refer to as "Asahi," to convert our glass
  containers facility in Mexicali, Mexico into a flat glass facility. We expect
  that the converted facility will have a flat glass production capacity of approximately
  200,000 metric tons per year. The flat glass produced by this facility will
  be allocated equally between AFG Industries and us, and each partner will market
  its allocation independently of the other. The capital expenditure that we estimate
  each of the partners will make in connection with this project is approximately
  $45 million. Our investment will be comprised of the contribution of our current
  facility, which was valued at approximately $17 million when the contribution
  was made in 2002, and approximately $28 million in cash, which disbursement
  will be made in 2003. The conversion of this facility is currently underway.
  The converted facility is expected to commence operations by the first quarter
  of 2004 and to supply flat glass to the western United
  States and Mexico.

On May 4,
  2001, through our subsidiary Vitro Plan, S.A. de C.V., which we refer
  to as "Vitro Plan," we acquired 60% of the outstanding shares of common stock
  of Cristalglass Vidrio Aislante, S.A. Cristalglass Vidrio Aislante, S.A. subsequently
  changed its name to Vitro Cristalglass, S.A.
  and we currently refer to it as "Cristalglass." Cristalglass processes and distributes
  value-added flat glass for the European construction industry. Cristalglass
  has 5 processing facilities located in Spain.

On April
  17, 2000, Vitro America
  acquired the business and substantially all of the assets of Harding Glass Inc.,
  which we refer to as "Harding," a subsidiary of SunSource Inc. Based on the
  size of Harding's distribution network, in 2000 it was one of the United
  States' largest distributors of glass products
  for the automotive and construction markets. Through the acquisition of Harding's
  business and assets, Vitro America
  added approximately $100 million to its annual revenue base and incorporated
  into its operations 5 distribution centers and 118 retail stores strategically
  located throughout the United States.
  The company holding Harding's assets was merged into Vitro America
  in January 2001. Upon the acquisition of the assets of Harding, Vitro America
  operated 10 manufacturing centers, 44 distribution centers and 151 "Binswanger"
  retail stores in the United States.

Operating Business Units

Our operations are currently organized into three
  operating business units: the Flat Glass business unit, the Glass Containers
  business unit and the Glassware business unit, which represented approximately
  47%, 42% and 11% of our consolidated net sales in 2002, respectively. Prior
  to October 2001, we organized our operations into five business units. On October 1, 2001, we integrated those
  of our subsidiaries that were part of our Diverse Industries business unit into
  our other business units, thus reducing the number of business units through
  which we conducted our operations to four. On July 3, 2002, we sold our controlling
  51% interest in Vitromatic, which was our Acros-Whirlpool business unit, to
  Whirlpool. Since the sale of our interest in Vitromatic, we have conducted our
  operations through our Flat Glass, Glass Containers and Glassware business units.

The organization of our operations into business
  units allows us to focus on the needs of distinct end-markets, diversifies our
  revenue base and enables us to take advantage of our expertise in the efficient
  production of glass products. In addition, our operations at the corporate level
  continue to provide us with certain administrative, technical and corporate
  services, including management information systems, human resources, finance,
  treasury, accounting and consolidation, procurement, labor and employee benefits,
  quality control, environmental compliance, industrial safety, communication
  and legal affairs.

Flat Glass

Based on the Flat Glass business unit's consolidated
  net sales of Ps. 11,380 million ($1,090 million) in 2002, we believe the business
  unit is the largest flat glass producer in Mexico, the second largest in Latin
  America and among the largest processors and distributors of flat glass in the
  United States. In 2002, this business unit accounted for 47% of our consolidated
  net sales. During the same period, approximately 24% of the consolidated net
  sales of the Flat Glass business unit came from exports and approximately 47%
  came from sales by our foreign subsidiaries that are part of the business unit.

The Flat Glass business unit focuses on the manufacturing,
  processing and distribution of flat glass for the construction and automotive
  industries and has a production capacity of over 500,000 tons of float glass
  per year. Since 1965, Pilkington, a leading manufacturer of flat glass in the
  world, has been our partner, holding a 35% interest in Vitro Plan, the holding
  company for our Flat Glass business unit. Pilkington has also been an important
  provider of technology to our Flat Glass business unit. Our Flat Glass business
  unit's customer base includes General Motors, Ford, DaimlerChrysler and Nissan
  in the automotive industry, and several large domestic and foreign companies
  in the construction industry.

In Mexico,
  our Flat Glass business unit manufactures, processes, distributes and installs
  flat glass for the construction and automotive markets. The business unit's
  Mexican operations include 10 manufacturing facilities, including 3 float glass
  tanks, and approximately 118 distribution or installation centers, of which
  approximately 57 are owned by us and approximately 61 are franchises owned by
  third parties.

We also have a significant presence in the United
  States' flat glass market through our subsidiary
  Vitro America.
  Vitro America
  processes, distributes and installs flat glass products for the construction
  and automotive markets in the United States.
  It operates in 29 states through 9 manufacturing facilities, 45 distribution
  centers and 124 installation centers.

On May 4,
  2001, we expanded our flat glass operations into Europe
  through the acquisition of 60% of the outstanding shares of common stock of
  Cristalglass, a processor and distributor of value-added flat glass for the
  European construction industry. Cristalglass has 5 processing facilities located
  in Spain. On
  December 27, 2002, we continued our expansion of our flat
  glass operations in Europe through the acquisition of
  60% of the outstanding shares of common stock of Vidraria Chaves, a Portuguese
  processor and distributor of glass and glazing products for the European construction
  industry.

The Flat Glass business unit also has joint ventures
  with Visteon through Vitro Flex, with Solutia through Quimica M, with Owens-Corning,
  through Vifisa and with AFG Industries through Vitro AFG. We have partnered
  with groups of individual investors with respect to Cristalglass, Vidraria Chaves
  and our Mexican automotive replacement glass installation business.

Glass Containers

Based on the Glass Containers business unit's consolidated
  net sales of Ps. 10,012 million ($959 million) in 2002, we believe it is the
  largest glass containers producer in Mexico
  and Central America. In 2002, this business unit accounted
  for 42% of our consolidated net sales. During the same period, approximately
  25% of the consolidated net sales of the Glass Containers business unit came
  from exports and approximately 13% came from sales by our foreign subsidiaries
  that are part of the business unit.

The Glass Containers business unit produces soda
  lime glass containers for the soft drink, beer, food, liquor and wine, pharmaceutical
  and cosmetics industries and has a production capacity of over 5,000 tons of
  glass per day. Its customers include leading companies such as Coca-Cola, Pepsi,
  Modelo, Nestle, Procter & Gamble, Gerber, Avon, Coty
  and Domecq.

The Glass Containers business unit operates 11 manufacturing
  facilities in Mexico,
  two in Central America and one in Bolivia.
  The business unit, which exports containers for the soft drinks, liquor and
  wine, pharmaceutical and cosmetic industries to the United
  States through its subsidiary Vitro Packaging,
  has 5 sales offices throughout the United States
  and includes Comegua, our joint venture with Cerveceria Centroamericana and
  Cerveceria de Costa Rica. Based on Comegua's net sales of Ps. 1,207 million
  ($115 million) in 2002, we believe it is the largest glass containers producer
  in Central America.

Glassware

Based on the Glassware business unit's consolidated
  net sales of Ps. 2,618 million ($251 million) in 2002, we believe the business
  unit is the largest producer of glassware in Mexico.
  In 2002, this business unit accounted for 11% of our consolidated net sales.
  During the same period, approximately 31% of the consolidated net sales of the
  Glassware business unit came from exports.

The Glassware business unit focuses on the manufacturing
  and distribution of glassware, flatware, stemware, bake ware and home decor
  products for the consumer segment, glassware and flatware for the food service
  segment and coffee carafes, blender jars, lids, meter covers, candle holders
  and lighting products for the industrial segment, in each case, of the glassware
  industry. This business unit has a production capacity of over 2 million units
  per day. Since 1997, Libbey, a leading producer of tableware in North America,
  has been our partner, holding a 49% interest in Vitrocrisa Holding, S. de R.L.
  de C.V., which we refer to as "Vitrocrisa," the holding company for our Glassware
  business unit. The business unit's customer base includes leading global manufacturers
  such as Hamilton Beach/Proctor-Silex and retailers such as Wal-Mart, HEB and
  other leading Mexican supermarket chains such as Gigante and Soriana.

The business unit has 3 manufacturing facilities
  in Monterrey, Mexico,
  2 manufacturing facilities in Mexico City, Mexico
  and 10 distribution centers located throughout Mexico.

The Glassware business unit is also responsible
  for the operation of our plastic manufacturing and distribution business, which
  accounted for 20% of the consolidated net sales of our Glassware business unit
  in 2002. Our plastics manufacturing and distribution operations are conducted
  through 2 of our wholly owned subsidiaries.

Capital Expenditures

Our capital expenditure program is focused on new
  investments in, technological upgrades to and maintenance of, our manufacturing
  facilities, as well as expansion of our production capacity. Our capital expenditure
  program also contemplates the purchase and maintenance of environmental protection
  equipment required to meet applicable environmental laws and regulations as
  such may be in effect from time to time.

The following table sets forth our capital expenditures
  by business unit for the periods presented.

|                 | Year ended on December 31, (Millions of constant pesos
        as of December 31, 2002) | Three-month period ended on March 31, (Million of constant
        pesos as of March 31, 2003)
|---------------- | --------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|Business Unit    | 2000                                                                                    | 2001                                                                                          
|Flat Glass       | Ps.   364                                                                               | Ps.   406                                                                                     
|Glass Containers | 407                                                                                     | 314                                                                                           
|Glassware        | 163                                                                                     | 91                                                                                            
|Corporate        | 18                                                                                      | 37                                                                                            
|                 |                                                                                         |                                                                                               
|Total            | Ps.   952                                                                               | Ps. 848                                                                                       

During 2003, we expect to make capital expenditures
  as follows:

*  the capital expenditure required by
  our agreement with AFG Industries to convert our glass containers facility in
  Mexicali, Mexico
  into a flat glass facility. We expect that the converted facility will have
  a flat glass production capacity of approximately 200,000 metric tons per year.
  The flat glass produced by this facility will be allocated equally between AFG
  and us, and each partner will market its allocation independently of the other.
  The capital expenditure that we estimate each of the partners will make in connection
  with this project is approximately $45 million. Our investment will be comprised
  of the contribution of our current facility, which was valued at $17 million
  when the contribution was made in 2002, and approximately $28 million in cash,
  which disbursement will be made in 2003. The conversion of this facility is
  currently underway. The converted facility is expected to commence operations
  by the first quarter of 2004 and to supply flat glass to the western United
  States and Mexico;

*  the capital expenditure required to
  refurbish and expand one of our furnaces located in Queretaro,
  Mexico. We expect that
  the refurbishment and expansion will increase the furnace's production capacity
  by 30%. The capital expenditure that we made in connection with this project
  was approximately $21 million, all of which was made in 2003. The refurbished
  and expanded furnace has resumed operations;

*  the capital expenditure required to
  refurbish and provide needed maintenance to one of our float glass tanks located
  in Monterrey, Mexico. We expect that the refurbished tank will have approximately
  the same production capacity as before the refurbishment. The capital expenditure
  that we estimate we will make in connection with this project is approximately
  $24 million in cash, all of which will be made in 2003. The refurbished furnace
  is expected to resume operations in 2003; and

*  the remaining capital expenditures in
  2003 will be focused on (i) providing maintenance to or upgrading the installed
  technology of several of our other facilities, (ii) purchasing equipment and
  making other expenditures relating to obtaining Industria Limpia certificates
  for each of our Mexican facilities, which capital expenditures we estimate will
  be approximately $5 million in 2003 and (iii) purchasing and maintaining environmental
  protection equipment required to continue to meet applicable environmental laws
  and regulations.

We expect to finance all of the capital expenditures
  discussed above with cash flow generated by our operations.

Please see "Item 5. Operating and Financial Review
  and Prospectus-Liquidity and Capital Resources" for a discussion of our principal
  capital expenditures during the last three full fiscal years.



BUSINESS OVERVIEW

Business Strategy

We are focusing on enhancing the value of Vitro
  by (i) concentrating on our core competencies of glass manufacturing and distribution,
  (ii) strengthening our financial position, (iii) continuing to reduce costs
  and enhance operating efficiencies, (iv) leveraging Vitro's brand name and (v)
  selectively pursuing opportunities in core markets. We have begun and intend
  to continue to improve operating efficiencies, take advantage of existing synergies
  between our business units to improve operating margins, secure and maintain
  business relationships and long-term contracts with our key customers and joint
  venture partners and concentrate on serving high-margin markets with high value-added
  and innovative products.

Our objective is to increase our profitability by
  solidifying our market position as a key player in the global glass manufacturing
  and distribution industry. In order to achieve this objective, we operate our
  business based on the following strategies:

Concentrate on Core Competencies of Glass
  Manufacturing and Distribution

We believe our current business portfolio, composed
  of the Flat Glass, Glass Containers and Glassware business units, provides us
  with long-term, sustainable growth opportunities. With respect to each of our
  three business units, our focus will remain on serving high-margin markets with
  high value-added and innovative products as part of our strategy to distinguish
  ourselves from commodity manufacturers. Our business units rely on our manufacturing
  experience, technological strength, manufacturing flexibility, market and customer
  knowledge and our ability to efficiently produce high-quality glass products
  in order to implement this strategy and grow our business.

We aim to strengthen the Flat Glass business unit's
  position in the Mexican, United States
  and European markets by targeting high-margin markets with our products. Where
  appropriate, we intend to selectively pursue investment and integration opportunities
  in other attractive markets, as we have done in Spain
  and Portugal.
  The Glass Containers business unit seeks to improve its margins, strengthen
  its relationships with key customers and optimize its cash generation by expanding
  into niche markets that require high-quality products on short lead times. The
  Glassware business unit intends to focus on marketing and product innovation
  as well as its distribution and customer service capabilities.

To this end and as part of our effort to concentrate
  on our core businesses, we sold our interest in Vitromatic, the holding company
  of our former Acros-Whirlpool business unit, on July 3, 2002. Please see "Item 4. Information on the CompanyHistory
  and Development of the CompanyDivestitures" for more information on
  our recent divestitures, including Vitromatic.

Strengthen Our Financial Position

We intend to strengthen our financial position in
  the medium term by reducing debt through the use of internally generated funds
  and proceeds from the disposition of non-strategic business and non-core assets.
  Additionally, we intend to extend the average life of our debt by reducing our
  short-term debt and to align the currency mix of our debt profile to match the
  currency mix profile of our expected cash flow generation. These initiatives
  should improve our liquidity, diminish our foreign currency exchange risk and
  support the growth of our core businesses.

Continue to Reduce Costs and Enhance Operating
  Efficiencies

As part of our ongoing efforts to reduce costs and
  expenses, in 2001 we reduced the number of administrative staffers throughout
  our business units and the corporate headquarters by more than 600 people. We
  plan to continue with our efforts to reduce our selling, general and administrative
  expenses.

In 2002, we enhanced our operations and our communications
  network by upgrading our information systems. These initiatives extended across
  the value chain from employees and suppliers to customers. To upgrade our information
  systems, we entered into an agreement with Electronic Data Systems, which we
  refer to as "EDS," to outsource some of our information technology needs. EDS
  provides us with computer hardware and software and telecommunications management
  in addition to technical support more efficiently than we can provide such goods
  and services to ourselves.

One of the goals of our capital expenditure program
  is to continue to outfit our facilities with state-of-the-art technologies and
  processes where we believe such investments will improve our operating efficiencies
  or reduce our production costs.

Leverage "Vitro" Brand Name

The "Vitro" brand name is widely recognized in Mexico
  and in other markets where we have a presence as a leader in the manufacturing
  and processing of high-quality glass and related products. We plan to continue
  leveraging the "Vitro" brand name to emphasize our commitment to high-quality
  glass products.

Selectively Pursue Opportunities in Core Markets

We believe that significant opportunities exist
  in glass markets outside of Mexico.
  We intend to pursue such opportunities on a selective basis. Historically, our
  growth has been through organic growth, expansion into foreign markets via exports
  and strategic acquisitions. Increasing access to foreign markets will support
  the achievement of our strategic objectives of consolidating our leadership
  position in the domestic and regional markets in the Americas,
  growing in attractive markets outside of the Americas
  and mitigating the impact of slowdowns in regional demand.

Competitive Strengths

Substantial Net Sales and Cash Generation
  Base

Our consolidated net sales were Ps. 23,922 million
  ($2,292 million) in 2002, placing us among the largest Mexican companies. Historically,
  we have been able to maintain a substantial level of consolidated net sales
  and generate a significant cash flow despite changes in the markets we serve
  and fluctuations in demand for our products.

Solid and Diverse Customer Base

We have successfully established long-term relationships
  with customers that are leaders in their industries due to the high-quality
  of our products and our ability to effectively meet our customers' specifications
  and volume requirements promptly and consistently. These long-standing relationships,
  some of which are over 50 years old, provide us with a stable and diverse revenue
  base. Ford, General Motors, Modelo, Coca-Cola, Pepsi, Domecq and Procter &
  Gamble are examples of companies with whom we have strong commercial relationships.
  In 2002, no single customer accounted for more than 5% of our consolidated net
  sales. Our customer diversity is enhanced by the breadth of industries we serve,
  which include the automotive, construction, beverage, food, lodging and restaurant,
  pharmaceutical and cosmetic industries.

Broad Market and Geographical Scope

Our Mexican customer base is complemented by our
  presence in other North, Central and South American as well as European markets.
  We have manufacturing facilities in eight countries throughout the Americas,
  Spain and Portugal. We have distribution centers throughout the Americas and
  Europe and benefit from a diversified customer base located in 70 countries.
  During the last three years, an average of approximately 80% of our consolidated
  net sales were denominated in or linked to the U.S. dollar. Our presence in
  mature economies, especially in the United States, partially balances our exposure
  to downturns in emerging market economies. For the year ended on December 31,
  2002, our total export and foreign subsidiaries' sales represented more than
  50% of our consolidated net sales. We have also reduced our exposure to downturns
  in any single industry by serving diverse glass market sectors through our three
  business units.

Strong Strategic Alliances

We have successfully established numerous joint
  ventures and technology sharing relationships, some of which are over 30 years
  old, with leading American and European companies. These arrangements supplement
  our product design and manufacturing technologies and, in certain instances,
  provide us with access to significant distribution networks. Sales attributable
  to joint ventures represented approximately 61% of our consolidated net sales
  in 2002. Many of our joint venture partners, including Pilkington (Flat Glass),
  AFG Industries (Flat Glass) and Libbey (Glassware), are recognized as global
  leaders in their respective industries.

Efficient Producer of High-Quality Glass Products

Our glass manufacturing experience and technology
  have allowed us to operate efficiently while manufacturing products recognized
  for their high quality. Our efficiency, expertise and focus on value-added products
  have allowed us to achieve competitive margins. For instance, we have reduced
  the number of units that we must produce in any single production run in order
  to do so efficiently and cost-effectively. Thus, we can plan and execute short
  production runs with less lead time per production run and fill orders of low-volume,
  high-margin products quickly and cost-effectively.

In addition, our experienced personnel constantly
  seek to obtain the best and most innovative technology available in the industry
  and to use it to develop products of superior quality. Through the years, our
  subsidiaries have received several domestic and international quality awards.

Experienced Management Team

We have an experienced senior management team with
  an average of over 27 years of industry experience and an experienced team of
  operating managers with an average experience of over 20 years in glass manufacturing.
  We employ highly-qualified and trained engineers and technicians who design,
  develop and maintain our production facilities. We maintain a training facility
  in Mexico where we conduct continuing training programs in competitive manufacturing
  and administrative processes for our operating and administrative personnel.



Operating Business Units

Our operations are currently organized into three
  operating business units: the Flat Glass business unit (approximately 47% of
  our consolidated net sales in 2002), the Glass Containers business unit (approximately
  42% of our consolidated net sales in 2002) and the Glassware business unit (approximately
  11% of our consolidated net sales in 2002). Prior to October 2001, we organized
  our operations into five business units. On October 1, 2001, we integrated those of our subsidiaries
  that were part of our Diverse Industries business unit into our other business
  units, thus reducing the number of business units through which we conducted
  our operations to four. On July 3, 2002,
  we sold our controlling 51% interest in Vitromatic, which was our Acros-Whirlpool
  business unit, to Whirlpool. Since the sale of our interest in Vitromatic, we
  have conducted our operations through our Flat Glass, Glass Containers and Glassware
  business units.

The table below lists our current principal products,
  customers and end users, sales regions and joint venture partners by business
  segment.

|Sector              |  | Products                                                                                                                                                |  | Customers
        and End Users                                                                                                                                                            |  | Sales Regions                                                                   |  | Joint Ventures                                               
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------- |  | -------------------------------------------------------------
|Flat Glass:         |  |                                                                                                                                                        
|Construction Glass  |  | Float glass, rolled
        glass, architectural tempered safety glass, insulated glass units and
        polyvinyl butiral                             |  | Construction industry,
        distributors and installers                                                                                                                                 |  | Mexico, U.S., Canada,
        Europe and Central and South America              |  | Pilkington plc, Solutia
        and AFG Industries           
|Automotive Glass    |  | Windshields, rear
        and side tempered glass and polyvinyl butiral                                                                                 |  | OEMs, automotive
        replacement glass market, distributors and installers                                                                                                             |  | Mexico, U.S., Canada
        and Central and South America                      |  | Pilkington plc, Visteon
        and Solutia                  
|Fiberglass Products |  | Fiberglass, thermal
        insulators and composites fibers                                                                                            |  | Construction, automotive
        and household products industries                                                                                                                         |  | Mexico, U.S. and
        Central and South America                              |  | Owens-Corning, Inc.                                          
|Glass Containers:   |  |                                                                                                                                                        
|Glass Containers    |  | Soda lime glass containers                                                                                                                              |  | Soft drink, food,
        beer, liquor and wine, pharmaceutical and cosmetics industries                                                                                                   |  | Mexico, U.S., the
        Caribbean and Central and South America               |  | Cerveceria
      Centroamericana and Cerveceria de Costa Rica
|Packaging           |  | Aluminum cans                                                                                                                                           |  | Beverage industry                                                                                                                                                                          |  | Mexico and Central
        America                                              |  | Rexam Beverage Can
        of the Americas, Inc.             
|Raw Materials       |  | Soda Ash, sodium
        bicarbonate, calcium chloride and salt                                                                                         |  | Glass manufacturers
        and detergent producers                                                                                                                                        |  | Mexico, U.S. and
        South America                                          |  |                                                              
|Capital Goods       |  | Glass forming machines,
        castings for glass molds, machinery parts and electronic controls                                                       |  | Glass Containers
        business unit, Flat Glass business unit, Glassware business unit, glass
        manufacturers and other third party manufacturers                                 |  | Mexico, U.S. and
        Central and South America                              |  |                                                              
|Glassware:          |  |                                                                                                                                                        
|Glassware           |  | Glassware, flatware,
        stemware, bake ware, home decor products, coffee carafes, blender jars,
        lids, candle holders and lighting products |  | Commercial distributors,
        supermarkets, discount stores, consumer and industrial markets, institutional
        food service customers, hotels and restaurants and reatil consumers |  | Mexico, U.S., Canada,
        Middle East, Europe and Central and South America |  | Libbey                                                       
|Packaging           |  | Plastic containers,
        plastic tubes and disposable thermofold ware and industrial products                                                        |  | Food and dairy industry,
        supermarket and convenience stores, pharmaceutical and personal care distributors
        and retail customers                                            |  | Mexico and U.S.                                                                 |  |                                                              

Please see "Item 5. Operating and Financial Review
  and Prospects-Results of Operations" and note 19 of our financial statements
  included elsewhere in this annual report for a breakdown of our consolidated
  net sales by business unit and geographic market for each of the last three
  full fiscal years.

Flat Glass Business Unit

The Flat Glass business unit began operations in
  1936 with the incorporation of Vidrio Plano, S.A. de C.V., in Monterrey, Mexico
  and, based on the business unit's consolidated net sales of Ps. 11,380 million
  ($1,090 million) in 2002, we believe the business unit is the largest flat glass
  producer in Mexico, the second largest in Latin America and among the largest
  processors and distributors of flat glass in the United States. Based on the
  number of molding furnaces the business unit currently operates in Mexico,
  we believe it is also a major manufacturer of safety glass products for the
  automotive OEM and replacement markets in Mexico.
  In 2002, this business unit accounted for 47% of our consolidated net sales.
  During the same period, approximately 24% of the consolidated net sales of the
  Flat Glass business unit came from exports and approximately 47% came from sales
  by our foreign subsidiaries that are part of the business unit.

The Flat Glass business unit focuses on the manufacturing,
  processing and distribution of flat glass for the construction and automotive
  industries and has a production capacity of over 500,000 tons per year of float
  glass. In 2002, approximately 60% of the business unit's Ps. 11,380 million
  ($1,090 million) consolidated net sales were to the construction industry and
  approximately 40% of such consolidated net sales were to the automotive industry.

Since 1965, Pilkington, a leading manufacturer of
  flat glass in the world, has been our partner, holding a 35% interest in Vitro
  Plan, the holding company for our flat glass business unit. Pilkington has also
  been an important provider of technology to our Flat Glass business unit. Our
  Flat Glass business unit's customer base includes General Motors, Ford, DaimlerChrysler
  and Nissan in the automotive industry, and several large domestic and foreign
  companies in the construction industry.

Our Flat Glass business unit also includes (i) Vifisa,
  our joint venture with Owens-Corning that is engaged in the manufacturing and
  distribution of fiberglass products, (ii) Vitro Flex, our joint venture with
  Visteon that is engaged in the manufacturing and distribution of flat glass
  products for the automotive industry, (iii) Cristalglass, our joint venture
  with a group of individual investors that is engaged in the manufacturing and
  distribution of flat glass products for the European construction industry and
  (iv) Quimica M, our joint venture with Solutia that is engaged in the manufacturing
  and distribution of polyvinyl butyral, which is an inner layer of plastic film
  used in the manufacture of clear and shaded windshields. Owens-Corning holds
  a 40% interest in Vifisa, Visteon holds a 38% interest in Vitro Flex and Solutia
  holds a 49% interest in Quimica M. A group of individual investors owns a 40%
  interest in Cristalglass.

The Flat Glass business unit's strategy is to:

* increase its leadership position as a manufacturer
  and distributor of higher-margin products in the markets it currently serves;*
  maintain its leading position in the Mexican flat glass market including the
  Mexican automotive replacement market;* solidify its relationship with automotive
  OEMs in Mexico and the United States;* consolidate its presence as a processor
  and distributor in the United States;* increase its presence in Spain and other
  markets in Europe; and* selectively pursue opportunities for profitable growth
  in other parts of the world.

The Flat Glass business unit uses float glass produced
  by its own float glass tanks to manufacture safety glass products. These safety
  glass products are then processed into windshields and tempered glass, including
  complex curvature glass for automobiles and architectural tempered safety glass,
  insulated glass units and mirror glass.

Generally, the Flat Glass Business unit's sales
  are not seasonal. However, sales to the automotive glass replacement market
  tend to decrease during the northern hemisphere's winter, particularly in the
  northern states of the U.S.

Exports and Foreign Subsidiaries' Sales

Export sales from the Flat Glass business unit's
  operations in Mexico
  were approximately $272 million in 2002. A majority of these export sales were
  sales by our Mexican subsidiaries to automotive OEMs in the United
  States. Sales of the business unit's foreign
  subsidiaries (principally Vitro America)
  were $460 million in 2002 while Vitro Plan sold approximately $219 million directly
  to customers in the United States
  and other countries. Consequently, in 2002, approximately 62% of the Flat Glass
  business unit's sales were made in the United
  States.

Mexican Operations

We believe that the Flat Glass business unit is
  the largest flat glass producer in Mexico
  based on the business unit's sales in Mexico
  in 2002. In 2002, the Mexican subsidiaries of the Flat Glass business unit serving
  the construction and automotive industries had consolidated net sales of approximately
  Ps. 5,395 million ($517 million), of which approximately 43% were to the construction
  industry and 57% were to the automotive industry. The principal products that
  the Flat Glass business unit produces for the construction industry in Mexico
  are float glass, rolled glass and tempered architectural safety glass, principally
  for commercial, residential and construction uses. The Flat Glass business unit
  also produces mirrors, insulating glass, tempered glass, tabletops and coated
  glass. The business unit is expanding its production of higher value-added products,
  such as Duo-Vent (insulated glass) windows, mirrors and tempered and laminated
  products.

In Mexico,
  the business unit's safety glass products are principally supplied to the automotive
  OEMs and to the Mexican automotive glass replacement market, while its construction
  glass products are used in the Mexican construction industry. The architectural
  and safety glass product lines of the Flat Glass business unit are produced
  by various subsidiaries of Vitro Plan.

The business unit's flat glass products are produced
  using the float method, which involves pouring molten glass over a molten tin
  bath. The Flat Glass business unit operates two float glass tanks near Monterrey,
  Mexico and one float glass
  tank in Mexico City, Mexico.
  Our total production capacity is over 500,000 tons of float glass per year.
  In addition, the Flat Glass business unit operates 5 processing facilities in
  Mexico for the
  automotive OEM market and the automotive glass replacement market, including
  Vitro Flex's facility located near Monterrey,
  Mexico. As of March 31, 2003, these facilities were operating at approximately
  90% of their capacity. All of the Flat Glass business units facilities have
  obtained International Organization for Standardization 9001 certification,
  which we refer to as "ISO 9001 Certification."

The Flat Glass business unit sells its construction
  products to builders, glass installers and distributors of glass products through
  its own sales force. With respect to automotive products, the Flat Glass business
  unit's Mexican operations sells directly to automotive OEMs in Mexico and the
  United States, independent distributors and installers and Vitro Car, S.A. de
  C.V., which we refer to as "Vitro Car," the business unit's wholly-owned subsidiary
  engaged in installing automotive replacement glass in Mexico.

Visteon is the largest customer of the business
  unit's automotive safety glass products, through its purchases from Vitro Flex,
  for use in Ford's assembly plants in the United
  States and, through its purchases from other
  subsidiaries of Vitro Plan subsidiaries, for use in Ford's assembly plants in
  Mexico. In addition,
  the Flat Glass business unit sells automotive safety glass products to other
  automobile manufactures in Mexico
  (including sales relating to the orders made under Pilkington's global supply
  agreements with such automobile manufacturers), the United
  States and other markets.

In order to better serve their customers, Vitro
  Plan's subsidiaries have designated marketing executives for major construction
  glass products customers and established account plans for automotive OEMs.
  The business unit has designated commercial executives to serve as individualized
  customer service representatives for the business unit's principal purchasers
  of construction products. Similarly, OEM account plans consist of staff whose
  time is exclusively dedicated to major OEMs and who provide specialized assistance
  in the areas of engineering, service and sales. Vitro Plan's subsidiaries have
  established 9 distribution centers throughout Mexico where customers of both
  construction and automotive products can access information about the availability
  of products on a real time basis.

The Flat Glass business unit relies exclusively
  on its own sales force for the sale of construction products, except for the
  business unit's skylight products, which are marketed by a group of independent
  manufacturers' representatives. This sales force markets the business unit's
  construction products to a large number of distributors and is supported by
  a technical support department that offers technical advice to construction
  glass installers.

The business unit's automotive products are sold
  exclusively through its own sales force and distribution centers. The business
  unit's sales force services automotive OEMs while the automotive glass replacement
  market is serviced through the business unit's distribution centers throughout
  Mexico.

Through Quimica M, the Flat Glass business unit
  also produces polyvinyl butyral in Mexico,
  which is an inner layer of plastic film in the manufacture of clear and shaded
  windshields.

In addition to supplying automotive OEMs, the Flat
  Glass business unit also supplies, through Vitro Car, the automotive glass replacement
  market in Mexico
  with safety glass produced by Vitro Plan and, to a lesser extent, with imported
  products purchased from manufacturers other than us. The business unit intends
  to extend the breadth of its automotive safety glass product line in order to
  increase exports to the automotive glass replacement market in the United
  States and Central and South America.

United States Operations

The United States operations of the Flat Glass business
  unit are conducted through Vitro America, which, based on its sales in 2002,
  is a major processor and distributor of flat glass products in the United States.
  In 2002, Vitro America had consolidated net sales of approximately $460 million,
  of which approximately 78% were to the commercial construction flat glass segment
  and approximately 22% were to the automotive replacement market.

Vitro America
  purchases flat glass from United States
  manufacturers and uses it as raw material to process tempered, spandrel, insulated,
  laminated and mirror products, as well as thick glass doors, vision walls and
  handrails. These products are sold directly to distributors as well as to end-buyers
  through Vitro America's
  own distribution centers and retail shops. Vitro America
  also distributes and sells to furniture manufacturers in the United
  States a significant number of custom-made
  glass tabletops produced by the business unit's manufacturing plants in Mexico.
  Additionally, Vitro America
  engages in the design, manufacture and installation of custom skylights in the
  United States
  and several other countries. Approximately 20% of the sales of Vitro America
  correspond to products manufactured by our Mexican subsidiaries and 80% corresponds
  to products purchased from third parties.

Vitro America also distributes to the United States
  automotive replacement market a full line of auto glass products, including
  windshields, side and back tempered windows for American and foreign cars and
  trucks, as well as a wide range of flat glass products produced by other manufacturers.

On April
  7, 2000, Vitro America
  consummated the acquisition of Harding, a subsidiary of SunSource Inc. Based
  on the size of Harding's distribution network, in 2000 it was one of the United
  States' largest distributors of glass products
  for the automotive and construction markets. Through the acquisition of Harding's
  business and assets Vitro America added approximately $100 million to its annual
  revenue base and incorporated into its operations 5 distribution centers and
  118 retail stores strategically located throughout the United States. The company
  holding Harding's assets was merged into Vitro America
  in January 2001. Upon the acquisition of the assets of Harding, Vitro America
  operated 10 manufacturing centers, 44 distribution branches and 151 "Binswanger"
  retail stores in the United States.

Vitro America sells its construction products to
  builders and glass installers, which employ its products in industrial and commercial
  projects such as skyscrapers and other buildings.

European Operations

The Flat Glass business unit competes in the European
  flat glass construction industry through Cristalglass. Cristalglass processes
  and distributes flat glass for the construction industry through 5 processing
  facilities located in Spain.
  In 2002, Cristalglass had consolidated net sales of Ps. 869 million ($83 million).
  Most of the sales of Cristalglass are of Duo-Vent (insulated glass) windows,
  a value-added product, which are distributed to builders and distributors by
  Cristalglass' own sales force.

Central and South American Operations

Through our Colombian subsidiary, Vidrios Templados
  Colombianos, S.A.,
  which we refer to as "Vitemco," the Flat Glass business unit processes tempered
  and laminated glass for the automotive replacement, construction and specialty
  markets in Colombia.
  Vitemco has 1 processing facility which is located in Colombia.
  In 2002, Vitemco had net sales of Ps. 177 million ($17 million). Vitemco is
  expanding into the OEM automotive glass market in Colombia
  and other Andean Pact nations as well as into the automotive replacement market
  in South America.

Vitemco markets its products through a network of
  independent distributors to small- and medium-sized builders. Vitro Plan is
  providing technical assistance to Vitemco with respect to the manufacturing
  of automotive glass for the OEM and the automotive glass replacement markets.

Competition

In Mexico, the Flat Glass business unit faces competition
  in the construction industry mainly from Compagnie de Saint Gobain, which we
  refer to as "Saint Gobain," and from imports of glass products. With
  respect to automotive safety glass, the business unit's principal competition
  includes Saint Gobain, PPG Industries, Asahi, Pilkington, Visteon and imports
  of low-volume automotive glass products that are being utilized in new automotive
  designs produced in Mexico. In addition to its float glass capacity, Saint Gobain
  operates an automotive glass manufacturing facility located in Cuautla, Mexico.
  In Mexico, the Flat Glass business unit competes primarily on price and quality.

The Flat Glass business unit faces competition in
  the United States
  from a variety of U.S.
  flat glass manufacturers, as well as from a large number of medium- and small-sized
  producers and distributors of flat glass products. The Flat Glass business unit
  competes for customers in the United States
  primarily on the basis of breadth of geographic distribution capabilities, service
  (on a full line of products) and quality.

In Europe, the Flat Glass
  business unit faces competition in the niche-markets that it serves from several
  small-and medium-sized distributors.

Fiberglass Products

Fiberglass products manufactured by Vifisa include
  insulating materials used for piping, tanks, boilers, ducts and air conditioning
  equipment, as well as insulation slabs used in the construction industry for
  roofs, walls and ceilings. Vifisa also produces thermal insulators for use in
  refrigerators, ranges, ovens and water and space heaters and manufactures reinforcing
  fibers for plastic resins, which are used in automobiles, boats and other products.
  In 2002, Vifisa had net sales of approximately Ps. 612 million ($59 million).
  In November 2000, Vifisa received the first ever Iberoamerican Quality Award,
  prevailing over important manufacturers located throughout Latin
  America, Spain
  and Portugal.

Vifisa's products are marketed in Mexico
  through its own sales force and distribution centers. Vifisa faces competition
  from imports of fiberglass insulation and other insulating materials from the
  United States
  and from substitute materials such as foam polyurethane.

Although Vifisa is 60% owned by Vitro Envases Norteamerica,
  S.A. de C.V., which we refer to as "VENA," the holding company of the Glass
  Containers business unit, Vifisa is operated by, and its operating results are
  consolidated into, the Flat Glass business unit. Owens-Corning holds the remaining
  40% interest in Vifisa.

Glass Containers Business Unit

The Glass Containers business unit began its operations
  in 1909 as Vidriera Monterrey, S.A. de C.V., the founding company of the Vitro
  group of companies, and, based on the business unit's consolidated net sales
  in 2002 of Ps. 10,012 million ($959 million) we believe it is the largest glass
  container producer in Mexico and Central America. In 2002, this business unit
  accounted for 42% of our consolidated net sales. During the same period, approximately
  25% of the consolidated net sales of the Glass Containers unit came from exports
  and approximately 13% came from sales by our foreign subsidiaries that are part
  of the business unit.

The business unit produces soda lime glass containers
  for the soft drink, beer, food, liquor and wine, pharmaceutical and cosmetics
  industries and has a production capacity of over 5,000 tons of glass per day.
  Its customers include leading companies such as Coca-Cola, Pepsi, Modelo, Nestle,
  Procter & Gamble, Gerber, Avon, Coty and Domecq.

The Glass Containers business unit also includes
  (i) Comegua, our joint venture with Cerveceria Centroamericana and Cerveceria
  de Costa Rica, which, based on Comegua's net sales in 2002 of Ps. 1,207 million
  ($115 million), we believe is the largest glass containers producer in Central
  America and (ii) Alcali, Vancan, FAMA and Vilux. Alcali, Vancan and FAMA were
  previously part of the Diverse Industries business unit and manufacture, respectively,
  soda ash and bicarbonate, aluminum cans and capital goods, such as glass forming
  machines and molds. Alcali, Vancan and FAMA were integrated into the Glass Containers
  business unit effective October 1, 2001. Cerveceria Centroamericana and Cerveceria
  de Costa Rica, together, hold a 50% interest in Comegua, but we operate the
  business. Rexam Beverage Can of the Americas, Inc., which we refer to as "Rexam,"
  holds a 50% interest in Vancan. Vilux is our wholly-owned Bolivian glass containers
  manufacturer.

The Glass Containers business unit's business strategy
  is to maintain its leadership position in the glass containers sector of the
  rigid packaging industry in Mexico
  and Central America and to increase sales in the United
  States and South America.
  Among the business unit's key competitive strengths are its productivity, quality
  levels, low production costs and versatile production processes. The business
  unit's high levels of productivity, quality and low production costs, as well
  as its ability to rapidly meet higher demand, allows the business unit to aggressively
  compete with other container technologies in Mexico
  and offer value-added products at attractive prices in the United
  States and other export markets. Similarly,
  the business unit's technological expertise permits the introduction of new
  products, lightweight bottles and innovative customized images in order to meet
  the design requirements of customers. In keeping with the trend in the glass
  container industry, the Glass Containers business unit is producing lighter-weight
  containers, that are at least as strong as the heavier containers they replace,
  yet have lower production costs. The versatility and flexibility of the business
  unit's production processes are reflected in the business unit's ability to
  offer customers special glass colors, fast turnarounds on small production runs
  on a cost-efficient basis, as well as decorating and labeling processes, including
  "plastishield," adhered ceramic labels and heat transfer labels. The business
  unit has reduced the product development cycle for glass containers from
  to 5 weeks, which response time is in line with the response time of other world-class
  producers. The Glass Containers business unit has a widely diversified customer
  base.

Traditionally, the Glass Containers business unit
  has had access to technology that we believe is state of the art in the glass
  containers industry. For the production of glass bottles, the Glass Containers
  business unit utilizes its own technology, some of which has been patented,
  and technology provided by Owens-Illinois pursuant to a series of technical
  assistance agreements that began in 1964 and expired in September 1999. Owens-Illinois
  allows the business unit to continue using Owens-Illinois' unexpired patents
  in Mexico. Our latest glass container labeling capability includes state of
  the art technology in organic paints. This process, which is called Ultraviolet
  Cure and which we refer to as "UV Cure," was developed to further our continuous
  efforts to grow in high-margin niche markets by providing value-added products.
  We are currently the only glass containers manufacturer in the Americas with
  this type of UV Cure, high-speed decoration process capable of applying up to
  six colors at high speeds. We are currently waiting for patent approval on our
  formula for this type of paint, which is more environmentally friendly than
  similar products in the market. We are currently supplying this type of decoration
  to customers such as Coca-Cola and Coors.

Sales of the Glass Containers business unit in the
  beer and soft drinks segments in Mexico
  are seasonal, where hot weather is a positive contributing factor. As a result,
  second and third quarter sales are typically higher than sales in the first
  and fourth quarters. Accordingly, the Glass Containers business unit generally
  builds its inventory of soda lime glass containers during the fourth and first
  quarters in anticipation of seasonal demand.

In addition, to maintain as well as improve operating
  margins and production levels, the Glass Container business unit is actively
  working with its principal customers and is constantly pursuing new and existing
  customers requiring niche-type products.

Exports and U.S. Operations

Total export sales of the Glass Containers business
  unit, which do not include the sales of our Central and South American operations,
  amounted to $236 million in 2002. The large majority of the export sales of
  the business unit are made to the United States,
  principally through our United States
  trading company, Vitro Packaging, which also sources part of its glass containers
  from third parties. The Glass Containers business unit intends to increase export
  sales into the United States
  by offering value-added specialty products, through sales in the cosmetics segment
  and to wine and liquor bottlers in the western United
  States. The business unit also produces special
  promotional containers for soft drink bottlers in the United
  States. Approximately 38% of the Glass Containers
  business unit's sales are made outside of Mexico.

Mexican Operations

The Glass Containers business unit produces soda
  lime containers at 6 manufacturing facilities located throughout Mexico.
  The business unit's facilities are located in close proximity to major customers,
  ensuring heightened responsiveness to customer design and production requirements
  and lower transportation costs. All such facilities have obtained ISO 9001 certification.
  We also own two cullet-processing plants one of which is leased to a third party
  which, in turn, supplies us the cullet. In the cullet processing plants, scrap
  or broken glass is gathered for re-melting and mixed with virgin raw materials
  in order to obtain cost reductions in the production process without affecting
  the quality of the products. Although there are currently no mandatory recycling
  laws in Mexico
  similar to those prevailing in the United States
  and in other countries, we conduct campaigns throughout Mexico
  to collect glass containers.

In Mexico,
  the Glass Containers business unit relies primarily on its own sales and marketing
  force, utilizing outside sales representatives to service customers with smaller
  volume demand. The business unit has implemented an online system for sharing
  information with customers. From their respective offices, the business unit's
  customers can access product information, place orders, check inventories, trace
  shipments and consult account statements.

Central and South American Operations

Comegua, a joint venture in which we hold a 49.7%
  interest, is a Panamanian holding company that operates manufacturing facilities
  in Guatemala
  and Costa Rica
  and distributes glass containers throughout Central America
  and the Caribbean. We first invested in Comegua in 1964.
  Glass containers sales at Comegua for 2002 were Ps. 1,207 million ($115 million).

We also own 100% of the common stock of Vilux, a
  company that owns and operates what we believe is the largest glass container
  manufacturing facilities in Bolivia
  based on its 2002 production capacity. Vilux distributes glass containers for
  the soft drink, food, beer, wine and liquor and pharmaceutical industries throughout
  Bolivia, southern
  Peru and northern
  Argentina.

Competition

Although, based on the business unit's consolidated
  net sales in 2002 of Ps. 10,012 million ($959 million) we believe the Glass
  Containers business unit is the principal supplier of glass containers in Mexico,
  it competes with various smaller domestic manufacturers as well as with the
  glass containers operations of the two major Mexican beer producers. Glass containers
  in Mexico also
  compete with alternative forms of packaging, including metal, plastic, paper
  and cardboard laminated containers, such as tetra-pack. In the soft drink industry,
  the Glass Containers business unit has faced increasing competition from returnable
  and non-returnable polyethylene therephtalate containers, which we refer to
  as "PET," as well as aluminum cans. In particular, since 1993 the shift of soft
  drink and food containers from glass to PET has continued, albeit at a slower
  rate in recent years. Although the business unit has and continues to introduce
  several presentations of returnable and non-returnable glass containers for
  soft drinks, we cannot be certain that demand for returnable PET containers
  will not continue to grow at the expense of demand for glass containers. In
  response to the trend in soft drinks and food containers from glass to PET,
  we have and continue to implement measures to offset the effect of PET substitution,
  including improving operating efficiencies, novel product presentations and
  customer service.

In Mexico,
  the business unit competes for customers primarily on the basis of service (focusing
  on on time deliveries and design), quality (including the ability to conform
  to a wide variety of specifications) and scale (including the ability to assure
  customers of the capacity necessary to support their growth).

The Glass Containers business unit faces greater
  competition in the United States
  than in Mexico,
  mainly from Saint Gobain and Owens-Illinois. However, the business unit has
  utilized its competitive strengths to supply a variety of higher margin, value
  added products, including specialty food, beverage, cosmetics, wine and liquor
  containers, and to increase its production expertise and flexibility thereby
  allowing it to reap higher operating margins relative to traditional products.
  The business unit's ability to offer cost-effective short production runs, quick
  turn-around of new products, an extensive glass color selection, diverse labeling
  capabilities and unique container designs are all examples of the application
  of its competitive strengths. The Glass Containers business unit competes primarily
  on quality, design and price in the United States.

In Central America, the Glass
  Containers business unit competes with a number of smaller regional manufacturers.

Raw Material Operations

The raw materials operations of the business unit
  are carried out by Alcali, a wholly-owned subsidiary of VENA. The principal
  product lines of Alcali are synthetic soda ash, sodium bicarbonate, calcium
  chloride and salt for industrial and commercial consumption. A significant portion
  of Alcali's soda ash production, which is used in the manufacture of glass,
  detergents and tripolyphosphates, is sold to third parties.

Alcali competes in the soda ash sector with the
  American Natural Soda Ash Corporation, which we refer to as "Ansac," a United
  States exporter of natural soda ash. Alcali
  maintains a separate sales and marketing force for its products, which are distributed
  directly to its customers.

Packaging Operations

The Glass containers business unit also produces
  aluminum cans through Vancan, our joint venture with Rexam, one of the worldwide
  leaders in the production of aluminum cans. Rexam holds a 50% interest in Vancan.
  Vancan operates a can manufacturing facility in Queretaro,
  Mexico. The aluminum cans
  produced by Vancan serve mainly the Mexican beverage industry. We provide marketing
  and distribution expertise and administrative support services to Vancan, while
  Rexam provides technical assistance to the joint venture. Vancan maintains its
  own marketing and sales force and distributes its products directly to its customers.
  Net sales of Vancan in 2002 totaled Ps. 672 million ($64 million).

In Mexico,
  Vancan faces competition from a Mexican subsidiary of a United
  States manufacturer of aluminum cans, an affiliate
  of a major Mexican beer producer and a subsidiary of a major Mexican beer and
  soft drink producer.

Capital Goods

Our capital goods operations are conducted through
  FAMA. FAMA was founded in 1943 to source our needs for molds and machinery for
  our glass manufacturing operations.

FAMA produces state of the art glass forming machines
  for the Glass Containers business unit. In addition, FAMA produces castings
  of special alloys for glass molds and for different types of machinery and parts
  for machinery used in the oil industry. FAMA also produces mold equipment for
  the glass industry and ancillary equipment for the glass, packaging and other
  industries, as well as electronic controls for machinery operation and process
  controls for glass forming machines. Finally, FAMA manufactures annealing lehrs
  for the float and hollow glass industries.

FAMA generally competes with the major international
  manufacturers of machinery and equipment for the glass industry.

Glassware Business Unit

We believe that the Glassware business unit, which
  commenced operations in 1936 with the incorporation of Cristaleria, S.A. de
  C.V., is the largest producer of glassware in Mexico based on its consolidated
  net sales of Ps. 2,618 million ($251 million) in 2002. The Glassware business
  unit is also one of the largest plastic container, plate, glass, cup and flatware
  manufacturers in Mexico. Presently, the Glassware business unit consists of
  seven operating companies.

The Glassware business unit's principal products
  include glassware, dinnerware, stemware, bake ware, plastic containers and home
  decor products for the consumer segment, glassware, plastic containers and flatware
  for the food service segment and coffee carafes, blender jars, lids, meter covers
  and lighting products for the industrial segment, in each case, of the glassware
  industry.

The business strategy of the Glassware business
  unit is to strengthen its core glass product business, with an emphasis on developing
  its high value added and industrial product lines, thus improving both profitability
  and sales in Mexico
  and abroad.

On August
  29, 1997, we entered into a joint venture with Libbey pursuant to
  which Libbey became our partner in Vitrocrisa and Crisa Industrial, LLC, which
  we refer to as "Crisa Industrial." Libbey holds a 49% interest in each of Vitrocrisa
  and Crisa Industrial. We are responsible for the day-to-day management of the
  joint venture.

We have identified that the second and fourth quarter
  of the year tend to show an increase in sales in Mexico, as some of our products
  are sold as gifts, and therefore are in higher demand, particularly during April
  and November. Also, the promotional segment of the market tends to increase
  its demand in those years in which important events such as the Olympic games
  or the World Cup are held.

Exports

Total exports sales of the Glassware business unit
  amounted to $79 million in 2002, or approximately 31% of its consolidated net
  sales. All glass product export sales of this business unit are conducted through
  our joint venture with Libbey and are exported mainly to the United
  States and Canada.

Mexican Operations

Vitrocrisa manufactures soda lime glass and borosilicate
  glass products in its two facilities in Monterrey,
  Mexico. We believe that
  the business unit's borosilicate glass products, which are more resistant than
  soda lime glass products to rapid temperature changes are attractive to potential
  customers in industrial applications. Vitrocrisa's plants also are capable of
  manufacturing products in a number of different colors and thermal treatments,
  which provides a competitive advantage compared to colored glass and specialty
  glass product lines. The business unit also manufactures flatware products in
  another facility located in Monterrey, Mexico.
  All of the Glassware business unit's facilities have obtained ISO 9001 certification.

Based on its consolidated net sales in 2002, the
  Glassware business unit is the largest producer of glass tableware in Mexico.
  The business unit has 10 distribution centers and several sales offices located
  throughout Mexico.
  The business unit relies exclusively on its own sales and marketing force in
  Mexico, which
  markets the products directly or through wholesale commercial distributors,
  supermarkets and department, discount and outlet stores and direct consumer
  marketing efforts.

The business unit is focusing on attempting to reduce
  the time of a new product development, improve service to its customer and increase
  the number of products developed per year. The business unit utilizes a variety
  of marketing research tools, including consumer focus groups, point of sale
  analysis and customer usage and habit studies to stay informed of changes in
  customers' product preferences. It is also constantly evaluating methods to
  simplify its distribution channels so as to get closer to the end user of its
  products. We believe that by doing these things we will better satisfy consumer
  demands thus increasing our customer's satisfaction with our products.

International Operations

The Glassware business unit's operations in the
  United States
  and Canada are
  conducted through Crisa Corporation, Crisa Industrial and Crisa Ltd., which
  operate under their own management and are all located in Laredo,
  Texas. The principal products distributed
  by Crisa Corporation in the consumer segment include glassware, dinnerware and
  home decor products. In the industrial sector, Crisa Industrial distributes
  products such as coffee carafes, blender jars, lids and lighting products to
  industrial customers.

Crisa Corporation sells glassware products to Libbey
  for the consumer and food service markets in the United
  States and Canada.
  Crisa Industrial distributes in the United States
  and Canada the
  industrial line of products it manufactures in Mexico.

Competition

The business unit's glass dinnerware products compete
  with ceramic products produced by several other Mexican and international manufacturers.
  The Glassware business unit differentiates itself primarily through its quality,
  service, breadth of product line and price.

Plastic Containers

The business unit supplies a variety of industries
  and end users with plastic containers, plastic tubes and disposable thermofold
  ware and industrial products. These products are manufactured at 2 manufacturing
  facilities, both located within the Mexico City,
  Mexico area.

The business unit's plastic container products are
  marketed by the business unit's internal sales force and outside distributors.
  The business unit's plastic containers operations face competition from a large
  number of small and medium sized Mexican manufacturers of plastic container
  products.

Raw Materials

Glass

The most important raw materials utilized by our
  business units are soda ash, which we purchase from Ansac, silica sand and feldspar.
  With respect to the sourcing of our needs of silica sand and feldspar, we entered
  into a ten year supply agreement with Unimin Corporation, which we refer to
  as "Unimin," ending June 2007, whereby our applicable subsidiaries are committed
  to purchase, and certain of Unimin's subsidiaries are committed to sell, the
  business unit's requirements of silica sand and feldspar at market prices. In
  terms of soda ash sourcing, the Glass Containers business unit, through its
  subsidiary Alcali, has, to a large extent, the production capacity to supply
  the needs of our glass making operations in Mexico.
  To the extent that any of our subsidiaries in Mexico
  requires silica sand or soda ash of a different grade than that produced by
  Unimin (silica sand and feldspar) or by Ansac and Alcali (soda ash), such companies
  may acquire such silica sand or soda ash from various suppliers in the United
  States. Our glass making business units are
  not dependent on any single supplier for any of the raw materials utilized in
  their business activities.

Energy

In October 2000, several subsidiaries of Vitro,
  which together operated 17 manufacturing facilities throughout Mexico, mainly
  in the vicinity of Monterrey and Mexico City, entered into a 15 year "take-or-pay"
  power purchase agreement for the purchase of 110 megawatts of electricity with
  Enron Energia Industrial de Mexico, S. de R.L. de C.V., which we refer to as
  "Energia Industrial," a subsidiary of Enron Corp. After the sale of our interest
  in Vitromatic in July 2002, certain of our subsidiaries continue to have a commitment
  to purchase 104 megawatts from Energia Industrial. Such purchases represent
  approximately 80% of our aggregate annual electricity consumption in Mexico.
  In December 1999, Alcali entered into a 15 year steam purchase agreement with
  Energia Industrial for the purchase of a minimum of 150 tons of steam per hour.
  Vitro guaranteed its subsidiaries' obligations to purchase electricity and steam
  under these agreements.

In October 2001, Enron Corp. sold 80% of its equity
  participation in Energia Industrial to Tractebel, S.A., which we refer to as
  "Tractebel," and the name of Energia Industrial was changed to Tractebel Energia
  de Monterrey, S. de R.L. de C.V., which we refer to as "Tractebel Energia".
  During the first semester of 2002, Enron Corp. sold its remaining equity participation
  in Tractebel Energia to Tractebel. Tractebel Energia declared the plant commercially
  operational in April of 2002 for power and May of 2002 for steam, at which time
  the 15 year periods under the power purchase agreement and the steam purchase
  agreement began to run.

Our obligations under the power purchase agreement
  are contractually established and partially based on known variables such as
  the inflation rate in Mexico
  and the exchange rate between the peso and the U.S. dollar. Although it is impossible
  for us to accurately predict the inflation rate in Mexico
  or the exchange rate between the peso and the U.S. dollar, we can reasonably
  estimate, based on our current internal projections, that our average annual
  payments for the amounts we are contractually required to purchase under the
  agreement will be between $18 and $22 million. We estimate average yearly savings
  of approximately $10 million relative to our expenditures on energy before April
  2002.

Natural Gas

Most of our glass furnaces are fueled by natural
  gas. The vast majority of the natural gas utilized at our Mexican facilities
  is purchased from Petroleos Mexicanos, S.A. de C.V., which we refer to as "Pemex."
  We have never suffered any material interruption in our natural gas supply from
  Pemex. In order to protect against the volatility of natural gas prices, we
  have entered into hedging arrangements with Pemex and others that have the effect
  of fixing the price we will pay for natural gas. However, these hedging arrangements
  will all expire during 2003. We cannot assure you that we will be able to enter
  into similar hedging arrangements in the future on terms favorable to us or
  at all. various alternative sources. See "Operating and Financial Review and
  Prospects─Qualitative and Quantitative Market Disclosure─Natural
  Gas Price Risk."

We believe that all the above-described raw materials
  are and will continue to be available from various suppliers and, in the case
  of natural gas, from Pemex.



PROPERTY, PLANT AND EQUIPMENT

Most of our assets and property are located in Mexico,
  the United States, Central and South America and Europe. On December 31, 2002,
  the net book value of all land and buildings, machinery and equipment and construction
  in progress was Ps. 18,490 million ($1,771 million), of which approximately
  Ps. 16,466 million ($1,577 million) represented assets located in Mexico, approximately
  Ps. 268 million ($26 million) represented assets located in the United States,
  approximately Ps. 1,466 million ($140 million) represented assets located in
  Central and South America and approximately Ps. 291 million ($28 million) represented
  assets located in Europe.

Our principal executive offices are located in the
  Monterrey, Mexico
  area and are owned by us. We have granted a mortgage on these offices.

We own and operate 47 manufacturing facilities in
  Mexico and elsewhere, of which three float glass tanks are our largest facilities.
  We have granted a mortgage on one of our float glass tanks and our subsidiary
  Comegua has granted a mortgage on one of its furnaces.

We believe that all our facilities are adequate
  for our present needs and suitable for their intended purpose and that our manufacturing
  facilities are generally capable of being utilized at a higher capacity to support
  expected increases in demand.

The following table sets forth each business unit's
  principal manufacturing facilities.

|Business
        Unit | Average
        Capacity Utilization as of December 31, 2002 | Average
        Capacity Utilization as of March 31, 2003 | Number
        of Facilities
        by City or Country                                                                                                     
|--------------------- | ------------------------------------------------------------ | --------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|Flat Glass            | 92%                                                          | 90%                                                       | Monterrey
        (4)
        Mexico City (5)
        Puebla
        United States (9)
        Colombia
        Spain (5)
        Portugal (3)              
|Glass Containers      | 89%                                                          | 82%                                                       | Monterrey
        (4)
        Guadalajara.
        Mexico City (2)
        Queretaro (3)
        Toluca
        Costa Rica
        Guatemala
        Bolivia
|Glassware             | 66%                                                          | 50%                                                       | Mexico
        City (2)
        Monterrey, N.L. (3)                                                                                                         

We also maintain over 100 sales offices and warehouses
  in Mexico and over 150 warehouses, sales offices and retail shops in the United
  States, most of which are leased.

Please see "Item 4. Information on the Company-History
  and Development of the Company-Capital Expenditures" and "Item 5. Operating
  and Financial Review and Prospects-Liquidity and Capital Resources-Capital Expenditures"
  for discussions of our capital expenditures.

Environmental Matters

Our Mexican operations are subject to both Mexican
  federal and state laws and regulations relating to the protection of the environment.
  The primary federal environmental law is the Ley General de Equilibrio Ecologico
  y Proteccion al Ambiente pursuant to which rules have been promulgated concerning
  water pollution, air pollution, noise pollution and hazardous substances. The
  Mexican federal government has also enacted regulations concerning imports and
  exports of hazardous materials and hazardous wastes. In addition, in 1995, Mexico
  promulgated environmental regulations that established a series of increasingly
  stringent air emission standards for glass manufacturing operations. We expect
  to spend approximately $4 million in capital expenditures over the next 2 years
  to comply with these and other environmental regulations as they become effective
  or are modified. We may, however, incur amounts greater than currently estimated
  due to changes in law and other factors beyond our control.

The Mexican federal authority in charge of overseeing
  compliance with the federal environmental laws is the Secretaria del Medio Ambiente
  y Recursos Naturales, which we refer to as "SEMARNAT." An agency of SEMARNAT,
  the Procuraduria Federal de Proteccion al Ambiente, which we refer to as "PROFEPA,"
  has the authority to enforce the Mexican federal environmental laws. As part
  of its enforcement powers, PROFEPA can bring civil and criminal proceedings
  against companies and individuals that violate environmental laws and has the
  power to close facilities not in compliance with federal environmental laws.
  Furthermore, in special situations or certain areas where federal jurisdiction
  is not applicable or appropriate, the state and municipal authorities can regulate
  and enforce certain environmental regulations, as long as they are consistent
  with federal law.

We believe we are in substantial compliance with
  environmental laws in Mexico applicable to our operations. Moreover, in 1998,
  the subsidiaries of Vitro initiated an environmental auditing program, which
  was approved by PROFEPA. An independent auditor certified by PROFEPA has completed
  environmental audits of 25 of our facilities in Mexico. Thirteen of these 25
  facilities have already obtained PROFEPA's certification of Industria Limpia
  or "Clean Industry," which is a certification of our compliance with
  certain environmental laws. The remaining 12 audited facilities are in the process
  of making the changes necessary to obtain the Industria Limpia certificate from
  PROFEPA. We intend to meet all the requirements of the environmental audit and
  obtain Industria Limpia certificates for these remaining facilities by December
  2003, at an estimated cost of approximately $5 million.

In addition, we have implemented energy conservation,
  emissions reduction and water management programs at our Mexican facilities.
  In the last six years, these programs have reduced our energy consumption by
  approximately 30%, our nitrogen dioxide and particulate emissions by approximately
  30% and our water consumption by approximately 20%, in each case, per ton of
  glass melted. Since glass manufacturing is an energy and resource intensive
  process, these programs have reduced our operating costs and created for us
  competitive advantages.

Our foreign operations, to the extent they have
  manufacturing and processing facilities, are subject to federal, state and local
  laws relating to the protection of the environment of the country in which such
  operations are conducted. We believe each such operation is in substantial compliance
  with the applicable foreign environmental laws. We do not believe that continued
  compliance with Mexican and foreign environmental laws applicable to our operations
  will have a material adverse effect on our financial condition or results of
  operations.



Item 5. OPERATING AND FINANCIAL
  REVIEW AND PROSPECTS

You should read this discussion in conjunction
  with our consolidated financial statements and notes thereto and other financial
  information included elsewhere in this annual report. We prepare our financial
  statements in accordance with Mexican GAAP, which differs in certain respects
  from U.S. GAAP. Note 21 to our audited consolidated financial statements provides
  a description of the principal differences between Mexican GAAP 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 "Risk Factors" and the matters
  set forth in this annual report. Please see "Forward Looking Statements."

OPERATING RESULTS

Recent Developments

New Ventures and Dispositions

Vidraria Chaves

On December
  27, 2002, through our Spanish subsidiary Cristalglass, we acquired
  60% of the outstanding shares of common stock of Vidraria Chaves for $1 million
  in cash. Vidraria Chaves is a Portuguese processor and distributor of glass
  and glazing products for the European construction industry. We believe that
  this addition will allow Cristalglass to continue to penetrate the European
  market and to satisfy its customers' needs for laminated glass and double glazing
  products in Europe, particularly in Spain
  and Portugal.
  Moreover, we believe that Vidraria Chaves and Cristalglass will reap significant
  synergies in the processing and distribution of laminated glass for the European
  construction industry due to the improvement of their distribution network and
  expanded geographical presence. With the addition of Vidraria Chaves, Cristalglass
  also intends to increase its presence in the facade business in Portugal
  and the rest of Europe.

Vitromatic

On July 3, 2002, we sold our controlling 51% interest
  in Vitromatic, our joint venture with Whirlpool that engaged in the production
  and distribution of household appliances, to Whirlpool for $148.3 million in
  cash ($10 million of which was paid into escrow in support of certain indemnification
  obligations to Whirlpool). At the time of the transaction, approximately $67
  million of our consolidated debt and approximately $97 million of our consolidated
  off-balance sheet financings were obligations of Vitromatic. Consequently, upon
  the consummation of the sale of our interest in Vitromatic, our consolidated
  debt and off-balance sheet financings were reduced by approximately $67 million
  and approximately $97 million, respectively.

Asahi

On June
  19, 2002, through our subsidiary Vitro AFG, we entered into an agreement
  with AFG Industries, a subsidiary of Asahi, to convert our glass containers
  facility in Mexicali, Mexico
  into a flat glass facility. We expect that the converted facility will have
  a flat glass production capacity of approximately 200,000 metric tons per year.
  The flat glass produced by this facility will be allocated equally between AFG
  Industries and us, and each partner will market its allocation independently
  of the other. The capital expenditure that we estimate each of the partners
  will make in connection with this project is approximately $45 million. Our
  investment will be comprised of the contribution of our current facility, which
  was valued at approximately $17 million when the contribution was made in 2002,
  and approximately $28 million in cash, which disbursement will be made in 2003.
  The conversion of this facility is currently underway. The converted facility
  is expected to commence operations by the first quarter of 2004 and to supply
  flat glass to the western United States
  and Mexico.

Ampolletas

On April
  15, 2002, we sold our 51% interest in ASA to Gerresheimer for $13.4
  million in cash. At the time of the transaction, approximately $6.5 million
  of our consolidated debt were obligations of ASA. Consequently, upon the consummation
  of the sale of our interest in ASA, our consolidated debt was reduced by approximately
  $6.5 million. ASA is engaged in the manufacturing of borosilicate glass products
  for laboratory and pharmaceutical use, such as ampoules, vials and syringes.

Financing Transactions

Bank of America-Vitro America Credit Agreement

On January 31, 1997, Vitro America entered into
  a credit agreement with the Bank of America which provided for a revolving line
  of credit for up to $50 million. As of May 31, 2003, the outstanding balance
  of the letters of credit issued under this credit agreement was $11 million,
  which was collateralized by a security interest in certain assets of Vitro America,
  includingaccounts receivable, inventory, equipment and intangible assets,
  and guaranteed by certain affiliates of Vitro America. The credit agreement
  contained certain customary restrictive covenants and required continued compliance
  with certain financial ratios. Provided we met certain financial ratios and
  certain other conditions, our ability to pay dividends was unrestricted by this
  credit agreement. During 2001 and 2002, we did not meet such financial ratios
  and conditions for dividend payments.

On June 27, 2003, Vitro America and the Bank of
  America amended the credit agreement to (i) reduce the maximum amount borrowable under the
  revolving line of credit to $25 million and (ii) change the maturity date of the loans
  made and letters of credit issued under this credit agreement to June 26, 2006.
  The restated credit agreement provides for (i) revolving loans at an annual
  floating interest rate equal to the Bank of America's prime rate plus a spread
  ranging between 0.25% and 1.00%, (ii) revolving loans at an annual floating
  interest rate of LIBOR plus a spread ranging between 2.00% and 2.75% and (iii)
  the issuance of standby letters of credit up to a maximum amount of $15 million.
  The credit agreement is collateralized by a security interest in certain assets
  of Vitro America, including accounts receivable, inventory, equipment, intangible
  assets and fixed assets. The amended credit agreement contains certain customary
  restrictive covenants and requires continued compliance with certain financial
  ratios. Provided we meet certain financial ratios and certain other conditions,
  our ability to pay dividends is unrestricted by this credit agreement.

Vitro America Accounts Receivable Factoring Program/Wachovia Bank Accounts Receivable Securitization Facility

On March
  19, 2003, General Electric Capital Corporation, which we refer to
  as "GECC," assigned Vitro America's
  accounts receivable factoring program to us in exchange for $38 million in cash.
  Subsequently, we assigned such accounts receivable factoring program to one
  of our subsidiaries. The liquidity that the assigned accounts receivable factoring
  program provided to Vitro America
  has been replaced by liquidity provided by our subsidiary that was the assignee
  of the accounts receivable factoring program.

On June 27, 2003, Vitro America entered into a $40 million accounts receivable securitization facility with Wachovia
Bank.  The facility contains certain customary restrictive covenants.  As of June 27, 2003, we had not sold any accounts receivable to the facility.  We entered into the accounts receivable securitization
facility to replace the accounts receivable factoring program that GECC assigned to us on March 19, 2003.

Flat Glass Credit Facility

On February
  26, 2003, Vitro Plan entered into a credit facility with Comerica
  Bank, Citibank and certain other lenders pursuant to which it borrowed an aggregate
  amount of $201 million. The credit facility includes (i) an approximately $80
  million, 3-year term loan with an annual floating interest rate equal to LIBOR
  plus a spread ranging between 1.875% and 2.125%, (ii) an approximately Ps. 628
  million, 4-year term loan with an annual floating interest rate equal to TIIE
  plus a spread ranging between 2.000% and 2.375% and (iii) an approximately $64
  million, 5-year term loan with an annual floating interest rate equal to LIBOR
  plus a spread ranging between 2.25% and 2.75%. The principal of these loans
  will become due upon their respective maturities. The loans are partially collateralized
  and are guaranteed by all wholly-owned subsidiaries of Vitro Plan. The credit
  facility contains a requirement that our debt to EBITDA ratio be below 2.75
  and certain other customary covenants, including a limitation on the payment
  of dividends under certain circumstances. The proceeds from these loans were
  used to repay short-term debt.

2002-2003 Peso-Denominated Certificados Bursatiles

On October 10, 2002, we established a Certificados
  Bursatiles or medium-term notes program under which we can issue up to an aggregate
  principal amount of Ps. 2.5 billion. Our program was approved by the CNBV. Each
  Certificado Bursatil issued under the program must be denominated in pesos and
  have a maturity in excess of one year. The program will expire on October 10,
  2006.

On October
  10, 2002, we issued Certificados Bursatiles with an aggregate principal
  amount of Ps. 360 million. The Certificados Bursatiles were issued under the
  program referenced above. At issuance, Fitch Mexico,
  S.A. de C.V., which we refer to as "Fitch Mexico,"
  rated the Certificados Bursatiles at AA-(mex). The Certificados Bursatiles bear
  an annual floating interest rate of 3.25% over the 182-day CETES and mature
  on October 2, 2008, at which point the entire aggregate principal
  amount will become due. The Certificados Bursatiles are senior unsecured obligations
  of Vitro and do not impose restrictive covenants on us. The proceeds from the
  Certificados Bursatiles were used to refinance short- and long-term debt and
  for working capital purposes.

On December 30, 2002, we issued Certificados Bursatiles
  with an aggregate principal amount of Ps. 1 billion. The Certificados Bursatiles
  were issued under the program referenced above. At issuance, Fitch Mexico rated
  the Certificados Bursatiles at AA-(mex). The Certificados Bursatiles bear an
  annual floating interest rate of 3.25% over the 182-day CETES and mature on
  December 22, 2008, at which point the entire aggregate principal amount will
  become due. The Certificados Bursatiles are senior unsecured obligations of
  Vitro and do not impose restrictive covenants on us. The proceeds from the Certificados
  Bursatiles were used to refinance short- and long-term debt and for working
  capital purposes.

On February
  13, 2003, we issued Certificados Bursatiles with an aggregate principal
  amount of Ps. 1.14 billion . The Certificados Bursatiles were issued under the
  program referenced above. At issuance, Fitch Mexico
  rated the Certificados Bursatiles at AA-(mex). The Certificados Bursatiles bear
  an annual floating interest rate of 3.25% over the 182-day CETES and mature
  on February 5, 2009, at which
  point the entire aggregate principal amount will become due. The Certificados
  Bursatiles are senior unsecured obligations of Vitro and do not impose restrictive
  covenants on us. The proceeds from the Certificados Bursatiles were used to
  refinance short- and long-term debt and for working capital purposes.

HSBC-Vitro Credit Agreement

On May 14, 2002, Vitro entered into a credit agreement
  with HSBC Bank USA pursuant to which it borrowed $25 million. The loan made
  under this agreement bears an annual floating interest rate of LIBOR plus 3%.
  The final amortization of the loan will become due on December 23, 2004. The
  loan is secured by mortgages on our corporate headquarters' facilities, which
  are owned by Fomento Inmobilario y de la Construcción, S.A. de C.V. and
  Vitro Corporativo, S.A. de C.V. The credit agreement contains certain customary
  restrictive covenants. Provided we meet certain financial ratios, our ability
  to pay dividends is unrestricted by this credit agreement for dividend payments.

Senior Notes due in 2009, Credit Linked Notes
  and Swap

On April 30, 2002, we sold $88.35 million aggregate
  principal amount of our 11.50% Senior Notes due 2009, which we refer to as the
  "2009 Senior Notes," to Credit Suisse First Boston International, which we refer
  to as "CSFBI," an affiliate of Credit Suisse First Boston Corporation, for net
  proceeds of $77.9 million. The notes bear a fixed annual interest rate of 11.50%.
  The 2009 Senior Notes are senior, unsecured debt securities governed by an indenture
  dated as of April 30, 2002
  between Vitro, as issuer, and JPMorgan Chase Bank, as trustee. The indenture
  contains customary covenants.

A portion of the net proceeds of the sale of the
  2009 Senior Notes, in the amount of $38.8 million, was used to pay a portion
  of the principal and accrued interest of the $175 million aggregate principal
  amount 10 1/4% Guaranteed Notes due in 2002 issued by our wholly owned subsidiary
  Servicios y Operaciones Financieras Vitro, S.A. de C.V., which was formerly
  known as Vicap, S.A. de C.V. and which we refer to as "SOFIVSA," and guaranteed
  by us, which matured on May 15, 2002. The remaining proceeds, in the amount
  of $39.1 million, were used to purchase 13.889% Credit Linked Notes issued by
  Credit Suisse First Boston, acting through its Nassau branch, which we refer
  to as the "CLN Issuer," with an aggregate principal amount of $40 million. Under
  the terms of the 13.889% Credit Linked Notes, upon the occurrence of a Credit
  Event, which includes our bankruptcy or insolvency, noncompliance with the terms
  of our indebtedness which would permit the acceleration thereof, a default with
  respect to our indebtedness, a restructuring of our indebtedness or a repudiation
  of or moratorium with respect to payments of our indebtedness, whether by us
  or a governmental entity, the principal amount of the 13.889% Credit Linked
  Notes will be reduced pursuant to a formula based on the then current market
  price of SOFIVSA's 113⁄8% Guaranteed Notes due 2007, which we refer to as
  the "113⁄8% Guaranteed Notes." As a result, if a Credit Event occurs and
  we are not able to cure such Credit Event within the applicable period, we may
  lose the entire amount that we invested in the 13.889% Credit Linked Notes.
  As long as a Credit Event has not occurred, the CLN Issuer is generally required
  to redeem (i) the 13.889% Credit Linked Notes in four annual installments, beginning
  on May 7, 2003 and (ii) a pro rata portion of the 13.889% Credit Linked Notes
  at the time any portion of the 2009 Senior Notes is sold by CSFBI.

Concurrently with the issuance of the 2009 Senior
  Notes and the purchase of the 13.889% Credit Linked Notes, we entered into a
  swap agreement with CSFBI pursuant to which we agreed to make certain payments
  on April 30 of each year, beginning on April 30, 2003 and ending on April 30,
  2006, to CSFBI calculated with respect to an original notional amount of $80
  million if a proportional part of the 2009 Senior Notes have not been sold by
  CSFBI at that time and the market price of the 11?% Guaranteed Notes has declined
  from an initial benchmark price which is based on the price paid by CSFBI for
  the 2009 Senior Notes. In addition, under the swap agreement, CSFBI may require
  us to, at any time, make payments of all amounts that would be owed by us on
  all future payment dates if the market price of the 11?% Guaranteed Notes has
  declined to certain levels, with any such payments being reduced by payments
  we would be required to make on future payment dates. If certain Termination
  Events occur, which are similar to the Credit Events described above, CSFBI
  may terminate the swap agreement. In that event, we may owe CSFBI an amount
  calculated as described above with respect to declines in the market price of
  the 2009 Senior Notes for up to $40 million.

In accordance with the swap transaction, we have
  already paid to CSFBI a notional amount of $22.01 million of the $88.35 million
  aggregate principal amount of the 2009 Senior Notes. As of the date of this
  annual report, the outstanding aggregate principal amount of the 13.889% of
  the Credit Linked Notes is $29.1 million and the outstanding aggregate principal
  amount of the 2009 Senior Notes is $66.3 million.

Short-term Loans

On April 26, 2002, we entered into a credit agreement
  with Banco Inbursa, S.A. pursuant to which we borrowed an aggregate amount of
  $130 million. The loan under this credit agreement was a short-term loan whose
  proceeds were used to pay SOFIVSA's 10.25% Guaranteed Notes due 2002, which
  matured on May 15, 2002. The loan under this credit agreement was repaid in
  full in July 2002 using the proceeds of the sale of our interest in Vitromatic.

Trend Information

In April 2003, we issued our earnings for the first
  quarter of 2003 which showed a decrease, compared to the same period of 2002,
  in our consolidated net sales and operating income, mainly due to the global
  economic slowdown. These results are not necessarily representative of what
  the results will be for 2003, but we can give no assurance that this decrease
  in our consolidated net sales and operating income relative to the year ended
  on December 31, 2002 will not continue
  in the near future. Following is a brief discussion of our first quarter financial
  results.

Net Sales

Our consolidated net sales for the first quarter
  of 2003 decreased by 6.2%, or $35 million, to $525 million compared to our consolidated
  net sales for the same period in 2002. This was the result of a decline in consolidated
  net sales when compared to the first quarter of 2002 of $6 million, $25 million
  and $7 million in the Flat Glass, Glass Containers and Glassware business units,
  respectively. The decline in consolidated net sales expressed as a percentage
  change relative to the same period for the year 2002 was 2.0%, 10.8% and 11.2%
  in the Flat Glass, Glass Containers and Glassware business units, respectively.

Consolidated net sales volume for the first quarter
  of 2003 of the Flat Glass business unit declined mainly due to continued weakness
  and uncertainty in the U.S.
  economy aggravated by the war in Iraq.
  Particularly affected were the non-residential construction segment and the
  OEM automotive market in the United States.
  These declines were partially offset by increased volume in the Mexican construction
  industry and our Spanish operations.

Consolidated net sales for the first quarter of
  2003 of the Glass Containers business unit decreased relative to the same period
  in 2002 due to the loss of ASA's sales resulting from its divestiture in April
  2002. This accounted for 32% of the decline of the business unit's sales and
  23% of the decline of our sales in the first quarter of 2003. Consolidated net
  sales were also negatively impacted by the unusually large seasonal declines
  in the beer and soft drink segments as a consequence of the longer than expected
  winter in the U.S.

Consolidated net sales for the first quarter of
  2003 of the Glassware business unit decreased in the industrial segment of the
  Mexican market due to a decrease in the volumes demanded, which was partially
  offset by an increase in the Mexican retail and wholesale segments. Lower pricing
  and a decrease in demand in the plastics segment due to increased competition
  also affected sales of the business unit.

Operating Income

Our consolidated operating income for the first
  quarter of 2003 decreased by 35.9% or $18 million when compared with the first
  quarter of 2002 due to the factors described below.

Operating income for the first quarter of 2003 of
  the Flat Glass business unit decreased by 8.5% or $2 million relative to the
  same period of 2002 as a result of lower net sales which was partially offset
  by lower cost of goods sold from lower sales volume.

Operating income for the first quarter of 2003 of
  the Glass Containers business unit decreased by 44.3% or $13 million relative
  to the same period in 2002 as a result of the lower fixed costs absorption resulting
  mainly from lower consolidated net sales in the beer and soft drink segments.
  Operating income was also affected by the divestiture of ASA, which accounted
  for 8% of the decline.

Operating income for the first quarter of 2003 of
  the Glassware business unit decreased $5 million when compared to the same period
  of 2002, reflecting the decline in consolidated net sales which resulted in
  lower fixed costs absorption. The plastic segment was affected by higher prices
  of resin, which are sensitive to oil and related products prices.

Other Trends

Some known trends that have had an impact in our
  results in 2002 and might have an impact in the future, include the following:

* in the past few years each of our business units
  has faced pricing pressures in some of the markets in which it participates.
  We continue to see pricing pressures in these markets.* one of the Glass Containers
  business unit's largest customers is vertically-integrated to glass production.
  This customer sources its glass containers needs from a combination of its own
  production and products purchased from us. Historically, in years immediately
  following this customer's expansion of its glass containers production capacity,
  the Glass Containers business unit's consolidated net sales were adversely impacted.
  New capacity became available to this customer in the fourth quarter of 2002
  and our 2003 year-to-date glass containers shipments to such customer have been
  adversely impacted.* foreign flat glass manufacturers may choose to install
  new float glass production capacity in Mexico. The current level of imports
  into the country could justify a new investment that could put additional pressure
  on our domestic market margins.* some of our customers in the Glassware OEM
  segment have moved, or are considering moving, production capacity to China
  to reduce labor costs. In this segment, the Glassware business unit's products
  are a component of the final product. This decision by our customers puts us
  at a disadvantage when compared to local producers of glass in China. This trend,
  if continued, could mean a reduction in our consolidated net sales, which, if
  not replaced, would have an adverse impact on our results.

Factors Affecting Vitro's Results of Operations

Economic Conditions in Mexico

A substantial portion of our operations are in Mexico.
  Therefore, economic conditions in Mexico have a significant effect on our business,
  results of operations and financial position.

General

After experiencing a severe economic crisis during
  1995, Mexico's GDP increased in real terms by 5.1% and 6.7% during 1996 and
  1997, respectively. The inflation rate decreased from 27.7% in 1996 to 15.7%
  in 1997, while the peso depreciated, in nominal terms, 1.8% and 2.4% in 1996
  and 1997, respectively, to a Free Exchange Rate of Ps. 7.8765 per U.S. dollar
  as of December 31, 1996 and Ps. 8.0681 per U.S. dollar as of December 31, 1997.

However, from the fourth quarter of 1997 through
  the first quarter of 1999, these economic indicators deteriorated as a result
  of the Asian, Russian and Brazilian financial crises coupled with the decline
  in international oil prices. In 1998, Mexico's GDP experienced a slower rate
  of growth in real terms of 4.8% than in the previous two years, the inflation
  rate rebounded to 18.6% and the peso increased its nominal devaluation rate
  to 22.7% to a Free Exchange Rate of Ps. 9.8963 per U.S. dollar as of December
  31, 1998.

Throughout 1999, and with the support of rising
  international oil prices during the second, third and fourth quarters of that
  year, conditions in the Mexican economy generally improved. The inflation rate
  for the year decreased to 12.3%, the Free Exchange Rate, in nominal terms, appreciated
  4.0% relative to the U.S. dollar to reach Ps. 9.4986 per U.S. dollar as of December
  31, 1999 and real GDP grew by approximately 3.7%.

Throughout 2000, the improvement shown in 1999 continued.
  The official inflation rate for the whole year was 9.0%, while Mexico experienced
  a marginal nominal peso devaluation relative to the U.S. dollar of 1.2% and
  real GDP growth of 6.9%.

During the first three quarters of 2001 and increasing
  in the fourth quarter of 2001, amid concerns of a global economic slowdown and
  a recession in the United States, Mexico started experiencing an economic slowdown.
  In 2001, real GDP declined by 0.3%, although inflation declined to 4.4% and
  the peso appreciated, in nominal terms, 4.6% relative to the U.S. dollar. The
  economic slowdown in the Mexican economy has continued through 2002 and the
  first quarter of 2003. In 2002, GDP grew by 0.9% in real terms, inflation was
  5.7% for the year and the peso devalued by 13.8% relative to the U.S. dollar.
  Given the current state of the global economy, the Mexican economy may not continue
  to grow at similar rates as it has grown in the past and the current slowdown,
  which had a significant impact on our 2002 results, may continue to negatively
  impact our business and our results of operations.

Trade Liberalization

Steps taken by Mexico since the 1980s to reduce
  import barriers and open its economy to foreign competition, such as becoming
  a signatory to the General Agreement on Tariffs and Trade, which we refer to
  as "GATT," and a member of the North American Free Trade Agreement, which we
  refer to as "NAFTA," led to a substantial increase in imports into Mexico. Although
  the peso devalued, in real terms, in 1998, the trade balance of Mexico showed
  a deficit of $7.9 billion in 1998. In 1999, in spite of the peso's real appreciation
  relative to the U.S. dollar, the deficit decreased to $5.4 billion due to increased
  revenues from higher oil prices. During 2000 and 2001, as the peso continued
  to appreciate in real terms, the trade balance of Mexico reached deficits of
  $8.0 billion and $9.7 billion, respectively. During 2002, despite the real devaluation
  of the peso, the trade balance of Mexico reached a deficit of $7.9 billion.
  We cannot predict the behavior of the Mexican trade balance in the future or
  the country's ability to finance a trade deficit, if any. With the liberalization
  of the Mexican economy and the implementation of NAFTA, other free trade agreements
  entered into by Mexico with the European Union, Chile, Costa Rica, Nicaragua,
  Colombia, Venezuela, Bolivia and Israel and a multilateral free trade agreement
  which became effective on January 1, 2001 with Guatemala, El Salvador and Honduras,
  manufacturers, such as us and certain of our domestic customers, have come under
  increased competitive pressure from imported goods. The reduction and phase-out
  of import duty rates has generally limited our flexibility to adjust pricing
  levels to offset the effects of devaluation and inflation in Mexico. In addition,
  the appreciation of the peso relative to the U.S. dollar makes our exports less
  price competitive or reduces our margins on such exports.

On the other hand, the trade liberalization seen
  in the past few years between Mexico and its trading partners has reduced the
  import duties and tariffs our exported products pay upon entry to foreign countries
  that are signatories to free trade agreements with Mexico and the amount of
  regulation and delay experienced in connection with the exports of our products
  to such countries. We believe that implementation of the free trade agreements
  will enhance our ability and the ability of certain of our domestic customers
  to increase the exports of our and their respective products to the countries
  that are signatories to these agreements.

Effect on us of Economic Conditions in Mexico
  and the United States

Our results of operations are affected by, among
  other factors, (i) our costs of production, which principally consist of costs
  of raw materials, labor, energy and depreciation, of which energy and labor
  are sensitive to the general level of prices, (ii) the relationship between
  the peso, the currency in which an important portion of our operating costs
  and expenses are incurred, and the U.S. dollar, the currency in which most of
  our export sales are made and to which a significant amount of our domestic
  sales prices relate, (iii) the level of demand for our products in Mexico and
  the U.S. and (iv) financing costs, which are incurred in both pesos and U.S.
  dollars. These factors are sensitive to changes in economic conditions in Mexico.

Inflation and Foreign Currency Exchange Rate
  Fluctuations

The following table sets forth, for the periods
  indicated, certain information relating to inflation and foreign currency exchange
  rates.

|                                                                             | For the year ended on December 31,
|---------------------------------------------------------------------------- | ----------------------------------
|                                                                             | 2000                              
|Nominal
      peso devaluation (appreciation) relative to the U.S. dollar(1) | 1.2%                              
|Mexican
      inflation (based on changes in INPC)(1)                        | 9.0%                              
|U.S.
      inflation (based on changes in Consumer Price Index)(2)           | 3.4%                              
|Inflation
      differential (Mexican vs. U.S.)(1)(2)(3)                     | 5.4%                              
|Real
      peso devaluation (appreciation) relative to the U.S. dollar(4)    | (4.0)%                            
|Free
      Exchange Rate as of year end(1)                                   | 9.6098                            
|Mexican
      GDP Growth(1)                                                  | 6.9%                              

(1) Source: Banco de Mexico
  (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

Effects of Inflation and Foreign Currency Exchange
  Rate Fluctuations on Operating Margins

Changes in the relative value of the peso to the
  U.S. dollar have a significant effect on our results of operations. In general,
  a real devaluation of the peso will result in higher operating margins when
  measured in pesos, and a real appreciation of the peso will result in lower
  operating margins when measured in pesos, in each case, as described in the
  following paragraph.

A substantial portion of the sales of our Mexican
  and U.S. subsidiaries are either denominated in or sensitive to the value of
  the U.S. dollar. More than 80% of our consolidated net sales were either denominated
  in or sensitive to the value of the U.S. dollar in 2002. This is underlined
  by the fact that the prices of a significant portion of the products we sell
  in Mexico, in particular those of flat glass for automotive uses, capital goods,
  certain glassware products and most chemical and packaging products, are linked
  to the U.S. dollar. In addition, substantially all of our export sales are denominated
  in U.S. dollars. U.S. dollar sales of our Mexican subsidiaries and our U.S.
  dollar export sales are translated into pesos using the exchange rate in effect
  at the time of the sale. The translated U.S. dollar sales of our Mexican subsidiaries
  are then restated into constant pesos using the INPC as of the date of the most
  recent balance sheet included in those financial statements. As a result, when
  the peso devalues in real terms relative to the U.S. dollar, as was the case
  in the second half of 1998 and 2002, the same level of U.S. dollar sales as
  in a prior period will result in higher constant peso revenues in the more recent
  period. Conversely, when the peso appreciates in real terms relative to the
  U.S. dollar, as was the case in 1999, 2000 and 2001, the same level of U.S.
  dollar sales as in a prior period will result in lower constant peso revenues
  in the more recent period. Moreover, because a large part of our cost of sales
  and general, selling and administrative expenses are invoiced in pesos, and
  that part tends to vary substantially based on changes in Mexican inflation
  and not based on changes in the relative value in real terms of the peso to
  the U.S. dollar, the real appreciation or devaluation of the peso relative to
  the U.S. dollar has a significant effect on our operating margins in the short
  term.

During 2000 and 2001, the increase in the relative
  value of the peso in real terms against the U.S. dollar negatively impacted
  our consolidated net sales and our operating margins in peso terms. During 2002,
  the net decrease in the value of the peso relative to the dollar sales increased
  our consolidated net sales and our operating margin in peso terms. However,
  since most of the peso's devaluation relative to the U.S. dollar happened in
  late 2002, that impact was modest.

Sales of products manufactured, processed or sold
  by Vitro outside Mexico (principally, by Vitro America, Vitro Packaging, Comegua,
  and Cristalglass), as well as such subsidiaries' expenses, are restated during
  a financial reporting period by adjusting such amount for the inflation observed
  in the country in which the subsidiary operates and then translated into pesos
  at the exchange rate in effect at the end of the period. Since such subsidiaries'
  revenues and expenses are generally both earned and incurred in the same currency
  the devaluation or appreciation of the peso has a much more limited effect on
  the operating margins of such subsidiaries. However, profits, as reported in
  real peso terms, are substantially impacted by the devaluation or appreciation
  of the peso relative to the appropriate currency.

We refer to the change in amounts measured in inflation-adjusted
  pesos resulting from the same level of U.S. dollar-denominated or linked amounts
  as in a prior period as a change in the "peso equivalent" of U.S. dollar-denominated
  or linked amounts.

Effect of Inflation and Foreign Currency Exchange
  Rate Fluctuations on Total Financing Cost

Our total financing cost includes (i) net interest
  expense, (ii) the net effect of inflation on our monetary assets and liabilities
  and (iii) the net effect of changes in nominal foreign currency exchange rates
  on monetary assets and liabilities denominated in foreign currencies. Net interest
  expense is calculated as the nominal amount of interest expense incurred by
  us with respect to our short- and long-term debt and off-balance sheet financings
  minus the nominal amount of interest income generated by us with respect to
  our monetary assets.

Inflation affects our total financing cost. During
  periods of inflation, the principal amount of our monetary debt will generally
  be reduced in real terms by the rate of inflation. The amount of such reduction
  will result in a gain from monetary position. This gain must be offset by the
  reduction in real terms in the value of the monetary assets we held during such
  period. Historically, our monetary liabilities have exceeded our monetary assets
  and, thus, we have tended to experience monetary gains during periods of inflation.
  Declining levels of inflation since 1999 have resulted in our recording lower
  monetary gains.

Our total financing cost is also impacted by changes
  in the nominal value of the peso relative to the U.S. dollar. Exchange gains
  or losses included in total financing cost result primarily from the impact
  of nominal changes in exchange rates on U.S. dollar-denominated monetary liabilities
  (such as dollar-denominated debt and accounts payable arising from imports of
  raw materials and equipment) and monetary assets (such as dollar-denominated
  cash and cash equivalents and accounts receivable from exports) of Vitro and
  its Mexican subsidiaries. U.S. dollar-denominated monetary liabilities and assets
  are translated into pesos at the Free Exchange Rate at the date of the balance
  sheet. Any net change in the peso-translated amounts during a financial reporting
  period in such U.S. dollar-denominated assets and liabilities is reported in
  our income statement in "Exchange loss (gain), net." Because our U.S. dollar-denominated
  liabilities have historically been significantly in excess of our dollar-denominated
  monetary assets, the devaluation of the peso resulted in exchange losses. In
  1998 and 2002, the larger nominal devaluation of the peso significantly increased
  our exchange losses. In 1999 and 2001, however, the appreciation of the peso
  relative to the U.S. dollar translated into an exchange gain for us. In 2000,
  the marginal devaluation of the peso resulted in less significant exchange losses
  in our financial statements.

Results of Operations

The following table sets forth selected items on
  our consolidated income statement calculated as a percentage of net sales:

|                                                     | For the year ended on December 31,
|---------------------------------------------------- | ----------------------------------
|                                                     | 2000                              
|Net
      sales                                      | 100%                              
|Cost
      of goods sold                             | 68.6                              
|Gross
      profit                                   | 31.4                              
|Selling,
      administrative and general expenses   | 19.0                              
|Operating
      Income                               | 12.4                              
|Total
      financing cost                           | 4.3                               
|Net
      income (loss) for the year                 | 3.6                               
|Resources
      generated from continuing operations | 13.6                              
|EBITDA(1)                                            | 21.1                              

(1) EBITDA consists of operating
  income plus depreciation, amortization and reserves for seniority premiums and
  pensions. Seniority premiums and pension reserves for the year 2000, 2001 and
  2002 were Ps. 211 million, Ps. 211 million and Ps. 187 million, respectively.
  The concept of EBITDA is presented because some of our investors have indicated
  to us that they consider it an appropriate measurement of the funds we have
  available to service our debt. EBITDA is not intended to represent cash flow
  from operations as defined by generally accepted accounting principles and should
  not be considered as an alternative to net income as an indicator of our operating
  performance or to resources generated by continuing operations as a measure
  of our liquidity. Please see "-EBITDA Reconciliation" for a reconciliation of
  EBITDA to resources generated by continuing operations. Because not all companies
  calculate EBITDA identically, our presentation of EBITDA may not be comparable
  to other similarly entitled measures used by other companies.



The following table sets forth, for the periods
  indicated, consolidated net sales (before elimination of interdivisional sales
  and other), export sales, operating income (before corporate and other eliminations)
  and EBITDA of each of our business units, as well as the contribution to our
  audited consolidated results, in percentage terms, of net sales (after elimination
  of interdivisional sales), export sales, operating income (after corporate and
  other eliminations) and EBITDA of each of our business units. The following
  table does not include the results of discontinued operations.

|                                                            | Year
        Ended December 31,                                                             
|----------------------------------------------------------- | --------------------------------------------------------------------------------------------
|                                                            | 2000                                                                                        
|                                                            | Amount                                                                                      
|                                                            | (Millions
        of constant pesos as of December 31, 2002,
        except for percentages)
|Net  sales                                                  |                                                                                             
|Flat Glass                                                  | Ps. 11,624                                                                                  
|Glass Containers                                            | 10,258                                                                                      
|Glassware                                                   | 3,187                                                                                       
|Interdivisional sales and other                             | (6)                                                                                         
|Consolidated net sales                                      | Ps. 25,005                                                                                  
|                                                            |                                                                                             
|                                                            | (Millions
        of US Dollares, except for percentages)                                   
|Export sales                                                |                                                                                             
|Flat Glass                                                  | $ 274                                                                                       
|Glass Containers                                            | 245                                                                                         
|Glassware                                                   | 89                                                                                          
|Consolidated exports                                        | $ 608                                                                                       
|                                                            |                                                                                             
|                                                            | (Millions
        of constant pesos as of December 31, 2002,
        except for percentages)
|Operating income (loss)                                     |                                                                                             
|Flat Glass                                                  | Ps. 1,779                                                                                   
|Glass Containers                                            | 1,165                                                                                       
|Glassware                                                   | 546                                                                                         
|Corporate and other eliminations                            | (385)                                                                                       
|Consolidated operating income                               | Ps. 3,105                                                                                   
|                                                            |                                                                                             
|                                                            | (Millions
        of constant pesos as of December 31, 2002,
        except for percentages)
|Resources generated from continuing operations              |                                                                                             
|Flat Glass                                                  | Ps. 1,198                                                                                   
|Glass Containers                                            | 1,770                                                                                       
|Glassware                                                   | 886                                                                                         
|Corporate and other eliminations                            | (460)                                                                                       
|Consolidated resources generated from continuing operations | Ps. 3,394                                                                                   
|                                                            |                                                                                             
|                                                            | (Millions
        of constant pesos as of December 31, 2002,
        except for percentages)
|EBITDA(2)                                                   |                                                                                             
|Flat Glass                                                  | Ps. 2,438                                                                                   
|Glass Containers                                            | 2,274                                                                                       
|Glassware                                                   | 801                                                                                         
|Corporate and other eliminations                            | (249)                                                                                       
|Consolidated EBITDA                                         | Ps. 5,264                                                                                   

(1) Peso amounts have been translated
  into U.S. dollars, solely for the convenience of the reader, at the rate of
  10.4393 pesos per one U.S. dollar, the Free Exchange Rate on December 31, 2002.
  (2) EBITDA consists of operating income plus depreciation, amortization and
  reserves for seniority premiums and pensions. Seniority premiums and pension
  reserves for the years 2000, 2001 and 2002 were Ps. 211 million, Ps. 211 million
  and Ps. 187 million, respectively. The concept of EBITDA is presented because
  some of our investors have indicated to us that they consider it an appropriate
  measurement of the funds we have available to service our debt. EBITDA is not
  intended to represent cash flow from operations as defined by generally accepted
  accounting principles and should not be considered as an alternative to net
  income as an indicator of our operating performance or to resources generated
  by continuing operations as a measure of our liquidity. Please see "-EBITDA
  Reconciliation" for a reconciliation of EBITDA to resources generated by continuing
  operations. Because not all companies calculate EBITDA identically, our presentation
  of EBITDA may not be comparable to other similarly entitled measures used by
  other companies.



EBITDA Reconciliation

The following table sets forth, for the periods
  indicated, the reconciliation of EBITDA to resources generated from continuing
  operations of each of our business units.

|                                                                        | Year ended on December 31,                          
|----------------------------------------------------------------------- | ----------------------------------------------------
|                                                                        | 1998                                                
|                                                                        | (Millions of constant pesos as of December 31, 2002)
|Flat Glass:                                                             |                                                     
|EBITDA                                                                  | 3,189                                               
|Other expense net of write-off of assets                                | (41)                                                
|Income and asset tax and workers' profit sharing, net of deferred taxes | (745)                                               
|Amortization of cost of debt issuance                                   | 1                                                   
|(Gain) loss from sale of subsidiaries                                   | -                                                   
|Total Financing Cost                                                    | (465)                                               
|Changes in working capital                                              | 246                                                 
|Resources generated from continuing operations                          | 2,185                                               
|                                                                        |                                                     
|Glass Containers:                                                       |                                                     
|EBITDA                                                                  | 3,249                                               
|Other expense net of write-off of assets                                | 172                                                 
|Income and asset tax and workers' profit sharing, net of deferred taxes | (405)                                               
|Amortization of cost of debt issuance                                   | 23                                                  
|(Gain) loss from sale of subsidiaries                                   | -                                                   
|Total Financing Cost                                                    | (1,333)                                             
|Changes in working capital                                              | (163)                                               
|Resources generated from continuing operations                          | 1,543                                               
|                                                                        |                                                     
|Glassware:                                                              |                                                     
|EBITDA                                                                  | 831                                                 
|Other expense net of write-off of assets                                | (21)                                                
|Income and asset tax and workers' profit sharing, net of deferred taxes | (43)                                                
|Amortization of cost of debt issuance                                   | -                                                   
|(Gain) loss from sale of subsidiaries                                   | -                                                   
|Total Financing Cost                                                    | (255)                                               
|Changes in working capital                                              | (18)                                                
|Resources generated from continuing operations                          | 494                                                 
|                                                                        |                                                     
|Corporate and other eliminations:                                       |                                                     
|EBITDA                                                                  | (238)                                               
|Other expense net of write-off of assets                                | 1                                                   
|Income and asset tax and workers' profit sharing, net of deferred taxes | 404                                                 
|Amortization of cost of debt issuance                                   | 32                                                  
|(Gain) loss from sale of subsidiaries                                   | (88)                                                
|Total Financing Cost                                                    | (718)                                               
|Changes in working capital                                              | 387                                                 
|Resources generated from continuing operations                          | (220)                                               
|                                                                        |                                                     
|Consolidated:                                                           |                                                     
|EBITDA                                                                  | 7,031                                               
|Other expense net of write-off of assets                                | 111                                                 
|Income and asset tax and workers' profit sharing, net of deferred taxes | (789)                                               
|Amortization of cost of debt issuance                                   | 56                                                  
|(Gain) loss from sale of subsidiaries                                   | (88)                                                
|Total Financing Cost                                                    | (2,771)                                             
|Changes in working capital                                              | 452                                                 
|Resources generated from continuing operations                          | 4,002                                               



Year Ended on December 31, 2002 Compared to
  Year Ended on December 31, 2001

Net Sales

Our consolidated net sales decreased 2.0% to Ps.
  23,922 million in 2002 from Ps. 24,406 million in 2001. This decrease was mainly
  attributable to (i) the decline in sales of Vitro America, our U.S. flat glass
  subsidiary, by Ps. 411 million, (ii) the divestiture of ASA, which had sales
  of Ps. 291 million in 2001 and Ps. 85 million during the period between January
  1, 2002 and April 15, 2002, (iii) pricing reductions for our products arising
  from the slowdown in the United States and Mexican economies and (iv) lower
  sales volume, mainly in our Glassware business unit, reflecting increased competition
  from imports sold into Mexico. The decrease in our net sales was partially offset
  by the net sales of Cristalglass, which are included in our consolidated net
  sales for the twelve-month period ended on December 31, 2002 and eight months
  for the same period ended on December 31, 2001.

For the twelve-month period ended on December 31,
  2002, our consolidated export sales were $586 million, a decrease of 0.5% when
  compared to $589 million for the same period of 2001, principally due to the
  slowdown of the United States economy and the resulting reduction in the volume
  of products demanded. Our export sales represented approximately 25% of our
  consolidated net sales for the period ended on December 31, 2002. More than
  80% of our consolidated net sales for the twelve-month period ended on December
  31, 2002, were either denominated in or sensitive to the value of the U.S. dollar.
  This is due to the fact that, in addition to exports and foreign subsidiaries'
  sales, a significant portion of the sale prices of our products in Mexico was
  generally determined with reference to U.S. dollar-based prices.

Flat Glass Business Unit

Consolidated net sales of our Flat Glass business
  unit were Ps. 11,380 million for the twelve-month period ended on December 31,
  2002, a decrease of 3.2% from Ps. 11,753 million for the same period of 2001.
  This decrease was attributable primarily to (i) the decline in sales volume
  of Vitro America due to the continued slowdown in the U.S. non-residential construction
  glass industry, (ii) the slowdown in the OEM component of the automobile industry
  due to the slowdown in the United States economy and (iii) lower sales prices
  in the Mexican construction industry reflecting increased competition from imports
  sold into Mexico. This decrease in 2002 consolidated net sales was partially
  offset by the twelve-month sales of our Spain subsidiary Cristalglass, which
  in 2001 contributed to only for eight months of sales.

Export sales of the Flat Glass business unit were
  $272 million in the twelve-month period ended on December 31, 2002, an increase
  of 4.6% when compared to $260 million in the same period of 2001, as a result
  of higher sales to our foreign subsidiaries, which during 2002 shifted their
  purchases away from third parties and towards us.

Glass Containers Business Unit

Net sales of our Glass Containers business unit
  increased 0.2% to Ps. 10,012 million for the twelve month period ended on December
  31, 2002 from Ps. 9,997 million for the same period of 2001. The increase was
  principally attributable to an increase in the sales volume in the beer, wine
  and liquor, pharmaceutical and cosmetic segments in Mexico, which was partially
  offset by a price reduction in some segments, most notably in the beer segment,
  a reduction in volume in wine segment exports and the divestiture of ASA in
  April 2002.

For the year ended on December 31, 2002, export
  sales of the Glass Containers business unit amounted to $236 million, a decrease
  of 5.2% from $249 million for the same period of 2001, primarily due to lower
  sales volume mainly in the wine segment and the general impact on the business
  of the slowdown of the United States market.

Glassware Business Unit

Net sales of our Glassware business unit amounted
  to Ps. 2,618 million for the year ended on December 31, 2002, a decrease of
  5.7% from Ps. 2,776 million for the same period of 2001. The decrease in net
  sales was primarily attributable to (i) lower sales volumes mainly in the first
  part of the year due to the slowdown in the U.S. and Mexican economies and (ii)
  lower sales volumes sold to the Mexican market as a result of an increase in
  competition from Asian imports into Mexico, mainly in the low-end products segment
  in the domestic commercial market. This decrease in domestic net sales was offset
  in part by increased sales in the advertisement and promotional segment. During
  2002, the prices of our products remained stable.

Export sales of the Glassware business unit decreased
  2.5% from $80 million for the year ended on December 31, 2001 to $78 million
  for the same period of 2002. This decrease mainly reflected lower sales volume
  in the commercial segment, mainly in the U.S. market, but also in Europe and
  Latin America due to increased competition in those markets.

Operating Income

Our consolidated operating income decreased 14.2%
  from Ps. 2,315 million in 2001 to Ps. 1,986 million during 2002. This decrease
  was due primarily to the reduction in our net sales described above and higher
  cost of good sold due to the write-off of approximately $7 million of obsolete
  and damaged inventory of our Flat Glass business unit. This effect on our operating
  income was partially offset by a decrease of 1.1% in our cost of goods sold
  from Ps. 17,193 million for the twelve-month period ended on December 31, 2001
  to Ps. 16,999 million for the same period of 2002. The decrease in our cost
  of goods sold was primarily attributable to declines in the cost of goods sold
  in our Glass Containers and Glassware business units, which had lower depreciation
  due to the shutdown of a facility in Mexicali, Mexico and lower raw materials
  costs due to lower activity, respectively, and to the sale of ASA in April 2002.
  Our general, selling and administrative expenses increased by 0.8% from Ps.
  4,898 million in 2001 to Ps. 4,937 million in 2002 due to the inclusion of Cristalglass'
  expenses for the full year during 2002 as compared to only eight months during
  2001, which was partially offset by the divestiture of ASA in April 2002.

Flat Glass Business Unit

Operating income of the Flat Glass business unit
  amounted to Ps. 845 million for the twelve-month period ended on December 31,
  2002, a decrease of 37.2% from Ps. 1,346 million for the same period of 2001.
  This decrease was primarily due to (i) the decrease in net sales of the Flat
  Glass business unit described above, (ii) higher costs of goods sold due to
  the write-off of approximately $7 million of obsolete and damaged inventory
  of the business unit and (iii) increases in freight, energy and maintenance
  expenses. The increase in cost of goods sold was partially offset by a decrease
  in packaging costs.

Glass Containers Business Unit

The operating income of our Glass Containers business
  unit increased 27.5% from Ps. 932 million in the year ended on December 31,
  2001 to Ps. 1,188 million for the same period of 2002, primarily due to (i)
  improved fixed cost absorption as a result of higher sales volumes (i.e., the
  reduction in costs per unit as a result of increased sales volume which resulted
  in the allocation of our fixed costs to more units), (ii) lower per unit cost
  of goods sold as a result of longer production runs and (iii) a decrease in
  costs of goods sold as a result of lower freight costs and lower depreciation
  cost related to the shutdown of the glass container facility located in Mexicali,
  Mexico. During 2002, the prices of the business unit's products remained stable.

Glassware Business Unit

For the year ended on December 31, 2002, operating
  income of our Glassware business unit was Ps. 260 million, a decrease of 24.9%
  from Ps. 346 million for the same period of 2001. This decrease was attributable
  to the decrease in net sales described above, which was partially offset by
  a decrease in our cost of goods sold. The decrease in our cost of goods sold
  resulted mainly from a reduction in our energy costs and raw material consumption
  in the glass segment of the business due to the lower volume of sales, which
  was partially offset by an increase in our cost of goods in the plastic segment
  of the business, due to higher prices of resin, which are sensitive to oil and
  related products prices.

Total Financing Cost

Our total financing cost increased by Ps. 1,648
  million from Ps. 611 million for the year ended on December 31, 2001 to Ps.
  2,259 million for the same period of 2002. This increase in total financing
  cost was primarily due to a change from an exchange gain of Ps. 578 million
  in 2001 to an exchange loss of Ps. 1,544 million for the same period of 2002,
  due to the nominal devaluation of the peso against the U.S. dollar from 2001
  to 2002. The exchange loss, which is a non-cash item, was partially offset by
  lower interest expense resulting from lower short-term U.S. dollar- and peso-denominated
  interest rates.

Taxes and Workers' Profit Sharing

For the year ended December 31, 2002, we recorded
  a net benefit of Ps. 431 million from income tax, tax on assets and workers'
  profit sharing, as compared to an expense of Ps. 432 million for the same period
  of 2001. This change was primarily due to (i) a benefit in deferred taxes due
  to the reduction of the corporate income tax rate resulting from the recent
  tax reform passed by the Mexican Congress, (ii) lower operating earnings and
  (iii) the tax effect of the exchange loss in total financing cost.

Net Income

Our net income decreased Ps. 557 million from Ps.
  644 million for the year ended on December 31, 2001 to Ps. 87 million for the
  same period of 2002. This decrease resulted from the aforementioned reasons.

Year Ended on December 31, 2001 Compared to
  Year Ended on December 31, 2000

Net Sales

Our net sales decreased 2.4% from Ps. 25,005 million
  in 2000 to Ps. 24,406 million in 2001. The decline in net sales was largely
  due to the appreciation of the peso in real terms against the U.S. dollar, which
  resulted in a decline in the peso equivalent of sales denominated in or linked
  to the U.S. dollar, and in lower pricing due to an increased level of imports
  sold in Mexico as a result of the strength of the peso. In addition, the slowdown
  in both the Mexican and U.S. economies adversely affected our net sales.

In 2001, our export sales amounted to $589 million,
  a decrease of 3.2% compared to $608 million in 2000. Our export sales represented
  25% of our consolidated net sales in 2001. Approximately 52% of our consolidated
  net sales in 2001 were originally denominated in foreign currency, mostly U.S.
  dollars. The export sales declined in the year over year comparison mainly due
  to the slowdown in the U.S. economy resulting in lower prices and volumes in
  the construction industry, the automotive OEM segment and the markets that the
  Glassware business unit serves. In addition, a significant portion of the sale
  prices of our products in Mexico was generally determined with reference to
  U.S. dollar-based prices.

Flat Glass Business Unit

Net sales of our Flat Glass business unit increased
  1.1% to Ps. 11,753 million in 2001 from Ps. 11,624 million in 2000 as a result
  of the acquisition of Cristalglass in May 2001 and the inclusion in 2001 of
  a full year of the sales of Harding which was acquired in April 2000. Sales
  of Cristalglass totaled Ps. 485 million in the May to December 2001 period.
  Sales of Harding in 2001 cannot be separately determined because it was integrated
  with Vitro America, but Harding's average monthly sales in 2000 were Ps. 87
  million. However, excluding the effect of those acquisitions, net sales to the
  construction industry and automotive OEMs generally declined. Net sales to the
  construction industry decreased primarily due to a decline in sale prices resulting
  from the real appreciation of the peso relative to the U.S. dollar and increased
  competition in Mexico principally due to the reduction of import duties, which
  was only partially offset by slightly higher volumes. The appreciation of the
  peso reduced the peso equivalent of flat glass sales, a significant part of
  which are denominated in or linked to the U.S. dollar. Pricing pressure also
  resulted from increased competition from imports sold into Mexico, which we
  believe was due in part to the strength of the peso. Net sales to automotive
  OEMs decreased despite an increase in the volume sold to OEMs primarily due
  to a decline in the peso equivalent of sales prices as a result of the nominal
  appreciation of the peso relative to the U.S. dollar, since substantially all
  sales to automotive OEMs are denominated in or linked to the U.S. dollar, and
  the pricing pressures created, in part, by the new electronic bidding procedures
  of automotive OEMs. This new bidding process adds to the downward trend of prices
  in this market segment that might continue into the future. Despite the decline
  in sales prices, sales volume to the construction industry and automotive OEMs
  was relatively stable. Export sales decreased 5.1% to $260 million in 2001 from
  $274 million in 2000. This decrease was mainly attributable to (i) the slowdown
  in the U.S. economy resulting in lower prices and volumes to the construction
  industry and (ii) a decline in sales prices to automotive OEMs.

Glass Containers Business Unit

Net sales of our Glass Containers business unit
  decreased 2.5% to Ps. 9,997 million in 2001 from Ps. 10,258 million in 2000
  as a result of a general decline in sales prices of all of our product types
  due to the contraction of the aggregate demand in the Mexican economy and our
  decision to reduce prices in order to maintain volumes. The slowdown of the
  Mexican economy also caused a shift of some of the business unit's sales from
  the domestic to the export market which, when combined with the appreciation
  of the peso, decreased the unit's average price when measured in pesos. The
  net effect was an increase in exports sales of 1.6% to $249 million in 2001
  from $245 million in 2000. The decrease in net sales of domestic glass containers
  was partially offset by an increase of Ps. 78 million in the net sales of Comegua.

Glassware Business Unit

Net sales of our Glassware business unit decreased
  12.9% to Ps. 2,776 million in 2001 from Ps. 3,187 million in 2000. This decrease
  was due to a general decrease in net sales volume across all industry segments
  resulting primarily from (i) an increase in competition from Asian imports sold
  into Mexico, mainly in the low-end product segments, (ii) the strength of the
  peso, which decreases the peso equivalent prices of the products sold in foreign
  markets and, generally, makes our products less price competitive and (iii)
  a decrease in demand resulting from the slowdown in the Mexican and United States
  economies that affected sales particularly to Libbey, which concentrates on
  the hotel and restaurant industries. This decrease in net sales was partially
  offset by general increases in the average price per unit primarily due to a
  shift in sales mix from low- to high-end products. Export sales decreased 10.1%
  to $80 million in 2001 from $89 million in 2000. This decrease was mainly due
  to (i) a slowdown of the economies in the Americas and (ii) a decrease in peso
  equivalent export prices, except for exports to Libbey, resulting from competitive
  pressures outside of Mexico and the appreciation of the peso.

Operating Income

Our operating income decreased 25% from Ps. 3,105
  million in 2000 to Ps. 2,315 million in 2001. This decrease resulted primarily
  from the decrease in our net sales described above. Our costs of goods sold
  increased by 0.2% from Ps. 17,148 million in 2000 to Ps. 17,193 million in 2001
  due primarily to factors affecting our Flat Glass business unit and higher energy
  costs. Our general, administrative and selling expenses increased by 3.1% from
  Ps. 4,752 million to Ps. 4,898 million primarily due to the payment in 2001
  of approximately Ps. 101 million in employee productivity bonuses, which we
  accounted for as an administrative expense. In previous years, including 2000,
  this bonus was included as part of workers' profit sharing and thus not included
  in the calculation of operating income.

Flat Glass Business Unit

Operating income of our Flat Glass business unit
  decreased by 24.3% to Ps. 1,346 million in 2001 from Ps. 1,779 million in 2000.
  This decrease resulted mainly from an increase in cost of goods sold and general,
  administrative and selling expenses. Cost of goods sold increased primarily
  due to (i) an increase in variable costs due to purchases of some products from
  third parties to meet customer demand, whose purchase price was higher than
  our cost of producing similar products, (ii) higher energy costs and (iii) the
  acquisition of Cristalglass in May 2001 and the inclusion of a full year of
  costs of Harding, which was acquired in April 2000. This increase in cost of
  goods sold was partially offset by a decrease in the peso equivalent of the
  cost of raw materials, since a high percentage of our raw materials costs are
  either denominated in or linked to the U.S. dollar.

General, administrative and selling expenses increased
  primarily due to (i) the acquisition of Cristalglass and the inclusion of a
  full year of expenses of Harding, (ii) the payment in 2001 of employee productivity
  bonuses of approximately Ps. 58 million, which was included as part of workers'
  profit sharing in previous years and (iii) an increase in distribution costs
  resulting from increases in freight costs.

Glass Containers Business Unit

Operating income of our Glass Containers business
  unit decreased to Ps. 932 million in 2001 from Ps. 1,165 million in 2000 as
  a result of the decline in net sales described above, both because a large portion
  of the Glass Containers business unit's costs and expenses are fixed and because
  this unit's costs of goods sold and general, administrative and selling expenses
  remained largely unchanged notwithstanding the decline in sales.

Glassware Business Unit

Operating income of our Glassware business unit
  decreased to Ps. 346 million in 2001 from Ps. 546 million in 2000 as a result
  of the decline in net sales described above, both because a high portion of
  the Glassware business unit's costs and expenses are fixed and because our costs
  of goods sold and general, administrative and selling expenses remained largely
  unchanged.

Total Financing Cost

Our total financing cost decreased 43% from Ps.
  1,073 million in 2000 to Ps. 611 million in 2001. This decrease resulted primarily
  from (i) a reduction in our net interest expense of Ps. 423 million from Ps.
  2,265 million in 2000 to Ps. 1,842 million in 2001 and (ii) a foreign currency
  exchange gain of Ps. 578 million in 2001 compared with a loss of Ps. 111 million
  in 2000, due to the appreciation of the Mexican peso against the U.S. dollar.
  The decline in our interest expense was a result of a lower weighted average
  cost of our debt, due to lower interest rates in both the United States and
  Mexican financial markets, and a decrease in our aggregate amount of debt from
  Ps. 16,340 million in 2000 to Ps. 14,553 million in 2001. This decrease in financing
  cost was partially offset by a reduced non-cash gain from monetary position
  from Ps. 1,303 million in 2000 to Ps. 653 million in 2001 due to lower levels
  of inflation in 2001.

Taxes and Workers' Profit Sharing

The statutory federal tax rate on taxable income
  for each of our subsidiaries increased in 1999 to 35%. For 1999, the tax was
  paid at a 32% rate, with the remaining 3% payable when dividends are distributed,
  and for 2000, the tax was paid at a 30% rate, with the remaining 5% payable
  when dividends are distributed. In addition, in certain circumstances, Mexican
  tax law requires that our subsidiaries pay alternative minimum taxes on assets.
  The alternative minimum tax for each of our subsidiaries is 1.8% payable with
  respect to certain assets of each company as defined under Mexican tax law.
  Taxable income, as defined under Mexican tax law, differs in certain respects
  from income before taxes under Mexican GAAP. In addition, we consolidate for
  tax purposes in Mexico but only with respect to 60% of our ownership, as permitted
  by applicable law. Consequently, Vitro and all of its subsidiaries pay taxes
  on taxable income, provided such taxable income exceeds each company's alternative
  minimum taxes that would otherwise be payable. However, Mexican tax law allows
  our companies to offset their future taxable income with their accumulated tax
  losses and offset future income tax payments with excess alternative minimum
  taxes paid, if any. Such losses and excess alternative minimum tax payments
  can be carried forward for up to 10 years from the date they arise. In addition
  to federal income taxes, each of our companies is required under Mexican tax
  law to pay to employees of each company a profit sharing bonus of 10% of such
  company's pre-profit sharing income, as defined under Mexican tax law.

Effective January 1, 2000, Mexican GAAP rules changed
  to an asset and liability approach for recognizing income tax (Bulletin D-4).
  The new rules require taxpayers' to recognize the effects of deferred tax for
  any transactions recorded in different periods for accounting and tax purposes.
  Deferred income tax assets and liabilities are determined by comparing the accounting
  and tax basis of assets and liabilities multiplied by the statutory tax rate.
  The deferred effects of workers' profit sharing are determined based on the
  reconciliation between the net accounting income for the year and income for
  statutory profit-sharing purposes multiplied by the statutory rate applicable
  to workers' profit sharing. Deferred tax assets are only recognized to the extent
  there is a high probability of recovery.

Income tax and workers' profit sharing decreased
  to Ps. 432 million in 2001 from Ps. 905 million in 2000, resulting in an effective
  tax rate of 48.7% in 2001 (including workers' profit sharing) as compared to
  56.7% in 2000. Our taxes and workers' profit sharing decreased in 2001 as a
  result of (i) lower levels of pre-tax income and (ii) our reclassifying a Ps.
  103 million employee productivity bonus as an administrative expense rather
  than as workers' profit sharing as described above.

Net Income

Our net income decreased 28.6% from Ps. 902 million
  in 2000 to Ps. 644 million in 2001. This decrease in our net income resulted
  primarily from the decrease in net sales described above which was partially
  offset by declines in our total financing cost and taxes and workers' profit
  sharing.

Application of Critical Accounting Policies

We prepare our consolidated financial statements
  in conformity with Mexican GAAP. As such, we are required to make certain estimates,
  judgments and assumptions that we believe are reasonable based on the available
  information. These estimates and assumptions affect the reported amounts of
  assets and liabilities at the date of the financial statements, the reported
  amounts of revenues and expenses during the periods presented and the related
  disclosures. The significant accounting policies which we believe are the most
  sensitive to such estimates and relevant to aid you in fully understanding and
  evaluating our reported financial statements, in addition to those described
  above under "Item 3. Key Information-Selected Consolidated Financial Information,"
  are the following:

Trade Receivables

We perform ongoing credit evaluations of our customers
  and adjust credit limits based upon payment history and the customer's current
  creditworthiness, as determined by our review of their current credit information.
  We continually monitor collections and payments from customers and maintain
  an allowance for doubtful accounts based upon our historical experience and
  any specific customer collection issues that we have identified. While such
  credit losses have historically been within our expectations and the provisions
  established, we cannot guarantee that we will continue to experience the same
  credit loss rates that we have in the past. A significant change in our experience
  of credit losses could have a material adverse impact on our future operating
  results.

Accounts receivable financings

We entered into several factoring agreements to
  sell accounts receivables. We continuously monitor collections and customer
  creditworthiness and provide an allowance for any estimated uncollectible amounts.
  A significant change in our experience could have a material adverse impact
  on our future operating results. Please see "Item 5. Operating and Financial
  Review and Prospects-Off-Balance Sheet Arrangements."

Contingencies

Contingencies, by their nature, relate to uncertainties
  that require management to exercise judgment both in assessing the likelihood
  that a liability has been incurred as well as in estimating the amount of potential
  loss. We believe the amounts recorded and/or disclosed in our financial statements
  are based on the best estimates and judgments of management. However actual
  outcomes could differ from our estimates.

Financial Instruments

Assets and liabilities resulting from financial
  instruments, except for such instruments held to maturity, are recorded on the
  balance sheet at fair value. The financial instruments held to maturity are
  valued at their acquisition cost. The effects of changes in the valuation of
  the financial instruments not held to maturity, including their cost and yield,
  are recorded in the corresponding year in the statement of operations.

Financial instruments for hedging purposes are valued
  using the same criteria of valuation of the underlying assets or liabilities
  hedged, and the effect of such valuation is recognized in net income, net of
  costs, expenses or income from the assets or liabilities whose risks are being
  hedged.

For U.S. GAAP purposes, fair values of financial
  instruments are estimated using available market information or other appropriate
  valuation methodologies that require considerable judgment in interpreting and
  developing estimates. The use of different market assumptions and/or estimation
  methodologies may have a material adverse effect on the estimated fair value
  amounts. Please see "Item 11. Quantitative and Qualitative Disclosures
  About Market Risk."

Seniority premiums and retirement plans

Seniority premiums and pension plans for all personnel
  are considered as costs in the periods in which services are rendered. Periodic
  costs are calculated in accordance with Bulletin D-3 issued by the IMCP and
  the actuarial computations are made by an independent actuary, utilizing extensive
  estimates of salaries, inflation, investment returns, mortality, turnover and
  discount rates well into the future. While we have made such estimates based
  on published tables and current market conditions, significant variance in actual
  experience compared to our estimates could have a material adverse effect on
  our future operating results and financial condition.

Environmental Obligations

Our operations are subject to the environmental
  laws and regulations of the jurisdictions in which we conduct our operations.
  Our environmental department monitors the status of environmental exposures
  and compliance with regulations through various means, one being an environmental
  auditing program. An environmental reserve is recorded to cover the costs of
  expected environmental obligations when we become aware that an expenditure
  will be required. We estimate the cost for the environmental obligations based
  on historical experience, results of monitoring and the known extent of exposure.
  We believe we are in substantial compliance with Mexican and foreign environmental
  laws applicable to our operations. We do not believe that continued compliance
  with these environmental laws will have a material adverse effect on our financial
  condition or results of operations. However, a significant change in laws, the
  discovery of previously unknown contamination and other factors beyond our control
  could result in expenditures that are materially greater than currently estimated.

Impairment of Long-lived Assets

Long-lived assets, which include property, goodwill,
  intangible assets and certain other assets, comprise a significant portion of
  our total assets. We make judgments and estimate the carrying value of these
  assets, including amounts to be capitalized, depreciation and amortization methods
  and useful lives. Additionally, the carrying value of these assets are periodically
  reviewed for impairment or whenever events or circumstances indicate that the
  carrying amounts may not be recoverable. An impairment loss is recorded in the
  period in which it is determined that the carrying amount is not recoverable.
  This requires us to make long-term forecasts of our future revenues and costs
  relating to the assets under review. These forecasts require assumptions about
  demand for our products, future market conditions and technological developments.
  Significant and unanticipated changes to these assumptions could result in a
  determination that the value of these long-lived assets has been impaired in
  a future period.

New Accounting Pronouncements

Mexican GAAP

Liabilities, Reserves, Contingent Assets and
  Liabilities and Obligations

In December 2002 the IMCP issued Bulletin C-9 which
  sets forth the accounting standards under Mexican GAAP that are to be applied
  with respect to liabilities, reserves, contingent assets and liabilities and
  other obligations. Bulletin C-9 applies to all financial statements prepared
  under Mexican GAAP relating to periods beginning on or after January 1, 2003.
  Bulletin C-9 supersedes former Bulletin C-9 and Bulletin C-12 relating to liabilities
  and contingencies and obligations, respectively. Bulletin C-9, in addition to
  clarifying the guidelines to be used when accounting for liabilities, reserves,
  contingent assets and liabilities and other obligations, establishes new standards
  for the use of present value techniques to measure liabilities and for the accounting
  of early settlement of obligations. We do not anticipate that Bulletin C-9 will
  have a significant impact on our financial position or our results of operations.

Intangible Assets

In January 2002, the IMCP issued Bulletin C-8 which
  requires, among other things, that project development costs be capitalized
  if they fulfill the criteria to be recognized as an asset. In particular, any
  start-up expenses relating to project development must be recorded as an expense
  unless they meet such criteria. Bulletin C-8 also requires that all intangible
  assets be individually identified to the extent practicable in order to reduce
  amounts allocated to goodwill in connection with business combinations. Bulletin
  C-8 supersedes former Bulletin C-8 and applies to all financial statements prepared
  under Mexican GAAP relating to periods beginning on or after January 1, 2003,
  except that intangible assets acquired prior to January 1, 2003 may be accounted
  for in accordance with former Bulletin C-8. We do not anticipate that Bulletin
  C-8 will have a significant impact on our financial position or our results
  of operations.

Impairment in the Value of Long-lived Assets
  and their Disposition

In March 2003, the IMCP issued Bulletin C-15 which
  set forth new principles to be used for the evaluation and recognition of impairment
  in the value of long-lived assets and the reversal of the recognition of impairment.
  In particular, the calculation of the amount of impairment in the value of a
  long-lived asset requires the determination of the recoverable value, which
  is now defined as the greater of the net selling price of a cash generating
  unit and its value in use or the net present value of future cash flows. Bulletin
  C-15 also sets forth examples of indicators of possible impairment in the value
  of tangible and intangible long-lived assets then in use, including goodwill.
  Bulletin C-15 applies to all financial statements prepared under Mexican GAAP
  relating to periods beginning on or after January 1, 2004. We do not anticipate
  that Bulletin C-15 will have a significant impact on our financial position
  or our results of operations.

Segment Financial Information

In April 2003, the IMCP issued Bulletin B-5 which
  requires, among other things, that the segment financial information reported
  under Mexican GAAP be the same segment information that is used by management
  in taking managerial decisions. Bulletin B-5 technically supersedes International
  Accounting Standard 14, which we refer to as "IAS 14," although, in fact, Bulletin
  B-5 requires substantially the same information as IAS 14, other than the requirement
  described in the foregoing sentence. Bulletin B-5 applies to all financial statements
  prepared under Mexican GAAP relating to periods beginning on or after January
  1, 2003. We do not anticipate that Bulletin B-5 will have a significant impact
  on our financial position or our results of operations.

Financial Instruments with Characteristics of
  both Liabilities and Equity

In April 2003, the IMCP issued Bulletin C-12 which
  sets forth the criteria to be used as in determining how to classify and record
  the debt and equity components of complex financial instruments. Bulletin C-12
  applies to all financial statements prepared under Mexican GAAP relating to
  periods beginning on or after January 1, 2004. We do not anticipate that Bulletin
  C-12 will have a significant impact on our financial position or our results
  of operations.

U.S. GAAP

Accounting of Asset Retirement Obligations

In June 2001, the Financial Accounting Standards
  Board, which we refer to as "FASB," issued SFAS No. 143 which discusses financial
  accounting and reporting obligations associated with the retirement of tangible
  long-lived assets and the associated asset retirement costs. SFAS No. 143 applies
  to legal obligations associated with the retirement of long-lived assets that
  result from the acquisition, construction, development or the normal operation
  of a long-lived asset and it requires that the fair value of a liability for
  an asset retirement obligation be recognized in the year in which it is incurred
  if a reasonable estimate of fair value can be made. The associated asset retirement
  costs must be capitalized as part of the carrying amount of the long-lived asset.
  SFAS applies to all financial statements prepared under or reconciled to U.S.
  GAAP relating to periods beginning on or after January 1, 2003. Although we
  are still evaluating the effect of SFAS No. 143 on us, we do not anticipate
  that it will have a significant impact on our financial position or our results
  of operations.

Rescission of FASB Statements No. 4, 44, and
  64; Amendment to FASB Statement No. 13

In April 2002, the FASB issued SFAS No. 145 which
  requires that gains and losses from extinguishment of debt be classified as
  extraordinary items only if they meet the criteria set forth in APB Opinion
  30. SFAS No. 145 also amended SFAS No. 13 to eliminate inconsistencies between
  the required accounting for sale-leaseback transactions and the required accounting
  for certain lease modifications that have economic effects that are similar
  to sale-leaseback transactions. SFAS No. 145 applies to all financial statements
  prepared under or reconciled to U.S. GAAP relating to periods beginning on or
  after May 15, 2002, except that leases entered into before May 15, 2002 need
  not be accounted for in accordance with SFAS No. 145. Although we are still
  evaluating the effect of SFAS No. 145 on us, we do not anticipate that it will
  have a significant impact on our financial position or our results of operations.

Exit or Disposal Activities

In June 2002, the FASB issued SFAS No. 146 which
  requires that costs associated with exit or disposal activities be recorded
  at their fair value at the time the liability is incurred. Under previous guidance,
  certain exit costs were accrued at the time management committed to an exit
  plan, which is generally before an actual liability is incurred. SFAS No. 146
  applies to exit and disposal activities initiated after December 31, 2002. Although
  we are still evaluating the effect of SFAS No. 146 on us, we do not anticipate
  that it will have a significant impact on our financial position or our results
  of operations.

Disclosure Requirements for Guarantees

In November 2002, the FASB issued FASB Interpretation
  No. 45 which requires that guarantors recognize, at the time of the issuance
  of certain guarantees, a liability for the fair value of the obligation undertaken
  when issuing such guarantees. FASB Interpretation No. 45 also requires additional
  disclosure about the guarantor's obligations under certain guarantees it has
  issued. The initial recognition and measurement provisions of this interpretation
  are applicable to guarantees issued or modified after December 31, 2002 and
  the disclosure requirements apply to all financial statements prepared under
  or reconciled to U.S. GAAP relating to periods ending on or after January December
  15, 2002. We do not anticipate that this interpretation will have a significant
  impact on our financial position or our results of operations.

Consolidation of Variable Interest Entities

In January 2003, the FASB issued FASB Interpretation
  No. 46 "Consolidation of Variable Interest Entities." This interpretation
  of Accounting Research Bulletin No. 51 "Consolidated Financial Statements"
  addresses the consolidation of variable interest entities by business enterprises.
  Under current practice, if an entity controls another through the ownership
  of voting interests of such entity, the controlled entity should be included
  in the controlling entity's consolidated financial statements. FASB Interpretation
  No. 46 defines "variable interests" and requires existing unconsolidated
  variable interest entities to be consolidated by their primary beneficiaries
  if the entities do not effectively disperse the risk among the parties involved.
  This interpretation applies immediately to variable interest entities created
  after January 31, 2003 and to variable interest entities in which an enterprise
  obtains an interest after that date. It applies in the first fiscal year or
  interim period beginning after June 15, 2003 to variable interest entities in
  which an enterprise holds a variable interest that it acquired before February
  1, 2003. We do not anticipate that it will have a significant impact on our
  financial position or our results of operations.

Derivative Instruments

In April 2003, the FASB issued SFAS No. 149 which
  amends and clarifies financial accounting and reporting standards for derivative
  instruments, including certain derivative instruments embedded in other contracts
  and for hedging activities under SFAS No. 133. These changes require that contracts
  with comparable characteristics be accounted for similarly. The new standard
  will applies for contracts entered into or modified after June 30, 2003, except
  for hedging relationships designated after June 30, 2003 and as stated below,
  and will be applied prospectively. The provisions of SFAS No. 149 that relate
  to SFAS No. 133 that have been effective for fiscal quarters that began prior
  to June 15, 2003 will continue to be applied in accordance with their respective
  effective dates. Although we are still evaluating the effect of SFAS No. 149
  on us, we do not anticipate that it will have a significant impact on our financial
  position or our results of operations.

Financial Instruments with Characteristics of
  both Liabilities and Equity

In May 2003, the FASB issued SFAS No. 150 which
  aims to eliminate diversity in the practice by requiring that the following
  three types of financial instruments be reported as liabilities by their issuers:
  (i) mandatory redeemable instruments, (ii) forward contracts, written put options
  and other financial instruments not in the form of shares that either obligate
  or may obligate the issuer to settle its obligation for cash or by transferring
  other assets and (iii) certain other financial instruments that include obligations.
  SFAS No. 150 applies to all financial instruments issued or whose terms are
  modified after May 31, 2003 and to pre-existing instruments effective as of
  the beginning of the first interim period of the issuer beginning after June
  15, 2003. Although we are still evaluating the effect of SFAS No. 150 on us,
  we do not anticipate that it will have a significant impact on our financial
  position or our results of operations.



OFF-BALANCE SHEET ARRANGEMENTS

Account Receivable Factoring Programs

In order to diversify our sources of financing,
  we have implemented certain accounts receivable factoring programs. We have
  implemented accounts receivable factoring programs for our Glass Containers
  business unit, Vitro America and Cristalglass. As of December 31, 2002, we had
  utilized $53 million out of the $75 million available in the Glass Containers
  business unit's program, $37 million out of the $55 million available in Vitro
  America's program, and $9 million out of the $10 million available in Cristalglass'
  program. Through these programs, in 2002, we factored approximately 30% of our
  consolidated accounts receivables and we therefore consider these factoring
  programs significant to our financial condition.

In general terms, the accounts receivable factoring
  programs, in addition to providing an alternate source of financing, offer other
  advantages to us, both in terms of cost and in non-financial value added commitments
  that promote the sale of certain of our consumer products. When the sale of
  receivables resulted in a true sale pursuant to Mexican and U.S. GAAP, we treated
  such sales as off-balance-sheet transactions. As of December 31, 2001 and 2002,
  respectively, we had an aggregate of $93 million and $99 million in off-balance-sheet
  financing related to these accounts receivables factoring programs. We have
  the obligation to pay uncollectible receivables in the case of non-compliance
  of clients.

On March 19, 2003, GECC assigned Vitro America's
  accounts receivable factoring program to us in exchange for $38 million in cash.
  Subsequently, we assigned such accounts receivable factoring program to one
  of our subsidiaries. The liquidity that the assigned accounts receivable factoring
  program provided to Vitro America has been replaced by liquidity provided by
  our subsidiary that was the assignee of the accounts receivable factoring program.

On June 27, 2003, Vitro America entered into a $40 million accounts receivable securitization facility with Wachovia
Bank.  The facility contains certain customary restrictive covenants.  As of June 27, 2003, we had not sold any accounts receivable to the facility.  We entered into the accounts receivable securitization
facility to replace the accounts receivable factoring program that GECC assigned to us on March 19, 2003.



LIQUIDITY AND CAPITAL RESOURCES

We operate in capital-intensive industries and require
  ongoing investments to update our assets and technology. Over the past years,
  funds for those investments and for working capital needs joint venture transactions,
  acquisitions and dividends have been provided by a combination of cash generated
  from operations, short and long-term debt and, to a lesser extent, divestitures.

Under Mexican GAAP, our consolidated statement of
  changes in financial position identifies the generation and application of resources
  representing differences between beginning and ending financial statement balances
  in constant pesos. Thus, the changes shown in the statements of changes in financial
  position included in our consolidated financial statements do not necessarily
  represent cash flow activities. Accordingly, the discussion of cash flows presented
  in the following paragraphs are based on the reconciliation to U.S. GAAP included
  in note 21 to our audited consolidated financial statements.

As of May 31, 2003, we had cash and cash equivalents
  totaling Ps. 1,177 million ($113 million). Our policy is to invest available
  cash in short-term instruments issued by Mexican and international banks and
  securities issued by the governments of Mexico and the United States. We obtain
  short-term financing from various Mexican and international banks. Short-term
  financing consists of lines of credit denominated in several currencies including
  pesos and U.S. dollars. Please see "-Description of Our Indebtedness Short
  Term Debt" for a description of our short-term financing. As of May 31,
  2003, outstanding short-term debt (including the current portion of long-term
  debt) totaled Ps. 5,248 million ($508 million), approximately 86% of which was
  U.S. dollar-denominated. As of May 31, 2003, our outstanding consolidated long-term
  debt (excluding the current portion thereof) totaled Ps. 10,151 million ($982
  million), 37% of which was U.S. dollar-denominated.

|Maturity            | Million Pesos | Million U.S. dollars | Denominated in pesos | Average interest rate | Denominated in U.S. dollars | Average interest rate
|------------------- | ------------- | -------------------- | -------------------- | --------------------- | --------------------------- | ---------------------
|2003                | Ps. 4,130     | Ps. 400              | Ps. 385              | 9.45%                 | Ps. 3,744                   | 4.91%                
|2004                | 1,984         | 192                  | 604                  | 9.59                  | 1,380                       | 5.22                 
|2005                | 1,452         | 141                  | 210                  | 12.25                 | 1,243                       | 5.51                 
|2006 and thereafter | 7,833         | 758                  | 5,955                | 10.37                 | 1,878                       | 8.69                 
|Total               | Ps. 15,399    | Ps. 1,490            | Ps. 7,154            | 10.33%                | Ps. 8,245                   | 6.29%                

Our working capital increased Ps. 788 million during
  2002. This increase was principally due to an increase in our inventories, trade
  receivables and other current assets and liabilities. Our inventories increased
  by Ps. 503 million due to (i) the reduction of sales volume in the liquor and
  wine segment of our Glass Containers business unit and (ii) the build-up of
  finished inventory of flat glass in anticipation of the refurbishment of one
  of our flat glass facilities during the first half of 2003. Our trade receivables
  increased Ps. 322 million due to the Ps. 104 million escrow relating to the
  sale of our former Acros Whirlpool business unit in July 2002 to Whirlpool and
  the advance payment of Ps. 208 million received from one of our clients of our
  Glass Containers business unit during 2001, which was extinguished during 2002.
  During 2002 our working capital investment was also impacted by a decrease in
  our accounts payable to suppliers and other short-term liabilities of Ps. 204
  million. This decrease was a result of our efforts to return to historic levels
  in our accounts payables, which required us to reduce our accounts payable by
  Ps. 338 million. In addition, during 2002, we made aggregate pension plan funding
  payments of Ps. 167 million.

The funds that we anticipate will be generated from
  continued operations, new and refinanced indebtedness and divestitures will
  be sufficient to meet our currently expected working capital requirements and
  investment activities.

Continued Operations

During 2002, net cash generated from continuing
  operations was Ps. 1,189 million, a decrease of 48.6% compared to the Ps. 2,313
  million of net cash generated from continuing operations in 2001. This decrease
  was primarily due to a Ps. 788 million increase in net working capital in 2002
  relative to 2001.

The Ps. 1,189 million of net cash generated from
  continuing operations in 2002 were used to partially fund (i) the Ps. 985 million
  in capital expenditures incurred in 2002, (ii) the Ps. 490 million employed
  in financing activities, including the payment of a Ps. 332 million dividend
  and (iii) the Ps. 1,251 increase in our cash balance.

Restrictions on Dividend Payments

Pursuant to article 20 of the Mexican Ley General
  de Sociedades Mercantiles, which we refer to as the "Mexican General Law
  of Corporations," 5% of the annual net income of Mexican corporations such
  as us and our Mexican subsidiaries must be set aside to create or increase a
  mandatory legal reserve until it amounts to not less than 20% of such corporation's
  outstanding equity capital. Thereafter, excess cash may be distributed as dividends
  to the shareholders, unless they agree otherwise at a general shareholders'
  meeting.

In addition to the foregoing restriction, the majority
  of our joint venture agreements require the consent of our joint venture partners
  for certain significant operating and management decisions, including the payment
  of dividends. For example, in our joint venture with Libbey, whether dividends
  will be paid and the amount of dividends to be paid are decisions determined
  by the vote of the majority of the shareholders represented in the Board of
  Directors, and such majority shall consist of at least one director appointed
  by us and one director appointed by Libbey. In our joint venture with Visteon,
  whether dividends will be paid and the amount of dividends to be paid are decisions
  determined by the vote of the majority of shares of common stock of Vitro Flex
  present at an ordinary shareholders' meeting, provided, however, that if less
  than 80% of earnings are to be distributed as dividends, then the approval by
  at least 65% of the Vitro Flex's outstanding shares is required. In the case
  of our joint venture with Pilkington, whether dividends will be paid and the
  amount of dividends to be paid are decisions determined by a vote of the majority
  of the shareholders. In our joint ventures with Solutia, AFG Industries and
  Rexam, approval by a majority of the shareholders is required in order to distribute
  dividends.

Description of our Indebtedness

Included below is a description of certain of the
  debt agreements and instruments governing our indebtedness. However, our financings
  also include off-balance financing transactions and derivative transactions
  that are not described in this section. Please see "Item 5. Operating and Financial
  Review and Prospects-Off-Balance Sheet Arrangements" for a description of such
  financing transactions and "Item 11. Quantitative and Qualitative Disclosures
  About Market Risk" for a description of such derivative transactions.

Long-Term Debt

As of December 31, 2002 and May 31, 2003, we had
  approximately Ps. 12,015 million ($1,150 million), and Ps. 12,282 million ($1,188
  million), respectively, of long-term debt, including the current portion of
  long-term debt.

The following description of certain of our debt
  agreements and instruments is limited to those agreements pursuant to which
  more than $20 million (or its equivalent in pesos) of long-term debt was outstanding
  as of May 31, 2003 or where the relevant debt is publicly listed or quoted.

|Facility                                                                                                                                                                        | Outstanding
      Principal Amount as of May 31, 2003                                                       |                                                                                                          | Interest Rate and Payment Dates                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Maturity/
      Amortization of Principal Amount
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------
|California
      Commerce Bank-Flat Glass Credit Agreement Borrower: Vitro Flotado, S.A de C.V. Guarantor: Vitro Plan                                                           | $
        30 million                                                                                        |                                                                                                          | Rate: 
        LIBOR plus 2.32% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                       | December
        5, 2003                        
|Interest
        Payment Dates: Semi-annually, beginning on June 5,
        2001.                                                                                              
|2000-1
      peso-denominated Medium-Term Notes Issuer: Vitro                                                                                                                   | Ps.
        310 million
      ($
        29 million)                                                        |                                                                                                          | Rate: 
        Determined every 196 days (every interest rate period includes 7 interest
        payment dates).  For the first 196-day period, 180-day CETES rate
        plus 2.4% per annum.  For the following 196-day periods, 180-day
        CETES rate plus 2.4% per annum, plus or minus the difference between (x)
        28-day CETES rate issued during the previous 196-day period plus 3.5%
        and (y) the rate established for the previous 196-day period. | February
        26, 2004                       
|                                                                                                                                                                                | Interest
        Payment Dates:  Interest is paid every 28 days
        beginning on December 7, 2000.     
|Bank
      of Montreal-Glassware Credit Facility Borrower: Vitrocrisa                                                                                                           | $
        23 million                                                                                        |                                                                                                          | Rate: 
        LIBOR plus 1.625%, 1.875% and 2.25% per annum for the first, second and
        third year, respectively.                                                                                                                                                                                                                                                                                                                                                         | January 5,
        2004                         
|Interest
        Payment Dates:  Quarterly beginning on April
        30, 2001.                                                                                                
|Banamex-Glassware
      Credit Agreement Borrower: Vitrocrisa Conditional Guarantor: Vitro                                                                                      | $
        30 million                                                                                        |                                                                                                          | Rate: 
        To be negotiated every 180 days.                                                                                                                                                                                                                                                                                                                                                                                                                                  | August
        31, 2004                         
|Interest
        Payment Dates:  Semi-annually beginning on February 19,
        1999.                                                                                         
|1999-3
      UDI-Medium-Term NotesIssuer: Vitro                                                                                                                                 | UDI
        50 million
      (Ps. 148 million or $ 14 million)                                              |                                                                                                          | Rate: 
        175 basis points above the 5-year UDI-denominated government bond rate
        per annum.                                                                                                                                                                                                                                                                                                                                                                         | October
        12, 2004                        
|                                                                                                                                                                                | Interest
        Payment Dates:  Quarterly beginning on January
        12, 2000.                          
|HSBC-Vitro
      Credit AgreementBorrower:  Vitro                                                                                                                               | $
        25 million                                                                                        |                                                                                                          | Rate: 
        LIBOR + 3%                                                                                                                                                                                                                                                                                                                                                                                                                                                        | December 23,
        2004                       
|Amortization
        and Interest Payment Dates:  Bimonthly or quarterly
        beginning on July 1, 2003                                                                     
|1991-1
      UDI-Medium-Term Notes Issuer:  Vitro                                                                                                                               | UDI
        200 million
      (Ps.
        578 million or $ 56 million)                                     |                                                                                                          | Rate: 
        9.0% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                   | June
        7, 2006                            
|                                                                                                                                                                                | Interest
        Payment Dates:  Quarterly beginning on September
        7, 1999.                         
|Bank
      of America-Vitro America Credit AgreementBorrower:  Vitro AmericaGuarantor:  VVP Holdings, Inc.                                                                      | $ 25 million                                                                                                |                                                                                                          | No loans are outstanding under this agreement.  An $11 million letter
        of credit has been issued.                                                                                                                                                                                                                                                                                                                                                                         | June 26, 2006                                   
|HSBC/SSB-Glass Containers Credit Facility Borrower:  Compania Vidriera, S.A. de C.V. Guarantors:  Vitro Packaging, VENA and Vitro                                               | $ 135 million                                                                                               |                                                                                                          | Rate:  LIBOR plus 2.25%, decreasing upon meeting
        debt ratios                                                                                                                                                                                                                                                                                                                                                                                                             | August 21, 2006                                 
|Amortization and Interest Payment Dates:  Quarterly
        beginning on November 14, 2001.                                                                                    
|Banamex-Viplamex
      Credit Agreements Borrower:  Vidrio Plano de Mexico, S.A. de C.V. Guarantor:  Vitro Plan                                                                 | $
        27 million                                                                                        |                                                                                                          | Rate: 
        LIBOR plus 2.26% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                       | September
        4, 2006                       
|Amortization
        and Interest Payment Dates:  Semi-annually beginning
        on March 25, 1997.                                                                           
|1999-2
      UDI-Medium-Term Notes Issuer: Vitro                                                                                                                                | UDI
        155 million                                                                                     |                                                                                                          | Rate: 
        9.90% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                  | October
        12, 2006                        
|(Ps.
        449 million or $ 43 million)                                                                                                                                       |                                                                                                             | Interest
        Payment Dates:  Quarterly beginning on January
        12, 2000.                       
|Flat
      Glass Credit Facility Borrowers:  Vitro Plan, VVP Holding Corp., VVP Syndication Inc.
      Guarantors:  All wholly-owned  material subsidiaries of Vitro
      Plan | Tranche
        A:                                                                                          |                                                                                                          | Rate
        Tranche A:                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Tranche
        A:                              
|$
        80 million                                                                                                                                                            |                                                                                                             | Year
        1:  LIBOR + 1.875%                                                                          | March
        27, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                |                                                                                                             | Year
        2:  LIBOR + 2.000%                                                                         
|                                                                                                                                                                                |                                                                                                             | Year
        3:  LIBOR + 2.125%                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                |                                                                                                             | Amortization
        and Interest Payment Dates:  Semi-annually beginning
        on September 27, 2003. |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                |                                                                                                             | Rate
        Tranche B:                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                |                                                                                                             | Year
        1:  LIBOR + 2.250%                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Tranche
        B:                                                                                                                                                              |                                                                                                             | Year
        2:  LIBOR + 2.375%                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                | $
        41 million                                                                                        |                                                                                                          | Year
        3:  LIBOR + 2.500%                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Tranche
        B:                              
|                                                                                                                                                                                |                                                                                                             |                                                                                                          | Year
        4:  LIBOR + 2.625%                                                                                                                                                                                                                                                                                                                                                                                                                                                  | March
        27, 2008                          
|                                                                                                                                                                                |                                                                                                             |                                                                                                          | Year
        5:  LIBOR + 2.750%                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                |                                                                                                             |                                                                                                          | Amortization
        and Interest Payment Dates:  Semi-annually beginning
        on September 27, 2004.                                                                                                                                                                                                                                                                                                                                                                         |                                                 
|                                                                                                                                                                                |                                                                                                             |                                                                                                          | Rate
        Tranche C:                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                 
|                                                                                                                                                                                |                                                                                                             |                                                                                                          | Year
        1:  TIIE 28d + 2.000%                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                 
|                                                                                                                                                                                |                                                                                                             |                                                                                                          | Year
        2:  TIIE 28d + 2.125%                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                 
|                                                                                                                                                                                |                                                                                                             |                                                                                                          | Year
        3:  TIIE 28d + 2.250%                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                 
|                                                                                                                                                                                | Tranche
        C:                                                                                          |                                                                                                          | Year
        4:  TIIE 28d + 2.375%                                                                                                                                                                                                                                                                                                                                                                                                                                               | Tranche
        C:                              
|                                                                                                                                                                                | Ps.
        628 million  ($ 61 million)                                                                     |                                                                                                          | Amortization and Interest Payment Dates:  Semi-annually
        beginning on September 27, 2003.                                                                                                                                                                                                                                                                                                                                                                                 | March
        27, 2007                          
|11
      3/8% Vicap Notes Issuer:  SOFIVSA Guarantor:  Vitro                                                                                                                    | $
        233 million                                                                                       |                                                                                                          | Rate: 
        11 3/8% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                | May
        15, 2007                            
|Interest
        Rate Payment Dates:  Semi-annually on May 15
        and November 15 of each year.                                                                            
|2002
      Peso-Denominated Certificados Bursatiles
      Issuer: Vitro                                                                                                         | Ps.
        360 million
      ($
        35 million)                                                        |                                                                                                          | Rate: 
        CETES 182d + 3.25 % per annum                                                                                                                                                                                                                                                                                                                                                                                                                                     | October
        2, 2008                         
|                                                                                                                                                                                | Interest
        Rate Payment Dates:  Interest is paid every 28
        days beginning on October 10, 2002.
|2002
      Peso-Denominated Certificados Bursatiles
      Issuer: Vitro                                                                                                         | Ps.
        1 billion
      ($
        97 million)                                                          |                                                                                                          | Rate: 
        CETES 182d + 3.25 % per annum                                                                                                                                                                                                                                                                                                                                                                                                                                     | December
        22, 2008                       
|                                                                                                                                                                                | Interest
        Rate Payment Dates: Interest is paid every 28 days
        beginning on December 30, 2002.
|2003
      Peso-Denominated Certificados Bursatiles
      Issuer: Vitro                                                                                                         | Ps.
        1.14 billion
      ($
        110 million)                                                      |                                                                                                          | Rate: 
        CETES 182d + 3.25 % per annum                                                                                                                                                                                                                                                                                                                                                                                                                                     | February
        5, 2009                        
|                                                                                                                                                                                | Interest
        Payment Dates:  Interest is paid every 28 days
        beginning on February 13, 2003.    
|11
      1/2% Senior Notes due 2009 Issuer: Vitro                                                                                                                               | $
        66 million                                                                                        |                                                                                                          | Rate: 
        11 1/2% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                | April
        30, 2009                          
|Interest
        Payment Dates:  Semi-annually on April 30 and
        October 30 of each year.                                                                                

Below is a summary of the terms of the foregoing
  facilities or securities.

California Commerce Bank-Flat Glass Credit Agreement

On November 24, 2000, Vitro Flotado, S.A. de C.V.
  entered into a credit agreement with California Commerce Bank pursuant to which
  it borrowed an aggregate amount of $30 million. The loan made under this agreement
  bears an annual floating interest rate of LIBOR plus 2.32%. The principal on
  this loan will become due on December 5, 2003. The loan is guaranteed by Vitro
  Plan and contains certain customary restrictive covenants including restrictions
  on the ability of Vitro Flotado to (i) enter into certain mergers, consolidations
  and asset sales, (ii) grant certain liens on its assets and (iii) make investments
  in, or purchases of, other enterprises. Provided we meet certain conditions,
  our ability to pay dividends is unrestricted by this credit agreement. During
  2001 and 2002, we met such conditions.

HSBC-Vitro Credit Agreement

On May 14, 2002, Vitro entered into a credit agreement
  with HSBC Bank USA pursuant to which it borrowed $25 million. The loan made
  under this agreement bears an annual floating interest rate of LIBOR plus 3%.
  The final amortization of the loan will become due on December 23, 2004. The
  loan is guaranteed by Fomento Inmobilario y de la Construcción, S.A.
  de C.V. and Vitro Corporativo, S.A. de C.V., and is secured by mortgages on
  our corporate headquarters' facilities. The credit agreement contains certain
  customary restrictive covenants. Provided we meet certain conditions, our ability
  to pay dividends is unrestricted by this credit agreement. During 2002, we met
  such conditions.

2000-1 Peso-Denominated Medium-Term Notes

On November 9, 2000, Vitro issued medium-term notes
  with an aggregate principal amount of Ps. 310 million. At issuance, Fitch Mexico
  rated the medium term notes at MAA-. These medium-term notes bear fixed annual
  interest rate which is determined every 196 days as follows: (i) for the first
  196-day period, the 180-day CETES rate plus 2.4% and (ii) for all subsequent
  196-day periods, the 180-day CETES rate plus 2.4% plus or minus the difference
  between (x) the 28-day CETES rate issued during the previous 196-day period
  plus 3.5% and (y) the rate established for the previous 196-day period. These
  notes mature on February 26, 2004, at which point the entire aggregate principal
  amount will become due. The medium-term notes are senior, unsecured obligations
  of Vitro and do not impose any restrictive covenants on us.

Bank of Montreal-Glassware Credit Agreement

On January 5, 2001, Vitrocrisa entered into a credit
  agreement with Bank of Montreal and certain other lenders which provides for
  loans of up to $30 million. As of May 31, 2003, the outstanding balance of the
  loans made under this credit agreement was approximately $23 million. The loans
  under this credit agreement bears an annual floating interest rate of LIBOR
  plus 1.625%, 1.875% and 2.25% for the first, second and third year, respectively.
  The final amortization on these loans will become due on January 5, 2004. The
  Bank of Montreal-Glassware Credit Facility requires Vitrocrisa to maintain compliance
  with certain financial covenants, including, among others, an interest coverage
  ratio, a leverage ratio and a minimum net worth. The Bank of Montreal-Glassware
  Syndicated Facility also contains certain customary restrictive covenants including
  restrictions on the ability of Vitrocrisa to (i) enter into certain asset sales,
  mergers or consolidations and (ii) grant certain liens on its assets. Provided
  we meet certain financial ratios and certain other conditions, our ability to
  pay dividends is unrestricted by this credit agreement. During 2001 and 2002,
  we met such financial ratios and conditions.

Banamex-Glassware Credit Facility

On August 19, 1998, Vitrocrisa entered into a credit
  agreement with Banamex pursuant to which it borrowed $30 million. The loan under
  this agreement bears the annual interest rate that is negotiated between the
  parties for the 180-day period following each date that is an integer multiple
  of 180 days after the date of the credit agreement's execution. The principal
  on this loan will become due on August 31, 2004. This loan is conditionally
  guaranteed by Vitro. The Banamex-Glassware Credit Facility requires Vitrocrisa
  to maintain compliance with certain financial covenants, including, among others,
  an interest coverage ratio and a leverage ratio. It also contains certain customary
  restrictive covenants including restrictions on the ability of Vitrocrisa to
  (i) enter into certain mergers, consolidations and asset sales and (ii) grant
  certain liens on its assets. Provided we meet certain financial ratios and certain
  other conditions, our ability to pay dividends is unrestricted by this credit
  agreement. During 2001 and 2002, we met such financial ratios and conditions.

1999 UDI-Medium-Term Notes

On October 12, 1999, we issued medium-term notes
  with an aggregate principal amount of UDI 50 million. The medium-term notes
  were issued under a single financing program, which was approved by the CNBV.
  At issuance, Fitch Mexico rated the medium term notes at AA-(mex). The medium-term
  notes bear an annual floating interest rate of 175 basis points over the 5-year
  UDI-denominated government bond rate and mature on October 12, 2004, at which
  point the entire aggregate principal amount will become due. The medium-term
  notes are senior unsecured obligations of Vitro and do not impose any restrictive
  covenants on us. On January 25, 2001, we entered into a swap agreement which
  had the effect of converting our payment obligations in UDIs under the medium-term
  notes into payment obligations in dollars. In May 2002, we entered into a swap
  agreement which had the effect of converting our payment obligations in dollars
  under the foregoing swap agreement into payment obligations in pesos.

On June 7, 1999, we issued medium-term notes with
  an aggregate principal amount of UDI 200 million. The medium-term notes were
  issued under a single financing program, which was approved by the CNBV. At
  issuance, Fitch Mexico rated the medium-term notes at AA-(mex). The medium-term
  notes bear an annual floating interest rate of 175 basis points over the 5-year
  UDI-denominated government bond rate and mature on June 7, 2006, at which point
  the entire aggregate principal amount will become due. The medium-term notes
  are senior unsecured obligations of Vitro and do not impose any restrictive
  covenants on us. On January 25, 2001, we entered into a swap agreement which
  had the effect of converting (i) our payment obligations in UDIs under the medium-term
  notes into payment obligations in dollars and (ii) the medium-term notes' floating
  interest rate into a 9.0% fixed interest rate. In May 2002, we entered into
  a swap agreement which had the effect of converting our payment obligations
  in dollars under the foregoing swap agreement into payment obligations in pesos.

On October 12, 1999, we issued medium-term notes
  with an aggregate principal amount of UDI 155 million. The medium-term notes
  were issued under a single financing program, which was approved by the CNBV.
  At issuance, Fitch Mexico rated the medium-term notes at AA-(mex). The medium-term
  notes bear an annual floating interest rate of 175 basis points over the 5-year
  UDI-denominated government bond rate and mature on October 12, 2006, at which
  point the entire aggregate principal amount will become due. The medium-term
  notes are senior unsecured obligations of Vitro and do not impose any restrictive
  covenants on us. On January 25, 2001, we entered into a swap agreement which
  had the effect of converting (i) our payment obligations in UDIs under the medium-term
  notes into payment obligations in dollars and (ii) the medium-term notes' floating
  interest rate into a 9.9% fixed interest rate. In May 2002, we entered into
  a swap agreement which had the effect of converting our payment obligations
  in dollars under the foregoing swap agreement into payment obligations in pesos.

Bank of America-Vitro America Credit Agreement

On January 31, 1997, Vitro America entered into
  a credit agreement with the Bank of America which provided for a revolving line
  of credit for up to $50 million. As of May 31, 2003, the outstanding balance
  of the letters of credit issued under this credit agreement was $11 million,
  which was collateralized by a security interest in certain assets of Vitro America,
  including accounts receivable, inventory, equipment and intangible assets, and
  guaranteed by certain affiliates of Vitro America. The credit agreement contained
  certain customary restrictive covenants and required continued compliance with
  certain financial ratios. Provided we met certain financial ratios and certain
  other conditions, our ability to pay dividends was unrestricted by this credit
  agreement. During 2001 and 2002, we did not meet such financial ratios and conditions
  for dividend payments.

On June 27, 2003, Vitro America and the Bank of
  America amended the credit agreement to (i) reduce the maximum amount borrowable under the
  revolving line of credit to $25 million and (ii) change the maturity date of the loans
  made and letters of credit issued under this credit agreement to June 26, 2006.
  The restated credit agreement provides for (i) revolving loans at an annual
  floating interest rate equal to the Bank of America's prime rate plus a spread
  ranging between 0.25% and 1.00%, (ii) revolving loans at an annual floating
  interest rate of LIBOR plus a spread ranging between 2.00% and 2.75% and (iii)
  the issuance of standby letters of credit up to a maximum amount of $15 million.
  The credit agreement is collateralized by a security interest in certain assets
  of Vitro America, including accounts receivable, inventory, equipment, intangible
  assets and fixed assets. The amended credit agreement contains certain customary
  restrictive covenants and requires continued compliance with certain financial
  ratios. Provided we meet certain financial ratios and certain other conditions,
  our ability to pay dividends is unrestricted by this credit agreement.

HSBC/SSB-Glass Containers Credit Facility

On August 14, 2001, Compañía
  Vidriera, S.A. de C.V., which we refer to as "COVISA", entered into
  credit agreement with HSBC, Salomon Smith Barney and certain other lenders which
  provide for loans of up to $235 million. As of May 31, 2003, COVISA had an outstanding
  balance approximately $135 million under this credit agreement. The loan under
  this credit agreement bears an annual floating interest rate of LIBOR plus 2.25%.
  The final amortization on this loan will become due on August 21, 2006. The
  loan made under this credit agreement is guaranteed by Vitro, VENA and Vitro
  Packaging, and is secured with export receivables. The credit agreement contains
  certain customary restrictive covenants including restrictions on the ability
  of the COVISA (i) to incur any additional indebtedness, pursuant to a debt to
  EBITDA ratio and (ii) to enter into certain transactions with affiliates. It
  also requires continued compliance with certain financial ratios. Provided we
  meet certain financial ratios and certain other conditions, our ability to pay
  dividends is unrestricted by this credit agreement. During 2001 and 2002, we
  did not meet such financial ratios and conditions for dividend payments.

Banamex-Viplamex Credit Agreements

On September 4, 1996, Vidrio Plano de Mexico, S.A.
  de C.V, which we refer to as "Viplamex," entered into two credit agreements
  with Banamex which provide for loans of up to $62 million. As of May 31, 2003,
  Viplamex had an outstanding balance of approximately $27 million under these
  credit agreements. The loans under these credit agreements bear an annual floating
  interest rate of LIBOR plus 2.26%. The final amortization on these loans will
  become due on September 4, 2006. The amounts outstanding under the Banamex-Viplamex
  Facilities are secured by mortgages on certain assets of Viplamex. The Banamex-Viplamex
  Facilities require Vitro Plan, on a consolidated basis, to maintain compliance
  with certain financial ratios, including, among others, a leverage ratio and
  a liquidity ratio. The Banamex-Viplamex Facilities contain certain customary
  restrictive covenants including restrictions on the ability of Viplamex and
  Vitro Plan to enter into certain mergers, consolidations and asset sales. Provided
  we meet certain financial ratios and certain other conditions, our ability to
  pay dividends is unrestricted by these credit agreements. During 2001 and 2002,
  we did not meet such financial ratios and conditions for dividen payments.

Flat Glass Credit Facility

On February 26, 2003, Vitro Plan entered into a
  credit facility with Comerica Bank, Citibank and certain other lenders pursuant
  to which it borrowed an aggregate amount of $182 million. The credit facility
  includes (i) an approximately $80 million, 3-year term loan with an annual floating
  interest rate equal to LIBOR plus a spread ranging between 1.875% and 2.125%,
  (ii) an approximately Ps. 628 million, 4-year term loan with an annual floating
  interest rate equal to TIIE plus a spread ranging between 2.000% and 2.375%
  and (iii) an approximately $41 million, 5-year term loan with an annual floating
  interest rate equal to LIBOR plus a spread ranging between 2.25% and 2.75%.
  The principal of these loans will become due upon their respective maturities.
  The loans are partially collateralized and are guaranteed by all wholly-owned
  material subsidiaries of Vitro Plan. The credit facility contains a requirement
  that our debt to EBITDA ratio be below 2.75 and certain other customary restrictive
  covenants. Provided we meet certain conditions, our ability to pay dividends
  is unrestricted by this credit agreement. The proceeds from these loans were
  used to repay short term debt.

2002-2003 Peso-Denominated Certificados Bursatiles

On October 10, 2002, we established a Certificados
  Bursatiles or medium-term notes program under which we can issue up to an aggregate
  principal amount of Ps. 2.5 billion. Our program was approved by the CNBV. Each
  Certificado Bursatil issued under the program must be denominated in pesos and
  have a maturity in excess of one year. The program will expire on October 10,
  2006.

On October 10, 2002, we issued Certificados Bursatiles
  with an aggregate principal amount of Ps. 360 million. The Certificados Bursatiles
  were issued under the program referenced above. At issuance, Fitch Mexico rated
  the Certificados Bursatiles at AA-(mex). The Certificados Bursatiles bear an
  annual floating interest rate of 3.25% over the 182-day CETES and mature on
  October 2, 2008, at which point the entire aggregate principal amount will become
  due. The Certificados Bursatiles are senior unsecured obligations of Vitro and
  do not impose restrictive covenants on us. The proceeds from the Certificados
  Bursatiles were used to refinance short- and long-term debt and for working
  capital purposes.

On December 30, 2002, we issued Certificados Bursatiles
  with an aggregate principal amount of Ps. 1 billion. The Certificados Bursatiles
  were issued under the program referenced above. At issuance, Fitch Mexico rated
  the Certificados Bursatiles at AA-(mex). The Certificados Bursatiles bear an
  annual floating interest rate of 3.25% over the 182-day CETES and mature on
  December 22, 2008, at which point the entire aggregate principal amount will
  become due. The Certificados Bursatiles are senior unsecured obligations of
  Vitro and do not impose restrictive covenants on us. The proceeds from the Certificados
  Bursatiles were used to refinance short- and long-term debt and for working
  capital purposes.

On February 13, 2003, we issued Certificados Bursatiles
  with an aggregate principal amount of Ps. 1.14 billion . The Certificados Bursatiles
  were issued under the program referenced above. At issuance, Fitch Mexico rated
  the Certificados Bursatiles at AA-(mex). The Certificados Bursatiles bear an
  annual floating interest rate of 3.25% over the 182-day CETES and mature on
  February 5, 2009, at which point the entire aggregate principal amount will
  become due. The Certificados Bursatiles are senior unsecured obligations of
  Vitro and do not impose restrictive covenants on us. The proceeds from the Certificados
  Bursatiles were used to refinance short- and long-term debt and for working
  capital purposes.

Vicap Notes

On May 13, 1997, Vicap, S.A. de C. V., which we
  refer to as "Vicap," Vitro's wholly-owned subsidiary and financing vehicle in
  Mexico, completed an offering under Rule 144A of the Securities Act of 1933,
  as amended, which we refer to as the "Securities Act" in the international capital
  markets of $250 million aggregate principal amount of its 11.375% Guaranteed
  Notes due 2007, unconditionally guaranteed by Vitro, which we refer to as the
  "Old Vicap Notes."

On November 18, 1998, in accordance with the terms
  of a registration rights agreement entered into at the time of the Old Vicap
  Notes, Vicap and Vitro consummated their offer to exchange the Old Vicap Notes
  for notes of Vicap with an aggregate principal amount of $250 million that were
  registered under the Securities Act, which we refer to as the "New Vicap Notes".
  The aggregate principal amount of Old Vicap Notes that were exchanged in the
  exchange offer for New Vicap Notes was $231,825,000. Pursuant to the undertaking
  by the Vicap and Vitro in the registration statement filed in connection with
  the Exchange Offer, Vicap and Vitro removed from registration all the New Vicap
  Notes that remained unexchanged as of November 18, 1998. Accordingly, as of
  November 18, 1998 there were outstanding approximately $232 million and $18
  million, respectively, of New Vicap Notes and Old Vicap Notes, which we refer
  to the Old Vicap Notes and the New Vicap Notes collectively as the "Vicap Notes".

The terms of the New Vicap Notes are identical in
  all material respects to the terms of the Old Vicap Notes except that the New
  Vicap Notes have been registered under the Securities Act and are issued free
  of any transfer restrictions. As a consequence, the Old Vicap Notes bear legends
  restricting their transfer and, in general, may not be offered or sold, unless
  registered under the Securities Act, except pursuant to an exemption from, or
  in a transaction not subject to, the Securities Act and applicable state securities
  laws.

The Vicap Notes are debt securities issued under
  an Indenture dated as of May 1, 1997, which we refer to as the "Indenture" among
  Vicap, as issuer, Vitro, as guarantor, and The Chase Manhattan Bank, as trustee.
  The Vicap Notes and the guarantee by Vitro are general, senior unsecured obligations,
  respectively, of Vicap and Vitro and rank pari passu with senior unsecured obligations,
  respectively of Vicap and Vitro (other than obligations given preference by
  statute). However, obligations of Vitro to its creditors, including holders
  of the Vicap Notes, are effectively subordinated in right of payment to all
  direct liabilities of its subsidiaries. The Vicap Notes are redeemable at the
  option of Vicap after May 15, 2002, at defined redemption prices plus accrued
  interest on the redemption date. The Indenture contains covenants limiting,
  among other things, the ability of Vitro and/or its Restricted Subsidiaries
  (as defined therein) to incur additional indebtedness, pay dividends or make
  certain investments, engage in transactions with affiliates, engage in mergers
  and consolidations and create or permit liens.

On January 31, 2001, SOFIVSA, a wholly-owned subsidiary
  of Vitro, entered into a merger agreement with Vicap and upon consummation of
  the merger contemplated therein, SOFIVSA became the surviving entity. On the
  same date, SOFIVSA, as issuer, Vitro as guarantor, and The Chase Manhattan Bank,
  as trustee, entered into a supplemental indenture pursuant to which SOFIVSA
  expressly assumed all of the obligations of Vicap under the notes and the Indenture.
  As of the filing of this annual report, we had purchased Vicap Notes with an
  aggregate principal amount of $17.5 million.

11 1/2% Senior Notes due in 2009

On April 30, 2002, we sold $88.35 million aggregate
  principal amount of our 2009 Senior Notes to CSFBI, an affiliate of Credit Suisse
  First Boston Corporation, for net proceeds of $77.9 million. The notes bear
  a fixed annual interest rate of 11.50%. The 2009 Senior Notes are senior, unsecured
  debt securities governed by an indenture dated as of April 30, 2002 between
  Vitro, as issuer, and JPMorgan Chase Bank, as trustee. The indenture contains
  customary covenants.

A portion of the net proceeds of the sale of the
  2009 Senior Notes, in the amount of $38.8 million, was used to pay a portion
  of the principal and accrued interest of the $175 million aggregate principal
  amount 10 1/4% Guaranteed Notes due in 2002 issued by our wholly owned subsidiary
  SOFIVSA, and guaranteed by us, which matured on May 15, 2002. The remaining
  proceeds, in the amount of $39.1 million, were used to purchase 13.889% Credit
  Linked Notes issued by the CLN Issuer with an aggregate principal amount of
  $40 million. Under the terms of the 13.889% Credit Linked Notes, upon the occurrence
  of a Credit Event, which includes our bankruptcy or insolvency, noncompliance
  with the terms of our indebtedness which would permit the acceleration thereof,
  a default with respect to our indebtedness, a restructuring of our indebtedness
  or a repudiation of or moratorium with respect to payments of our indebtedness,
  whether by us or a governmental entity, the principal amount of the 13.889%
  Credit Linked Notes will be reduced pursuant to a formula based on the then
  current market price of the 113⁄8% Guaranteed Notes. As a result, if a Credit
  Event occurs and we are not able to cure such Credit Event within the applicable
  period, we may lose the entire amount that we invested in the 13.889% Credit
  Linked Notes. As long as a Credit Event has not occurred, the CLN Issuer is
  generally required to redeem (i) the 13.889% Credit Linked Notes in four annual
  installments, beginning on May 7, 2003 and (ii) a pro rata portion of the 13.889%
  Credit Linked Notes at the time any portion of the 2009 Senior Notes is sold
  by CSFBI.

Concurrently with the issuance of the 2009 Senior
  Notes and the purchase of the 13.889% Credit Linked Notes, we entered into a
  swap agreement with CSFBI pursuant to which we agreed to make certain payments
  on April 30 of each year, beginning on April 30, 2003 and ending on April 30,
  2006, to CSFBI calculated with respect to an original notional amount of $80
  million if a proportional part of the 2009 Senior Notes have not been sold by
  CSFBI at that time and the market price of the 11?% Guaranteed Notes has declined
  from an initial benchmark price which is based on the price paid by CSFBI for
  the 2009 Senior Notes. In addition, under the swap agreement, CSFBI may require
  us to, at any time, make payments of all amounts that would be owed by us on
  all future payment dates if the market price of the 11?% Guaranteed Notes has
  declined to certain levels, with any such payments being reduced by payments
  we would be required to make on future payment dates. If certain Termination
  Events occur, which are similar to the Credit Events described above, CSFBI
  may terminate the swap agreement. In that event, we may owe CSFBI an amount
  calculated as described above with respect to declines in the market price of
  the 2009 Senior Notes for up to $40 million.

In accordance with the swap transaction, we have
  already paid to CSFBI a notional amount of $22.01 million of the $88.35 million
  aggregate principal amount of the 2009 Senior Notes. As of the date of this
  annual report, the outstanding aggregate principal amount of the 13.889% Credit
  Linked Notes is $29.1 million and the outstanding aggregate principal amount
  of the 2009 Senior Notes is $66.3 million.

Short-Term Debt

Our short-term debt consists primarily of unsecured
  borrowing arrangements with Mexican and foreign banks and commercial paper programs
  denominated in both U.S. dollars and Mexican pesos. We engage, from time to
  time, in the ordinary course of business, in a number and variety of short-term
  loan arrangements with a number of Mexican and foreign banks. Such loans generally
  have a maturity ranging from 30 to 180 days and have interest rates ranging
  from 1.5% to 2.5% above LIBOR, for the U.S. dollar-denominated loans, and floating
  market rates, for the peso-denominated loans. As of December 31, 2002 and March
  31, 2003, we had approximately Ps. 3,176 million ($305 million) and Ps. 3,117
  million ($302 million), respectively, of short-term debt, excluding the current
  portion of long-term debt.

Covenant Compliance

During the last three years and during the first
  six months of 2003, we breached of certain of our covenants relating to the
  maintenance of financial ratios and the provision of notice of a change in our
  subsidiary's corporate name contained in certain of our credit agreements and
  in one of our accounts receivables factoring programs. In each case, either
  (i) such breach was waived by the lender, (ii) we repaid in full the outstanding
  indebtedness under such credit agreements or (iii) we purchased the accounts
  receivable from the lender. At no time did we fail to make required principal
  or interest payments. We are currently not in (i) default in the payment of
  principal, interest or sinking or purchase fund installments or (ii) any other
  material default that has not been cured within 30 days, in each case, relating
  to our indebtedness and off-balance sheet arrangements.

In addition, under certain of our subsidiaries'
  credit agreements, if such subsidiary does not meet certain financial ratios
  and other conditions, its ability to pay dividends is restricted. During 2001
  and 2002, certain of our subsidiaries were restricted from paying dividends
  by credit agreements. For more information see "-Long-Term Debt."

Divestitures

During the last three years, we received aggregate
  net proceeds of approximately $200 million from divestitures and asset sales.
  Please refer to "Item 4. Information on the Company-History and Development
  of the Company-Divestitures" for a description of these transactions. These
  resources provided a non-recurring source of cash that were used primarily for
  debt reduction.

Share Repurchases and Dividends

During the second half of 1998 and the first quarter
  of 1999, we acquired 28 million common shares of Vitro from a special trust
  created by Mrs. Lydia Sada Trevino, Mr. Tomas Gonzalez Sada and Mr. Pablo Gonzalez
  Sada, whom we collectively refer to as the "Gonzalez Sada Family," in a cash
  neutral transaction that resulted from our agreement to sell our 49.9% interest
  in Cydsa, S.A., which we refer to as "Cydsa," to the Gonzalez Sada Family in
  exchange for stock of Vitro held by them. In addition, during the same period,
  we purchased in the open market three million common shares of Vitro in a series
  of transactions for an approximate nominal aggregate amount of Ps. 44 million.
  Additionally, five million common shares of Vitro were transferred from Vitro's
  stock option trust, which we refer to as the "Stock Option Trust," to us on
  October 1998. As a result of these transactions, we held 36 million common shares
  of Vitro in treasury that were canceled on March 26, 1999 at an extraordinary
  shareholders' meeting.

During the last three quarters of 1999, the Stock
  Option Trust purchased in the open market approximately 12.9 million common
  shares of Vitro in a series of transactions for an approximate aggregate amount
  of Ps. 172 million. These purchases, together with the 10.2 million common shares
  of Vitro previously held by the Stock Option Trust resulted in total holdings
  of 23.1 million common shares of Vitro by the Stock Option Trust as of December
  31, 1999.

During 2000, the Stock Option Trust purchased in
  open market transactions 32.1 million common shares of Vitro for an approximate
  aggregate amount of non-inflation adjusted Ps. 368.2 million. After the sale
  by the Stock Option Trust of 11.5 million and 11.4 million common shares of
  Vitro in connection with certain transactions which terminated in 2000 and the
  sale of 30.5 million common shares of Vitro to Vitro's pension plan, the Stock
  Option Trust held, as of December 31, 2000, 1.8 million common shares of Vitro.

Additionally, pursuant to the stock repurchase plan
  approved by our Board of Directors for a maximum aggregate amount of $40 million,
  from January 1, 2000 to October 9, 2000, in a series of open market transactions,
  we purchased a total of 34.3 million common shares of Vitro for an approximate
  aggregate amount of non-inflation adjusted Ps. 380 million. On August 25, 2000,
  our Board of Directors approved the funding of our subsidiaries' pension plans
  and on November 28, 2000, we sold to Vitro's pension plan 8.7 million common
  shares of Vitro for an approximate aggregate amount of non-inflation adjusted
  Ps. 76.3 million. On December 23, 2000, we sold to Vitro's pension plan an additional
  30.5 million common shares of Vitro for an approximate aggregate amount of non-inflation
  adjusted Ps. 271.5 million.

During the second quarter of 2002 we created a trust
  in order to pay, with Vitro shares at market value at that time, a part of our
  variable compensation program to some of our executive employees for an approximate
  aggregate amount of non-inflation adjusted Ps. 16 million, equivalent to 2.3
  million of Vitro's shares.

As of December 31, 2002, and May 30, 2003, we held
  approximately 48.0 million common shares of Vitro as treasury stock, of which
  (i) 24.7 million common shares were held by the Stock Option Trust, which we
  consider for accounting purposes as treasury stock, and (ii) 23.3 million common
  shares were held as treasury stock.

Capital Expenditures

The following table sets forth our capital expenditures
  by business unit for the periods presented.

|                 | Year ended on December 31, (Millions of constant pesos
        as of December 31, 2002) | Three-month period ended on March 31, (Million of constant
        pesos as of March 31, 2003)
|---------------- | --------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|Business Unit    | 2000                                                                                    | 2001                                                                                          
|Flat Glass       | Ps.   364                                                                               | Ps.   406                                                                                     
|Glass Containers | 407                                                                                     | 314                                                                                           
|Glassware        | 163                                                                                     | 91                                                                                            
|Corporate        | 18                                                                                      | 37                                                                                            
|                 |                                                                                         |                                                                                               
|Total            | Ps.   952                                                                               | Ps. 848                                                                                       

In 2002, our capital expenditures amounted to approximately
  Ps. 1,018 million ($98 million). The largest investment project was in our Glass
  Containers and Glassware business units for the expansion of one of our glass
  containers furnaces in Guadalajara, Mexico and a glassware furnace in Monterrey,
  Mexico. The remaining amount was mostly used for maintenance programs.

In 2001, our capital expenditures amounted to approximately
  Ps. 848 million ($81 million). The single largest investment project was in
  Vifisa, in which we invested Ps. 195 million ($19 million) for the expansion
  of one of the existing furnaces. Other investments were focused on maintenance
  and capacity expansions.

In 2000, our capital expenditures amounted to approximately
  Ps. 952 million ($91 million). The largest investment projects were focused
  on technological upgrades, maintenance, capacity expansions and environmental
  protection programs.

The capital expenditures described above do not
  include amounts that we have spent in connection with acquisition of companies,
  which amounted to approximately Ps. 31 million ($3 million) and Ps. 475 million
  ($46 million) in 2002 and 2001, respectively.

Please see "Item 4. Information on the Company-History
  and Development of the Company-Capital Expenditures" for a discussion of our
  capital expenditures during 2003.

Energy Project

Starting the second quarter of 2003, our contractual
  obligations pursuant to the purchase of electrical power and steam from a cogeneration
  plant built and operated by Tractebel are effective. The contract calls for
  15 Vitro subsidiaries to take on a 15 year basis an aggregate demand of 104
  Megawatts and for one of those subsidiaries to take a certain amount of steam
  produced by the plant. Our obligations are contractually established and partially
  based on known variables such as inflation and the peso/US dollar exchange rate,
  whose future value is uncertain. However, we can reasonably estimate that our
  average yearly payments throughout the life of the contract will be in the range
  of approximately $18 to $22 million for the fixed take-or-pay payments, while
  the average total savings, after paying for the fixed and variable charges,
  will be in the order of approximately $10 to $12 million per year.

Tax on Assets Refund

During the last quarter of 2002 we received a refund
  of Ps. 155 million from the Secretaria de Hacienda y Credito Publico of Mexico,
  which we refer to as the "SHCP," relating to excess asset tax paid for 4 years.
  The majority of the proceeds from this refund were used to reduce short-term
  debt.

PBGC Matter

As part of the disposal of Anchor Glass Inc., which
  we refer to as "Anchor Glass," in a transaction approved by the U.S.
  Bankruptcy Court, we entered into a term sheet which contemplated an agreement
  pursuant to which we would provide to the Pension Benefit Guaranty Corporation,
  which we refer to as the "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, which we refer to as "New Anchor."
  The amount of the guaranty was originally limited to $70 million. Under the
  guaranty, payments would not begin until August 1, 2002, and would then generally
  be payable in equal semiannual 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 $7 million semiannually until
  August 1, 2006, when the guaranty would expire if the plans did not terminate.

On April 15, 2002, New Anchor filed a pre-negotiated
  plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code. On August
  6, 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 us, noting that
  the plan was terminated effective as of July 31, 2002 with an estimated unfunded
  liability of $219 million but that the value of the recovery from New Anchor
  and reorganized New Anchor amounts to no more than $122.25 million. The PBGC
  asserts that the recovery that it secured in the bankruptcy is insufficient
  and that an underfunding in excess of the Vitro limited guaranty will occur.
  Accordingly, in such letter, the PBGC demands payments pursuant to the term
  sheet of $7 million on or before August 1, 2003 and of $3.5 million semi-annually
  through August 1, 2011. There are various issues concerning such demand and
  certain defenses that could be asserted by Vitro. It is not possible to estimate
  the amounts that will ultimately be paid in response to such demand. We have
  not recorded a reserve in connection with any liability we might have under
  the term sheet we entered into with the PBGC.



RESEARCH AND DEVELOPMENT

Our research and development efforts are generally
  decentralized with each operating business unit making its own decisions as
  to research and development expenditures and areas of emphasis. In 1999, we
  formed a technology committee which coordinates research and development projects
  that have the potential to create synergies or that could be implemented in
  more than one of our business units. In addition, in 2001 we migrated several
  of our Mexican subsidiaries that own certain of our intellectual property relating
  to our Flat Glass and Glass Containers business units to Switzerland. These
  Swiss subsidiaries will perform research and development activities, license
  the technology to our Mexican operating subsidiaries and undertake development
  efforts jointly with the Mexican subsidiaries and, eventually, third parties.
  Also, through technology licensing arrangements, we benefit significantly from
  research and development conducted by certain of our joint venture partners.
  Of particular significance to us is the technology license arrangement with
  Pilkington, which provides us with state of the art float glass technology.
  Please see. "Item 4 Information on the Company-Operating Business Units-Flat
  Glass Business Unit". We own a number of trademarks and patents, which, in the
  aggregate, are important to conduct our business, none of which, however, is
  individually considered material to our business as a whole. No material amount
  of money was spent on research activities during 2000, 2001 or 2002 nor the
  first semester of 2003.

A number of our subsidiaries conduct all or a portion
  of their businesses through joint ventures or technology alliances with non
  Mexican partners and we expect to enter into other similar arrangements in the
  future. Certain of these partners also license technology and trade names to
  our subsidiaries for use in the manufacture of various products, including flat
  glass, glassware and glass containers. We believe that these joint ventures,
  alliances and license arrangements provide us with important competitive advantages.
  We cannot be certain that in the future, some of these partners will not prefer
  to conduct business directly in Mexico and terminate their relationships with
  us in view of the easing of the limitations on foreign investments, the reduction
  of import duties and tariffs that has occurred under NAFTA or for other reasons.
  In addition, there can be no assurance that we will be successful in renewing
  any joint venture, technical assistance, license or other agreements or arrangements
  upon their expiration, in renewing these agreements on terms as favorable as
  the present ones, in forming similar alliances with other partners or in developing
  equivalent technologies independently. Please see "Item 4 Information on the
  Company-Operating Business Units."



TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following tables set forth a summary of our
  contractual obligations and commercial commitments, as of December 31, 2002
  in millions of pesos.

|Contractual Obligations            | Total      | Less than 1 year | 1-3 years | More than
      3 years
|---------------------------------- | ---------- | ---------------- | --------- | -----------------------
|Long- and Short-Term Debt          | Ps. 15,191 | Ps. 4,778        | Ps. 5,464 | Ps. 4,949              
|Capital Lease Obligations          | 0          | 0                | 0         | 0                      
|Operating Leases                   | 1,856      | 385              | 1,101     | 370                    
|Unconditional Purchase Obligations | 0          | 0                | 0         | 0                      
|Other Long-Term Obligations        | 0          | 0                | 0         | 0                      
|Total Contractual Obligations      | 17,407     | 5,163            | 6,565     | 5,319                  

The amounts set forth above under “Operating
  Leases” include payments that will be made under leases relating to warehouses,
three airplanes, forklifts and computer equipment.



Item 6. DIRECTORS, SENIOR
  MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

Directors

The following information refers to the directors
  of Vitro. There are no arrangements or understandings with major shareholders,
  customers, suppliers or others, pursuant to which any of them was selected as
  a director.

The Board of Directors is responsible for the management
  of the business. Our by-laws provide that the Board of Directors will consist
  of the number of directors determined by our shareholders at the annual general
  ordinary shareholders' meeting and that each member of the Board of Directors
  shall be elected at such shareholders' meeting for a renewable term of one year.
  Each director shall serve until a successor is duly elected and takes office.
  Our Board of Directors currently consists of 16 directors. We have no alternate
  directors.

A list of our current directors, their principal
  occupations and directorships, the year they first became a director and year
  of their birth are set forth below.

|Name                          | Principal Occupation                                                                              | First Became a Director | Year of Birth
|----------------------------- | ------------------------------------------------------------------------------------------------- | ----------------------- | -------------
|Adrian Sada Gonzalez          | Chairman
      of the Board of Directors of Vitro                                                 | 1984                    | 1944         
|Adrian Sada Trevino           | Director
      and Honorary Chairman of the Board of Directors of Vitro                           | 1969                    | 1920         
|Federico Sada Gonzalez        | President
      and Chief Executive Officer of Vitro                                              | 1982                    | 1949         
|Tomas Gonzalez Sada           | Chairman
      of the Board, President and Chief Executive Officer of Grupo Cydsa, S.A.           | 1980                    | 1943         
|Andres
      A. Yarte Cantu   | Chief
      Executive Officer of Distribuidora de Productos Ceramicos, S.A.                       | 1991                    | 1941         
|Dionisio
      Garza Medina   | Chairman
      and Chief Executive Officer of Alfa, S.A. de C.V.                                  | 1995                    | 1954         
|Gustavo Madero Munoz          | Chief
      Financial Officer of Promotora Empresarial del Norte, S.A. de C.V.                    | 1996                    | 1955         
|Roberto
      G. Mendoza      | Financial
      Advisor                                                                           | 1998                    | 1945         
|Carlos
      E. Represas      | Executive
      Vice President of Nestle S.A.                                                     | 1998                    | 1945         
|Jaime
      Serra Puche       | Senior
      Partner of SAI-Consultores, S.C.                                                     | 1998                    | 1951         
|Lorenzo
      H. Zambrano T.  | Chairman
      of the Board of Directors and Chief Executive Officer of Cemex, S.A. de
      C.V. | 1998                    | 1944         
|Carlos F. Munoz O.            | Private
      Investor                                                                            | 2000                    | 1955         
|Joaquin
      Vargas G.       | Chairman
      of the Board of Directors of Grupo MVS, S.A. de C.V.                               | 2000                    | 1954         
|Raul
      Rangel Hinojosa    | Legal
      and Financial Advisor and Secretary of the Board of Directors of Vitro                | 2001                    | 1949         
|Alejandro
      Garza Laguera | Member
      of the Executive Committee of Pulsar Internacional, S.A. de C.V.                     | 2001                    | 1926         
|Eduardo
      Brittingham S.  | Private
      Investor                                                                            | 2001                    | 1926         

The directors listed above were elected for a one-year
  term by our shareholders at the annual general ordinary shareholders' meeting
  held on March 27, 2003. The directors receive directors' fees of three Centenarios,
  which are 37.5-gram gold coins, per each meeting of the Board of Directors they
  attend and three Centenarios per each meeting of a committee of the Board
  of Directors they attend, except for the members of the Audit Committee, who
  receive five Centenarios plus a fee of Ps. 15,000 per each meeting of
  such committee they attend.

Following are brief descriptions of the current
  occupations and biographical information of each of Vitro's directors:

Adrian Sada Gonzalez, Chairman of the Board of
  Directors of Vitro:

Mr. Sada is a member of the Boards of Directors
  of Alfa, S.A. de C.V., Gruma, S.A. de C.V., Grupo Cydsa, S.A., Regio Empresas,
  S.A. de C.V., the Latin American Executive Board for the Wharton School of Finance,
  the Mexican Businessmen Council, the Consejo de Industriales de Nuevo Leon,
  Fondo Chiapas and Pronatura. In addition he is a member of the Young Presidents
  Organization.

Adrian Sada Trevino, Member and Honorary Chairman
  of the Board of Directors of Vitro:

Mr. Sada is Chairman of the Board of Directors of
  the Fundacion Martinez Sada.

Federico Sada Gonzalez, President and Chief Executive
  Officer of Vitro:

Mr. Sada is the former Chairman of the Mexican Council
  for Foreign Trade. He is currently a member of the Boards of Directors of Alpek,
  S.A. de C.V., Banco Nacional de Comercio Exterior, S.N.C., the Institute for
  Educational Investigation and Improvement, the Instituto Tecnologico y de Estudios
  Superiores de Monterrey, Regio Empresas, S.A. de C.V., The University of Texas,
  MD Anderson Cancer Center and in June 2003 he was appointed as a member of the
  Board of Directors of Bombardier Inc. Mr. Sada serves as the Chairman of the
  Council of the National Museum of History, as the Chairman of the Board of Trustees
  of Chipinque Ecological Park Foundation and as a Trustee of the Museum of Wildlife
  and Natural Sciences in Monterrey. Mr. Sada is also a member of the Consejo
  Coordinador Empresarial of the World Business Council for Sustainable Development
  and the International Business of the World Economic Forum. On May 14, 1999,
  he became the first President of the Mexican Council for International Commerce
  and he currently serves as President of the Mexico-France Bilateral Committee
  of such organization.

Tomas Gonzalez Sada, Chairman of the Board, President,
  Chief Executive Officer of Grupo Cydsa, S.A.:

Mr. Gonzalez is the Chairman of the Mexico-Japan
  Business Committee of the Mexican Council for Foreign Trade, the Chairman of
  the Board of Trustees of the Universidad Regiomontana, the Treasurer of the
  Fundacion Martinez Sada and a member of the Boards of Directors of Regio Empresas,
  S.A. de C.V., the Mexican Businessmen Council, The George Washington University
  School of Business and Public Management and the Young Presidents Organization.

Andres A. Yarte Cantu, Chief Executive Officer
  of Distribuidora de Productos Ceramicos, S.A.:

Mr. Yarte is Chairman of the Boards of Directors
  and Chief Executive Officer of Distribuidora de Productos Ceramicos, S.A. and
  K-Inver, S.A.

Dionisio Garza Medina, Chairman of the Board
  of Directors and Chief Executive Officer of Alfa, S.A. de C.V.:

Mr. Garza is the Chairman of the Board of Directors
  of Universidad de Monterrey and a member of the Boards of Directors of Cemex,
  S.A. de C.V., Grupo Cydsa, S.A., ING Mexico, S.A. de C.V. and Autoliv, S.A.
  de C.V., as well as a member of the Associate Board of Directors of the Harvard
  Business School. Mr. Garza is a member of the Harvard University Advisory Committee
  to the David Rockefeller Center for Latin American Studies, the Advisory Committee
  of the New York Stock Exchange and the Young Presidents Organization.

Gustavo Madero Munoz, Chief Financial Officer
  of Promotora Empresarial del Norte, S.A. de C.V.:

Mr. Madero serves as Chairman of the Boards of Directors
  of Hermanos Madero, Electronic Publishing and Campestre Carolinas. Mr. Madero
  is the Regional Vice President of Grupo Financiero Banamex Accival, S.A. de
  C.V. as well as a member of the Board of Directors of ING-Comercial America,
  S.A. de C.V. Mr. Madero is also the President of our Audit Committee.

Roberto G. Mendoza, Financial Advisor:

Mr. Mendoza is Chairman of the Board of Directors
  of Egg plc and is the former Vice Chairman of J.P. Morgan Chase & Co.

Carlos E. Represas, Executive Vice-President
  of Nestle S.A.:

Mr. Represas is Chairman of the Board of Directors
  of Nestle Mexico, S.A. de C.V. and Nestle Holdings, Inc. In addition he is also
  Co-Chairman of the Board of Directors of Coca-Cola Nestle Refreshments and a
  member of the Board of Directors of Cereal Partners Worldwide.

Jaime Serra Puche, Senior Partner of SAI-Consultadores,
  S.C.:

Mr. Serra is a member of the Boards of Directors
  of Fondo Mexico, Grupo Ferroviario Mexicano, Bardahl, Tamso, RMM Global Sourcing
  Solutions, Tenaris and Chiquita Brands International. He has served as Mexico's
  Undersecretary of Revenue, Secretary of Trade and Secretary of Finance.

Mr. Serra led the negotiation and implementation
  of NAFTA by Mexico and promoted the conclusion of the Uruguay Round and the
  creation of the World Trade Organization. Mr. Serra also headed the negotiation
  of free trade agreements with Chile, Colombia, Venezuela, Bolivia and Costa
  Rica. He founded the Mexican Investment Board and promoted the creation of the
  Mexican Federal Competition Commission. He served as a trustee of the Yale Corporation
  and currently co-chairs The President's Council on International Activities
  of Yale University. He is also a member of the Trilateral Commission and the
  U.S.-Mexico Bilateral Council.

Mr. Serra is a graduate of the Universidad Nacional
  Autonoma de Mexico. He earned his Master in Economics at El Colegio de Mexico
  and his Ph.D. in Economics at Yale University. He has been a professor at El
  Colegio de Mexico and at Stanford University, Princeton University and New York
  University.

Lorenzo H. Zambrano T., Chairman of the Board
  of Directors and Chief Executive Officer of Cemex, S.A. de C.V.:

Mr. Zambrano is Chairman of the Boards of Directors
  of the Instituto Tecnologico y de Estudios Superiores de Monterrey and the Americas
  Society. He is a member of the Executive Committee of Grupo Financiero Banamex
  Accival, S.A. de C.V. and the Salomon Smith Barney International Advisory Board.
  In addition, he is a member of the Boards of Directors of Coca-Cola Femsa, S.A.
  de C.V., Empresas ICA Sociedad Controladora, S.A. de C.V., Alfa, S.A. de C.V.,
  Grupo Cydsa, S.A. and Televisa, S.A. He is also a member of the Advisory Council
  to the Stanford Graduate School of Business, the Museo de Arte Contemporaneo
  and the U.S.-Mexico Commission for Educational and Cultural Exchange.

Carlos F. Munoz O., Private Investor:

Mr. Munoz is Vice-President of Fomento Bursatil,
  Super Mart and Manufacturas de Concreto. In addition, he is a member of the
  Board of Directors of Instituto Tecnologico y de Estudios Superiores de Monterrey,
  Chihuahua Campus.

Joaquin Vargas G., Chairman of the Board of Directors
  of Grupo MVS, S.A. de C.V.:

Mr. Vargas is Chairman of the Board of Directors
  of Corporacion Mexicana de Restaurantes, S.A. de C.V., President of the Asociacion
  Mexicana de Restaurantes A.C. and First Vice-President of Nucleo Radio Mil.
  In addition, he is Chairman of the Board of Trustees of the Camara Nacional
  de Industria de Radio y Television and a member of the Boards of Directors of
  Possehl, Grupo Costamex, S.A. de C.V., Grupo Posadas, the Mexican Stock Exchange
  and VistaLink Medical Communications Inc.

Raul Rangel Hinojosa, Legal, Financial Advisor
  and Secretary of the Board of Directors of Vitro:

Mr. Rangel is the President of the Institutional
  Relations of the Council for Foreign Trade. In addition, he is a member of the
  Boards of Directors of Consejo Coordinador Empresarial, the Centro Patronal
  de Nuevo Leon, the Camara de la Industria de la Transformacion en Nuevo Leon
  and the Centro de Estudios en Economia y Educacion. He is also member of the
  Advisory Council of the Universidad Autonoma de Nuevo Leon.

Alejandro Garza Laguera, Member of the Executive
  Committee of Pulsar Internacional, S.A. de C.V.:

Mr. Garza is a member of the Boards of Directors
  of Grupo Cydsa, S.A., Grupo Industrial Ramirez S.A., Instituto Tecnologico y
  de Estudios Superiores de Monterrey and the Centro de Estudios de Economia y
  Educacion. In addition, he is a member of the Boards of Governors of the Wharton
  School of Business and the Joseph H. Lauder Institute.

Eduardo Brittingham S., Private Investor:

Mr. Brittingham is also Chief Executive Officer
  of Auto Express Rapido Nuevo Laredo, S.A. de C.V., Laredo Autos, S.A. de C.V.
  and Corporacion Internacional de Manufacturas.

Examiner and Secretary

We have a comisario, or "Examiner," who is
  elected by our shareholders at the annual general ordinary shareholders' meeting.
  Under Mexican law, the Examiner's duties include, among other things, examination
  of our operations, books, records and any other appropriate documents and the
  presentation of a report of such examination at the general ordinary shareholders'
  meeting. At the annual general ordinary shareholders' meeting held on March
  27, 2003, Manuel Guemez de la Vega was elected to serve as Examiner for one
  year and Julio Escamez Ferreiro was elected as alternate Examiner also for one
  year. The Examiner receives a fee of three Centenariosper each meeting
  of the Board of Directors and three Centenarios per each meeting of the
  committees of the Boards of Directors he attends, other than the Audit Committee,
  for which he receives five Centenarios.

The Board of Directors has the power to appoint
  the Secretary of the Board of Directors, who need not be a director. The current
  Secretary of the Board of Directors, elected at the March 27, 2003 ordinary
  shareholders' meeting, is Raul Rangel Hinojosa.



Senior Management

The following table sets forth information with
  respect to the executive officers of Vitro. There are no arrangements or understandings
  with major shareholders, customers, suppliers or others, pursuant to which any
  of them was selected as a member of the senior management.

|Name                                 | Title                                                | Current Position Held Since | Year of Birth
|------------------------------------ | ---------------------------------------------------- | --------------------------- | -------------
|Federico
      Sada Gonzalez         | President and Chief Executive Officer                | 1995                        | 1949         
|Jose
      Domene Zambrano           | Chief Operating Officer                              | 2001                        | 1954         
|Francisco
      Romero Ramos         | Director of Legal and Regulatory Affairs             | 2002                        | 1964         
|Claudio
      L. del Valle           | Chief Financial Officer                              | 2002                        | 1960         
|Roberto
      Rubio Barnes           | Vice President of the Glassware business unit        | 2003                        | 1955         
|Fernando
      Flores Faz            | Vice President of the Flat Glass business unit       | 2003                        | 1946         
|Alfonso
      Gomez Palacio Gastelum | Vice President of the Glass Containers business unit | 2003                        | 1942         

The following are brief biographies of each of Vitro's
  executive officers:

Federico Sada Gonzalez, President and Chief Executive
  Officer:

Mr. Sada received a Bachelor of Science in Business
  Administration from the Instituto Tecnologico y de Estudios Superiores de Monterrey
  and a Master of Business Administration from IMD in Lausanne, Switzerland. He
  also attended Harvard University's Advanced Management Program. Mr. Sada joined
  Vitro in 1974. He became Planning and Finance Director of the Glass Containers
  business unit in 1978. In 1985, he was named President of the North America
  Glass Containers unit, the largest single business of Vitro at that time. This
  business included the operations of the Glass Containers business unit in Mexico
  and the investments of Vitro in North, Central and South America.

On January 1, 1995, Mr. Sada was named President
  and Chief Executive Officer of Vitro. He is a member of the Boards of Directors
  of Vitro, Alpek, S.A. de C.V., Banco Nacional de Comercio Exterior, S.N.C.,
  the Institute for Educational Investigation and Improvement, the Instituto Tecnologico
  y de Estudios Superiores de Monterrey, Regio Empresas, S.A. de C.V., and The
  University of Texas, MD Anderson Cancer Center.

In addition to his responsibilities at Vitro, Mr.
  Sada is the Chairman of the Council of the National Museum of History, the Chairman
  of the Board of Trustees of Chipinque Ecological Park Foundation and a Trustee
  of the Museum of Wildlife and Natural Sciences in Monterrey. He is a member
  of the Consejo Coordinador Empresarial of the World Business Council for Sustainable
  Development and the International Business of the World Economic Forum. On May
  14, 1999, he became the first President of the Mexican Council for International
  Commerce and he currently serves as President of the Mexico-France Bilateral
  Committee of such organization.

Jose Domene Zambrano, Chief Operating Officer:

Mr. Domene received a Bachelor of Science in Chemical
  Engineering at the University of Wisconsin-Madison in 1976 and a Master of Business
  Administration from Stanford University in 1979. Mr. Domene joined Alfa, S.A.
  de C.V. in 1976 and worked in several executive positions in strategic planning
  at Alfa Industries. In 1982, Mr. Domene was appointed Vice President of Finance,
  Planning and Tourism of the Electronics and Food Division at Grupo Protexa,
  S.A. de C.V. He was later promoted to President of Real Estate and Tourism at
  such corporation. In 1987, Mr. Domene joined Cemex, S.A. de C.V. as Chief Executive
  Officer of Cementos Anahuac. He was then appointed Chief Financial Officer of
  Cemex, S.A. de C.V. and later, Chief Executive Officer of Empresas Tolteca de
  Mexico. In 1991, Mr. Domene was appointed President of Cemex International.
  In April 1999, Mr. Domene became the Chief Executive Officer in Altos Hornos
  de Mexico, S.A. de C.V. Mr. Domene joined Vitro in April 2000. Mr. Domene was
  appointed Chief Operating Officer in April 2001.

Francisco Romero Ramos, Director of Legal and
  Regulatory Affairs:

Mr. Romero earned a law degree from the Universidad
  Autonoma de Chihuahua and a Master of Laws from Washington College of Law. In
  1991, Mr. Romero became an Associate at Baker & McKenzie Lawyers S.C. In
  1993, he became the Associate General Counsel of Vitro's North American division.
  In 2002, Mr. Romero was appointed Director of Legal and Regulatory Affairs.

Claudio L. del Valle, Chief Financial Officer:

Mr. del Valle earned a Bachelor degree in Public
  Accounting at the Universidad Regiomontana in Monterrey, Mexico. In 1978, Mr.
  del Valle began working for Gomez Morfin Meljem and Asoc. (now Deloitte &
  Touche) as a Junior Auditor and later became Senior Supervisor. In 1985, Mr.
  del Valle joined Vitro as a Chief of Special Studies for our former raw materials
  business. In 1986, he became Tax Consolidation Manager of Vitro. In 1992, Mr.
  del Valle was appointed Vice President for Administration of Vitro Corporativo,
  S.A. de C.V. and in 1995 he was appointed Vice President of Finance and Controller
  of Anchor Glass Container Corp. In 1996, Mr. del Valle was appointed Vice President
  of Treasury and Administration of Vitro. In 2002, Mr. del Valle was promoted
  to Chief Financial Officer of Vitro.

Mr. del Valle is a member of the Accounting Institute
  of the state of Nuevo Leon in Mexico. Also, in 2001 Mr. del Valle was appointed
  Vice President of the Fiscal Committee of the Mexican Stock Exchange. Currently,
  Mr. del Valle is the President of the Issuers' Committee of the Mexican Stock
  Exchange.

Roberto Rubio Barnes, Vice President of the Glassware
  business unit:

Mr. Rubio earned a Bachelor degree in Mechanical
  and Electrical Engineering from the Universidad de Anahuac in Mexico City in
  1977. In 1980, Mr. Rubio received a Master of Science in Industrial Engineering
  at North Carolina State University and, in 1990, a Master degree in Management
  at the Massachusetts Institute of Technology.

Mr. Rubio began working in 1980 for Vitro Flex and,
  in 1981, became manager of manufacturing engineering. He held several executive
  positions from 1981 until 1989 when he was appointed General Manager of Vitro
  Flex. In 1995, Mr. Rubio was promoted to Vice President for Administration for
  the glass businesses of the Glassware business unit and in 1996 he was appointed
  President of the Glassware business unit. At that time, he was also given the
  responsibility of managing technology at Vitro. In 1999, Mr. Rubio was appointed
  President of the Glass Containers business unit. In July 2001, he was appointed
  General Director of the Flat Glass business unit, in October 2002 he was appointed
  Director of Operations for the Glass Containers and Glassware business units.
  In May 2003 he was appointed as Vice President of the Glassware business unit.

Fernando Flores Faz, Vice President of the Flat
  Glass business unit:

Mr. Flores graduated with a degree in Industrial
  Engineering from the Instituto Tecnologico y de Estudios Superiores de Monterrey
  in 1970. Mr. Flores also attended the University of Texas' Advanced Management
  Program in 1979. He began working at Vidriera Monterrey, S.A. de C.V. in 1974,
  serving in several positions in the areas of industrial engineering, human resources
  and planning. In 1982, Mr. Flores was named General Manager of Envases de Borosilicato,
  S.A. de C.V., our former ampoules business. In 1986, he was appointed Vice President
  of Gas Range Operations and in 1988, he was appointed Vice President of Refrigerator
  Operations. Mr. Flores worked in the Glass Containers business unit in 1990
  as Vice President for Exports, in 1992 as Vice President for Operations and
  in 1998 as International Vice President for International Operations. In 1999,
  Mr. Flores was appointed General Director of the Glassware business unit and
  in July 2001 he was appointed General Director of the Glass Containers business
  unit. In October 2002 he was appointed Director of Operations for the Flat Glass
  business unit and in May 2003 Vice President of the Flat Glass business unit.

Alfonso Gomez Palacio Gastelum, Vice President
  of the Glass Containers business unit:

Mr. Gomez Palacio received a Bachelor and Master
  degree in Business Administration at the University of California at Berkeley.
  Later, Mr. Gomez Palacio received a degree in Advanced Studies in Business Administration
  and Commerce at the University of Bordeaux in France. He was appointed Commercial
  Vice President of the Glass Containers business unit in 1985 and Executive Vice
  President of the same business unit in 1992. Mr. Gomez Palacio was appointed
  Director of Marketing and Sales in October 2002 and in May 2003 he was appointed
  Vice President of the Glass Containers business unit.

Family Relationship of Directors and Senior Management

Seven of the 22 directors and executive officers
  are related by blood (including first cousins) or marriage to another member
  of this same group. Mr. Adrian Sada Trevino, is the father of Messrs. Adrian
  Sada Gonzalez and Federico Sada Gonzalez. Mr. Tomas Gonzalez Sada is a cousin
  of Messrs. Adrian Sada Gonzalez and Federico Sada Gonzalez and a nephew of Mr.
  Adrian Sada Trevino. Mr. Andres A. Yarte Cantu is Mr. Adrian Sada Trevino's
  son-in-law and Messrs. Adrian Sada Gonzalez's and Federico Sada Gonzalez's brother-in-law,
  as well as a cousin by marriage of Mr. Tomas Gonzalez Sada. Mr. Gustavo Madero
  Munoz is a cousin of Mr. Carlos Munoz.



COMPENSATION

For the year ended on December 31, 2002, the aggregate
  compensation for services rendered by our directors, our Examiners and our senior
  managers to us was approximately Ps. 255 million ($24 million). This amount
  includes (i) salaries and variable and extraordinary compensation to our senior
  managers, (ii) fees to our directors and our Examiners and (iii) approximately
  Ps. 59 million in salaries and severance payments to two senior managers that
  are no longer employed by Vitro.

During 2002, we accrued amounts relating to pension
  and retirement benefits for our senior managers. Our directors were not entitled
  to pension or retirement benefits from us during 2002. In accordance with actuarial
  practices in Mexico, reserves for seniority premiums and pensions are determined
  in the aggregate for each one of our subsidiaries using average amounts for
  variables such as turnover, age, and life expectancy. We therefore cannot determine
  the amount reserved for pension or retirement benefits for any individual employee,
  including our senior managers.

In addition, certain of our directors and senior
  managers received benefits in kind from the personal use of certain of our assets,
  including our corporate aircraft and certain real estate owned by us, and personal
  services performed by certain of our personnel. The personal use of such properties
  and receipt of personal services performed by such personnel was done in accordance
  with our Politica de Uso de Activos Restringidos, our use of restricted assets
  policy, approved by the Audit Committee of our Board of Directors in February
  2003.

Directors' Compensation

Pursuant to the Mexican General Law of Corporations,
  our shareholders, at the general ordinary shareholders' meeting held on March
  27, 2003, determined to compensate directors with three Centenarios or its equivalent
  monetary value, per each meeting of the Board of Directors they attend. Likewise,
  at such general ordinary shareholders' meeting, the shareholders resolved that
  the members of each of the Board of Director's committees, other than the Audit
  Committee's members, shall receive three Centenarios per each meeting of the
  respective committee they attend. In consideration of the Audit Committee's
  members newly expanded responsibilities pursuant to recently enacted legislation,
  the members of such committee receive five Centenarios plus a fee of Ps. 15,000
  per each meeting of the Audit Committee they attend.

Variable Compensation

In 2001, we implemented a variable compensation
  plan in order to help align the objectives of our employees with our business
  strategy. The purpose of this plan is to: (i) recognize the extraordinary performance
  of our employees, (ii) boost our growth and cash flow, (iii) align the interests
  and incentives of our employees with those of our shareholders, (iv) focus on
  key priorities and (v) attract and retain talented employees.

In order to determine the variable compensation
  payable to employees under our variable compensation plan, we monitor the improvement
  of the following metrics: (i) EBITDA, (ii) cash flow from operations, (iii)
  the quality of our products, services and procedures, as determined by our quality
  model and (iv) individual performance. Depending on the results of such metrics,
  our employees are eligible to receive between 2.7 and 10.5 months of their base
  salary.

In 2002, we paid to our employees, approximately
  Ps. 18 million ($2 million) under our variable compensation plan.

Employee Stock Option Plan

In March 1998, we adopted an employee stock option
  plan with respect to Vitro’s common shares, which we refer to as the “Plan.”
  Pursuant to the Plan, effective on the dates listed in the table below, we granted
  to certain of our employees, senior managers and directors, which we collectively
  refer to as the “Eligible Executives,” stock options pursuant to
  which the Eligible Executives have the right to buy a certain number of common
  shares of Vitro at an exercise price to be determined at the time such options
  are exercised, except for the options granted in 2000, 2001 and 2002, in which
  the exercise price is determined at the time of issuance of the options. We
  refer to each date on which we granted such options as a “Grant Date.”
  We established a stock option trust, which we refer to as the “Stock Option
  Trust,” to manage the Plan. As of May 30, 2003, the Stock Option Trust
  held in trust approximately 24.7 million common shares of Vitro.

Subject to certain exceptions, stock options generally
  vest and become exercisable as described in this paragraph. Options granted
  in 1998 and 1999 generally vest and become exercisable with respect to 50% of
  the shares covered thereby on the third anniversary of the Grant Date and with
  respect to 25% of the shares covered thereby on each of the fourth and fifth
  anniversaries of the Grant Date. Options granted in 2000 generally vest and
  become exercisable with respect to 25% of the shares covered thereby on each
  of the second, third, fourth and fifth anniversaries of the Grant Date, and
  options granted in 2001 and 2002 generally vest and become exercisable with
  respect to 25% of the shares covered thereby on each of the first, second, third
  and fourth anniversaries of the Grant Date. All options granted under the Plan
  expire on the tenth anniversary of the applicable Grant Date. Upon the consummation
  of a change in the ownership or control of Vitro, options granted under the
  Plan will generally vest and become immediately exercisable with respect to
  all shares covered thereby and will remain exercisable for a period of 180 days,
  after which any unexercised options will be canceled.

Except for options granted in 2000, 2001 and 2002,
  whose exercise price is Ps. 11.00, Ps. 8.27 and Ps. 7.53 per share, respectively,
  and which have no indexation mechanism, all options have been granted at an
  initial exercise price equal to the average closing price on the Mexican Stock
  Exchange of the common shares of Vitro on the 20 trading days prior to the applicable
  Grant Date. We refer to each such exercise price as an “Initial Exercise
  Price.” Upon vesting, such options may be exercised at an exercise price,
  which will be calculated as of immediately prior to such option’s exercise,
  equal to the product of the Initial Exercise Price and an indexing factor based
  on the cumulative performance of Vitro’s common shares from the Grant
  Date to the date of exercise relative to the cumulative performance of the Indice
  de Precios y Cotizaciones of the Mexican Stock Exchange, which we refer to as
  the “MSE Price Index,” which indexing factor is subject to certain
  ceilings and floors. The effect of the indexation is that, if the common shares
  of Vitro outperform the MSE Price Index, the Initial Exercise Price will be
  increased by a smaller amount than if the common shares of Vitro underperform
  the MSE Price Index. The Plan does not allow negative indexation. The indexed
  exercise price will be adjusted for dividends, stock splits and other similar
  transactions. We refer to the exercise price, as indexed and adjusted, as the
  “Adjusted Exercise Price".

Although the Plan contemplates yearly grants for
  a total of 5 years, we may at any time, and at our sole discretion, amend any
  of the terms of the Plan or otherwise terminate the Plan, subject to previously
  acquired rights. During 2001, we reset the exercise price of 940,950 options
  granted in 1998 from Ps. 31.31 to Ps. 13.00. Such repriced options vest and
  become exercisable with respect to 25% of the shares covered thereby on each
  of the first, second, third and fourth anniversaries of the Grant Date.

The table below shows for each of the Grant Dates,
  the number of common shares underlying the options granted, the Initial Exercise
  Price, and the Adjusted Exercise Price, where applicable, as of December 31,
  2002, assuming that the options could be exercised on such date.

|                                                   | For the year ended December 31,
|-------------------------------------------------- | -------------------------------
|                                                   | 1998                           
|Options granted during the year                    | 2,813,300                      
|Options cancelled during the year                  | 618,820                        
|Options outstanding as of December 31, 2002        | 2,194,480                      
|Exercise Price on Grant Date                       | $ 
        31.31               
|Adjusted Exercise Price as of December 31, 2002(1) | 34.82                          

(1) The Adjusted Exercise
  Price shown in the table assumes the exercise of such options on December 31,
  2002.  These Adjusted Exercise Prices are shown for illustrative purposes
  only and may not represent the actual Adjusted Exercise Price of such options
  at the time of their exercise.

The estimated cost to Vitro for options granted
  under the Plan was Ps. 23 million, Ps. 34 million and Ps. 37 million for 2000,
  2001 and 2002, respectively.

Pension Benefits

The pension benefit obligations of Vitro, S.A. de
  C.V. and its subsidiaries and the related costs are calculated using actuarial
  models and assumptions applicable in the countries where the plans are located,
  principally the United States and Mexico. Two critical assumptions, discount
  rate and expected return on assets, are important elements of plan expense and/or
  liability measurement. We evaluate these critical assumptions at least annually.
  Other assumptions involve demographic factors such as retirement, mortality,
  turnover and rate of compensation increase. These assumptions are evaluated
  periodically and are updated to reflect our experience. Actual results in any
  given year will often differ from actuarial assumptions because of economic
  and other factors. The discount rate enables us to state expected future cash
  flows at a present value on the measurement date. We have little latitude in
  selecting this rate, as it is required to represent the market rate for high-quality
  fixed income investments. A lower discount rate increases the present value
  of benefit obligations and increases pension expense. We reduced our weighted
  average discount rate from 5.0% in 2001 to 4.5% in 2002 to reflect market interest
  rate conditions. To determine the expected long-term rate of return on pension
  plan assets, we consider the current and expected asset allocations, as well
  as historical and expected returns on various categories of plan assets. We
  assumed that the weighted average of long-term returns on our pension plans
  were 7.0% in 2002 and 6.0% in 2001. With respect to the pension plans in the
  United States, at December 31, 2002, the assets set aside to satisfy the estimated
  obligations under such pension plans were sufficient to meet the estimated obligations
  as they come due. With respect to the pension plans in Mexico, at December 31,
  2002, the assets set aside to satisfy the estimated obligations under such pension
  plans were Ps. 423 million while the related estimated obligations were Ps.
  1,684 million. Our approximate pension expense in 2002 was Ps. 214 million.
  Further information on our principal pension plans, including the assumptions
  used in calculating the referenced obligations, is provided in Note 10 to our
  Consolidated Statements of Stockholders' Equity.



BOARD PRACTICES

Our by-laws provide that the Board of Directors
  will consist of the number of directors determined by our shareholders at the
  annual general ordinary shareholders' meeting and that each member of the Board
  of Directors shall be elected at such shareholders' meeting for a renewable
  term of one year. In the event the one year term of office of any director is
  not renewed at the annual general ordinary shareholders' meeting, each director
  shall serve until a successor is duly elected and takes office. Our Board of
  Directors currently consists of 16 directors, whose terms of office were renewed
  for 2003 at the annual general ordinary shareholders' meeting held on March
  27, 2003. We have no alternate directors.

Pursuant to Vitro's by-laws, the Board of Directors
  must meet at least four times per calendar year and dedicate one such meeting
  to the analysis of our medium- and long-term strategy. Meetings usually take
  place at our principal executive offices. However, if necessary, such meetings
  may be held anywhere within or without Mexico or by telephone. For a quorum
  to exist at a meeting of the Board of Directors, a majority of the directors
  must be in attendance. The affirmative vote of the majority of the directors
  present at a duly called meeting of the Board of Directors is required for the
  adoption of any resolution. Minutes must be prepared after every meeting of
  the Board of Directors to reflect the resolutions adopted and any relevant discussions
  that took place. Such minutes must be signed by the Chairman of the Board, the
  Secretary and the Examiner, in each case, if they attended the meeting. Resolutions
  adopted at meetings not conducted in person have the same force and effect as
  those adopted at a meeting conducted in person as long as they are duly documented
  in writing and adopted unanimously.

The Board of Directors can create as many committees
  as it deems appropriate for the discharge of its duties. However, pursuant to
  our by-laws the following committees are required: (i) Evaluation and Compensation,
  (ii) Audit and (iii) Finance and Planning. In addition to the foregoing, the
  Board of Directors has also formed a Corporate Responsibility Committee.

Each committee consists of between 3 and 5 directors
  and has the ability to delegate to experts, advisors or consultants such tasks
  or powers as the Board of Directors deems appropriate. The committees shall
  meet as often as necessary and must provide a report of their activities and
  findings to the Board of Directors at any time the Board of Directors requests
  such report or whenever the committee deems appropriate to report any events
  or facts that are relevant to Vitro.

Neither we nor our subsidiaries has entered into
  a service contract with any of our directors providing for benefits to such
  directors upon termination of employment.

Consistent with the new board and governance practices
  mandated by the Sarbanes-Oxley Act of 2002, which we refer to as the "SOA,"
  we have already complied, in advance of the timeframe required by SEC rules
  implementing the SOA, with the requirement of having an Audit Committee that
  is composed exclusively by independent members of the Board of Directors under
  the final rules implemented by the SEC, which may be supplemented by additional
  rules implemented by the NYSE. The Audit Committee is now responsible for verifying
  that our management is complying with its obligations regarding financial control
  and the preparation of financial statements and for the oversight of our auditors.
  In addition, the Audit Committee is responsible for the appointment, compensation
  and oversight of Vitro's independent external auditors. Moreover, the Audit
  Committee regularly meets with the Vitro's management, internal auditors and
  independent external auditors. Other requirements of the SOA will be complied
  with on or before the dates mandated by the SOA.

The Audit Committee's members are Messrs. Gustavo
  Madero M., Jaime Serra Puche, Joaquin Vargas G. and Alejandro Garza L. Mr. Gustavo
  Madero is the President of the Audit Committee. The Audit Committee's charter
  provides that (i) the members of the committee must be elected by our Board
  of Directors, (ii) the committee must be composed of at least three and not
  more than five independent directors, (iii) the president, examiner and secretary
  of the committee must be appointed by the Board of Directors, (iv) any member
  of the committee may convoke a meeting through written notice given to the other
  members of the committee at least five days before the meeting, (v) the committee
  must meet at least three times per year; (vi) the committee must provide to
  the Board of Directors and the annual shareholders' meeting a report about the
  annual activities of the committee, (vii) the attendance of at least the majority
  of the committee's members will be considered a quorum and the committee's resolutions
  shall be adopted by the vote of at least the majority of its members present
  at the relevant meeting, (viii) resolutions of the committee may be adopted
  without a meeting, provided such resolutions are approved unanimously and confirmed
  in writing, and (ix) the committee must perform such duties required by law
  and by our Board of Directors.

Moreover, pursuant to the Audit Committee's charter,
  the committee must verify that the internal and external audit duties are duly
  performed and corroborate our compliance with all laws and regulations regarding
  the reliability, sufficiency and transparency of our financial statements.

The Audit Committee shall have the authority to,
  among other things, (i) designate, compensate and supervise our independent
  auditors, (ii) review our independent working program, letters and reports and
  inform our Board of Directors about the audit's results, (iii) work as a communication
  channel between our Board of Directors, and internal and independent auditors
  and our Examiner, (iv) resolve conflicts between our senior management and our
  independent auditors, (v) assist our Board of Directors in the review, preparation
  and issuance of our financial statements, (vi) validate our management's proposal
  regarding our internal controls, (vii) verify that we have implemented mechanisms
  to ensure compliance with applicable laws and regulations, (viii) create procedures
  for the receipt of information from protected witnesses or unsigned letters,
  (ix) obtain support from external consultants or advisors for the accomplishment
  of its duties, (x) resolve issues involving conflicts of interest and transactions
  among related parties, pursuant to the Mexican Law of the Securities Market,
  (xi) review our annual reports filed with the SEC and the CNBV and (xi) approve
  our Code of Ethics and Business Conduct.

Our Board of Directors also has an Evaluation and
  Compensation Committee, which is composed of Messrs. Adrián Sada G.,
  Federico Sada G., Carlos E. Represas, Lorenzo H. Zambrano T., Alejandro Garza
  L. and Eduardo S. Brittingham. Mr. Lorenzo H. Zambrano T. is the President of
  the Evaluation and Compensation Committee. The Evaluation and Compensation Committee
  operates under the following guidelines, which were approved by our Board of
  Directors and provide that the committee must (i) meet whenever deemed necessary,
  but at least two meetings per year are recommended; (ii) support and advise
  our Board of Directors in the evaluation and compensation of our Director General
  (Chief Executive Officer) and senior management members; (iii) be composed by
  at least three and not more than five members; (iv) advise our Board of Directors
  about procedures to be proposed to the Chief Executive Officer and senior management
  members; (v) propose criteria to observe in the evaluation of the Chief Executive
  Officer and senior management’s performance, pursuant to our Board of
  Director’s own guidelines; (vi) analyze and propose to our Board of Directors
  the compensation to be granted to our senior management members; (vii) review
  that the recruiting conditions regarding the Chief Executive Officer and senior
  management are in conformity with our Board of Director’s guidelines;
  (viii) review that the severance conditions regarding the Chief Executive Officer
  and senior management are in conformity with our Board of Directors’ guidelines;
  and (ix) ensure that the policies regarding and the composition of our directors’,
  Chief Executive Officer’s and senior management’s compensation package
  are fully described in our publicly filed annual reports.



EMPLOYEES

As of December 31, 2002, we employed approximately
  27,000 persons, approximately 80% of whom were located in Mexico.

The following table sets forth, for the periods
  indicated, the period end and average number of employees of each of our three
  operating business units and our corporate offices.

|                  | 2002       | 2001    | 2000      
|----------------- | ---------- | ------- | ----------
|Business Unit     | Period End | Average | Period End
|Flat Glass        | 10,990     | 10,966  | 10,929    
|Glass Containers  | 10,922     | 11,191  | 11,195    
|Glassware         | 4,581      | 4,870   | 4,669     
|Corporate Offices | 680        | 737     | 770       
|Total             | 27,173     | 27,794  | 27,563    

The following table sets forth, for the periods
  indicated, our employees by geographic location.

|Location          | 2002    | 2001       | 2000   
|----------------- | ------- | ---------- | -------
|Period End        | Average | Period End | Average
|Mexico            | 21,380  | 22,002     | 21,594 
|United States     | 2,987   | 3,080      | 3,189  
|Rest of the world | 2,806   | 2,712      | 2,780  
|Total             | 27,173  | 27,794     | 27,563 

Although the aggregate number of our employees has
  not varied significantly, we have increased the number of our employees through
  acquisitions and decreased the number of our employees through employee reduction
  programs and divestitures.

Relation with Labor Unions

In Mexico, all of our workers (others than our empleados
  de confianza) are currently affiliated with labor unions. Labor relations in
  each manufacturing facility in Mexico are governed by separate collective bargaining
  agreements which were entered into between the relevant subsidiary and a union
  selected by the employees of the relevant facility. The terms of the collective
  bargaining agreements are renegotiated every two years, except for wages which
  are negotiated on every year. For over 60 years, we have not experienced any
  strikes that materially affected our overall operations in Mexico and management
  believes that it has a good relationship with its employees and the labor unions
  to which they are affiliated.

In the United States a majority of our workers are
  currently affiliated with labor unions. Management believes that it has a good
  relationship with its employees in the United States and the labor unions to
  which they are affiliated.



SHARE OWNERSHIP

The following table presents information regarding
  the beneficial ownership of shares of our common stock as of March 27, 2003,
  the date of our general ordinary annual stockholders' meeting, by each of our
  directors and our senior management.

|Name                    | Number of Shares Owned | Percentage of Shares Outstanding | Granted Options(3) | Exercise Price on Grant Date | Adjusted Exercise Price | Expiration Date
|----------------------- | ---------------------- | -------------------------------- | ------------------ | ---------------------------- | ----------------------- | ---------------
|Adrian Sada Gonzalez    | 14,697,104(1)          | 5.32%                            | 90,400             | 13.00                        | 13.00                   | March 1, 2008  
|                        |                        |                                  | 225,000            | 14.88                        | 17.48                   | March 1, 2009  
|                        |                        |                                  | 430,000            | 11.00                        | N/A                     | June 1, 2010   
|                        |                        |                                  | 550,000            | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 550,000            | 7.53                         | N/A                     | March 1, 2012  
|Adrian Sada Trevino     | 35,120,434(1)(2)       | 12.73%                           | 75,000             | 13.00                        | 13.00                   | March 1, 2008  
|Federico Sada Gonzalez  | 14,587,227(1)          | 5.28%                            | 90,400             | 13.00                        | 13.00                   | March 1, 2008  
|                        |                        |                                  | 225,000            | 14.88                        | 17.48                   | March 1, 2009  
|                        |                        |                                  | 430,000            | 11.00                        | N/A                     | June 1, 2010   
|                        |                        |                                  | 550,000            | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 550,000            | 7.53                         | N/A                     | March 1, 2012  
|Tomas Gonzalez Sada     | *                      | *                                | -                  | -                            | -                       | -              
|Andres A. Yarte Cantu   | *                      | *                                | -                  | -                            | -                       | -              
|Dionisio Garza Medina   | *                      | *                                | -                  | -                            | -                       | -              
|Gustavo Madero Munoz    | 3,226,575              | 1.07%                            | -                  | -                            | -                       | -              
|Roberto Mendoza         | *                      | *                                | -                  | -                            | -                       | -              
|Carlos Represas         | *                      | *                                | -                  | -                            | -                       | -              
|Jaime Serra Puche       | *                      | *                                | -                  | -                            | -                       | -              
|Lorenzo Zambrano        | *                      | *                                | -                  | -                            | -                       | -              
|Carlos Munoz            | 6,700,000              | 2.23%                            | -                  | -                            | -                       | -              
|Joaquin Vargas          | *                      | *                                | -                  | -                            | -                       | -              
|Raul Rangel Hinojosa    | *                      | *                                | -                  | -                            | -                       | -              
|Alejandro Garza Laguera | *                      | *                                | -                  | -                            | -                       | -              
|Jose Domene             | *                      | *                                | -                  | -                            | -                       | -              
|                        |                        |                                  | 180,000            | 11.00                        | N/A                     | June 1, 2010   
|                        |                        |                                  | 360,000            | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 360,000            | 7.53                         | N/A                     | March 1, 2012  
|Francisco Romero        | *                      | *                                | 5,400              | 13.00                        | 13.00                   | March 1, 2008  
|                        |                        |                                  | 9,000              | 14.88                        | 17.48                   | March 1, 2009  
|                        |                        |                                  | 18,000             | 11.00                        | N/A                     | March 1, 2010  
|                        |                        |                                  | 19,200             | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 37,500             | 7.53                         | N/A                     | March 1, 2012  
|Claudio del Valle       | *                      | *                                | 15,100             | 13.00                        | 13.00                   | March 1, 2008  
|                        |                        |                                  | 28,000             | 14.88                        | 17.48                   | March 1, 2009  
|                        |                        |                                  | 60,000             | 11.00                        | N/A                     | June 1, 2010   
|                        |                        |                                  | 59,000             | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 60,500             | 7.53                         | N/A                     | March 1, 2012  
|Roberto Rubio           | *                      | *                                | 48,200             | 13.00                        | 13.00                   | March 1, 2008  
|                        |                        |                                  | 100,000            | 14.88                        | 17.48                   | March 1, 2009  
|                        |                        |                                  | 180,000            | 11.00                        | N/A                     | June 1, 2010   
|                        |                        |                                  | 190,000            | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 150,000            | 7.53                         | N/A                     | March 1, 2012  
|Fernando Flores         | *                      | *                                | 13,300             | 13.00                        | 13.00                   | March 1, 2008  
|                        |                        |                                  | 45,000             | 14.88                        | 17.48                   | March 1, 2009  
|                        |                        |                                  | 150,000            | 11.00                        | N/A                     | June 1, 2010   
|                        |                        |                                  | 160,000            | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 160,000            | 7.53                         | N/A                     | March 1, 2012  
|Alfonso Gomez Palacio   | *                      | *                                | 54,300             | 13.00                        | 13.00                   | March 1, 2008  
|                        |                        |                                  | 90,000             | 14.88                        | 17.48                   | March 1, 2009  
|                        |                        |                                  | 120,000            | 11.00                        | N/A                     | June 1, 2010   
|                        |                        |                                  | 130,000            | 8.27                         | N/A                     | March 1, 2011  
|                        |                        |                                  | 150,000            | 7.53                         | N/A                     | March 1, 2012  

* Beneficially owns less than one
  percent of the outstanding shares of our common stock.

(1) Beneficial ownership is determined
  in accordance with the rules of the SEC and generally includes voting or investment
  power with respect to securities. All such shares have the same voting rights
  as the shares owned by any other shareholder.
  (2) Reported as a group with his wife, Mrs. Maria Nelly Gonzalez de Sada.
  (3) The options listed below are options to purchase shares of Vitro's common
  stock, no par value.

Please see "-Compensation-Employee Stock Option
  Plan" for a discussion of our only arrangement providing our employees with
  equity-based compensation.



Item 7. MAJOR SHAREHOLDERS
  AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

As of June 20, 2003, Vitro had 324 million issued
  and approximately 300 million outstanding shares of common stock, no par value,
  of which approximately (i) 24.7 million shares of common stock were held by
  the Stock Option Trust and (ii) approximately 23.3 million shares of common
  stock were held as treasury stock. Vitro has one class of American Depositary
  Shares, which we refer to as "ADSs," registered pursuant to the Securities Act.
  ADSs are evidenced by American Depositary Receipts, which we refer to as "ADRs,"
  which in turn represent three Ordinary Participation Certificates. Each Ordinary
  Participation Certificate represents one share of common stock of Vitro. As
  of March 31, 2003, there were approximately 22.5 million ADSs outstanding (representing
  approximately 67.5 million common voting shares of Vitro). Vitro's ADRs are
  issuable by Citibank, N.A. pursuant to a deposit agreement.

The following table discloses our major shareholders
  and their shareholdings as of March 27, 2003. The shares held by our major shareholders
  have similar voting rights to the shares held by all of our other shareholders.

|Name                                     | Shares outstanding(1)(2) | % of ownership(1)(2)
|---------------------------------------- | ------------------------ | --------------------
|Pension Plan Trust                       | 39,150,000               | 14.18%              
|Mrs. Maria Nelly Gonzalez de Sada(3) (4) | 18,650,011               | 6.76%               
|Mr. Adrian Sada Trevino(3) (4)           | 16,470,423               | 5.97%               
|Mr. Adrian Sada Gonzalez                 | 14,697,104               | 5.32%               
|Mr. Federico Sada Gonzalez               | 14,587,227               | 5.28%               

(1) In order to calculate the shares
  outstanding, we are considering, when applicable, the granted options.
  (2) In order to calculate the ownership percentage, we have used as the denominator
  the total number of shares outstanding minus the number of shares held as treasury
  stock, which as of May 9, 2003 were 47,979,489 shares, including the shares
  held by the Stock Option Trust.
  (3) Mr. Adrian Sada Trevino and his wife Mrs. Maria Nelly Gonzalez de Sada together
  hold 12.73% of the outstanding shares of Vitro's common stock.
  (4) The number of shares of Vitro's common stock owned by Ms. Alejandra Sada
  Gonzalez and Mrs. Maria Nelly Sada de Yarte, their children, their children's
  spouses and their respective children, is 19,435,589 shares, representing 7.04%
  of the total outstanding shares of Vitro's common stock. Ms. Alejandra Sada
  Gonzalez and Mrs. Maria Nelly Sada de Yarte are the daughters of Mr. Adrian
  Sada Trevino and Mrs. Maria Nelly Gonzalez de Sada.

For information relating to changes in shareholdings
  of the major shareholders during the three prior fiscal years, please see "Item
  5. Operating and Financial Review and Prospects-Liquidity and Capital Resources-Share
  Repurchases and Dividends."

Please see "Item 5. Operating and Financial Review
  and Prospects-Liquidity and Capital Resources-Share Repurchases and Dividends"
  for a description of changes in beneficial ownership of shares of Vitro's common
  stock.



RELATED PARTY TRANSACTIONS

We purchase paint for industrial equipment from
  Regio Empresas, S.A. These purchases are made after arm's-length negotiations
  and on terms and conditions that are no less favorable to us than prevailing
  terms and conditions in the market. The aggregate annual amount of these purchases
  is approximately Ps. 10 million per year. As a group, certain of our directors
  and senior managers own 26.4% of the outstanding shares of common stock of Regio
  Empresas, S.A. These directors and senior managers are also shareholders of
  Vitro.

As approved by our Board of Directors and Audit
  Committee, on June 27, 2003, we sold certain of our non-strategic real estate
  to Mrs. Liliana Melo Gonzalez, Mrs. Esther Cueva Garza and Mr. Adrián
  Sada Cueva for an aggregate approximate amount of $4 million. Mrs. Melo Gonzalez
  is Mr. Federico Sada Gonzalez’ wife. Mrs. Cueva Garza and Mr. Sada Cueva
  are Mr. Adrián Sada Gonzalez’ wife and son, respectively. The sales
  price was determined by reference to an independent appraisal of such real estate
  and the terms of the sale, including the sales price, were no less favorable
  to us than the prevailing market terms for similar sales.



Item 8. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.

Consolidated Financial Statements

Please see "Item 18. Financial Statements" and pages
  F-1 to F-47 for a copy of our audited financial statements.

Export Sales

The following table sets forth, for the periods
  indicated, a breakdown of our domestic sales, export sales and sales attributable
  to our foreign subsidiaries.

|                     | Flat  Glass | % of Consol. Sales | Glassware | % of Consol.
        Sales | Glass Containers | % of Consol.
        Sales | Consolidated | % of Consol.
        Sales
|-------------------- | ----------- | ------------------ | --------- | -------------------------- | ---------------- | -------------------------- | ------------ | --------------------------
|2002                 |             |                    |           |                            |                  |                            |              |                           
|Domestic sales       | Ps. 3,334   | 29%                | Ps. 1,817 | 69%                        | Ps. 6,256        | 62%                        | Ps. 11,319   | 47%                       
|Export sales         | 2,718       | 24%                | 801       | 31%                        | 2,474            | 25%                        | 5,993        | 25%                       
|Foreign subsidiaries | 5,328       | 47%                | 0         | 0%                         | 1,282            | 13%                        | 6,610        | 28%                       
|Total sales          | Ps. 11,380  | 100%               | Ps. 2,618 | 100%                       | Ps. 10,012       | 100%                       | Ps. 23,922   | 100%                      
|                     |             |                    |           |                            |                  |                            |              |                           
|2001                 |             |                    |           |                            |                  |                            |              |                           
|Domestic sales       | Ps. 3,699   | 31%                | Ps. 1,940 | 70%                        | Ps. 6,167        | 62%                        | Ps. 11,686   | 48%                       
|Export sales         | 2,616       | 23%                | 836       | 30%                        | 2,645            | 26%                        | 6,097        | 25%                       
|Foreign subsidiaries | 5,438       | 46%                | 0         | 0%                         | 1,185            | 12%                        | 6,623        | 27%                       
|Total sales          | Ps. 11,753  | 100%               | Ps. 2,776 | 100%                       | Ps. 9,997        | 100%                       | Ps. 24,406   | 100%                      
|                     |             |                    |           |                            |                  |                            |              |                           
|2000                 |             |                    |           |                            |                  |                            |              |                           
|Domestic sales       | Ps. 3,990   | 34%                | Ps. 2,319 | 73%                        | Ps. 6,423        | 63%                        | Ps. 12,668   | 51%                       
|Export sales         | 2,783       | 24%                | 868       | 27%                        | 2,691            | 26%                        | 6,342        | 25%                       
|Foreign subsidiaries | 4,851       | 42%                | 0         | 0%                         | 1,144            | 11%                        | 5,995        | 24%                       
|Total sales          | Ps. 11,624  | 100%               | Ps. 3,187 | 100%                       | Ps. 10,258       | 100%                       | Ps. 25,005   | 100%                      



Legal or Arbitration Proceedings

For information relating to the PBGC matter, please
  see "Item 5. Operating and Financial Review and Prospects-Liquidity and
  Capital Resources-PBGC Matter."

Other than as set forth immediately above, there
  are no material pending legal proceedings to which we are a party.

Dividend Policy

The majority of the outstanding shares of our common
  stock, at a general ordinary shareholders' meeting, determine whether dividends
  are to be paid and the amount and date of their payment. This decision is generally,
  but not necessarily, based on the recommendation of our Board of Directors.
  Our Board of Directors, taking into account our financial condition and the
  terms of the shareholders' approval, generally determines the timing for the
  payment of the dividends formally declared by the corresponding general ordinary
  shareholders' meeting.



SIGNIFICANT CHANGES

Since the date of our annual financial statements,
  no significant change in our financial information has occurred other than those
  changes described in "Item 5. Operating and Financial Review and Prospects-Other
  Factors, Trends and Uncertainties."



Item 9. THE OFFER AND LISTING

OFFER AND LISTING DETAILS

Vitro is registered as a public company in Mexico.
  Vitro shares are listed in the Mexican Stock Exchange, where they trade under
  the symbol "VITROA", and listed on the NYSE through ADSs, which trade under
  the symbol "VTO."

The following table sets forth for each year in
  the five year period ended on December 31, 2002, the reported highest and lowest
  market quotation in nominal pesos on the Mexican Stock Exchange for shares of
  our Series "A" common stock and the high and low sales price in nominal dollars
  on the NYSE for our ADSs. There is no public market outside of Mexico for shares
  of our Series "A" common stock.

|     | Pesos per share of our Series "A" common stock(1)(3)
        Mexican Stock Exchange | U.S. dollars per ADS(2)(3)
        New York Stock Exchange
|---- | ----------------------------------------------------------------------------------- | ----------------------------------------------------------
|Year | High                                                                                | Low                                                       
|1998 | Ps. 35.90                                                                           | Ps. 11.50                                                 
|1999 | 23.10                                                                               | 11.90                                                     
|2000 | 17.00                                                                               | 6.60                                                      
|2001 | 11.30                                                                               | 6.96                                                      
|2002 | 14.09                                                                               | 6.47                                                      

(1) Source: Infosel
  (2) Not adjusted for dividends
  (3) Each ADS represents 3 shares of our Series "A" common stock

The following table sets forth for each quarter
  in the two year period ended on December 31, 2002 and the three month period
  ended on March 31, 2003, the reported highest and lowest market quotation in
  nominal pesos on the Mexican Stock Exchange for shares of our Series "A" common
  stock and the high and low sales price in nominal dollars on the NYSE for our
  ADSs.

|               | Pesos per share of our Series "A" common stock(1)
        Mexican Stock Exchange | U.S. dollars per ADS(2)(3)New York Stock Exchange
|-------------- | -------------------------------------------------------------------------------- | -------------------------------------------------
|Year           | High                                                                             | Low                                              
|2001           |                                                                                  |                                                  
|First Quarter  | Ps. 11.30                                                                        | Ps. 7.40                                         
|Second Quarter | 9.90                                                                             | 8.09                                             
|Third Quarter  | 9.60                                                                             | 7.52                                             
|Fourth Quarter | 8.20                                                                             | 6.96                                             
|2002           |                                                                                  |                                                  
|First Quarter  | Ps. 9.39                                                                         | Ps. 6.47                                         
|Second Quarter | 14.09                                                                            | 8.68                                             
|Third Quarter  | 11.31                                                                            | 8.60                                             
|Fourth Quarter | 9.10                                                                             | 7.80                                             
|2003           |                                                                                  |                                                  
|First Quarter  | Ps. 9.51                                                                         | Ps. 7.80                                         

(1) Source: Infosel
  (2) Not adjusted for dividends
  (3) Each ADS indirectly represents 3 shares of our Series "A" common stock.

The following table sets forth for each month in
  the six month period ended on May 31, 2003, the reported highest and lowest
  market quotation in nominal pesos on the Mexican Stock Exchange for shares of
  our Series "A" common stock and the high and low sales price in annual dollars
  on the NYSE for our ADSs.

|         | Pesos per share of our common stock(1)Mexican Stock Exchange | U.S. dollars per ADS(2)(3)
        New York Stock Exchange
|-------- | ------------------------------------------------------------ | ----------------------------------------------------------
|Year     | High                                                         | Low                                                       
|2002     |                                                              |                                                           
|December | 8.49                                                         | 8.00                                                      
|2003     |                                                              |                                                           
|January  | 9.51                                                         | 8.10                                                      
|February | 9.04                                                         | 8.00                                                      
|March    | 8.41                                                         | 7.80                                                      
|April    | 7.95                                                         | 7.15                                                      
|May      | 7.38                                                         | 7.05                                                      

(1) Source: Infosel
  (2) Not adjusted for dividends
  (3) Each ADS indirectly represents 3 shares of our Series "A" common stock.



MARKETS

Trading on the Mexican Stock Exchange

The Mexican Stock Exchange, located in Mexico City,
  is the only stock exchange in Mexico. Operating continuously since 1907, it
  is organized as a corporation whose shares are held by brokerage firms, which
  are the sole authorized entities to trade on the floor of the exchange. Trading
  on the Mexican Stock Exchange takes place electronically through the centralized
  automated system of the exchange, which is open each business day between the
  hours of 8:30 a.m. and 3:00 p.m., Mexico City time. Most transactions in listed
  Mexican securities take place through the Mexican Stock Exchange. Trades on
  or off the Mexican Stock Exchange involving ten percent or more of an issuer's
  outstanding capital stock must be reported to the CNBV, which in turn must notify
  the Mexican Stock Exchange of such trade. Directors, officers and other insiders
  must report to the CNBV any and all transactions undertaken with respect to
  securities of the issuer with which they are related. In addition, directors,
  officers and other insiders holding stock representing 5% or more of the outstanding
  capital stock of the related issuer may not buy or sell such stock within a
  period of three months from the date of their last purchase or sale.

The Mexican Stock Exchange publishes a daily official
  price list (Boletin Diario de Precios y Cotizaciones) that includes price information
  on each listed security traded that day. The Mexican Stock Exchange operates
  a system of automatic temporary suspensions of trading in shares of a particular
  issuer as a means of controlling excessive price volatility. Each day a price
  band is established, with upper and lower limits. If during the day a bid or
  offer is accepted at a price outside this price band, trading in the shares
  is automatically suspended for one hour. Suspension periods in effect at the
  close of trading are not carried over to the next trading day. Our shares of
  common stock, as well as other Mexican securities publicly traded in the United
  States, however, are not subject to the above-described temporary suspension
  of trading rules dictated by the Mexican Stock Exchange. In addition, the Mexican
  Stock Exchange may also suspend trading of a security, including securities
  not subject to the automatic suspension systems for up to five days if it determines
  that disorderly trading is occurring with respect to such security, such suspension
  may be extended beyond five days if so approved by the CNBV.

Trading on the New York Stock Exchange

Since November 19, 1991, our ADSs have been listed
  on the NYSE. Since May 6, 1992, each ADS represents three Ordinary Participation
  Certificates , which we refer to as a "CPO," issued by Nacional Financiera,
  as trustee, which we refer to as the "CPO Trustee," for a Mexican trust which
  we refer to as the "CPO Trust". Each CPO represents economic interests, but
  does not grant voting rights, in one share of our Series "A" common stock, with
  no par value, of Vitro held in the CPO Trust. The ADSs are evidenced by American
  Depositary Receipts, which we refer to as "ADRs." ADRs evidencing ADSs may be
  issued by Citibank, N.A., as depositary, which we refer to as the "Depositary,"
  pursuant to the Deposit Agreement dated as of November 26, 1991 among Vitro,
  the CPO Trustee, the Depositary and all registered holders, from time to time,
  of the ADRs issued thereunder. An ADR may evidence any number of ADSs.

As of March 31, 2003, approximately 7% of the outstanding
  shares of Vitro's common stock were publicly held through CPOs in the Mexican
  Stock Exchange and approximately 21% of the outstanding shares of Vitro's common
  stock were publicly held through ADRs (in turn representing CPOs) in the NYSE.
  Holders of ADRs and CPOs have no voting rights with respect to the underlying
  shares but have all economic rights relating to those shares. Pursuant to the
  Trust Agreements dated as of November 24, 1989 and November 28, 1990, Nacional
  Financiera, as trustee for both trusts, is required to vote the shares of our
  common stock held by such trusts in the same manner as the majority of the shares
  of our common stock that are not so held and that are voted at the relevant
  meeting. Consequently, under Mexican law, holders of CPOs and ADRs are not able
  to exercise voting or other rights granted to minorities. However, if a Mexican
  holder acquires CPOs, it may request from the trustee the cancellation of such
  CPOs and delivery of the equivalent number of shares.



Item 10. ADDITIONAL INFORMATION.

MEMORANDUM AND ARTICLES OF ASSOCIATION

Set forth below is a brief summary of certain provisions
  of our by-laws and applicable Mexican law. This summary does not purport to
  be complete and is qualified by reference to our by-laws and applicable Mexican
  law.

General Information and Corporate Purpose

Vitro was incorporated on August 27, 1936 as Fomento
  de Industria y Comercio, S.A., a corporation (sociedad anonima) formed under
  the laws of Mexico. The incorporation deed was registered on October 3, 1936
  in the Registro Publico de la Propiedad y del Comercio de Monterrey, which we
  refer to as the "Public Registry of Commerce of Monterrey," as entry number
  139, volume 82, book 3. On May 9, 1980, we changed our corporate name to Vitro,
  S. A. and the deed pursuant to which our name was changed was registered in
  the Public Registry of Commerce of Monterrey on June 9, 1980 as entry number
  1,224, volume 117, book 4. We adopted the variable capital corporate form on
  March 30, 1998 and the deed pursuant to which we adopted such corporate form
  was registered in the Public Registry of Commerce of Monterrey on April 1, 1998
  as entry number 2,091, volume 207-42, book 4.

Our corporate domicile is San Pedro Garza Garcia,
  State of Nuevo Leon, Mexico and its principal executive offices are located
  at Ave. Ricardo Margain Zozaya 400, San Pedro Garza Garcia, Nuevo Leon, Mexico.

Pursuant to the second clause of our by-laws, our
  principal corporate purposes are (i) to issue, buy and sell stock, bonds, debentures
  or other securities and generally execute any transaction involving such securities
  that is permitted by law, (ii) if authorized by our Board of Directors, to acquire
  shares of our capital stock through purchases on the Mexican Stock Exchange
  or any other securities exchange in which such shares are registered, (iii)
  to execute any kind of credit transaction, (iv) to issue, accept and endorse
  credit instruments, (v) to grant loans and guarantee in any manner, through
  personal or real guarantees, the fulfillment of our subsidiaries' or affiliates'
  obligations, and, with the consent of our Board of Directors, the obligations
  of any third party, (vi) to render services and perform promotion, enhancement
  and restructuring studies and analyses for our subsidiaries, (vii) to acquire
  such tangible or intangible goods and real estate properties that are necessary
  to conduct our business and (viii) in general, to enter into and execute agreements,
  negotiable instruments, guarantees, loans, credit transactions and any other
  related transactions necessary to fulfill our corporate purposes.

Directors' and Shareholders' Conflict of Interest

The provisions of applicable Mexican law described
  below govern issues relating to our directors' and shareholders' conflict of
  interests. The forty-second clause of our by-laws states that any issue not
  expressly provided for in our by-laws will be governed by the Mexican General
  Law of Corporations and the Ley del Mercado de Valores, which we refer to as
  the "Mexican Law of the Securities Market."

Pursuant to article 156 of the Mexican General Law
  of Corporations and article 14 Bis 5 of the Mexican Law of the Securities Market,
  any director of Vitro who has a conflict of interest with Vitro with respect
  to a transaction must disclose such fact to our other directors and abstain
  from voting on such transaction. A director of Vitro who does not comply with
  the requirements described in the immediately foregoing sentence will be liable
  to Vitro for any damages suffered by us arising out of such transaction. Additionally,
  the directors and Examiner of Vitro may not represent or act as a proxy for
  shareholders in any general shareholders' meetings. However, this limitation
  does not apply to prohibit directors of Vitro from attending, participating
  and voting at general shareholders' meetings to the extent they are also shareholders
  of Vitro.

Under article 196 of the Mexican General Law of
  Corporations, any shareholder of Vitro that has a conflict of interest with
  Vitro with respect to a transaction must abstain from voting on such transaction.
  A shareholder of Vitro who does not comply with the requirement described in
  the immediately foregoing sentence will be liable to Vitro for any damages suffered
  by us arising out of such transaction, but only if the transaction would not
  have been approved without such shareholder's vote.

Directors' Compensation

Our Board of Directors may not set the compensation
  of our directors. Our by-laws and article 181 of the Mexican General Law of
  Corporations require that a majority of the shares of our Series "A" common
  stock, no par value, which we refer to as our "Shares," present at the annual
  general ordinary shareholders' meeting with a right to vote, determine our directors'
  and our Examiner's compensation for the immediately subsequent year.

Capital Structure

As a sociedad anonima de capital variable, a portion
  of our capital must be fixed capital and we may have variable capital. The amount
  of our variable capital may not exceed ten times the amount of our fixed capital.
  Both our fixed and variable capital must be represented by our Shares. Other
  than our Shares, no class or series of our common stock has been authorized.

We have not issued Shares representing our variable
  capital and our fixed capital is Ps. 324,000,000, which is represented by 324,000,000
  of our Shares.

Pursuant to our by-laws and Mexican law, our Shares
  may only be held by Mexican investors. However, non-Mexican investors may acquire
  an economic interest in our Shares by holding CPOs. Any acquisition of our Shares
  by non-Mexican investors in violation of our by-laws or Mexican law would be
  null and void. Please see "-Description of CPOs."

Share Registration and Transfer

Our Shares are evidenced by share certificates in
  registered form. Shareholders of Vitro may hold their shares in the form of
  physical certificates or indirectly through institutions that have an account
  with S.D. Indeval, S.A. de C.V., Institucion para el Deposito de Valores, which
  we refer to as "Indeval." Brokers, banks or other entities approved by the CNBV,
  which we collectively refer to as "Indeval Participants," may maintain accounts
  at Indeval. Vitro maintains a registry of our shareholders who have either received
  physical certificates evidencing our Shares or are holding our Shares through
  an Indeval Participant. Only persons listed in such registry and persons holding
  statements issued by Indeval or an Indeval Participant evidencing ownership
  of our Shares will be recognized as shareholders of Vitro.

Voting Rights; Preferences and Restrictions

Although at least 50% of our outstanding Shares
  acting at a general extraordinary shareholders' meeting must approve the issuance
  of new series or classes of our common stock, whose terms may contain certain
  preferences or impose certain restrictions, other than our Shares, no series
  or class of our common stock has been authorized. Each of our Shares entitles
  the holder thereof to one vote at each general shareholders' meeting of Vitro.
  However, the holders of CPOs are not entitled to the voting rights appurtenant
  to the Shares underlying their CPOs. For a detailed description of this limitation,
  please see "-Description of CPOs."

So long as our Shares are registered at the Securities
  Section of the Registro Nacional de Valores, which we refer to as the "RNV,"
  we may not issue shares of common stock that do not grant a right to vote or
  limit other corporate rights without the approval of (i) the CNBV and (ii) at
  least 50% of our outstanding Shares acting at a general extraordinary shareholders'
  meeting. Pursuant to our by-laws, we may not have outstanding shares of our
  common stock whose terms are different than the terms of our Shares in excess
  of 25% of the aggregate book value of our outstanding equity capital. Notwithstanding
  the foregoing, the CNBV may authorize the increase of the foregoing limit by
  an additional 25% of the aggregate book value of our outstanding equity capital,
  provided that such additional shares must be non-voting or otherwise restricted
  shares and must be converted into our Shares within 5 years of their issuance.

Dividends

At each annual general ordinary shareholders' meeting,
  the Board of Directors must submit the audited financial statements of Vitro
  for the previous fiscal year, together with a report thereon prepared by the
  Board of Directors, to our shareholders for their consideration and approval.
  If and when our shareholders approve such financial statements, they must determine,
  subject to the immediately subsequent sentence, the allocation of our distributable
  earnings for the preceding fiscal year. Pursuant to our by-laws, 5% of our net
  income must be allocated to a legal reserve fund until such fund reaches an
  amount equal to at least 20% of our capital. Allocation to the legal reserve
  is determined without reference to inflation adjustments required by Mexican
  GAAP. Thereafter, the remainder of our net income may be allocated to create
  a reserve fund for the repurchase of our Shares and other reserve funds as determined
  by a majority of our Shares present at such annual general ordinary shareholders'
  meeting. The remaining net income shall be distributed to the shareholders on
  a pro rata basis among all of the outstanding Shares.

Those of our Shares that are fully paid and outstanding
  at the time a dividend or other distribution is declared will be entitled to
  share equally in such dividend or other distribution. Those of our Shares that
  are partially paid will be entitled to share in a dividend or distribution in
  the same proportion that such Shares have been paid at the time of the declaration
  of such dividend or distribution. In accordance with the Codigo de Comercio,
  which we refer to as the "Mexican Code of Commerce," our shareholders have 5
  years to collect their dividends from us, beginning on the date the dividends
  are declared payable. If the dividends are not collected during such period,
  a shareholder's right to the dividend is extinguished. For a description of
  dividend rights applicable to holders of CPOs, please see "-Description of CPOs".

Liquidation

Upon our dissolution, one or more liquidators which
  will wind up our affairs must be appointed by a majority of our Shares present
  at a general extraordinary shareholders' meeting. Those of our Shares that are
  fully paid and outstanding at the time of our dissolution will be entitled to
  share equally in any distribution upon liquidation. Those of our Shares that
  are partially paid at the time of our dissolution will be entitled to share
  in a liquidation distribution in the same manner as they would in a dividend
  distribution.

Employee's Mandatory Share in the Company's Profits

Pursuant to Mexican law, each of Vitro and its subsidiaries
  must pay to their respective employees 10% of the taxable income of such entity,
  as determined in accordance with such law, which is generally lower than the
  taxable income and the net income reported by each of Vitro and its subsidiaries.
  To see the amounts paid by us in previous years pursuant to such law, please
  refer to note 17 of our audited financial statements included elsewhere in this
  document.

Redemption

Our Shares are subject to redemption in connection
  with a reduction in our capital. Our capital may be reduced through redemption
  in the following situations: (i) to absorb losses, (ii) to return invested capital
  to shareholders, (iii) to redeem Shares with retained earnings, (iv) upon failure
  to pay for a subscribed Share and (v) upon a Share purchase. In each case, the
  redemption must be approved by at least 50% of our outstanding Shares acting
  at a general extraordinary shareholders' meeting.

The redemption set forth in clause (i) above must
  be on a pro rata basis among all of our outstanding Shares. Our Shares subject
  to the redemption procedure set forth in clause (ii) above would be selected
  by lot before a Notary Public and the selected Shares will be cancelled. In
  the event of a redemption of our Shares with retained earnings, at the option
  of at least 50% of our outstanding Shares acting at a general extraordinary
  shareholders' meeting, such redemption may be carried out either by means of
  a public tender offer conducted in the Mexican Stock Exchange at the prices
  and upon the offer terms determined by such majority or on a pro rata basis
  among all of our outstanding Shares, so that after the redemption, each of our
  shareholders will have the same ownership percentage of our outstanding Shares
  that they had before the redemption.

Purchase by us of our Shares

We may also decrease the number of outstanding Shares
  by purchasing our Shares in the Mexican Stock Exchange at prevailing market
  prices. Purchases would have the effect of either reducing (i) shareholders'
  equity or (ii) paid-in capital. If the purchased Shares are cancelled, shareholders'
  equity will be reduced. If the purchased Shares are held as treasury shares,
  paid-in capital will be reduced.

If the purchase is to be accounted for as a reduction
  of shareholders' equity, a majority of our Shares present at a general ordinary
  shareholders' meeting must approve, for the current fiscal year, the maximum
  aggregate amount of shareholders' equity that may be used for stock purchases,
  which amount may not exceed the aggregate amount of our net retained earnings.
  The Board of Directors' consent is not required for the sale or purchase of
  our Shares.

Purchase Obligation

In accordance with our by-laws, and as required
  by the CNBV, any controlling shareholder Vitro may have must make a public offer
  to purchase those of our Shares held by our other shareholders if our Shares
  cease to be quoted on the Mexican Stock Exchange due to a decision by our shareholders
  to delist our Shares or an order of the CNBV. The price at which such shares
  must be purchased by our controlling shareholder is the higher of (i) the average
  closing quotation price for the 30 trading days prior to the date of the offer
  and (ii) the book value per share, as reflected in the last quarterly report
  with the CNBV and the Mexican Stock Exchange. Notwithstanding the foregoing,
  our controlling shareholder is not required to make such public offer if all
  of our Shares present at the relevant general shareholders' meeting approve
  the delisting of our Shares from the Mexican Stock Exchange. Voluntary delisting
  of our Shares from the Mexican Stock Exchange requires the affirmative vote
  of at least 95% of our Shares present at the relevant general shareholders'
  meeting and the approval of the CNBV.

Variable Capital and Certain Rights to Sell

The fixed portion of our capital may be increased
  or decreased in the manner and on the terms approved by at least 50% of our
  outstanding Shares acting at a general extraordinary shareholders' meeting.
  The variable portion of our capital may be increased or decreased in the manner
  and on the terms approved by a majority of our Shares present at a general ordinary
  shareholders' meeting. Capital increases and decreases must be recorded in our
  Libro de Variaciones de Capital.

If we issue Shares representing the variable portion
  of our capital, any holder of such shares will have the right to have such shares
  redeemed at their request. Any such shareholder intending to obtain a total
  or partial redemption of our Shares representing the variable portion of our
  capital must notify Vitro of such intent by delivering an authenticated written
  notice of withdrawal. If a notice of withdrawal is received prior to the last
  quarter of the fiscal year, the withdrawal will become effective at the end
  of the fiscal year in which the notice is given. Otherwise, the withdrawal will
  become effective at the end of the following fiscal year.

According to our by-laws, shares representing the
  variable portion of our capital that are the subject to a withdrawal notice
  must be redeemed at the lower of: (i) 95% of the average closing quotation price
  on the Mexican Stock Exchange for the 30 trading days prior to the date on which
  the withdrawal becomes effective and (ii) the book value per share as stated
  in our financial statements (as such have been approved at the annual general
  ordinary shareholders' meeting) for the fiscal year at the end of which the
  withdrawal becomes effective. Any such amount to be paid by Vitro becomes due
  on the day following the annual ordinary general shareholders' meeting referred
  to in clause (ii) above.

Capital Increase; Preemptive Rights

At least 50% of our outstanding Shares acting at
  a general extraordinary shareholders' meeting may authorize an increase of the
  fixed portion of our capital and a majority of our Shares present at a general
  ordinary shareholders' meeting may increase the variable portion of our capital.
  An increase in our capital cannot be effected if the Shares representing our
  then existing capital have not been paid in full. Our capital may be increased
  either through (i) contributions made by existing or new shareholders, (ii)
  the capitalization of share-related premiums or advances previously made by
  our shareholders, (iii) the capitalization of retained earnings or valuation
  reserves or (iv) the capitalization of our indebtedness.

In the event of a capital increase, a holder of
  issued and outstanding Shares has a preferential right to subscribe for a sufficient
  number of our Shares to maintain such holder's existing proportional holdings
  of our Shares. Preemptive rights must be exercised within 15 days following
  the publication of notice of the capital increase in the Periodico Oficial del
  Estado de Nuevo Leon. Under Mexican law, such preferential rights cannot be
  waived in advance and cannot be represented by an instrument that is negotiable
  separately from the corresponding Share.

Our shareholders are not entitled to preferential
  rights to subscribe for our Shares issued in connection with a public offering
  if (i) at least 50% of our outstanding Shares acting at a general extraordinary
  shareholders' meeting called for such purpose approves the public offering and
  (ii) other requirements specified in Article 81 of the Mexican Law of the Securities
  Market are satisfied, including obtaining the approval of the CNBV. Such public
  offering may not be made if 25% or more of our Shares present at the general
  extraordinary shareholders' meeting called to consider the public offering vote
  against the public offering.

Appraisal Rights

The Mexican General Law of Corporations provides
  that upon the adoption, at a general extraordinary shareholders' meeting, of
  any of the resolutions listed below, dissenting shareholders will have the right
  to have the Shares they hold appraised and to compel us to redeem such shares
  at the appraised price, subject to the satisfaction of certain terms and conditions.
  The appraisal price will be determined by the proportion of shares submitted
  for appraisal to our net worth as stated in our financial statements approved
  at the most recent general ordinary shareholders' meeting.

Such appraisal rights are triggered by shareholders'
  resolutions approving (i) changes in our business purpose, (ii) our reincorporation
  in a jurisdiction other than Mexico or (iii) our transformation from one corporate
  form to another. Dissenting shareholders must perfect their appraisal rights
  by making a request for appraisal of their Shares within 15 days following the
  date on which the meeting adopting the relevant resolution adjourns.

Modification of Shareholders' Rights

The rights appurtenant to our Shares may only be
  modified through a resolution adopted by at least 50% of our outstanding Shares
  acting at a general extraordinary shareholders' meeting.

Shareholders' Meetings and Resolutions

General shareholders' meetings may be ordinary meetings
  or extraordinary meetings. Extraordinary general meetings are those called to
  consider those matters specified in Article 182 of the Mexican General Law of
  Corporations including, among others, (i) any amendments to our by-laws, (ii)
  our early dissolution, (iii) our merger with another corporation, (iv) any change
  of our business purpose, (v) our issuance of preferred stock, (vi) our transformation
  from one corporate form to another and (vii) any increases or decreases of the
  fixed portion of our capital. General shareholders' meetings called to consider
  all other matters, including increases and decreases of the variable portion
  of our capital, are ordinary meetings.

A general ordinary shareholders' meeting must be
  held at least once a year within the four months following the end of the prior
  fiscal year. The annual general ordinary shareholders' meeting is held every
  year (i) to discuss, approve or modify the Board of Directors' annual report
  regarding our prior year's financial results, the business' development, relevant
  projects, the policies adopted by the Board of Directors and our current financial
  condition, (ii) to elect our directors and Examiner for the immediately subsequent
  year, (iii) to determine our directors' and Examiner's compensation for the
  immediately subsequent year, (iv) to consider, and approve our Board of Directors'
  annual report to our shareholders regarding our subsidiaries' prior year's results
  and performance, including the approval of their respective financial statements
  for the preceding fiscal year and (v) to determine the amount of capital that
  may be used for the purchase of our Shares. A general ordinary shareholders'
  meeting may be called and held at any time (i) to discuss and approve the acquisition
  or disposition of our Shares, whose value exceeds 20% of our shareholders' equity
  as determined by reference to our most recent financial statements, whether
  through one transaction or a series of transactions, (ii) to discuss and approve
  the disposition of shares of one of our subsidiaries dedicated to the production,
  manufacture, distribution or sale of glass containers, flat glass products or
  glassware products, when such disposition would cause the change of control
  of such subsidiary, and (iii) to approve an increase or decrease of the variable
  portion of our capital. At any such general ordinary shareholders' meeting,
  any shareholder or group of shareholders holding 10% or more of our outstanding
  Shares may appoint one of our directors. A majority of our Shares present at
  the annual general ordinary shareholders' meeting must determine the number
  of directors that will comprise the Board of Directors for the immediately subsequent
  fiscal year. The directors elected at the annual general ordinary shareholders'
  meeting serve for a renewable term of one year. If the one year term of office
  of any of our directors is not renewed at the annual general shareholders' meeting,
  each such director will serve until his or her successor is duly elected and
  takes office.

The quorum for a general ordinary shareholders'
  meeting convened at the first call is at least 50% of our outstanding Shares
  entitled to vote at such meeting and action may be taken by holders of a majority
  of our Shares present at such meeting. If a quorum is not present, a subsequent
  meeting may be called at which a quorum shall exist regardless of the number
  of our Shares present at such subsequent meeting and action may be taken by
  a majority of our Shares present at such subsequent meeting. The quorum for
  a general extraordinary shareholders' meeting convened at the first call is
  75% of our Shares entitled to vote at such meeting. If a quorum is not present,
  subsequent meetings may be called at which 50% of our Shares entitled to vote
  at such subsequent meeting will constitute a quorum. Whether on first or subsequent
  calls, actions at a general extraordinary shareholders' meeting may be taken
  only by at least 50% of our outstanding Shares, except for the cancellation
  of the registration of our Shares with the RNV or the delisting of our Shares
  from the Mexican Stock Exchange, which actions may only be taken by at least
  95% of our outstanding Shares.

General shareholders' meetings may be called by
  (i) the Board of Directors or the Examiner, (ii) 10% of our Shares entitled
  to vote at such meeting by means of a request to the Board of Directors or the
  Examiner to call such a meeting, (iii) a Mexican court in the event the Board
  of Directors or the Examiner do not comply with a request as described in clause
  (ii) above and (iv) any of our shareholders, if no general shareholders' meeting
  has been held for two consecutive years or if any of the following matters has
  not been addressed at a general shareholders' meeting within such two year period:
  (a) the annual report of the Board of Directors regarding our financial statements,
  (b) the allocation of our net income, (c) the appointment of our directors and
  Examiner or (d) the compensation of our directors and Examiner. Notice of general
  shareholders' meetings must be published in the Periodico Oficial del Estado
  de Nuevo Leon or in a newspaper of wide distribution in Monterrey, Mexico at
  least 15 calendar days prior to a general shareholders' meeting. Only shareholders
  who have either deposited Shares at our offices or who present statements issued
  by Indeval or an Indeval Participant evidencing ownership by such person of
  our Shares will be admitted as a shareholder to a general shareholders' meeting.
  In order to attend and participate in a general shareholders' meeting, each
  shareholder must obtain from our Secretary a certificate acknowledging their
  status as a shareholder at least 48 hours before the date of the general shareholders'
  meeting. A shareholder may be represented by an attorney-in-fact who holds a
  duly granted proxy or power-of-attorney.

Under the Mexican Law of the Securities Market,
  at least 10% of our Shares entitled to vote on a particular matter may seek
  to have any shareholder action with respect to such matter set aside by filing
  a complaint with a court of law within 15 days after the adjournment of the
  general shareholders' meeting at which such action was taken and showing that
  the challenged action violates Mexican law or our by-laws. Such relief is only
  available to holders (i) who were entitled to vote on, or whose rights as shareholders
  were adversely affected by, the challenged shareholder action and (ii) whose
  Shares were not represented when the action was taken or, if represented, voted
  against it.

Under Mexican law, Vitro must initiate an action
  for civil liabilities against one or more of our directors upon the approval
  of a resolution of our shareholders to that effect. If our shareholders approve
  such a resolution, the persons against whom such action is brought will immediately
  cease to be one of our directors. Additionally, at least 15% of our outstanding
  Shares may directly initiate such an action against our directors, provided
  that (i) such Shares shall not have been voted against initiating such an action
  at the relevant general shareholders' meeting and (ii) the claim covers all
  of the damages alleged to have been caused to Vitro and not merely the damages
  suffered by the plaintiffs. Any recovery of damages with respect to such actions
  will be for our benefit and not for the benefit of the shareholders bringing
  the action.

Asset Acquisitions and Divestitures

Pursuant to our bylaws, the Board of Directors has
  the exclusive and non-assignable power to approve transactions involving: (i)
  the acquisition or disposition of 10% or more of our total assets, (ii) guarantees
  by Vitro in an amount exceeding 30% of our total assets and (iii) transactions
  different from the foregoing in any way affecting more than 1% of our total
  assets.

Description of CPOs

The following is a description of certain provisions
  of (i) the Trust Agreement dated as of November 28, 1990 between Nacional Financiera,
  S.N.C., as grantor and as CPO Trustee, and Vitro, (ii) the public deed dated
  as of November 29, 1990 which evidences the issuance of CPOs by the CPO Trustee
  pursuant to the CPO Trust Agreement and which deed is registered with, and may
  be examined at, the Registro Publico del Comercio de la Ciudad de Mexico, D.F.,
  which deed we refer to as the "First CPO Deed," (iii) the public deed dated
  as of June 24, 1998 which evidences the issuance of CPOs by the CPO Trustee
  pursuant to the CPO Trust Agreement and which deed is registered with, and may
  be examined at, the Registro Publico del Comercio de la Ciudad de Mexico, D.F.,
  which deed we refer to as the "Second CPO Deed," and (iv) applicable provisions
  of the Ley General de Titulos y Operaciones de Credito, which we refer to as
  the "Negotiable Instruments Law." We refer to the First CPO Deed and the Second
  CPO Deed, together, as the "CPO Deeds." This description does not purport to
  be complete and is qualified in its entirety by reference to the CPO Trust Agreement,
  the CPO Deeds, and the provisions of Mexican law referred to in this description.

The CPO Trust Agreement established a master trust
  that enables non-Mexican investors to acquire ordinary participation certificates
  representing economic interests in our Shares. The trust is necessary because,
  under Mexican law and our by-laws, our Shares may not be purchased or held directly
  by non-Mexican investors, as such are determined by applicable law and our by-laws.

The terms of the CPO Trust Agreement were authorized
  by an official communication dated November 27, 1990 from the Direccion General
  de Inversiones Extranjeras de la Comision Nacional de Inversiones Extranjeras.
  The CPO Trust Agreement is registered with the Registro Nacional de Inversiones
  Extranjeras in Mexico City, which we refer to as the "National Registry of Foreign
  Investment." An official communication of the CNBV authorized the issuance of
  CPOs by the CPO Trustee pursuant to the CPO Trust Agreement.

CPOs, which are negotiable instruments under Mexican
  law, have been issued by the CPO Trustee pursuant to the terms of the CPO Trust
  Agreement and the CPO Deeds and may be redeemed as described in "-Deposit and
  Withdrawal of our Shares." Each CPO represents an economic interest in one of
  our Shares held in the CPO Trust. Currently, the maximum number of CPOs that
  can be issued pursuant to the CPO Deeds is 200,000,000. Holders of CPOs are
  not entitled to exercise any voting rights with respect to our Shares held in
  the CPO Trust. Such rights are exercisable by the CPO Trustee pursuant to the
  terms of the CPO Trust Agreement. Pursuant to the Ley de Inversion Extranjera,
  which we refer to as the "Foreign Investment Law," the CPO Trust Agreement qualifies
  as a "neutral investment" trust because, among other things, voting rights in
  respect of the underlying Shares are exercisable only by the CPO Trustee and
  not by the holders of the CPOs.

Deposit and Withdrawal of our Shares

Holders of our Shares may deliver such shares to
  the account of the CPO Trustee at Indeval and receive in return CPOs delivered
  by the CPO Trustee pursuant to the CPO Trust Agreement. All of our Shares delivered
  to the CPO Trustee will be held in trust by the CPO Trustee in accordance with
  the terms and conditions of the CPO Trust Agreement. We will deem the CPO Trustee
  to be the holder of the Shares delivered to the CPO Trustee. Transfer of ownership
  of those of our Shares that underlie CPOs will be effected through the records
  maintained by Indeval and Indeval Participants.

The CPO Trustee will deliver CPOs in respect of
  our Shares transferred as described above. All of the CPOs are evidenced by
  a single certificate, which we refer to as the "Global CPO," which has been
  issued to and deposited with Indeval, acting as depositary. Ownership of CPOs
  deposited with Indeval will be shown on, and transfer of the ownership of such
  CPOs will be effected through, records maintained by Indeval and Indeval Participants.
  Holders of CPOs are not entitled to receive physical certificates evidencing
  such CPOs but may request statements issued by Indeval and Indeval Participants
  evidencing ownership of CPOs. Holders of CPOs that are non-Mexican investors
  are not entitled to withdraw the Shares that are held in the CPO Trust and represented
  by CPOs.

Holders of CPOs may sell their CPOs (i) to a non-Mexican
  investor, in which case, the non-Mexican investor will become the transferee
  of such CPOs or (ii) to a Mexican investor, through the Mexican Stock Exchange,
  in which case, the Mexican investor would be the transferee of the Shares underlying
  such CPOs directly or, by keeping such shares deposited at an account at Indeval,
  such CPOs will be held by the CPO Trustee pending delivery.

Dividends, Other Distributions and Preemptive
  and Other Rights

Holders of CPOs are entitled to receive the economic
  benefits related to the Shares underlying such CPOs, including those dividends
  or distributions approved by our shareholders and to receive the proceeds from
  the sale of such shares at the termination of the CPO Trust Agreement. Please
  see "-Termination of the CPO Trust." The CPO Trustee, through Indeval, will
  distribute cash dividends and other cash distributions received by it with respect
  to our Shares held in the CPO Trust to the holders of the CPOs in proportion
  to their respective holdings in the same currency in which they were received.
  Dividends paid with respect to our Shares underlying CPOs will be distributed
  to CPO holders by Indeval on the business day following the date on which Indeval
  receives the funds on behalf of the CPO Trustee.

If a distribution by Vitro consists of a stock dividend
  on our Shares, such distributed shares will be transferred to Indeval, on behalf
  of the CPO Trustee, and held in the CPO Trust. The CPO Trustee will distribute
  to the holders of outstanding CPOs, in proportion to their holdings, additional
  CPOs in an aggregate number equal to the aggregate number of our Shares received
  by the CPO Trustee as the stock dividend. If the maximum amount of CPOs that
  may be delivered under the CPO Deeds would be exceeded as a result of a dividend
  on our Shares, a new CPO deed will be entered into setting forth that new CPOs
  (including those CPOs exceeding the number of CPOs authorized under the CPO
  Deed) may be issued. If the CPO Trustee receives any distribution with respect
  to our Shares held in the CPO Trust (other than in the form of cash or additional
  Shares), the CPO Trustee will adopt such method, as it may deem legal, equitable
  and practicable to effect the distribution of such property. If we offer, or
  cause to be offered, to the holders of our Shares, the right to subscribe for
  additional Shares, subject to applicable law, the CPO Trustee will offer to
  each holder of CPOs the right to instruct the CPO Trustee to subscribe for such
  holder's proportionate share of such additional Shares (subject to such holder
  providing the CPO Trustee (through Indeval) with the funds necessary to subscribe
  for such additional Shares). Neither we nor the CPO Trustee will be obliged
  to register such rights or the related Shares or CPOs under the Securities Act.
  If an offering of rights occurs, under applicable law and without registration
  under the Securities Act, and CPO holders provide the CPO Trustee with the necessary
  funds, the CPO Trustee (through Indeval) will subscribe for the corresponding
  number of our Shares, which will be placed in the CPO Trust (to the extent possible),
  and deliver additional CPOs (through Indeval) in respect of such shares to the
  applicable CPO holders pursuant to the CPO Deeds or, if applicable, through
  a new CPO deed.

According to Mexican law, dividends or other distributions
  and the proceeds from the sale of our Shares held in the CPO Trust that are
  not received or claimed by a CPO holder within 3 years from the receipt of such
  dividends or distributions by the CPO Trustee or 10 years from such sale will
  become the property of the Mexican Secretaria de Salud.

Changes Affecting our Shares

Upon any change in par value, stock split, consolidation
  or any other reclassification of our Shares, upon any merger or consolidation
  affecting us, or if we pay dividends by distributing shares or other goods different
  from our Shares, the CPO Trustee shall determine, in an equitable and proportional
  manner, any required amendments to be made to the CPO Trust, the CPO Deeds and
  the CPOs, as well as to the instruments representing such CPOs. If in connection
  with a redemption of our Shares, any of our Shares held in the CPO Trust are
  called for redemption, the CPO Trustee will, in accordance with the instructions
  of the technical committee (as defined in "-Administration of the CPO Trust"),
  determine, in any manner deemed to be legal, equitable and practicable, the
  CPOs that are to be redeemed (in a number equal to the number of our Shares
  held in the CPO Trust called for redemption) and pay the holders of such CPOs
  their proportionate share of the consideration paid by us in respect thereof.

Voting of our Shares

Holders of CPOs are not entitled to exercise any
  voting rights with respect to our Shares held in the CPO Trust. Such voting
  rights are exercisable only by the CPO Trustee, which is required by the terms
  of the CPO Trust to vote such shares in the same manner as a majority of our
  outstanding Shares that not held in the CPO Trust are voted at the relevant
  shareholders' meeting. Because CPOs grant no voting rights to holders thereof,
  such holders do not have the benefit of any rights (including minority protection
  rights) granted under applicable law or our by-laws to holders of our Shares.

Administration of the CPO Trust

Pursuant to the terms of the CPO Trust Agreement,
  the CPO Trustee administers the CPO Trust under the direction of a technical
  committee. The technical committee of the CPO Trust, which we refer to as the
  "CPO Technical Committee," consists of five members and their respective alternates.
  Each of the following entities appoints one member of the CPO Technical Committee:
  the Comision Nacional de Inversiones Extranjeras, the Mexican Stock Exchange,
  the Asociacion Mexicana de Casas de Bolsa, the Common Representative (as defined
  below) and the CPO Trustee. Actions taken by the CPO Technical Committee must
  be approved by a majority of the members present at any meeting of such committee,
  at which at least the majority of the members are present. Banca Serfin, Sociedad
  Anonima, Institucion de Banca Multiple, Grupo Financiero Serfin, has been appointed
  as the common representative of the holders of CPOs and we refer to it as the
  "Common Representative."

Pursuant to the Negotiable Instruments Law, the
  duties of the Common Representative include, among others, (i) verifying the
  due execution and terms of the CPO Trust Agreement, (ii) verifying the existence
  of our Shares being held in the CPO Trust, (iii) authenticating the Global CPO,
  (iv) exercising the rights of the CPO holders in connection with the payment
  of any dividend or distribution to which such CPO holders are entitled, (v)
  undertaking any other action to protect the rights, actions or remedies to which
  CPO holders are entitled, (vi) calling and presiding over CPO holders' general
  meetings, each of which we refer to as a "CPO General Meeting," and (vii) carrying
  out the decisions adopted therein. The Common Representative may request from
  the CPO Trustee all information and data necessary for the performance of its
  duties. CPO holders, by a resolution adopted at a duly held CPO General Meeting,
  may (i) revoke the appointment of the Common Representative and appoint a substitute
  Common Representative and (ii) instruct the Common Representative to undertake
  certain actions.

Holders of CPOs representing at least 10% of the
  aggregate number of outstanding CPOs may request that the Common Representative
  call a CPO General Meeting, including in such request the order of business
  for such meeting. Announcements of CPO General Meetings shall be published in
  the Dario Oficial de la Federacion and in one of the newspapers with the largest
  distribution in the domicile of the CPO Trustee, which is currently Mexico City,
  at least 10 days in advance of the date on which the CPO General Meeting is
  scheduled. Announcements of CPO General Meetings shall include the order of
  business for such meetings.

In order for holders of CPOs to be entitled to attend
  CPO General Meetings, such holders must request a statement from Indeval or
  an Indeval Participant, not less than 2 days prior to the date on which such
  meeting is scheduled, evidencing their holdings of CPOs and must submit such
  statement to the institution designated for such purpose in the notice for such
  meeting on or before the day prior to the date on which such meeting is scheduled.
  Persons appointed by an instrument in writing as representatives for a holder
  of CPOs will be entitled to attend CPO General Meetings.

At CPO General Meetings, each holder of a CPO will
  be entitled to one vote per CPO owned by them. Resolutions of the CPO holders
  must be approved by a majority of CPOs present at a CPO General Meeting at which
  there is a quorum. A quorum at a CPO General Meeting initially is constituted
  by holders of a majority of CPOs delivered and, if no quorum is present at such
  meeting, any CPOs present at a subsequently called CPO General Meeting shall
  constitute a quorum. Resolutions adopted by the required number of CPO at a
  duly convened CPO General Meeting will bind all CPOs including absent and dissident
  holders.

Certain matters must be approved at a special CPO
  General Meeting at which, for the first call, 75% of the CPOs delivered must
  be present and resolutions with respect to such matters must be approved by
  a majority CPOs present at such meeting. Such matters include appointment and
  revocation of the Common Representative and the granting of consents, waivers
  or grace periods to the CPO Trustee. If a quorum is not present with respect
  to a CPO General Meeting discussing any such matters, a subsequent meeting may
  be called at which action may be taken regardless of the percentage of delivered
  CPOs present at such meeting.

Enforcement of Rights of CPO Holders

In accordance with the Negotiable Instruments Law,
  CPO holders may, with certain limitations, individually and directly exercise
  certain rights with respect to CPOs. Such rights include the right to cause
  the CPO Trustee to distribute dividends or other distributions received by it
  (directly or through Indeval), to cause the Common Representative to protect
  the rights to which the CPO holders are entitled and to enforce such rights
  and to bring action against the Common Representative for civil liabilities
  in the event of willful misconduct.

Status of CPO Holders

The CPO Trust Agreement and the CPO Deeds provide
  that any investors deemed a non-Mexican investor acquiring CPOs shall be considered
  under the CPO Trust Agreement, by virtue of its acquisition of CPOs, to be a
  Mexican national with respect to its holdings of CPOs and shall be deemed to
  have agreed not to invoke the protection of its own government. If such protection
  is invoked, such CPO holder will forfeit its CPOs to the Mexican government.
  A holder of CPOs is deemed to have invoked the protection of the home government
  of such holder by, for example, asking such government to interpose a diplomatic
  claim against the Mexican government with respect to the CPO holders' rights
  or by bringing suit in its home jurisdiction against the Mexican government
  with respect to such rights. CPO holders will not be deemed to have waived any
  of their other rights, including any rights such holder may have under the United
  States securities laws or pursuant to the terms and provisions of the CPOs.

Termination of the CPO Trust

The CPO Trust Agreement and the CPOs issued under
  the CPO Deeds will expire 30 years after the date of execution of the CPO Trust
  Agreement. The CPO Trustee will commence the procedure for the termination of
  the CPO Trust Agreement 12 months prior to its expiration. At the time of such
  termination, the CPO Trustee will sell our Shares held in the CPO Trust and
  will distribute the proceeds of such sale to the holders of the CPOs on a pro
  rata basis in accordance with the number of CPOs owned by each holder. The CPO
  Trust, with respect of our Shares, may also be terminated upon a resolution
  approved by a majority of the CPOs present at a CPO General Meeting. Notwithstanding
  the foregoing, the CPO Trust Agreement cannot be terminated if any dividends
  or other distributions previously received by the CPO Trustee remain unpaid
  to the CPO holders.

Upon the expiration of the CPO Trust Agreement,
  subject to obtaining the applicable authorizations from the Mexican government,
  the CPO Trustee and any CPO holder may execute a new trust agreement with the
  same terms as the CPO Trust Agreement. There can be no assurances that a new
  trust agreement will be executed. In such a case, our Shares represented by
  the CPOs owned by any holder who executes the new trust agreement will be transferred
  by the CPO Trustee to the new trust created pursuant to such new trust agreement
  and new ordinary participation certificates issued under the new trust agreement
  will be issued by the trustee and delivered to such holder.

Limitations Affecting ADSs Holders

Each of our Shares is entitled to one vote at general
  shareholders' meetings. Holders of ADRs and CPOs are not entitled to vote the
  underlying Shares. Voting rights with respect to the underlying Shares are exercisable
  only by the CPO Trustee, which is required to vote all such shares in the same
  manner as the majority of our Shares that are not held in the CPO Trust are
  voted at the relevant meeting.

Our by-laws prohibit ownership of our Shares by
  non-Mexican nationals. Any acquisition of our Shares in violation of such provision
  would be null and void under Mexican law and such shares would be cancelled
  and our capital accordingly reduced. Non-Mexican nationals may, however, hold
  an economic interest in our Shares through a neutral investment trust such as
  the CPO Trust.



MATERIAL CONTRACTS

Vitromatic

On July 3, 2002, we sold our controlling 51% interest
  in Vitromatic, our joint venture with Whirlpool that engaged in the production
  and distribution of household appliances, to Whirlpool for $148.3 million in
  cash ($10 million of which was paid into escrow in support of certain indemnification
  obligations to Whirlpool). At the time of the transaction, approximately $67
  million of our consolidated debt and approximately $97 million of our consolidated
  off-balance sheet financings were obligations of Vitromatic. Consequently, upon
  the consummation of the sale of our interest in Vitromatic, our consolidated
  debt and off-balance sheet financings were reduced by approximately $67 million
  and approximately $97 million, respectively.

Indebtedness

Please see "Item 5. Operating and Financial Review
  and Prospects-Liquidity and Capital Resources-Description of our Indebtedness"
  for a summary of the terms of the agreements and instruments governing our material
  indebtedness.

Off-Balance Sheet Arrangements

Please see "Item 5. Operating and Financial Review
  and Prospects-Off-Balance Sheet Arrangements" for a description of our off-balance
  sheet arrangements.



EXCHANGE CONTROLS

Please see "Risk Factors-If exchange controls and
  restrictions are imposed, we may not be able to service our debt in U.S. dollars,
  which can expose investors to currency risk."



TAXATION

Mexican Taxes

The following general summary of Mexican taxes is
  based on Mexican federal tax laws in force on the date of this Form 20 F, which
  are subject to change. It is not intended to constitute a complete analysis
  of the tax consequences under Mexican law of the purchase, ownership and sale
  of ADSs, CPOs or Common Shares. (See “Item 5. Operating and Financial
  Review and Prospects—Liquidity and Capital Resources—Description
  Of Our Indebtedness—Vicap Notes) by individuals or corporations non-residents
  of Mexico.

Each prospective investor should consult its tax
  adviser as to the Mexican, United States, or other tax consequences of an investment
  in, the ownership of, and the disposition of, ADSs, CPOs, common shares, or
  Vicap Notes, including the effects of any foreign, state or local tax laws.

ADSs, CPOs and Common Shares

Effective in June 2001 a new rule was issued by
  the Ministry of Finance and Public Credit under which payments of dividends,
  either in cash or any other form, paid with respect to ADSs, CPOs or Common
  Shares to a non-resident of Mexico will be subject to a withholding tax equal
  to 5% of the amount of dividends paid.

Gains realized by non-residents of Mexico resulting
  from the sale of Common Shares, CPOs or ADSs sold through an authorized stock
  exchange (such as the Mexican Stock Exchange or the New York Stock Exchange)
  or broad-based market in any country, as determined by the general rules issued
  therefore by the Ministry of Finance and Public Credit (an "Authorized Stock
  Exchange Market") are exempt from Mexican Federal withholding tax. However,
  if the sale of the Common Shares, CPOs or ADSs by a non-resident of Mexico is
  not made through an Authorized Stock Exchange Market, the transaction will be
  subject to Mexican federal withholding tax at a rate of 20% of the gross sales
  price. However if the seller is a resident of a country not-deemed a tax-haven
  under Mexican Law, and the seller appoints a representative in Mexico for income
  tax purposes related to such sale, the seller has the option to pay Mexican
  federal income tax at a rate of 40% of the gain on the sale.

Notwithstanding the foregoing, according to the
  Tax Treaty (as defined below), gains obtained by a resident of the United States
  for tax from the sale of stock of the Company (such as our Common Shares, CPOs
  and ADSs), may only be taxed in Mexico if the recipient of the gain, during
  the 12 month period preceding such sale, had a participation, directly or indirectly,
  of at least 25% in our capital; otherwise such gain will not be taxed in Mexico.

Deposits and withdrawals of CPOs in exchange for
  ADSs will not be subject to Mexican federal withholding tax. There are no Mexican
  indebtedness taxes imputable to the ownership, transfer or dispositions of Common
  Shares, CPOs or ADSs.

United States Taxes

ADS, CPOs and Common Shares

The following summary of United States federal income
  taxes is based on United States federal income tax laws in force on the date
  of this Form 20 F. It describes the principal United States federal income tax
  consequences of the purchase, ownership and sale of ADSs (which are evidenced
  by ADRs) or CPOs, as the case may be, by a citizen, or resident of the United
  States or a corporation (or entity taxable as a corporation) organized or created
  in the United States or any political subdivision thereof, as the case may be
  ("United States Holder"). This section does not provide a complete analysis
  or listing of all of the possible tax consequences of the purchase, ownership
  and sale of the ADSs or CPOs, as the case may be, and does not address tax consequences
  to special persons such as dealers or traders in securities, United States Holders
  whose functional currency is not the U.S. dollar, persons holding ADSs or CPOs,
  as part of a hedge, straddle, conversion or other integrated transaction, certain
  U.S. expatriates, banks, real estate investment trusts (REITs), regulated investment
  companies (RICs), tax-exempt entities or corporations owning at least 10% of
  our stock.

If a partnership holds ADSs or CPOs, the tax treatment
  of a partner will generally depend upon the status of the partner and upon the
  activities of the partnership. If you are a partner of a partnership holding
  ADSs or CPOs you should consult your tax advisor. Investors should consult their
  tax advisors with respect to the tax consequences of the purchase, ownership
  and sale of ADSs or CPOs including consequences under state and local tax laws.

Taxation of Cash Distributions and Distributions
  of Stock

For United States federal income tax purposes, United
  States Holders of ADSs or CPOs generally will be treated as the owners of the
  underlying Common Shares. To the extent that distributions paid by us with respect
  to such Common Shares do not exceed our earnings and profits ("E&P"), as
  calculated for United States federal income tax purposes, such distributions
  will be taxed as dividends. If these dividends constitute qualified dividend
  income ("QDI"), individual United States Holders of our ADSs or CPOs will generally
  pay tax on such dividends at rates applicable to net capital gains (see "Taxation
  Upon Sale or Other Disposition"), provided that certain holding period requirements
  are satisfied. Dividends paid by us will be QDI if we are a Qualified Foreign
  Corporation ("QFC") at the time the dividends are paid. We believe that we are
  currently, and will continue to be, a QFC so as to allow all dividends paid
  by us to be QDI for United States federal income tax purposes. Corporate Holders
  receiving dividends paid by us will not benefit from the reduced tax rate on
  dividends available to individual Holders.

To the extent that distributions by us exceed our
  E&P, such distributions will be treated as a tax-free return of capital,
  by both individual and corporate Holders, to the extent of each such Holder's
  basis in their ADSs or CPOs, and will reduce such Holder's basis in the ADSs
  or CPOs on a dollar-for-dollar basis (thereby increasing any gain or decreasing
  any loss on a disposition of the ADSs or CPOs). To the extent that the distributions
  exceed the Holders basis in the ADSs or CPOs, each such individual or corporate
  Holder will be taxed as having recognized gain on the sale or disposition of
  the ADSs or CPOs (see "Taxation Upon Sale or Disposition," below). Because we
  are not a United States corporation, dividends paid by us will not be eligible
  for the dividends received deduction generally allowable to corporations under
  the Internal Revenue Code.

If distributions on the ADSs and CPOs are made in
  pesos, any dividends so paid generally will be includible in a United States
  Holder's gross income in a U.S. dollar amount calculated by reference to the
  exchange rate in effect on the day such Holder or the CPO Trustee receives the
  dividend. It is expected that the CPO Trustee will, in the ordinary course,
  convert pesos received by it as distributions on the ADSs or CPOs into U.S.
  dollars. To the extent that the CPO Trustee does not convert the pesos into
  U.S. dollars at the time that such Holder is required to take the distribution
  into gross income for United States federal income tax purposes, such Holder
  may recognize foreign exchange gain or loss, taxable as ordinary income or loss,
  on the later conversion of the pesos into U.S. dollar. The gain or loss recognized
  will generally be based upon the difference between the exchange rate in effect
  when the pesos are actually converted at the "spot" exchange rate in effect
  at the time the distribution is taken into account.

Dividends paid by us will generally be treated as
  foreign source income for United States foreign tax credit limitation purposes.
  Subject to certain limitations, United States holders may elect to claim a foreign
  tax credit against their United States federal income tax liability for foreign
  tax withheld (if any) from dividends received in respect of the ADSs or CPOs,
  as applicable. The limitation on foreign taxes eligible for credit is calculated
  separately with respect to specific classes of income. For this purpose, dividends
  paid in respect of our ADSs or CPOs, as applicable, generally will be "passive
  income" or, in the case of certain types of United States holders, "financial
  services income" and therefore any United States federal income tax imposed
  on these dividends cannot be offset by excess foreign tax credits that such
  Holders may have from foreign source income not qualifying as passive income
  or financial service income, respectively. United States Holders that do not
  elect to claim a foreign tax credit may instead claim a deduction for foreign
  tax withheld (if any).

Distributions of Common Shares to the CPO Trustee
  with respect to its holdings of Common Shares and distributions of CPOs and
  ADSs to United States Holders with respect to their holdings of CPOs and ADSs,
  as the case may be (such previously held ADSs or CPOs being "Old Stock"), that
  are pro rata with respect to their holdings of Old Stock will generally not
  be subject to United States federal income tax (except with respect to cash
  received in lieu of fractional Common Shares, CPOs and ADSs). The basis of the
  CPOs and ADSs so received will be determined by allocating the United States
  Holder's adjusted basis in the Old Stock between the Old Stock and the CPOs
  and ADSs so received.

Taxation Upon Sale or Other Disposition

A United States Holder that holds ADSs or CPOs as
  capital assets will recognize capital gain or loss for United States federal
  income tax purposes upon a sale or other disposition of such ADSs or CPOs in
  an amount equal to the difference between such United States Holder's basis
  in the ADSs or CPOs and the amount realized on their disposition. Under current
  law, capital gains realized by corporate and individual taxpayers are generally
  subject to United States federal income taxes at the same rate as ordinary income,
  except that long-term capital gains realized by individuals, trusts and estates
  are subject to federal income taxes at a maximum rate of 15% for taxable years
  beginning before January 1, 2009 (20% thereafter). Certain limitations exist
  on the deductibility of capital losses by both corporate and individual taxpayers.
  Capital gains and losses on the sale or other disposition by a United States
  Holder of ADSs or CPOs generally should constitute gains or losses from sources
  within the United States.

If you are a cash basis United States Holder who
  receives foreign currency in connection with a sale or other taxable disposition
  of ADSs or CPOs, as applicable, the amount realized will be based on the U.S.
  dollar value of the foreign currency received with respect to such ADSs or CPOs
  as determined on the settlement date of such sale or other taxable disposition.

If you are an accrual basis United States Holder,
  you may elect the same treatment required of cash basis taxpayers with respect
  to a sale or other taxable disposition of ADS or CPOs, as applicable, provided
  that the election is applied consistently from year to year. Such election may
  not be changed without the consent of the Internal Revenue Service. If you are
  an accrual basis United States Holder and do not elect to be treated as a cash
  basis taxpayer (pursuant to the Treasury Regulations applicable to foreign currency
  transactions) for this purpose, you may have a foreign currency gain or loss
  for United States federal income tax purposes because of differences between
  the U.S. dollar value of the foreign currency received prevailing on the date
  of the sale or other taxable disposition of ADSs or CPOs, as applicable, and
  the date of payment. Any such currency gain or loss generally will be treated
  as ordinary income or loss and would be in addition to gain or loss, if any,
  that you recognized on the sale or other taxable disposition of ADS or CPOs,
  as applicable.

Deposits and withdrawals by United States Holders
  of CPOs in exchange for ADSs and of ADSs in exchange for CPOs will not be subject
  to any United States federal income tax.

U.S. Federal Income Tax Consequences to Non-United
  States Holders

Taxation of Cash Distributions and Distributions
  of Stock

Holders who are not United States Holders ("Non-United
  States Holders") will generally not be subject to U.S. federal income tax on
  distributions made on ADSs or CPOs, as the case may be, unless such Holders
  conduct a trade or business in the United States and such dividends are effectively
  connected with the conduct of that trade or business (and, if an applicable
  income tax treaty so requires as a condition for you to be subject to U.S. federal
  income tax on a net income basis in respect of income from our ADSs or CPOs,
  such dividends are attributable to a permanent establishment that you maintain
  in the United States).

If a Non-United States Holder fails the above test,
  such Holder will generally be subject to U.S. federal income tax with respect
  to such dividends in the same manner as a United States Holder, as described
  above. In addition, any effectively connected dividends received by a non-U.S.
  corporation may also, under certain circumstances, be subject to an additional
  branch profit tax at a 30% rate, or such lower rate as may be specified by an
  applicable income tax treaty.

Taxation Upon Sale or Other Disposition

Non-United States Holders will not be subject to
  U.S. federal income tax in respect of gain recognized on a sale or other disposition
  of ADSs or CPOs unless (i) such non-United States Holder's gain is effectively
  connected with a trade or business conducted by such Holder in the United States
  (and, if an applicable tax treaty so requires, as a condition for you to be
  subject to U.S. federal income tax on a net basis in respect of gain from the
  sale or other disposition of ADSs or CPOs, such gain is attributable to a permanent
  establishment maintained by such Holder in the United States or (ii) such Holder
  is an individual and present in the United States for at least 183 days in the
  taxable year of the sale or other disposition and certain other conditions are
  met.

Effectively connected gains realized by a non U.S.
  corporation may also, under certain circumstances, be subject to an additional
  branch profit tax at a 30% rate, or such lower rate as may be specified by an
  applicable income tax treaty.

United States Backup Withholding and Information
  Reporting

In general, information reporting requirements will
  apply to certain payments of principal or interest on payments of dividends
  on Common Shares, ADSs or CPOs and the proceeds of certain sales of Common Shares,
  ADSs or CPOs in respect of United States Holders other than certain exempt persons
  (such as corporations). A 28% backup withholding tax (31% for 2011 and thereafter)
  will apply to such payments if the United States Holder fails to provide a correct
  taxpayer identification number of certification of exempt status or, with respect
  to certain payments, the United States Holder fails to report in full all dividend
  and interest income and the Internal Revenue Service notifies the payer of such
  under-reporting. Non-United States Holders generally are not subject to information
  reporting and backup withholding, but may be required to provide certification
  of Non-United States status in order to establish exemption. Backup withholding
  may apply to Non-United States Holders if such Holders sell Common Shares, ADSs
  or CPOs through a U.S. broker and information reporting, but not backup withholding,
  may apply if such Holders sell Common Shares, ADSs or CPOs through a broker
  with certain connections in the U.S. Amounts withheld under the backup withholding
  rules may be credited against your United States federal tax liability, and
  you may obtain a refund of any excess amounts withheld under the backup withholding
  rules by filing the appropriate claim form with the Internal Revenue Service.

Tax Treaties

A Convention for the Avoidance of Double Taxation
  and a Protocol thereto (the "Tax Treaty") between the United States and Mexico
  became effective on January 1, 1994. Provisions of the Tax Treaty that may affect
  the taxation of certain United States holders of Notes are included above. The
  United States and Mexico have also entered into an agreement that covers the
  exchange of information with respect to tax matters. In addition, Mexico has
  in effect similar tax treaties with Belgium, Brazil, Canada, Denmark, Finland,
  France, Germany, Italy, Japan, Korea, Netherlands, Norway, Spain, Singapore,
  Sweden, Switzerland, the United Kingdom, Chile, Ecuador, Ireland, Israel and
  Venezuela.



DIVIDENDS AND PAYING AGENTS

Owners of ADSs and CPOs are entitled to receive
  any dividends payable in respect of the shares of Series "A" common stock underlying
  such ADSs and CPOs. However, those owners are not entitled to vote the underlying
  shares of Series "A" common stock, including with respect to the approval of
  such dividends. Cash dividends will be paid to the CPO Trustee in pesos and,
  with respect to CPOs on deposit with the Depositary, such dividends will be
  paid by the CPO Trustee to the Depositary in pesos.



DOCUMENTS ON DISPLAY

Vitro is subject to the informational reporting
  requirements of the Exchange Act and files with the SEC:

* annual reports;

* certain other reports or information that it makes
  public under Mexican law, files with the CNBV and the Mexican Stock Exchange
  or distributes to shareholders; and

* other information.

You may access and read Vitro's SEC filings through
  the SEC's Internet site at www.sec.gov. This site contains reports and other
  information that Vitro files electronically with the SEC.

You may also read and copy any reports or other
  information that Vitro files with the SEC at the SEC's public reference room
  at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
  for further information on the public reference room. In addition, materials
  filed by Vitro may also be inspected at the offices of the New York Stock Exchange
  at 20 Broad Street, New York, New York 10005.

As a foreign private issuer, Vitro is exempt from
  the rules under the Exchange Act prescribing the furnishing and content of proxy
  statements and is not required to file proxy statements with the SEC. In addition,
  Vitro's officers, directors and principal shareholders are exempt from the reporting
  and "short swing" profit recovery provisions contained in Section 16 of the
  Exchange Act.

You may request copies of any of our SEC filings
  or any other document described in this annual report by requesting them in
  writing or by telephone at the following address and phone number:

Vitro, S.A. de C.V.Av. Ricardo Margain Zozaya 440,Col.
  Valle del Campestre,San Pedro Garza Garcia,Nuevo Leon, 66265, MexicoAttention:
  Investor Relations DepartmentTelephone number: (52-81) 8863-12-00

You may obtain additional information about Vitro
  through our web site at www.vitro.com. The information contained therein is
  not part of this annual report.



Item 11. QUANTITATIVE AND
  QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our business activities require that we hold or
  issue financial instruments, primarily debt obligations in pesos or in U.S.
  dollars, that expose us to market risk caused by movements in interest rates
  or currency exchange rates. To minimize our exposure to these risks, we utilize
  financial derivative instruments. We enter into derivative transactions for
  periods and amounts consistent with related underlying exposures. We do not
  enter into derivative transactions for arbitrage or speculative purposes.

Debt Subject to Market Risk

The table below provides information as of December
  31, 2002 regarding our debt obligations with maturities originally extending
  for more than one year that are sensitive to changes in interest or foreign
  currency exchange rates. For these debt obligations, the table presents scheduled
  principal according to their respective maturity dates. The fair value of long-term
  fixed-rate debt is based on the quoted market prices for the debt instrument
  when there is an observable market (Senior Vicap Notes) or, when this is not
  the case, fair value is calculated based on the present value of future cash
  flows, discounted back using the yield curve that applies to the most recent
  issuance of a comparable instrument (fair value of fixed-rate UDIs future cash
  flows is discounted back using the forward variable rate that applies to the
  recent issuance of Certificados Bursatiles).

|                                                                             | Expected Maturity Date  
|---------------------------------------------------------------------------- | ------------------------
|(Millions of constant pesos as of December 31, 2002, except for percentages)
|                                                                             | 2003                    
|Fixed rate debt:                                                             |                         
|Dollar-denominated(1)                                                        | Ps. 234                 
|Weighted average coupon                                                      | 11.40%                  
|                                                                             |                         
|Floating rate debt:                                                          |                         
|Dollar-denominated(1)                                                        | Ps.  1,525              
|Weighted average interest rate                                               | LIBOR plus 2.28%        
|                                                                             |                         
|Peso-denominated                                                             | Ps. 0                   
|Weighted average interest rate:                                              | 180-day CETES plus 3.09%
|                                                                             |                         
|UDI-denominated(2)                                                           | Ps. 54                  
|Weighted average interest rate                                               | 9.40%                   

(1) The principal amount of our dollar-denominated
  debt was translated to pesos at 10.4393, the Free Exchange Rate as of December
  31, 2002.
  (2) Based on the pesos per UDI value published by Banco de México in
  the Diario Oficial de la Federación, which in turn, is based on the INPC.

Interest Rate Risk

Our exposure to market risk associated with changes
  in interest rates relates primarily to our debt obligations, most of which bear
  interest at floating rates. In the ordinary course of business we enter into
  interest rate swap agreements to hedge future interest payments under floating
  rate debt.

The following table presents notional amounts and
  weighted average interest rates by contractual maturity dates of our interest
  rate swaps as of December 31, 2002. Notional amounts are used to calculate the
  contractual payments to be exchanged under each contract.

|                                                       | Outstanding Notional Amounts                                                
|------------------------------------------------------ | ----------------------------------------------------------------------------
|                                                       | (Millions of constant pesos as of December 31, 2002, except for percentages)
|Interest
      Rate Swaps                              | 2002                                                                        
|a) From Float to Fixed                                 |                                                                             
|Aggregate outstanding notional  at year end            | Ps. 2,164                                                                   
|Vitro pays (vs LIBOR receipts)                         | 5.39%                                                                       
|                                                       |                                                                             
|b) From Fixed on UDIS to Fixed on $                    |                                                                             
|Aggregate outstanding notional  at year end            | Ps
        1,145                                                            
|Vitro pays over a notional amount of 107.9 Million Ps. | 8.97%                                                                       
|Vitro receives over the outstanding notional amount    | 9.39%                                                                       

Interest Rate Options

|Aggregate outstanding notional  at year end | Ps. 3,654 | Ps. 3,654 | Ps. 3,654 | Ps. 3,654 | Ps.
        0 | Ps.
        0 |       |                
|------------------------------------------- | --------- | --------- | --------- | --------- | ------------- | ------------- | ----- | ---------------
|Option
      premium (financed)             | 1.95%     | 1.95%     | 1.95%     | 1.95%     |               |               | 1.95% |                
|Strike price on 6 month LIBOR               | 4.00%     | 4.00%     | 4.00%     | 4.00%     |               |               | 4.00% | Ps.
        210

(1) The fair value of this Swap is
  included in the valuation of the "Swaps covering UDI-denominated debt"
  in the following section.

Figures shown in brackets represent a gain in the
  market value of the derivative transaction.

Exchange Rate Risk

We periodically enter into currency swap agreements
  to mitigate our exposure to foreign currency exchange rate variation. The table
  below provides information as of December 31, 2002 regarding our currency swaps
  used primarily to reduce our exposure to UDI or U.S. dollar exchange rate risk.

|                                                                  | Exchange of Notional Amounts
|----------------------------------------------------------------- | ----------------------------
|(millions of constant pesos as of December 31, 2002)             
|Currency
      Exchange Swaps                                     | 2003                        
|a) Swaps covering UDI-denominated debt notional UDIs (receive (1) | UDIs  0                     
|Nominal Pesos (pay)(2)                                            | Ps. 0                       
|                                                                  |                             
|b) Swaps covering dollar denominated debt                         |                             
|                                                                  | $ 0                         
|Notional $(receive)                                               |                             
|Nominal Pesos (pay)                                               | Ps. 0                       

(1) UDIS amounts are shown in Millions.
  Entered into to cover debt represented by notes issued by us in the Mexican
  public market. The price of the UDI as of December 31, 2002 was Ps. 3.225778
  per UDI. We will receive an amount of Pesos equal to the notional amount of
  UDIs shown in the table, multiplied by the peso/UDI exchange rate on the maturity
  date, and we will pay the amount of pesos shown in the table.

Since this table deals with amounts of local currency
  to be received in the future, it is appropriate to express the amounts in nominal
  or non-inflation adjusted amounts.

Other Financial Instruments Risks

As described in "Item 5. Operating and Financial
  Review and Prospects-Liquidity and Capital Resources-Description of our Indebtedness,"
  a swap and the 13.889% Credit Linked Notes issued by the CLN Issuer in connection
  with its purchase of the 2009 Senior Notes convey certain exposure to financial
  risk to us until the total amount of the 2009 Senior Notes are sold by CSFBI.
  Our exposure depends on the market value of 11 3/8% Guaranteed Notes and the
  occurrence of a "Credit Event" (as defined in the 13.889% Credit Linked
  Notes).

Natural Gas Price Risk

Natural gas is the principal fuel source of our
  glass furnaces. We have entered in the past, and intend to continue entering
  in the future, into natural gas purchase contracts to reduce the price volatility
  to us of the natural gas we consume. Any such contracts we have entered into
  or will enter into will be designated as cash flow hedges to cover our anticipated
  natural gas requirements. Accordingly, these natural gas hedges will be purchases
  in the ordinary course of business, and thus, not subject to derivative accounting.

As of December 31, 2002, we maintained hedges on
  the price of natural gas for approximately 42% of our consumption needs with
  Pemex at a price of $4.00 per million British Thermal Unit, which we refer to
  as “MMBTU.” These hedges expired on March 31, 2003. Approximately
  an additional 25% of our natural gas requirements were covered by additional
  hedges contracted in the derivatives market at prices averaging $4.08 per MMBTU,
  which we refer to as the “market hedges.” The market hedges expired
  on or prior to March 31, 2003.

We also maintain additional hedges with Pemex at
  a price of $4.16 MMBTU which will expire in December 2003. These hedges relate
  to approximately 17% of our expected natural gas consumption for the remainder
  of 2003.



Item 12. DESCRIPTION OF SECURITIES
  OTHER THAN EQUITY SECURITIES

Not applicable.



PART II

Item 13. DEFAULTS, DIVIDEND
  ARREARAGES AND DELINQUENCIES

Covenant Compliance

During the last three years and during the first
  six months of 2003, we breached certain of our covenants relating to the maintenance
  of financial ratios and the provision of notice of a change in our subsidiary's
  corporate name contained in certain of our credit agreements and in one of our
  accounts receivables factoring programs. In each case, either (i) such breach
  was waived by the lender, (ii) we repaid in full the outstanding indebtedness
  under such credit agreements or (iii) we purchased the accounts receivable from
  the lender. At no time did we fail to make required principal or interest payments.
  We are currently not in (i) default in the payment of principal, interest or
  sinking or purchase fund installments or (ii) any other material default that
  has not been cured within 30 days, in each case, relating to our indebtedness
  and off-balance sheet arrangements.

In addition, under certain of our subsidiaries'
  credit agreements, if such subsidiary does not meet certain financial ratios
  and other conditions, its ability to pay dividends is restricted. During 2001
  and 2002, certain of our subsidiaries were restricted from paying dividends
  by their credit agreements. For more information, please see "Item 5. Operating
  and Financial Review and Prospects-Liquidity and Capital Resources-Description
  of our Indebtedness-Long-Term Debt."

Anchor Glass Inc.

In September 1996, Anchor Glass filed for protection
  under Chapter 11 of the United States Bankruptcy Code. In connection with the
  bankruptcy proceedings, Anchor Glass stopped payments of principal and interests
  due on approximately $470 million in aggregate principal amount of its various
  series of outstanding debt securities (of which, $170 million, $100 million
  and $200 million were senior secured, senior unsecured and senior subordinated
  debt securities, respectively). In February 1997, Anchor Glass sold substantially
  all of its assets to New Anchor and to Owens-Brockway Glass. In connection with
  such sale, the creditors' committee of Anchor Glass released Vitro from any
  liabilities we might have had under Anchor Glass' indebtedness.



Item 14. MATERIAL MODIFICATIONS
  TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

Item 15. CONTROLS AND PROCEDURES

We have conducted an evaluation of the effectiveness
  of the design and operation of our "disclosure controls and procedures" within
  the 90 days prior to the date of this Annual Report on Form 20 F. We refer to
  such disclosure controls and procedures as our "Disclosure Controls." This evaluation,
  which we refer to as the "Controls Evaluation," was conducted under the supervision
  and with the participation of management, including the Chief Executive Officer
  and the Chief Financial Officer, which we refer to as the "CEO" and the "CFO,"
  respectively.

Our management, including the CEO and the CFO, does
  not expect that our Disclosure Controls or our internal controls and procedures
  for financial reporting, which we refer to as our "Internal Controls," will
  prevent all error and all fraud. A control system, no matter how well conceived
  and operated, can provide only reasonable, not absolute, assurance that the
  objectives of the control system are met. Further, the design of a control system
  must reflect the fact that there are resource constraints and the benefits of
  the controls must be considered relative to their costs. Because of the inherent
  limitations in all control systems, no evaluation of controls can provide absolute
  assurance that all control issues and instances of fraud, if any, within Vitro
  have been detected. These inherent limitations include the realities that judgments
  in decision-making can be faulty and that breakdowns can occur because of simple
  error or mistake. Additionally, controls can be circumvented by the individual
  acts of some persons, by collusion of two or more people or by management override
  of the control. The design of any system of controls also is based in part upon
  certain assumptions about the likelihood of future events and there can be no
  assurance that any design will succeed in achieving its stated goals under all
  potential future conditions; over time, controls may become inadequate because
  of changes in conditions or the degree of compliance with the policies or procedures
  may deteriorate. Because of the inherent limitations in a cost-effective control
  system, misstatements due to error or fraud may occur and not be detected.

Based upon the Controls Evaluation, the CEO and
  the CFO have concluded that, subject to the limitations noted above, the Disclosure
  Controls are effective to timely alert management to material information relating
  to us during the period when our periodic reports are being prepared.

In addition, since the date of the Controls Evaluation
  to the date of this Annual Report, there have been no significant changes in
  our Internal Controls or in other factors that could significantly affect our
  Internal Controls, including any corrective actions with regard to significant
  deficiencies and material weaknesses.

**Outsourcing of Internal Audit Function**

During 2001, 2002 and the first half of 2003, we
  outsourced our internal audit function to Deloitte & Touche / Galaz, Yamazaki,
  Ruiz Urquiza, S.C., which was also our independent auditor during the same periods.
  Beginning on May 6, 2004, pursuant to the SOA and the SEC regulations enacted
  thereunder, such internal audit functions may not be performed for us by our
  independent auditor. We have already begun the process of interviewing and selecting
  an alternative provider of these internal audit functions.

Item 16. RESERVED

Item 16A. AUDIT COMMITTEE
  FINANCIAL EXPERT

As required by the regulations issued by the CNBV,
  on March 19, 2003, we designated Mr. Jaime Serra Puche, one of our directors,
  as the experto financiero serving on the Audit Committee of our Board of Directors.
  The attributes necessary to be an experto financiero for purposes of Mexican
  regulation are not the same attributes necessary to be an "audit committee financial
  expert" under the rules and regulations issued by the SEC and the listing standards
  of the NYSE. Therefore, Mr. Serra Puche may not be, and we make no representation
  that he is, an "audit committee financial expert" for purposes of U.S. federal
  securities law.



PART III

Item 17. FINANCIAL STATEMENTS

We are furnishing financial statements pursuant
  to the instructions of Item 18 of Form 20 F.

Item 18. FINANCIAL STATEMENTS

The consolidated financial statements of Vitro,
  S.A. de C.V. and its subsidiaries attached to this annual report on Form 20
  F have been audited by Deloitte & Touche, independent public accountants,
  as stated in their report with respect to the consolidated financial statements.
  See pages F 1 to F-47.

Item 19. EXHIBITS

|                                                                                                                                                                                                                                                                                                                                                                                                                                     | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|1.1  By-laws (Estatutos Sociales)
      of Vitro, S.A. de C.V.                                                                                                                                                                                                                                                                                                                                                                       | *** 
|2.1  Form of Deposit Agreement among the Company, Nacional Financiera
      S.N.C., Citibank, N.A. and all registered holders from time to time of American
      Depositary Receipts issued thereunder, including the form of American Depositary
      Receipt                                                                                                                                                                     | **  
|2.2  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                                                                                                                                                                                                                                        | **  
|2.3  Public Deed dated November 29, 1009 (the "Public Deed"), together
      with an English translation                                                                                                                                                                                                                                                                                                                             | **  
|2.4  Common Shares Trust Agreement                                                                                                                                                                                                                                                                                                                                                                                                   | **  
|2.5  CPO Trust Agreement and Public Deed                                                                                                                                                                                                                                                                                                                                                                                             | **  
|2.6  Form of Certificado Bursatil                                                                                                                                                                                                                                                                                                                                                                                                    | *   
|2.7  Indenture dated as of May 1, 1997 among Vicap, S.A. de C.V., Vitro,
      S.A. and Texas Commerce Bank National Association, as Trustee (including
      exhibits)                                                                                                                                                                                                                                                              | ****
|2.8  Form of 11 3/8% Guaranteed Senior Note due 2007 (included in Exhibit
      2.7)                                                                                                                                                                                                                                                                                                                                                 | ****
|2.9  Form of 11 3/8% Guarantee (included in Exhibit 2.7)                                                                                                                                                                                                                                                                                                                                                                             | ****
|2.10  Indenture dated as of April 30, 2002 between Vitro, S.A. de C.V.
      and JPMorgan Chase Bank (including exhibits)                                                                                                                                                                                                                                                                                                            | *   
|2.11  Form of 11.50% Senior Note due 2009 (included in Exhibit 2.10)                                                                                                                                                                                                                                                                                                                                                                 | *   
|4.1  Vitro Flex, S.A. Joint Venture Agreement dated October 1, 1979
      between Ford Motor Company and Vidrio Plano de Mexico, S.A.                                                                                                                                                                                                                                                                                                | **  
|4.2  Articles of Incorporation and By-laws of Vitro Flex, S.A. together
      with an English translation                                                                                                                                                                                                                                                                                                                            | **  
|4.3  Agreement dated March 29, 1965 between Pilkington Brothers Limited
      and Fomento de Industria y Comercio S.A.                                                                                                                                                                                                                                                                                                               | **  
|4.4  Letter Agreements dated June 15, 1998 amending the Technical Assistance
      Agreement dated September 1, 1983 between Pilkington Brothers plc and Vitro
      Flotado, S.A. de C.V.                                                                                                                                                                                                                                           | **  
|4.5  Master Investment Agreement dated August 15, 1997 among Libbey
      Inc., Libbey Glass Inc., LGA 2 Corp., LGA 3 Corp. and LGA 4 Corp., on the
      one hand, and Vitro, S.A., Vitrocrisa Holding, S.A. de C.V., Vitro Corporativo,
      S.A. de C.V., Vitrocrisa, S.A. de C.V., World Crisa Corporation and Crisa
      Corporation                                                                                          | ****
|4.6  Loan Agreement dated as of August 14, 2001 among Compania Vidreria,
      S.A. de C.V., HSBC Securities (USA) Inc., Salomon Smith Barney Inc. and
      certain other lenders party thereto                                                                                                                                                                                                                                     | *   
|4.7 Loan Agreement dated as of February 26, 2003 among Vitro Plan, S.A.
      de C.V., VVP Holding Corp., VVP Syndication, Inc., Salomon Smith Barney
      Inc., Salomon Smith Barney Inc. and certain other lenders party thereto                                                                                                                                                                                                  | *   
|4.8 Loan Agreement dated as of February 26, 2003 among Vitro Plan, S.A.
      de C.V., certain subsidiaries and affiliates of Vitro Plan, Banco Nacional
      de México, S.A. and certain other lenders party thereto, together
      with an English translation                                                                                                                                                                   | *   
|4.9 Factoring Agreement dated as of August 4, 2000 (the "Factoring
      Agreement") among Vitro Envases Norteamérica, S.A. de C.V. ("VENA"),
      certain subsidiaries of VENA party thereto and Transamerica Comercial Finance
      Corporation ("Transamerica")                                                                                                                                                                 | *   
|4.10 Amendment Number One to the Factoring Agreement dated as of November
      1, 2000 among VENA, certain subsidiaries of VENA party thereto and Transamerica                                                                                                                                                                                                                                                                      | *   
|4.11 Amendment Number Two to the Factoring Agreement dated as of April 30,
      2002 among VENA, certain subsidiaries of VENA party thereto and Transamerica                                                                                                                                                                                                                                                                        | *   
|4.12 Stock Purchase Agreement dated as of June 3, 2002 between Whirlpool
      Corporation, Whirlpool Holdings, Inc. and Vitro, S.A. de C.V.                                                                                                                                                                                                                                                                                         | *   
|8.1 List of subsidiaries of Vitro, S.A. de C.V.                                                                                                                                                                                                                                                                                                                                                                                      | *   
|12.1 Certifications of the Chief Executive Officer and the Chief Financial
      Officer of Vitro, S.A. de C.V. pursuant to 18 U.S.C. 1350, as adopted pursuant
      to Section 906 of the Sarbanes Oxley Act of 2002.                                                                                                                                                                                                              | *   
|12.2 Certifications of the Chief Executive Officer and the Chief Financial
      Officer of Vitro, S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.                                                                                                                                                                                                                                                     | *   
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |     
|*  Filed herewith                                                                                                                                                                                                                                                                                                                                                                                                                    |     
|**  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                                                                                                                                                                                                                                                               
|***  Originally 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.  Amendments to the Corporate Charter of Vitro
      were filed as exhibits to Vitro's annual reports on Form 20-F for the fiscal
      years ended December 31, 1992, 1993, 1994 and 1997 and are incorporated
      herein by reference thereto.
|**** 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                                                                                                                                                                                                                                                              

Link to Financial Statements



SIGNATURES

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

| | Vitro,
        S.A. de C.V.
      By:
      /s/
        Claudio Luis del Valle
        Claudio Luis del Valle
      Chief
        Financial Officer
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

Date: June 30, 2003