Independent
    Auditors' Report Board
    of Directors and Stockholders of Vitro, S.A. de C.V.San
    Pedro Garza Garcia, N. L. (Amounts
    in millions of Mexican pesos) We
    have audited the accompanying consolidated balance sheets of Vitro, S.A. de
    C.V. and Subsidiaries (the "Company") as of December 31, 2000 and
    2001, and the related consolidated statements of operations, stockholders'
    equity and changes in financial position for each of the three years in the
    period ended December 31, 2001 (all expressed in millions of Constant Mexican
    pesos as of December 31, 2001) . These financial statements are the responsibility
    of the Company's management. Our responsibility is to express an opinion on
    these financial statements based on our audits. The financial statements of
    the subsidiaries and associated companies named in note 2 b) , were audited
    by other auditors and our opinion, regarding the amounts reported by these
    companies, is based only on the reports of such other auditors. The total
    assets of the companies above mentioned represent 21% in 2000 and 2001 of
    the consolidated total assets, whereas their net sales represent 28% of the
    consolidated net sales in 1999, 26% in 2000 and 28% in 2001. We
    conducted our audits in accordance with auditing standards generally accepted
    in the United States of America. Those standards require that we plan and
    perform the audit to obtain reasonable assurance about whether the financial
    statements are free of material misstatement. An audit includes examining,
    on a test basis, evidence supporting the amounts and disclosures in the financial
    statements. An audit also includes assessing the accounting principles used
    and significant estimates made by management, as well as evaluating the overall
    financial statement presentation. We believe that our audits provide a reasonable
    basis for our opinion. In
    our opinion, based upon our audits and the reports of other auditors mentioned
    in the first paragraph, such consolidated financial statements present fairly,
    in all material respects, the consolidated financial position of Vitro, S.A.
    de C.V. and Subsidiaries as of December 31, 2000 and 2001, and the consolidated
    results of their operations, changes in their stockholders' equity and changes
    in their financial position for the years ended December 31, 1999, 2000 and
    2001, in conformity with accounting principles generally accepted in Mexico. Effective
    January 1, 2000 the Company applied the provisions of the new Bulletin D-4,
    "Accounting Treatment of Income Tax, Tax on Assets and Workers' Profit Sharing".
    The effects in net income for the years ended December 31, 2000 and 2001 were
    increases of Ps. 112 and Ps. 66, respectively. Additionally, the effect in
    comprehensive loss for the year 2000 was an increase of Ps. 2,468 (see note
    3 o) . Accounting
    principles generally accepted in Mexico vary in certain significant respects
    from accounting principles generally accepted in the United States of America.
    The application of the latter would have affected the determination of net
    income for each of the three years in the period ended December 31, 2001 and
    the determination of stockholders' equity at December 31,1999, 2000 and 2001
    to the extent summarized in note 22. Our
    audits also comprehended the translation of Mexican peso amounts into United
    States dollar amounts and, in our opinion, such translation has been made
    in conformity with the basis stated in note2
    a) . Such United States dollar amounts are presented solely for the convenience
    of readers. The
    accompanying financial statements have been translated into English language
    for the convenience of readers. February
    14, 2002
    April 15, 2002, as to note 21a)
    Junio 3, 2002, as to note 21b)Junio
    19, 2002, as to note 21c) and 22     Vitro, S.A. de C.V. and
    SubsidiariesConsolidated Balance Sheets(Millions of constant Mexican pesos as of December 31, 2001) Millions
          of US dollarsDecember
          31,
      (Convenience
          Translation) December 31,2000
      2001
      2001ASSETSCash
        and cash equivalents
      Ps.
          787
      Ps.
          1,005
      $
          110Trade
        receivables, net of allowance for doubtful accounts of Ps. 71 and Ps.
        60
      2,341
      2,238
      244Other
        receivables
      1,249
      1,021
      111Inventories
        (note 5)
      3,781
      3,589
      391Current
        assets
      8,158
      7,853
      856Investment
        in associated companies (note 6)
      196
      43
      5Land
        and buildings (note 7)
      9,736
      9,606
      1,048Machinery
        and equipment (note 7)
      11,534
      10,749
      1,172Construction
        in progress
      1,421
      690
      75Excess
        of cost over fair value of net assets acquired, net of accumulated amortization
        of Ps. 104 and Ps. 132
      300
      627
      68Intangible
        pension asset
      795
      702
      77Other
        assets
      1,035
      1,077
      117Long
        - term assets
      25,017
      23,494
      2,562Total
        assets
      Ps.
          33,175
      Ps.
          31,347
      $
          3,418LIABILITIESShort-term
        borrowings (note 8)
      Ps.
          3,207
      Ps.
          3,369
      $
          368Current
        maturities of long-term debt (note 9)
      1,109
      2,793
      304Trade
        payables
      2,537
      3,311
      361Accrued
        expenses
      787
      631
      69Other
        current liabilities
      1,255
      1,052
      115Current
        liabilities
      8,895
      11,156
      1,217Long-term
        debt (note 9)
      12,017
      8,291
      904Seniority
        premiums, pensions and other long-term liabilities
      1,131
      1,320
      144Deferred
        tax liabilities (note 17)
      1,690
      1,713
      186Long-term
        liabilities
      14,838
      11,324
      1,234Total
        liabilities
      23,733
      22,480
      2,451STOCKHOLDERS'
        EQUITYCapital
        stock: no par value, shares issued and outstanding, 324,000,000 in 2000
        and 2001
      324
      324
      35Restatement
        of capital stock
      5,543
      5,543
      605Capital
        stock restated
      5,867
      5,867
      640Treasury
        stock, (27,399,020 shares in 2000 and 50,294,020 in 2001)
      (327)
      (519)
      (57)Paid-in
        capital
      840
      891
      97Shortfall
        in restatement of capital
      (16,507)
      (16,864)
      (1,839)Cumulative
        effect of deferred taxes
      (1,404)
      (1,404)
      (153)Minimum
        pension liability adjustment
      (152)
      (181)
      (20)Retained
        earnings reserved for reacquisition of shares of Vitro
      1,300
      1,300
      142Retained
        earnings
      16,269
      16,309
      1,779Net
        income for the year
      347
      135
      15Total
        majority interest
      6,233
      5,534
      604Minority
        interest in consolidated subsidiaries
      3,209
      3,333
      363Total
        stockholders' equity (note 13)
      9,442
      8,867
      967Total
        liabilities and stockholders' equity
      Ps.
          33,175
      Ps.
          31,347
      $
          3,418 Vitro, S.A. de C.V. and
    SubsidiariesConsolidated Statements of Operations(Millions of constant Mexican pesos as of December 31, 2001, except for
    share amounts) Millions
          of US dollars, except per share amountsYear
          ended December 31,
      (Convenience
          Translation)
          Year ended December 31,1999
      2000
      2001
      2001Net
        sales
      Ps.
          28,599
      Ps.
          28,631
      Ps.
          28,190
      $
          3,074Cost
        of sales
      19,765
      20,307
      20,638
      2,250Gross
        profit
      8,834
      8,324
      7,552
      824General,
        administrative and selling expenses
      4,479
      4,807
      4,949
      540Operating
        income
      4,355
      3,517
      2,603
      284Total
        financing cost (note 14)
      324
      1,196
      651
      71Income
        after financing cost
      4,031
      2,321
      1,952
      213Other
        expense,net (note 15)
      1,249
      488
      866
      95Share
        in net income of unconsolidated associated companies (note 6)
      24
      5
      7
      1Income
        before income tax and workers' profit sharing
      2,806
      1,838
      1,093
      119Income
        and asset tax (note 17)
      1,600
      675
      407
      44Workers'
        profit sharing (note 17)
      260
      326
      109
      12Net
        income from continuing operations
      946
      837
      577
      63Income
        on disposal of discontinued operations (note 4)
      573Extraordinary
        item (note 18)
      158Net
        income for the year
      Ps.
          1,677
      Ps.
          837
      Ps.
          577
      $
          63Net
        income of minority interest
      Ps.
          953
      Ps.
          490
      Ps.
          442
      48Net
        income of majority interest
      724
      347
      135
      15Ps.
          1,677
      Ps.
          837
      Ps.
          577
      $
          63Earnings
        per common share (based on weighted average shares outstanding of 310,464,210
        for 1999, 278,402,173 for 2000 and 286,078,897 for 2001):Net
        income from continuing operations
      Ps.
          3.05
      Ps.
          3.01
      Ps.
          2.01
      $
          0.22Income
        on disposal of discontinued operations
      1.84Extraordinary
        item
      0.51Net
        income of minority interest
      (3.07)
      (1.76)
      (1.54)
      (0.17)Net
        income of majority interest
      Ps.
          2.33
      Ps.
          1.25
      Ps.
          0.47
      $
          0.05 Vitro, S.A. de C.V. and
    SubsidiariesConsolidated Statements of Changes in Financial Position(Millions of constant Mexican pesos as of December 31, 2001) Millions
          of US dollarsYear
          ended December 31,
      (Convenience
          Translation)
          Year ended December 31,1999
      2000
      2001
      2001OPERATING
        ACTIVITIES:Net
        income from continuing operations
      Ps.
          946
      Ps.
          837
      Ps.
          577
      $
          63Add
        (deduct) non cash items:Depreciation
        and amortization
      2,121
      2,084
      2,050
      224Provision
        for seniority premiums and pensions
      77
      78
      208
      23Amortization
        of debt issue costs
      51
      47
      55
      6Share
        in net income of unconsolidated associated companies
      (24)
      (5)
      (7)
      (1)(Gain)
        loss from sale of subsidiaries and associated companies
      83
      (57)
      117
      13Loss
        to reduce investments to market value
      214Write-off
        and loss from sale of assets
      875
      349
      401
      43Deferred
        income tax and workers' profit sharing
      (19)
      324
      156
      17Tax
        effect from discontinued operations and extraordinary item
      7315,055
      3,657
      3,557
      388Increase
        in trade payables
      113
      49
      691
      75Decrease
        in trade receivables
      162
      764
      157
      17Increase
        in inventories
      (139)
      (478)
      (81)
      (9)Change
        in other current assets and liabilities, net
      (253)
      216
      (334)
      (36)Pension
        funding payments
      
      (520)
      (86)
      (9)Resources
        generated from continuing operations
      4,938
      3,688
      3,904
      426FINANCING
        ACTIVITIES:Short-term
        bank loans
      7,368
      6,617
      4,826
      526Long-term
        bank loans
      5,758
      6,643
      5,911
      645Capital
        stock contributed by minority interest
      
      8
      101
      11Monetary
        effect on liabilities with financing cost
      (2,116)
      (1,384)
      (664)
      (72)Payment
        of short-term loans
      (6,126)
      (5,159)
      (6,804)
      (742)Payment
        of long-term loans
      (7,433)
      (7,536)
      (5,061)
      (552)Acquisition
        of treasury stock
      (188)
      (814)
      (171)
      (19)Sale
        of treasury stock
      
      588Dividends
        paid to stockholders of Vitro
      (355)
      (323)
      (153)
      (17)Dividends
        paid to minority interest
      (570)
      (405)
      (272)
      (30)Resources
        used in financing activities
      (3,662)
      (1,765)
      (2,287)
      (250)INVESTING
        ACTIVITIES:Investment
        in land and buildings and machinery and equipment
      (1,854)
      (1,110)
      (944)
      (103)Sale
        of land and buildings and machinery and equipment
      366
      308
      139
      15Investment
        in subsidiaries and associated companies
      (40)
      (533)
      (449)
      (49)Sale
        of subsidiaries and associated companies
      169
      
      88
      10Long-term
        investments
      
      
      (137)
      (15)Other
      22
      (421)
      (96)
      (10)Resources
        used in investing activities
      (1,337)
      (1,756)
      (1,399)
      (152)Net
        increase (decrease) in cash and cash equivalents
      (61)
      167
      218
      24Balance
        at beginning of year
      681
      620
      787
      86Balance
        at end of year
      Ps.
          620
      Ps.
          787
      Ps.
          1,005
      $
          110 Vitro, S.A. de C.V. and SubsidiariesConsolidated Statements of Stockholder's Equity(Millions of constant Mexican pesos as of December 31, 2001, except for
    per share amounts) Capital
          stock
      Treasury
          Stock and paid-in capital
      Shortfall
          in restatement of capital
      Cumulative
          effect of deferred taxes
      Minimum
          pension liability adjustment
      Retained
          earnings
      Net
          income (loss) for the year
      Minority
          interest
      Stock-
          holders' equityBalance
        atDecember 31, 1998
      Ps.
          6,518
      Ps.
          239
      Ps.
          (15,455)
      Ps.
      Ps.
          (91)
      Ps.
          18,478
      Ps.
          (955)
      Ps.
          4,476
      Ps.
          13,210Appropriation
        of net loss from prior year
      
      
      
      
      
      (955)
      955Dividends
        (Ps. 1.10 per share)
      
      
      
      
      
      (355)
      
      
      (355)Decrease
        in minority interest
      
      
      
      
      
      
      
      (697)
      (697)Capital
        stock redemption
      (651)
      651Paid
        in capital
      
      15
      
      
      
      
      
      
      15Acquisition
        of  treasury stock
      
      (188)
      
      
      
      
      
      
      (188)Comprehensive
        income (note 13 j)
      
      
      (798)
      
      (39)
      
      724
      606
      493Balance
        atDecember 31, 1999
      5,867
      717
      (16,253)
      
      (130)
      17,168
      724
      4,385
      12,478Appropriation
        of net income from prior year
      
      
      
      
      
      724
      (724)Dividends
        (Ps. 1.00 per share)
      
      
      
      
      
      (323)
      
      
      (323)Decrease
        in minority interest
      
      
      
      
      
      
      
      (505)
      (505)Sale
        of treasury stock
      
      660
      
      
      
      
      
      
      660Paid
        in capital
      
      (50)
      
      
      
      
      
      
      (50)Acquisition
        of treasury stock
      
      (814)
      
      
      
      
      
      
      (814)Comprehensive
        loss (note 13 j)
      
      
      (254)
      (1,404)
      (22)
      
      347
      (671)
      (2,004)Balance
        atDecember 31, 2000
      5,867
      513
      (16,507)
      (1,404)
      (152)
      17,569
      347
      3,209
      9,442Appropriation
        of net income from prior year
      
      
      
      
      
      347
      (347)Dividends
        (Ps. 1.00 per share)
      
      
      
      
      
      (307)
      
      
      (307)Decrease
        in minority interest
      
      
      
      
      
      
      
      (123)
      (123)Paid
        in capital
      
      52
      
      
      
      
      
      
      52Acquisition
        of treasury stock
      
      (193)
      
      
      
      
      
      
      (193)Comprehensive
        loss (note 13j)
      
      
      (357)
      
      (29)
      
      135
      247
      (4)Balance
        atDecember 31, 2001
      Ps.
          5,867
      Ps.
          372
      Ps.
          (16,864)
      Ps(1,404)
      Ps.
          (181)
      Ps.
          17,609
      Ps.
          135
      Ps3,333
      Ps.
          8,867   Vitro, S.A. de C.V. and Subsidiaries Notes to Consolidated Financial Statements (Millions of constant Mexican pesos as of December 31, 2001, except for per
  share amounts) 1.
    Activities of the company Vitro,
    S.A. de C.V. ("Vitro") is a holding company, the subsidiaries of which manufacture
    and market glass and plastic containers, thermoformed articles, aluminum cans,
    flat glass for architectural and automotive uses, glassware for table and
    kitchen use, fiberglass insulation and reinforcements, certain chemical products
    and minerals, household appliances and capital goods. 2.
    Basis of presentation and principles of consolidation a) Basis of presentation The
    consolidated financial statements of Vitro and its subsidiaries (the "Company") are prepared in accordance with accounting principles generally accepted in
    Mexico ("Mexican GAAP") , as further described in note 3. The
    consolidated financial statements presented herein are expressed in millions
    of constant Mexican pesos as of December 31, 2001, except per share amounts.
    However, solely for the convenience of users, the consolidated financial statements
    as of and for the year ended December 31, 2001 have been translated into United
    States (US) dollars at the rate of 9.1695 pesos per one dollar, the rate of
    exchange determined by Banco de Mexico (Mexico's Central Bank) on December
    31, 2001.  The translation should not be construed as a representation that
    the peso amounts shown could be converted into US dollars at such rate or
    at any rate. All
    references to dollars, in the financial statements and these notes, correspond
    to dollars of the United States of America b)
    Consolidated subsidiaries Those companies in which Vitro holds, directly or indirectly, more than 50%
    of the capital stock or which Vitro controls are included in the consolidated
    financial statements.  For those companies in which Vitro has joint control,
    the proportionate consolidation method is used.  All significant intercompany
    balances and transactions have been eliminated in consolidation. Vitro's subsidiaries Vitromatic, S. A. de C. V. and subsidiaries; Empresas
    Comegua, S.A. and subsidiaries; and Vitro Flex, S. A. de C. V.; as well as
    certain other subsidiaries and associated companies which in the aggregate
    are not material, are audited by firms of public accountants other than the
    Company's principal auditor. In
    order to consolidate the financial statements of subsidiaries located in the
    United States of America, the effects of inflation were taken into consideration
    in accordance with Bulletin B-10, as amended, which is the principal difference
    between US generally accepted accounting principles ("US GAAP") and Mexican
    GAAP for these companies.  Such companies' financial statements are initially
    prepared in accordance with US GAAP and are translated into Mexican pesos
    under the current rate method.  The assets, liabilities, stockholders' equity
    (except capital stock) and the income statement accounts are translated into
    Mexican pesos using the exchange rate as of the date of the most recent balance
    sheet presented.  The cumulative translation adjustment is included as a component
    of stockholders' equity. c)
    Investment in associated companies Associated companies are those companies in which Vitro holds,
    as a permanent investment, less than 50% of the capital stock and maintains
    significant influence.  Such investments are accounted for by the equity method. 3. Principal accounting policies a)  Accounting
    method for the treatment of the effects of inflation The consolidated financial statements of the Company have been prepared in
    accordance with Bulletin B-10, "Recognition of the Effects of Inflation in
    Financial Information", as amended, issued by the Mexican Institute of Public
    Accountants ("IMCP") , which relates to the recognition of the effects of inflation.
    The Third Amendment to Bulletin B-10 (the "Third Amendment") has been adopted
    in preparing such consolidated financial statements.  The Third Amendment
    requires the restatement of all comparative financial statements to constant
    pesos as of the date of the most recent balance sheet presented.  For that
    purpose, Vitro's Mexican subsidiaries and associated companies use the "Indice
    Nacional de Precios al Consumidor" (Mexican National Consumer Price Index:
    "INPC") , published by Banco de Mexico; Vitro's US subsidiaries use the Consumer
    Price Index - All Urban Consumers - All Items, Unadjusted ("CPI") published
    by the US Labor Department, and are translated using the exchange rate at
    the end of the last period presented. Bulletin B-12 set the rules related to the statement of changes
    in financial position.  This statement presents the sources and uses of funds
    during the period measured as the differences, in constant pesos, between
    the beginning and ending balances of balance sheet items adjusted by the excess
    (shortfall) in restatement of capital.  As required by Bulletin B-12, the
    monetary effect and the effect of changes in exchange rates are not considered
    non-cash items in the determination of resources generated from operations
    due to the fact they affect the purchasing power of the entity. b)
    Cash and cash equivalents Highly liquid short-term investments with original maturity of ninety days
    or less, consisting primarily of Mexican Government Treasury Bonds and money
    market instruments, are classified as cash equivalents. They are valued at
    the lower of acquisition cost plus accrued yields or estimated net realizable
    value. c) Financial instruments Assets
    and liabilities resulting from any financial instrument, except for such instruments
    held to maturity, are recorded in the balance sheet at fair value. The financial
    instruments held to maturity are valued at their acquisition cost.  The effects
    of valuation of the financial instruments, 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 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. d)
    Inventories and cost of sales Inventories
    are valued at the price of the last purchase made during the year or at the
    latest production cost without exceeding the net realizable value.  Cost of
    sales is determined by using the price of the last purchase prior to the date
    of consumption or the latest production cost at the time of sale. e) Land, buildings,
    machinery and equipment Expenditures
    for land, buildings, machinery and equipment, including renewals and improvements
    that extend useful lives, are capitalized.  The Company follows the principles
    of the Fifth Amendment to Bulletin B-10, under which, fixed assets are restated
    under the method of consumer price index adjustment, using the INPC.  The
    initial balance to apply the INPC was the net replacement value as of December
    31, 1996. For machinery and equipment purchased in a foreign country, the
    restatement is based on a general consumer price index from the country of
    origin and the exchange rate at the end of each period. Maintenance
    and repair expenses are recorded as costs and expenses in the period when
    they are incurred. Depreciation
    is calculated using the straight-line method, taking into consideration the
    estimated useful life of the asset, in order to depreciate the original cost
    and the revaluation.  The depreciation begins in the month in which the asset
    is placed in service.  The estimated useful lives of the assets are as follows: YearsBuildings
      20
        to 50Machinery
        and equipment
      5
        to 30 f)
    Excess of cost over fair value of net assets acquired The excess of cost over fair value of net assets acquired is amortized on
    a straight-line basis over a period of 20 years.  Amortization expense for
    the years ended December 31, 1999, 2000 and 2001 was Ps. 12 , Ps. 15  and
    Ps. 28 , respectively. g)  Excess of
    book value over cost of net assets acquired The
    excess of book value over cost of net assets acquired is amortized over the
    period that the subsidiary or associated company is expected to be integrated
    into the operations of the group, which cannot exceed 5 years. Amortization
    for the year ended December 31, 2000 was Ps. 57. h)
    Seniority premiums, retirement plans and severance payments 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 were made by an independent actuary, using estimates of the salaries
    that will be in effect at the time of payment. The past service cost is amortized
    over the average period required for workers to reach their retirement age.
    The method used is the projected unit credit. Effective year 2000 the Company
    is funding a trust in order to cover the payment of such liabilities. Severance payments are expensed in the period in which such
    payments are made. i) Excess (shortfall)
    in restatement of capital This
    item, which is an element of stockholders' equity, reflects the accumulated
    effect of holding non-monetary assets and the effect of the initial monetary
    position gain or loss.  The accumulated effect of holding non-monetary assets
    represents the difference between the specific values of non-monetary assets
    in excess of or below the increase attributable to general inflation as measured
    by the INPC and CPI. j)
    Restatement of capital stock and retained earnings Capital
    stock and retained earnings, for Mexican subsidiaries, are restated using
    the INPC from the respective dates such capital was contributed or net income
    generated to the date of the most recent balance sheet presented.  Retained
    earnings for US subsidiaries are restated using the CPI. k) Employee stock option plan An employee stock option plan (see note 13b) was adopted in 1998.  The Company
    is accounting for stock-based compensation using a fair value based method.
    Compensation cost is measured at the grant date based on the value of the
    stock option award and is recognized over the vesting period. l) Transactions
    in foreign currency for Mexican subsidiaries All
    transactions in foreign currency are translated at the exchange rate as of
    the date of such transactions.  In accordance with the Third Amendment, such
    transactions are restated using the INPC.  Monetary assets and liabilities
    denominated in foreign currency are translated into Mexican pesos at the exchange
    rate at the date of the financial statements.  Exchange fluctuations are recorded
    in the statements of operations as part of the total financing cost. m) Revenue recognition Revenues and related
    costs are recognized in the period in which risks and benefits are transferred
    to purchasers, which generally coincides with the shipment of products to
    costumers in satisfaction of orders. n) Gain (loss)
    from monetary position The gain (loss) from
    monetary position reflects the result of holding monetary assets and liabilities
    during periods of inflation.  Values stated in current monetary units decrease
    in purchasing power over time.  This means that losses are incurred by holding
    monetary assets over time, whereas gains are realized by maintaining monetary
    liabilities.  The net effect is presented in the statements of operations
    as part of the total financing cost.  For subsidiaries located in the US the
    result from monetary position is calculated using the CPI. o)
    Income tax, tax on assets and profit sharing to workers Effective
    January 1, 2000, the Company applies the provisions of the new Bulletin D-4
    "Accounting Treatment of Income Tax, Tax on Assets and Workers' Profit Sharing",
    issued by the IMCP.  As required by this bulletin, deferred income taxes are
    provided for differences between the book and tax value of assets and liabilities
    and deferred workers' profit sharing for temporary differences between the
    financial and adjusted tax income, that are expected to reverse in the future.
    Additionally, the tax on assets paid is recognized as an asset. Until 1999,
    deferred taxes were provided only for identifiable, non-recurring timing differences
    that were expected to reverse over a definite period of time, and the tax
    on assets paid was recognized in the statement of operations. The effects
    in net income on the years ended December 31, 2000 and 2001 were increases
    of Ps. 112 and Ps. 66, respectively. Additionally, the effect in comprehensive
    loss for the year 2000 was an increase of Ps. 2,468 (note 13 j) . p)
    Earnings per share Earnings
    per share are computed by dividing income by the weighted average number of
    shares outstanding during each period. q)
      Use of estimates The preparation of financial statements in conformity with generally accepted
    accounting principles, requires management to make estimates and assumptions
    that affect the reported amounts in these consolidated financial statements
    and in the related disclosures.  Actual results could differ from those estimated. 4. Discontinued
    operations Anchor
    Glass Container Corporation ("Anchor") As
    a result of the disposal in 1996 of Anchor, a wholly owned subsidiary of Vitro,
    the 1999 tax benefit of Ps. 573, resulting from utilization of net operating
    losses of Anchor generated in 1996, are presented in the 1999 statement of
    operations as "Income on disposal of discontinued operations". As
    part of Anchor's disposal in a transaction approved by the Bankruptcy Court,
    Vitro provided to the Pension Benefit Guaranty Corporation ("PBGC") ,
    a United States governmental agency that guarantees pensions, a limited guarantee
    of Anchor's under funded pension  liability.  No payments would be made under
    the guarantee unless the PBGC terminates any of Anchor's pension plans, and
    the guarantee would be payable only to the extent the PBGC could not otherwise
    recover the under funded liabilities from the entity that purchased Anchor's
    assets.  The amount of the guarantee is limited to $ 70 million.  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 guarantee would be proportionately
    reduced if the pension plans were terminated after January 31, 2002. Beginning
    February, 2002, this guarantee was reduced to $ 63 million, and would be reduced
    semiannually by $ 7 million until August 1, 2006 when this guarantee expires. 5.
    Inventories Inventories are summarized as follows: December
          31,2000
      2001Semi-finished
        and finished products
      Ps.
          2,858
      Ps.
          2,607Raw
        materials
      435
      464Packaging
        materials
      100
      843,393
      3,155Spare
        parts
      273
      255Refractory
      17
      49Merchandise
        in transit
      84
      82Other
      14
      48Ps.
          3,781
      Ps.
          3,589 6.
    Investment in associated companies An
    analysis of the investment in associated companies follows (the percentage
    of ownership as of December 31, 2000 and 2001, appears in parenthesis) : December
          31,2000
      2001Regioplast,
        S. A. de C. V. (50%, 0% see note 19 e)
      Ps.
          148
      .Sourdillon
        de Mexico, S. A. de C. V. (34%, 34%)
      48
      43Ps.
          196
      Ps.
          43 The
    Company's share in net income of unconsolidated associated companies is as
    follows: Year
          ended December 31,1999
      2000
      2001Regioplast,
        S. A. de C. V.
      Ps.
          22
      Ps.
          4
      Ps.
          8Sourdillon
        de Mexico, S. A. de C. V.
      2
      1
      (1)Ps.
          24
      Ps.
          5
      Ps.
          7 7.
    Land and buildings, and machinery and equipment Land
    and buildings, and machinery and equipment are summarized as follows: December
          31,2000
      2001Land
      Ps.
          3,510
      Ps.
          3,462Buildings
      11,220
      11,227Accumulated
        depreciation
      4,994
      5,083Ps.
          9,736
      Ps.
          9,606Machinery
        and equipment
      Ps.
          28,824
      Ps.
          27,663Accumulated
        depreciation
      17,290
      16,914Ps.
          11,534
      Ps.
          10,749 As
    mentioned in note 3 e) , machinery and equipment purchased in a foreign country
    was restated using the CPI of such country. 8.
    Short-term borrowings At
    December 31, 2000 and 2001, short-term borrowings denominated in Mexican pesos
    totaled Ps. 253 and Ps. 115, respectively, and short-term borrowings denominated
    in foreign currency (all of which are denominated in US dollars) totaled Ps.
    2,954 and Ps. 3,254, respectively. 9.
    Long-term debt Long-term
    debt consists of the following: December
          31,2000
      2001I.
        Foreign Subsidiaries (payable in US Dollars):Secured
        debt, floating interest rate based on LIBOR plus a spread of 2.0%, principal
        payable in several installments through 2003.
      Ps.
          39
      Ps.
          25Secured
        debt, fixed interest rate of 4.5%, principal payable in several installments
        through 2005.
      176
      112Unsecured
        debt, floating interest rate based on LIBOR plus a spread of 1.6%, principal
        payable in  2003.
      308
      268II.
        Mexican Subsidiaries (payable in US Dollars):Secured
        debt, floating interest rate based on LIBORplus
        a spread between 1.5% and 2.3%, principalpayable
        in several installments through 2006.
      1,037
      913Unsecured
        debt, floating interest rate based on LIBORplus
        a spread between 1.5% and 2.5%, principalpayable
        in several installments through 2005.
      4,184
      3,959Unsecured
        debt, fixed interest rate of 5.9%, principalpayable
        in several installments through 2004.
      60
      4110
        1/4% guaranteed senior unsecured notes duein
        2002 and 11 3/8% guaranteed seniorunsecured
        notes due in 2007.
      4,163
      3,805III.
        Vitro and Mexican Subsidiaries (payable in Mexican Pesos):Unsecured
        debt, floating interest rate based on interbank interest rate (TIIE)
        plus a spread of 1.5%, principal payable in 2004.
      321Unsecured
        medium term notes, floating interestrate
        based on TIIE plus a spread of 0.4%, principalpayable
        in 2002.
      710Unsecured
        medium term notes, floating interestrate
        based on  treasury bonds (CETES) 182 days plus a spread of 2.4%, principal
        payable in 2004.
      324
      310IV. Vitro and Mexican Subsidiaries denominated inUDI's
        (investment units), payable in Mexican Pesos:Unsecured
        debt, interest rate of 8.75%, principalpayable
        in several installments through 2006.
      Ps.
          241
      Ps.
          217Unsecured
        medium term notes, fixed interestrate
        between 9.0% and 10.0%, principal payablein
        2002 and 2006.
      1,413
      1,296Unsecured
        medium term notes, floating rate based on UDI's plus 1.75%, principal
        payable in 2004.
      150
      13813,126
      11,084Less
        current maturities
      1,109
      2,793Ps.
          12,017
      Ps.
          8,291 As
    of December 31, 2001, the interest rate of TIIE, CETES and LIBOR were 7.94%,
    6.37% and 1.92%, respectively. The
    schedule of principal payments of long-term debt as of December 31, 2001 is
    as follows: Year
        endingDecember
        31,2003
      Ps.
          2,3082004
      1,4942005
      6162006
      1,6692007
      2,204Ps.
          8,291 Certain
    of the Company's long-term debt agreements contain restrictions and covenants
    that require the maintenance of various financial ratios.  The Company has
    complied with the restrictions and covenants during 2001. Debt
    of the Company totaling Ps. 1,050 is collateralized with fixed assets and
    trade accounts receivable with a book value of Ps. 3,827  as of December 31,
    2001. During 2001 the Company
    entered into several interest rate swaps. The contracts resulted in swapping
    variable interest rates for fixed interest rates on certain debt agreements
    with total principal of Ps. 7,134. The weighted average fixed interest rate
    was 5.74%. The amount charged in the income statement in 2001 was Ps. 30. Additionally, during
    2001 the Company entered into several foreign currency forward contracts to
    convert UDIS denominated debt totalling 515 million UDIS (Ps. 1,434) to dollars.
    The favorable effect in net income was Ps. 154. 10.
    Pension plans and seniority premiums The
    disclosures relating to the Company's pension plans and seniority premiums
    required by Bulletin D-3, issued by IMCP, calculated as described in note
    3 h) , together with certain actuarial assumptions utilized are presented
    below as of December 31, 2000 and 2001: December
          31,2000
      2001Accumulated
        benefit obligation
      Ps.
          1,610
      Ps.
          1,633Projected
        benefit obligation
      Ps.
          1,755
      Ps.
          1,700Plan
        assets at fair value
      (532)
      (396)Unrecognized
        net loss
      (267)
      (248)Unrecognized
        transition obligation
      (566)
      (498)Changes
        in assumptions and adjustments from experience
      (291)
      (261)Projected
        net liability
      Ps.
          99
      Ps.
          297Additional
        minimum liability
      Ps.
          994
      Ps.
          951Net
        periodic cost (Ps. 237 for 1999)
      252
      220Assumptions:December
          31,2000
      2001Discount
        rate
      5%
      5%Expected
        rate of return on plan assets
      7%
      7%Rate
        of compensation increase
      1%
      1% 11. Commitments
    and contingencies a)In October, 2000, several subsidiaries of Vitro, S.A. de C.V. which have
    facilities throughout Monterrey, Mexico and the Mexico City area, entered
    into a 15 year energy purchase agreement for approximately 110 MW ("Megawatts")
    of electricity with Enron Energia Industrial de Mexico, S. de R.L. de C.V.
    ("Enron Mexico") , a subsidiary of Enron Industrial Energy of Mexico Holding
    I, LLC, ("Enron") .  The purchase price of electricity is variable. On
    October 19, 2001, Enron sold 80% of its common shares of Enron Mexico to Tractebel,
    S.A. ("Tractebel") . Effective December 14, 2001, Enron Mexico changed it's
    name to Tractebel Energia de Monterrey, S. de R.L. de C.V. ("Tractebel Energia
    de Monterrey") . It is expected that
    Tractebel Energia de Monterrey will commence commercial operations during
    the third quarter of 2002. b)The Company's consumption of gas during 2001 was 19,707,967 million British
    Thermal Units ("MMBTUS") , of which, it had covered a total of 13,352,771
    MMBTUS with fixed price purchased contracts as follows: %
          of coverage over consumption
      MMBTUS coverage pricePetroleos
        Mexicanos
      30%
      $
          4.00Enron
      20%
      5.06Enron
      35%
      3.68 As
    a result of Enron's bankrupcy filing on December 2, 2001, the contracts between
    the Company and Enron terminated automatically. As
    of December 31, 2001, the Company maintains hedges on price of natural gas
    for approximately 50% of its consumption with Petroleos Mexicanos at a price
    of $4.00 dollar per MMBTUS. As
    of December 31, 2001, the market price for MMBTUS was $ 2.10 dollars. c) The Company
    has several non-cancellable operating lease agreements for the rent of warehouses
    and equipment. Rental expense for the years 1999, 2000 and 2001 was Ps. 239,
    Ps. 307 and Ps. 340, respectively. Future
    minimum lease payments under these agreements are as follows: 2002
      Ps.
          2732003
      2822004
      2972005
      3052006
      305 d)Sale of receivables - the Company has entered into several factoring agreements
    to sell trade accounts receivable. In accordance with the terms of these agreements,
    the Company has the obligation to pay uncollected receivables, in case of
    non-compliance of clients. The outstanding balance of receivables sold at
    December 31, 2001, amounted to $231. The Company periodically monitors collections
    to provide for any uncollectible account. e)The Company is not a party, and none of its assets is subject, to any
    pending legal proceedings nor is the Company subject to any contingent liabilities,
    other than as described in note 4, and legal proceedings and contingent liabilities
    arising in the normal course of business and against which the Company is
    adequately insured or indemnified or which the Company believes are not material
    in the aggregate. 12. Foreign
    currency operations a)
    At December 31, 2001, the assets and liabilities denominated in foreign currency
    (other than Mexican pesos) of the Company's Mexican subsidiaries consist of
    the following: Millions
          of
        US
          dollars
      Millions
          of
        Mexican
          pesosMonetary
        assets
      $105
      Ps.
          959Inventories
      51
      471Fixed
        assets
      533
      4,886Monetary
        liabilities
      1,603
      14,703 b)Foreign operations of the Company's Mexican subsidiaries during 2001 consisted
    of the following: Millions
          of
        US
          dollars
      Millions
          of
        Mexican
          pesosExports
      $801
      Ps.
          7,534Imports
      531
      5,051Interest
        expense, net
      142
      1,429 c)The condensed financial information of the principal foreign subsidiaries
    of the Company at   December 31, 2001 is the following: United
          States of America
      Central
          and South America
      EuropeNet
        sales
      Ps.
          7,039
      Ps.
          1,173
      Ps.
          417Operating
        income
      316
      161
      84Total
        assets
      2,710
      2,127
      1,060Total
        liabilities
      1,451
      551
      297 d)The exchange rates of the Mexican peso against the US dollar, used for
    purposes of the Company's consolidated financial statements at the following
    dates were: December
        31, 1998
      Ps.
          9.8963December
        31, 1999
      9.4986December
        31, 2000
      9.6098December
        31, 2001
      9.1695 On
    February 14, 2002, the date of issuance of these consolidated financial statements,
    the exchange rate was Ps. 9.0838  per one US dollar. 13.
    Stockholders' equity a)At December 31, 2000 and 2001, the capital stock of the Company consisted
    of 324,000,000  ordinary, nominative, fully paid common shares, without par
    value. b)The Company maintains an Employee Stock Option Plan established in March
    1998 (the "Plan") . The Plan specifies amount of shares, time and initial
    exercise price, which is equal to the average closing price on the Mexican
    Stock Exchange of the common shares on the 20 days prior to the Grant Date,
    except for the options issued during 2000 and 2001, which were Ps. 11.00 and
    Ps. 8.27,  respectively. The
    following table summarizes the activity relating to the Plan: 1998
      1999
      2000
      2001Options
        granted during the year
      2,813,300
      2,893,000
      4,851,900
      3,204,800Initial
        exercise price
      Ps.
          31.31
      Ps.
          14.88
      Ps.
          11.00
      Ps.
          8.27Exercise
        price at December 31, 2001
      33.45
      15.92
      11
      8.27 The
    closing price of the Company's shares on the Mexican Stock Exchange on December
    31, 2001 was Ps. 7.50. The
    exercise price of the options granted in 1998 and 1999 will be determined
    at the time such options are exercised by indexing the initial price using
    an indexing factor based on the cumulative performance of the Company's common
    shares relative to the cumulative performance of the Indice de Precios y Cotizaciones
    of the Mexican Stock Exchange; such indexing factor is subject to certain
    ceilings and floors. There is no indexing factor for the options granted in
    2000 and 2001. The
    estimated fair value of the options was made on the Grant Date using the Black-Scholes
    option-pricing model with the following assumptions: Risk-free
        interest rate
      15%Expected
        life in years
      5Price
        volatility
      44% During
    2001, the Company repriced 940,950 of the options granted in 1998 to Ps. 13.00
    . Compensation
    cost charged against income for such plan was Ps. 15,  Ps. 22  and Ps. 32
    for  1999, 2000 and 2001,  respectively. c)As of December 31, 2000 and 2001 the treasury shares held by the Company
    were 27,399,020 and 50,294,020, respectively, which include the shares held
    by Stock Option Trust (see note 13b) which were 1,779,020 and 24,674,020 as
    of December 31, 2000 and 2001, respectively. d)Stockholders' equity, except restated paid-in capital and tax retained
    earnings will be subject to a 35% dividend tax, payable by the Company in
    the event of distribution. Beginning 2003 such tax rate will be reduced by
    1 percent each year through 2005. The tax paid for such dividend can be credited
    against the income tax of the Company during the three years following the
    payment. e) Dividends declared and paid: Dividend
          amountStockholders'
        meeting date
      Nominal
      Constant
      
      Payment
          dateMarch
        26, 1999
      Ps.
          292
      Ps.
          355
      
      April,1999March
        31, 2000
      146
      162
      
      April,2000March
        31, 2000
      146
      153
      
      October,2000April
        5, 2001
      149
      153
      
      May,2001April
        5, 2001
      149
      
      
      (1) (1)
    this dividend will be paid on a date to be determined by the Board of Directors. f)Minority
    interest in consolidated subsidiaries consists of the following: December
          31,2000
      2001Capital
        stock
      Ps.
          3,810
      Ps.
          3,888Shortfall
        in restatement of capital
      (2,995)
      (3,148)Cumulative
        effect of deferred taxes
      (1,064)
      (1,064)Retained
        earnings
      2,968
      3,215Net
        income for the year
      490
      442Ps.
          3,209
      Ps.
          3,333 g)Majority interest stockholders' equity consists of the following: December
          31,2001Nominal
          value
      Restatement
          value
      RestatedCapital
        stock
      Ps.
          324
      Ps.
          5,543
      Ps.
          5,867Treasury
        stock
      (336)
      (183)
      (519)Paid-in
        capital
      (95)
      986
      891Shortfall
        in restatement of capital
      
      (16,864)
      (16,864)Cumulative
        effect of deferred taxes
      (1,259)
      (145)
      (1,404)Minimum
        pension liability adjustment
      (181)
      
      (181)Retained
        earnings
      (2,397)
      20,006
      17,609Net
        income for the year
      137
      (2)
      135Ps.
          (3,807)
      Ps.
          9,341
      Ps.
          5,534 h)At December 31, 2001, stockholders equity includes Ps. 290 of undistributed
    profits and Ps. 2,659 of other undistributed capital items of the subsidiaries. i)Retained earnings reserved for reacquisition of Vitro's shares is the
    amount reserved pursuant to shareholders' meetings to repurchase shares of
    Vitro.  In accordance with Mexican regulations once the reserve is established,
    the Board of Directors has the authority to decide when such repurchase is
    made. j)Comprehensive income (loss) that is reflected in the accompanying statements
    of Stockholders' Equity, represents the net result of the Company's performance
    each financial year, and consists of net income of each year plus other items
    of comprehensive income of the same period, which in accordance with the Mexican
    GAAP are reflected directly in Stockholders' Equity, without affecting the
    income statement. The other items of comprehensive income consist of the result
    of holding non-monetary assets and the minimum pension liability adjustment.
    In addition, in 2000 the comprehensive loss includes the cumulative effect
    of deferred income tax of Ps. 1,404 in majority interest and Ps. 1,064 in
    minority interest. Consequently, the comprehensive income (loss) of 2001 and
    1999,  are not comparable with  2000. 14.
    Total financing cost Following
    is a disclosure of the most important items that are included in total financing
    cost. Year
          ended  December  31,1999
      2000
      2001Interest
        expense on debt denominated in dollars
      Ps.
          1,334
      Ps.
          1,236
      Ps.
          1,262Interest
        expense on debt denominated in pesos
      788
      377
      149Interest
        expense on debt denominated in UDI's
      206
      178
      47Restatement
        of UDI's
      190
      156
      25Interest
        income
      (36)
      (25)
      (27)Exchange
        loss (gain), net
      (453)
      183
      (590)Gain
        from monetary position
      (2,005)
      (1,315)
      (651)Other
        financial expenses
      300
      406
      436Total
        financing cost
      Ps.
          324
      Ps.
          1,196
      Ps.
          651 15. Other
    expense, net Following
    is the analysis of other expenses, net: Year
          ended December 31,1999
      2000
      2001Restructuring
        charges
      Ps.
          140
      Ps.
          152
      Ps.
          319Write-off
        and loss from sale of fixed assets
      875
      291
      401Excess
        of book value over cost
      
      (57)Loss
        from sale of subsidiaries and associated companies.
      83
      
      117Loss
        to reduce investments to market value
      214Disposition
        of Manufacturas, Ensamblajes y Fundiciones, S. de R.L. de C.V. (see note
        19 d)
      
      72Other
      (63)
      30
      29Ps.
          1,249
      Ps.
          488
      Ps.
          866 In
    1999 the Company downsized the production capacity of its Glass Containers
    business unit to match the market's demand.  The downsizing involved closing
    the facility known as Vidriera Oriental, located in Mexico City.  A charge
    of Ps. 764  was taken in 1999 to reduce the book value of the operation to
    its net realizable value associated with the plant shutdown.  Also in 1999,
    2000 and 2001 the Company downsized its corporate services at headquarters
    and certain business units, which resulted in a charge of Ps. 140 , Ps. 152
    and Ps. 319, respectively. 16.
    Tax loss carryforwards At
    December 31, 2001, the tax loss carryforwards, the asset tax to be recovered
    and the capital losses that can be amortized against capital gains consist
    of the following: Tax
          loss carryforwards
      Asset
          TaxExpiration
      Majority
      Minority
      Majority
      Minority
      CapitalYear
      interest
      interest
      interest
      interest
      losses2002
      
      
      
      Ps.
          1
      Ps.
          1,0392003
      
      
      
      12004
      
      
      217
      1
      2,7002005
      
      289
      
      12006
      
      
      
      
      5082007
      1,636
      662008
      4,340
      19
      189
      12009
      46
      1
      352010
      417
      23
      382011
      184
      28
      3Ps.
          6,623
      Ps.
          426
      Ps.
          482
      Ps.
          5
      Ps.
          4,247 17.
    Income tax , workers' profit sharing and asset tax a)The Company is subject to income tax and tax on assets for consolidation
    purposes in the proportion of the number of the subsidiary's voting shares
    that Vitro owns. Since January 1, 1999, the taxable income of the subsidiaries
    are consolidated at 60% of the mentioned proportion. The monthly tax advances
    to Secretaria de Hacienda y Credito Publico of Vitro as well as its subsidiaries,
    are made as if they have not elected tax consolidation. b)The income tax and workers' profit sharing included in the Company's results
    are (the 2000 and 2001 amounts are not comparable with the 1999 amounts, see
    note 3 o) : Year
          ended December 31,1999
      2000
      2001Income
        tax:Current
      Ps.
          1,534
      Ps.
          496
      Ps.
          297Deferred
      (57)
      167
      1101,477
      663
      407Asset
        tax
      123
      12Ps.
          1,600
      Ps.
          675
      Ps.
          407Year
          ended December 31,1999
      2000
      2001Workers'
        profit sharing:Current
      Ps.
          273
      Ps.
          182
      Ps.
          63Deferred
      (13)
      144
      46Ps.
          260
      Ps.
          326
      Ps.
          109 Deferred
    tax assets (liabilities) presented on the balance sheets consist of the following: 2000
      2001Assets:Accounts
        receivable
      Ps.
          180
      Ps.
          243Tax
        benefit from the future deductionof
        inventories held on December 31, 1986
      301
      198Reserve
        for seniority premiums and pensions
      478
      466Tax
        loss carryforwards
      2,577
      2,174Exchange
        fluctuations
      4
      (37)Asset
        tax
      431
      3923,971
      3,436Liabilities:Inventories
      924
      1,046Fixed
        assets
      4,179
      3,728Other
      558
      3755,661
      5,149Net liabilities
      Ps.
          1,690
      Ps.
          1,713 c)The income tax rate is 35%. In accordance with the new income tax law,
    which became effective on January 1, 2002,  the income tax rate will be reduced
    annually by 1% beginning 2003 through 2005. The effect of this decrease in
    the income tax rate will be recorded effective January 1, 2002 and will be
    a decrease in net long-term liabilities and an increase in net income of $172. Following
    is a reconciliation between the Company's effective income tax rate and the
    statutory rate (amounts of 2000 and 2001 are not comparable with those of
    1999, refer to note 3 o): Year
          ended December 31,1999
      2000
      2001Effective
        income tax rate
      57.0%
      36.7%
      37.2%Asset
        tax included as income tax
      (5.6)Effect
        of loss in value of long-term investments
      2.0Loss
        on sale of subsidiaries
      (2.1)
      
      5.6Purchase
        deductions
      0.2Difference
        between tax and accounting basis for monetary gain
      0.7
      (0.6)
      (1.9)Reserves
      0.4Loss
        from foreign companies and minority interest
      
      (0.2)
      (3.6)Difference
        between tax and accounting basis for depreciation
      (2.4)Difference
        between tax and accounting basis on sale and write-down of fixed assets
      (12.5)Other
      (2.7)
      (0.9)
      (2.3)Statutory
        income tax rate
      35.0%
      35.0%
      35.0% d)
    Changes in stockholders' equity in shortfall in restatement of capital and
    minimum pension liability adjustment are presented net of deferred tax effect
    as follows: Year
          ended December 31,2000
      2001Shortfall
        in restatement of capital
      Ps.
          102
      Ps.
          163Minimum
        pension liability adjustment
      12
      16Ps.
          114
      Ps.
          179 18.
    Extraordinary item The
    extraordinary item in 1999 is the tax benefit that resulted from the utilization
    of tax loss carry forwards and the recovery of the asset tax paid in previous
    years. 19.
    Business acquisitions and dispositions a) Sale of Silicatos y Derivados, S.A.-In December 1999, Vitro sold its
    55% interest in Silicatos y Derivados, S.A., to its long-standing partner
    in such company, PQ Corporation, for $ 9.9 million.  A loss of Ps. 43 was
    realized as a result of this transaction and is included in Other expense,
    net.  This company produces sodium silicate and aluminum sulfate for the soap,
    detergent, water treatment and paper industries. The company's sales represented
    approximately 1.4% of Vitro's consolidated sales. b)
    Sale of Compania Manufacturera de Vidrio del Peru Ltda, S.A.- In December
    1999, Vitro accepted the November 17, 1999 public tender offer made by Vidrios
    Industriales, S.A. (a subsidiary of Owens-Illinois, Inc.) for its 23.66% interest
    of Compania Manufacturera de Vidrio de Peru Ltda, S.A. The amount received
    for the sale was $ 6.6 million. A loss of Ps. 40 was realized as a result
    of this transaction and is included in Other expense, net. Vitro accounted
    for this investment, under the equity method. c) Acquisition of Harding Glass Inc.- In April 2000, VVP America consummated
    the acquisition of substantially all of the assets of Harding Glass, Inc.,
    for an amount of $ 31.4 million.  With the acquisition of Harding, VVP America
    incorporated into its operations 5 distribution centers and 118 retail stores
    located throughout the United States. Harding is one of the leading distributors
    of glass products for automotive and construction markets. d) Disposition of Manufacturas, Ensamblajes y Fundiciones, S. de R. L. de C.V.-
    On August 10, 2000 Vitro and GE Mexico, S.A. de C.V. a subsidiary of General
    Electric Company, a U.S. Corporation, decided to terminate their Joint Venture
    Agreement which in 1997 resulted in the creation of Manufacturas, Ensamblajes
    y Fundiciones, S. de R.L. de C.V.  The termination of the joint venture was
    subject to compliance with certain requirements imposed by both parties. Those
    requirements were completed in January 2001, resulting in the closing of such
    facility.  A loss of Ps. 72 was recognized and is included in Other expense,
    net. e) Sale of
    Regioplast, S.A. de C.V.- On May 21, 2001, Vitro sold its 50% interest
    in Regioplast, S.A. de C.V. to Owens Illinois Inc., former partner of Vitro
    in such company, for an amount of $ 8.0 million. A loss of Ps. 81 was realized
    as a result of this transaction and is included in Other expense, net. f) Acquisition
    of Cristalglass Vidrio Aislante, S.A. -On May 4, 2001 the Company acquired
    60 percent of the outstanding shares of Spain's Cristalglass Vidrio Aislante,
    S.A., holding company of Group Cristalglass.  Cristalglass fabricates, distributes
    and sells flat glass for the construction industry. The company employs over
    300 people. Annual sales are approximately  $ 60 million. 20. Business
    segment data The
    accounting policies of the segments are the same as those described in notes
    2 and 3.  The Company evaluates the performance of its segments on the basis
    of operating income.  Intersegment sales and transfers are accounted for as
    if the sales and transfers were to third parties, that is, at current market
    prices. Vitro's
    reportable segments are strategic business units that offer different products.
    The segments are managed separately; each requires different manufacturing
    operations, technology and marketing strategies; and each segment primarily
    serves a different customer base. Beginning
    October 1, 2001, the Company has four reportable segments: Glass Containers,
    Flat Glass, Acros-Whirlpool and Glassware. The companies previously part of
    the former Diverse Industries Business Unit were reallocated to the four existing
    reportable segments to vertically integrate operations and to better realign
    ourselves with our market needs.  For comparison purposes, the amounts of
    previous years have been reclassified to present the information in four reportable
    segments. The principal products of each of the segments are summarized below: Segment
      Principal
        productsGlass
        Containers
      Glass
        containers, sodium carbonate, borosilicate glass, capital   goods, aluminum
        cans, precision components and molds for glass industry.Flat
        Glass
      Flat
        glass for the construction and automotive industries and FiberglassAcros-Whirlpool
      Home
        appliances.Glassware
      Glassware
        for table and kitchen use, and plastic disposable thermo fold ware The segment data presented
    below does not include discontinued operations for any of the periods presented. Glass
          Containers
      Flat
          Glass
      Acros-
          Whirlpool
      Glassware
      Corporate
          and other
      ConsolidatedDecember
        31, 1999:Net
        sales
      Ps.
          10,327
      Ps.
          10,056
      Ps.
          5,587
      Ps.
          2,764
      Ps.
          51
      Ps.
          28,785Interdivisional
        sales
      35
      110
      
      41
      
      186Consolidated
        net sales
      10,292
      9,946
      5,587
      2,723
      51
      28,599Operating
        income
      1,458
      1,980
      635
      563
      (281)
      4,355Assets
      15,729
      10,052
      4,723
      3,277
      1,337
      35,118Capital
        expenditures
      894
      410
      394
      136
      20
      1,854Depreciation
        and amortization
      1,042
      564
      269
      191
      55
      2,121December
        31, 2000:Net
        sales
      Ps.
          9,406
      Ps.
          10,536
      Ps.
          5,784
      Ps.
          2,967
      Ps.
          124
      Ps.
          28,817Interdivisional
        sales
      50
      96
      
      40
      
      186Consolidated
        net sales
      9,356
      10,440
      5,784
      2,927
      124
      28,631Operating
        income
      1,092
      1,663
      615
      509
      (362)
      3,517Assets
      14,306
      10,705
      4,324
      3,701
      139
      33,175Capital
        expenditures
      373
      343
      223
      154
      17
      1,110Depreciation
        and amortization
      953
      580
      257
      228
      66
      2,084December
        31, 2001:Net
        sales
      Ps.
          9,149
      Ps.
          10,610
      Ps.
          5,960
      Ps.
          2,585
      Ps.
          73
      Ps.
          28,377Interdivisional
        sales
      61
      88
      
      38
      
      187Consolidated
        net sales
      9,088
      10,522
      5,960
      2,547
      73
      28,190Operating
        income
      831
      1,243
      467
      320
      (258)
      2,603Assets
      12,455
      10,442
      4,246
      3,183
      1,021
      31,347Capital
        expenditures
      292
      381
      152
      86
      33
      944Depreciation
        and amortization
      943
      575
      243
      238
      51
      2,050 Export sales from Mexico,
    substantially all of which are denominated in US dollars, are mainly to the
    United States and Canada and were as follows (in million of US dollars) : Year
          ended December 31,1999
      2000
      2001$749
      $776
      $801 Certain geographic information
    about the Company's operations and assets is summarized as follows: Year
          ended December 31,1999
      2000
      2001Net
        sales (1)  to customers in:Mexico
      Ps.
          16,052
      Ps.
          15,734
      Ps.
          14,968All
        foreign countries, mainlythe
        United States and Canada
      12,547
      12,897
      13,222Consolidated
      Ps.
          28,599
      Ps.
          28,631
      Ps.
          28,190 Consolidated net sales
    to any single external customer did not equal 10% or more of Vitro's total
    consolidated net sales.(1)Net sales are attributed to countries based on
    location of customer. December
          31,1999
      2000
      2001Land
        and buildings, machinery and equipment, and construction in progress:Mexico
      Ps.
          22,650
      Ps.
          21,066
      Ps.
          19,329All
        foreign countries, mainly Central and South America and the United States
      1,667
      1,625
      1,716Consolidated
      Ps.
          24,317
      Ps.
          22,691
      Ps.
          21,045 21. Subsequent events a)	In April 15,  2002, the Company sold to Gerresheimer Glas AG,  its 51% interest in Ampolletas, S.A. for  a consideration that includes cash, the assumption of debt and the assignment of certain receivables, that altogether amount to approximately $21 million. b)	In June 3, 2002 the Company signed the final agreement of the sale of its 51% interest in Vitromatic to Whirlpool Corporation, previously announced on February 25,2002, and is subject to the completion of governmental approvals. c)	In June 19, 2002, the Company entered into an agreement with AFG Industries Inc, to convert one of the glass container facilities, located in Mexicali, Baja California, into a flat glass facility. The facility is expected to commerce operations by the fourth quarter of 2003. 22.
    Differences between Mexican and United States accounting principles The
    Company's consolidated financial statements are prepared in accordance with
    Mexican GAAP, which differ in certain significant respects from US GAAP.
    The Mexican GAAP consolidated financial statements include the effects of
    inflation as provided for under Bulletin B-10, as amended (see note 3) , whereas
    financial statements prepared under US GAAP are presented on a historical
    basis.  However, the following reconciliation to US GAAP does not include
    the reversal of the adjustments required under Bulletin B-10, as amended,
    with the exceptions of the adjustment required by the fifth amendment to Bulletin
    B-10 discussed in note 22 i) and the restatement of prior years' balances
    mentioned in note 22 j) .  The application of Bulletin B-10, as amended, represents
    a comprehensive measure of the effects of price level changes in the inflationary
    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. The
    other principal differences between Mexican GAAP and US GAAP and the effect
    on consolidated net income and consolidated stockholders' equity are presented
    below: Reconciliation
    of Net Income: Year
          ended December 31,
      Millions
          of US Dollars (Convenience Translation) Year Ended December 31,1999
      2000
      2001
      2001Net
        income of majority interest asreported
        under Mexican GAAP
      Ps.
          724
      Ps.
          347
      Ps.
          135
      15Deferred
        income tax  *
      (607)
      279
      78
      9Reduction
        of depreciation expense
      (127)
      (161)
      (145)
      (16)Equity
        in associated companies
      179Workers'
        profit sharing  *
      (84)
      (41)
      325
      35Pre-operating
        expenses
      31
      24
      15
      2Capitalized
        interest
      (8)
      (7)
      (6)
      (1)Effect
        of applying equity method on theinvestment
        in Empresas Comegua, S.A.
      (80)
      (27)
      (69)
      (7)Effect
        of applying Bulletin B-15
      8
      7Effect
        of the above adjustments on netincome
        of minority interest
      315
      183
      20
      2Discontinued
        Operations:Minority
        interest
      46
      15
      (8)
      (1)Majority
        interest
      14
      4
      21
      2TOTAL
        US GAAP adjustments
      (313)
      276
      231
      25Net
        income of majority interest underUS GAAP
      Ps.
          411
      Ps.
          623
      Ps.
          366
      40*
        Net of monetary gain Reconciliation
    of Stockholders' Equity: Millions
          of US Dollars (Convenience Translation) Year Ended December 31,Year
          ended  December  31,1999
      2000
      2001
      2001Total
        stockholders' equity reported underMexican
        GAAP
      Ps.
          12,478
      Ps.
          9,442
      Ps.
          8,867
      967Less
        minority interest included as stockholders' equity under Mexican GAAP
      (4,385)
      (3,209)
      (3,333)
      (363)Majority
        interest stockholders' equity under Mexican GAAP
      8,093
      6,233
      5,534
      604US
        GAAP adjustments:Deferred
        income tax:Effect
        on retained earnings
      (1,636)
      (31)
      65
      7Effect
        on excess (shortfall) inrestatement
        of capital
      (1,636)
      (573)
      (758)
      (83)Reversal
        of negative goodwill
      (4,250)
      (4,250)
      (4,250)
      (464)Reversal
        of the accumulated depreciation related to negative goodwill
      3,994
      4,035
      4,068
      444Workers'
        profit sharing
      (369)
      (429)
      (81)
      (9)Preoperating
        expenses
      (39)
      (15)Capitalized
        interest
      104
      94
      85
      9Effect
        of applying the Fifth Amendment
      1,395
      1,452
      1,619
      177Effect
        of applying equity method on theinvestment
        in Empresas Comegua, S.A
      (633)
      (740)
      (618)
      (67)Effect
        of applying Bulletin B-15
      193
      132Fair
        value of derivative financial instruments
      
      
      136
      15Effect
        of the above adjustments inStockholders'
        equity of minority interest
      1,415
      590
      346
      37Total US GAAP adjustments
      (1,462)
      265
      612
      66Total
        majority interest stockholders' equity under US GAAP
      Ps.
          6,631
      Ps.
          6,498
      Ps.
          6,146
      670 a)Minority interest Under
    Mexican GAAP the minority interest in consolidated subsidiaries is presented
    as a separate component within the stockholders' equity section in the consolidated
    balance sheet.  For US GAAP purposes, the minority interest is not included
    in stockholders' equity. b)Provision for deferred income tax The
    Company applies the provisions of the Bulletin D-4 "Accounting Treatment of
    Income Tax, Tax on Assets and Workers' Profit Sharing", issued by the IMCP
    (see notes 3o and 17) . As required by this bulletin, deferred income taxes
    are provided for differences between the book and tax value of assets and
    liabilities and deferred workers' profit sharing for temporary differences
    between the financial and adjusted tax income that are expected to reverse
    in the future. Additionally, the tax on assets paid is recognized as an asset.
    Until December 31, 1999, deferred taxes were provided only for identifiable,
    non-recurring timing differences that were expected to reverse over a definite
    period of time, and the tax on assets paid was recognized in the income statement.
    For U.S. GAAP purposes, the Company has applied Statement of Financial Accounting
    Standards (SFAS) No. 109, "Accounting for Income Taxes" for all periods presented. Under
    SFAS No. 109, deferred tax assets and liabilities are recognized for future
    tax consequences of temporary differences between the financial statement
    carrying amounts of assets and liabilities and their tax bases.  Deferred
    tax assets are also recognized for the estimated future effects of tax loss
    carry forwards.  Deferred tax assets are reduced by any tax benefits that
    are not expected to be realized. The
    significant components of deferred tax assets and liabilities, net from discontinued
    operations, which differ for US GAAP from deferred tax assets and liabilities
    calculated under Mexican GAAP, are presented as follows: December
          31,2000
      2001DEFERRED
        TAX ASSETS AND LIABILITIESNONCURRENT:AssetsReversal
        of negative goodwill
      Ps.
          75
      Ps.
          63
      (1)NOL
        and tax on assets carryforwards
      222
      388
      (1)Capital
        losses
      1,308
      1,486LiabilitiesFair
        value of financial instruments
      
      (48)Buildings
        and machinery and equipment
      (409)
      (447)Stockholders'
        equity
      (143)
      (113)Other
      (18)
      (20)
      (1)Net
        deferred assets
      1,035
      1,309VALUATION
        ALLOWANCE
      (1,530)
      (1,874)Net
        deferred tax liability
      Ps.
          (495)
      Ps.
          (565) (1)
    The valuation allowance at December 31, 2000 and 2001 of Ps. 1,530 and Ps.
    1,874, respectively, includes Ps. 1,308 and Ps. 1,486, respectively, related
    to capital losses and Ps. 222 and Ps. 388, respectively, related to NOL and
    tax on assets carry forwards. c)Negative goodwill and reduction in depreciation expense The
    Company records as a component of the consolidated statements of operations
    the amortization of the excess of book value over cost of certain acquisitions
    (negative goodwill) .  The period of amortization for negative goodwill is
    18 months.  Under US GAAP, such excess is recorded as a reduction of fixed
    assets, and depreciation expense is reduced accordingly. d)Workers' profit sharing In
    accordance with Mexican GAAP the Company determines the provision of workers'
    profit sharing with the partial accrual method (Bulletin D-4). For US GAAP
    purposes the Company uses a different accrual methodology. If the methodology
    of SFAS 109 had been used for the year ended December 31, 2001, the cumulative
    effect in the results of the Company would have been an expense of Ps. 1,059
    and a debit to excess (shortfall) in restatement of capital in the amount
    of Ps. 445. From these amounts the effect in the results for the years 1999,
    2000 and 2001 would have been an increase (decrease) in the amount of Ps.
    220, Ps. 304 and Ps. (116) , respectively. e)Pre-operating expenses Pre-operating
    expenses, which have been deferred under Mexican GAAP, are charged to expense
    as incurred under US GAAP. f)Capitalized interest The
    Company has not capitalized interest under Mexican GAAP in 1999. In 1999 certain
    interest on additions to buildings and machinery and equipment was capitalized
    as is required under US GAAP. Consequently, the related differences in depreciation
    on such amounts included in buildings and machinery and equipment are presented
    in the reconciliation of net income for the years ended December 31, 2000
    and 2001. g)
    Consolidation of less than fifty percent owned entity In accordance with Mexican GAAP, the Company has consolidated Empresas Comegua,
    S.A. ("Comegua") since May 1995, when the Company obtained administrative
    control of Comegua even though its interest is 49.7%.  Under US GAAP the equity
    method is to account for this investment. Summary
    information of Comegua, follows: As
          of and for the year endedDecember  31,2000
      2001Current
        assets
      Ps.
          516
      Ps.
          595Total
        assets
      1,890
      1,816Total
        liabilities
      419
      593Stockholders'
        equity
      1,471
      1,223Net
        sales
      930
      958Net
        income
      54
      134 Under
    US GAAP the Company's investment in Comegua at December 31, 2000 and 2001
    is Ps. 731 and Ps. 608, respectively. h)Other differences and supplemental US GAAP disclosures 1.Pension disclosures.-  The Company maintains pension plans for all of
    its subsidiaries and seniority premium plans for all of its Mexican subsidiaries.
    For the Mexican companies, the Company adopted Bulletin D-3 issued by the
    IMCP.  The accounting treatment for pensions set forth in this Bulletin are
    substantially the same as those set forth in Statement of Financial Accounting
    Standards No. 87 "Employer's Accounting for Pensions" ("SFAS 87") .  The Company
    records the pension cost determined by actuarial computations, as described
    in notes 3h) and 10. Significant assumptions (weighted average rates) used
    in determining net periodic pension cost and related pension obligations for
    the benefit plans for 2000 and 2001 are also described in note 10. For
    purposes of determining the cost of pensions and seniority premiums under
    US GAAP, the Company applies SFAS 87. The additional pension disclosures under
    Statement of Financial Accounting Standards No. 132   "Employers Disclosures
    about Pensions and Other Post-retirement Benefits" ("SFAS 132") which are
    applicable to the Company, net from discontinued operations, are presented
    below. 2000
      2001Change
        in benefit obligation:Benefit
        obligation at beginning of year
      Ps.
          1,702
      Ps.
          1,591Service
        cost
      40
      44Interest
        cost
      69
      75Benefits
        paid
      (193)
      (152)Benefit
        obligation at end of year
      1,618
      1,558Changes
        in plan assets:Fair
        value of plan assets at beginning of year
      13
      509Actual
        return on plan assets
      2
      49Contribution
        of cash and securities (1)
      516
      (163)Benefits
        paid
      531
      395Fair
        value of plan assets at end of year
      1,087
      1,163Funded
        statusUnrecognized
        actuarial loss
      (286)
      (271)Unrecognized
        prior service costs
      (775)
      (689)Net
        amount recognized
      Ps.
          26
      Ps.
          203Amounts
        recognized in the consolidated balance sheet consists of:Accrued
        benefit liability
      Ps.
          947
      Ps.
          1,115Intangible
        asset
      (756)
      (663)Accumulated
        other comprehensive income
      (165)
      (249)Ps.
          26
      Ps.
          203 (1)Includes
    approximately Ps. 363 as of December 31, 2001, Vitro common shares (39,150,000
    shares at market value on date of contribution). Pension
    and seniority premium costs for 1999, 2000 and 2001 are summarized below: Year
          ended December 31,1999
      2000
      2001Service
        costs
      Ps.
          41
      Ps.
          41
      Ps.
          45Interest
        cost
      77
      69
      75Return
        on plan assets
      (1)
      (1)
      (30)Net
        amortization and deferral
      101
      124
      108Net
        periodic cost
      Ps.
          218
      Ps.
          233
      Ps.
          198 2.Proportionate consolidation method.- The subsidiary Vitro-American National
    Can, S.A. de C.V. (Vancan) is a joint venture in which the Company has 50%
    interest and shares the control of the subsidiary with the other partner,
    Rexam. Under Mexican GAAP this company is consolidated using the proportionate
    method.  Under US GAAP, the Company's investment in and its interest in the
    net income of Vancan is recorded based on the equity method. Summary
    information of the Company's 50% interest follows: As
          of and for the  year  endedDecember  31,2000
      2001Current
        assets
      Ps.
          131
      Ps.
          142Total
        assets
      397
      380Total
        liabilities
      190
      167Stockholders'
        equity
      207
      213Net
        sales
      384
      308Net
        income
      23
      13Cash
        flow information-net cash provided by:Operating
        activities
      61
      48Financing
        activities
      (49)
      (28)Investing
        activities
      (3)
      (8) Under
    US GAAP, the Company's investment in Vancan at December 31, 2000 and 2001
    is Ps. 207 and Ps. 213, respectively. 3.
    Weighted average interest rates.- The weighted average interest rates on short-term
    borrowings outstanding as of December 31, 1999, 2000 and 2001 were approximately
    11.4%, 8.4% and 6.2%, respectively. 4.Fair value of financial instruments.- Statement of Financial Accounting
    Standards No. 107, "Disclosures about Fair Value of Financial Instruments"
    ("SFAS 107") requires disclosure of the estimated fair values of certain financial
    instruments.  The carrying amounts and estimated fair values of the Company's
    significant financial instruments were as follows: December
          31,
      December
          31,2000
      2001Carrying
          Amount
      
      Carrying
          AmountFair
          Value
      Fair
          ValueLiabilities:Short-term borrowings
      3,207
      3,207
      3,369
      3,369Long-term debt (1)
      13,126
      12,668
      11,084
      10,630Derivative
        instruments:Interest swaps
      
      
      
      (43)Foreign
        currency forward contracts
      
      
      1,435
      1,256 (1)
    Includes current portion of long-term debt. The
    fair value of short-term borrowings approximate their carrying value due to
    their short maturities. The fair value of the U.S. (dollar denominated) publicly
    traded long-term debt was Ps. 3,415 and Ps. 3,351 as of December 31, 2000
    and 2001, respectively, and its related book value was Ps. 3,874 and Ps. 3,805,
    respectively. The fair value of the remaining long-term debt closely approximates
    its book value of Ps. 9,252 and Ps. 7,279 as of December 31, 2000 and 2001,
    respectively. The
    fair value of long-term investments and long-term debt was determined using
    available quoted market prices or other appropriate valuation methodologies
    that require considerable judgment in interpreting market data and developing
    estimates.  Accordingly, the estimates presented above on long-term financial
    instruments are not necessarily indicative of the amounts that the Company
    could realize in a current market exchange.  The use of different market assumptions
    and/or estimation methodologies may have a material effect on the estimated
    fair value amounts. The
    fair value information presented herein is based on information available
    to management as of December 31, 2000 and 2001.  Although management is not
    aware of any factors that would significantly affect the estimated fair value
    amounts, such amounts have not been comprehensively revalued for purposes
    of these financial statements since that date and, therefore, the current
    estimates of fair value may differ significantly from the amounts presented
    herein. 5.
    Worker's profit sharing.-  In a US GAAP statement of operations, worker's
    profit sharing expense would be classified as an operating expense. 6.Net
    sales and operating income.-  The use of the proportionate consolidation method
    for Vancan and the consolidation of Comegua under Mexican GAAP as discussed
    under 22h (2) and 22g above, results in differences in net sales and operating
    income as reported under Mexican GAAP and US GAAP. 7.Earnings per common share in accordance with US GAAP.- Earnings per share
    in accordance with US GAAP are based on the provisions of Statement of Financial
    Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128")
    and are calculated using the weighted average number of common shares outstanding
    during each period. The stock options granted under the Company's Plan (see
    note 13b) were not dilutive during 1999, 2000 and 2001, as the average market
    price per share of the Company's common stock during the period was less than
    the exercise price per share of the options. The Company has no other potentially
    dilutive securities. Basic earnings per share are based upon, 310,464,210,
    278,402,173 and 286,078,897 weighted average shares outstanding for 1999,
    2000 and 2001, respectively. Earnings
    per common share computed in accordance with US GAAP are presented below: Year
          ended December 31,1999
      2000
      2001Basic
        and diluted earnings per common share
      Ps.
          1.32
      Ps.
          2.24
      Ps.
          1.28 8. Comprehensive
    income.- Under US GAAP, Statement of Financial Accounting Standards No. 130
    "Reporting Comprehensive Income" ("SFAS 130") , establishes standards for
    reporting and display of comprehensive income and its components.  Vitro's
    only items of other comprehensive income are loss from holding non- monetary
    assets, unrealized gain (loss) on long-term investments and minimum pension
    liability adjustments. See
    note 22 l) , for Consolidated Financial Statements on a US GAAP basis, which
    reflects the provisions of SFAS 130. Additional
    required disclosures under SFAS 130 are as follows: Disclosure
    of accumulated other comprehensive income balances: Loss
          from Holding Non-monetary Assets
      Minimum
          Pension Liability Adjustment
      Fair
          Value of  Financial InstrumentsBalance
        at December 31, 1999
      Ps.
          (15,658)
      Ps.
          (130)
      Ps.Bulletin
        B-15 effect
      445
      (22)Change
        for the year
      (139)Balance
        at December 31, 2000
      (15,352)
      (152)
      -Bulletin
        B-15 effect
      (736)Change
        for the year
      (198)
      (29)
      89Balance
        at December 31, 2001
      Ps.
          (16,286)
      Ps.
          (181)
      Ps.
          89 There
    were no reclassification adjustments for any of the periods presented. 9.Employee stock option plan.- The Plan (see note 13b) was adopted in 1998.
    The Company applies SFAS 123 in accounting for its Plan under both Mexican
    GAAP and US GAAP.  The disclosures required under US GAAP are included in
    note 13b) . 10.Derivative instruments.- Under Mexican GAAP, derivative instruments that
    are considered as a hedge from an accounting perspective, are valued using
    the same criteria of valuation of the assets or liabilities hedged and the
    effect of such valuation is recognized in net income; under US GAAP are valued
    at fair value and recognized in other comprehensive income until the hedged
    item is recognized in earnings.  The effect of the above at December 31, 2001
    was an increase in comprehensive income of Ps. 136. 11.
    New accounting pronouncements.- In July 2001, the FASB issued SFAS 141,
    "Business Combinations"(SFAS 141) and SFAS 142, "Goodwill and Other
    Intangible Assets"(SFAS 142) .SFAS 141 addresses financial accounting
    and reporting for business combinations and requires that the purchase method
    of accounting be used for all business combinations initiated after June 30,
    2001.  Under SFAS 142, goodwill and certain other intangible assets will no
    longer be systematically amortized, but instead will be reviewed for impairment
    at least annually and written-down with a charge to operations when the carrying
    amount exceeds the estimated fair value.  SFAS 142 is effective for fiscal
    years beginning after December 15, 2001.  Management expects the effect of
    ceasing amortization of goodwill will increase after-tax net income by approximately
    $25 in the year ended December 31, 2002.  The Company has not yet completed
    its assessment of the additional effects of adopting SFAS 142. The FASB also issued
    SFAS 143, "Accounting for Obligations Associated with the Retirement of
    Long-Lived Assets"(SFAS 143) in August 2001.  SFAS 143 establishes accounting
    standards for the recognition and measurement of an asset retirement obligation
    and its associated asset retirement cost.  It provides accounting guidance
    for legal obligations associated with the retirement of tangible long-lived
    assets.  SFAS 143 is effective for fiscal years beginning after June 15, 2002,
    with early adoption permitted.  Management is currently evaluating the effects
    of adopting SFAS 143, but believes it will not have a material effect on the
    Company's results of operations and financial position. In
    addition, the FASB issued SFAS144, "Accounting for the Impairment or Disposal
    of Long-Lived Assets"(SFAS 144) in October 2001.  SFAS 144 establishes
    a single accounting model for the impairment or disposal of long-lived assets,
    including discontinued operations.  SFAS 144 is effective for fiscal years
    beginning after December 15, 2001.  Management  is  currently  evaluating
    the effects of adopting SFAS 144, but believes it will not have a material
    effect on the Company's results of operations or financial position. i)Effect of applying
    the Fifth Amendment to Bulletin B-10. As
    discussed in note 3e) , under Mexican GAAP the Fifth Amendment to Bulletin
    B-10 requires the restatement of machinery and equipment purchased in a foreign
    country using the consumer price index of the country of origin.  For US GAAP
    purposes, such restatement is based on the INPC. j)Effect of applying Bulletin B-15. In
    1997, the IMCP issued Bulletin B-15 which specifies procedures to be applied
    in the consolidation of foreign subsidiaries by Mexican companies for (i) current year amounts and (ii) for prior year amounts, presented for comparative
    purposes. Vitro's accounting policies for the consolidation of its foreign
    subsidiaries are described in notes 2b) and 3a) .  Such policies conform to
    the requirements of Bulletin B-15. The
    staff of the SEC has agreed that the methodology of Bulletin B-15 to translate
    the current year amounts for foreign operations will not result in a difference
    between Mexican GAAP and US GAAP which must be reconciled in order to comply
    with the rules of the SEC. There
    are two methods allowed under Bulletin B-15 to restate prior years amounts
    for foreign subsidiaries.  Vitro uses the method which reconsolidates prior
    years' balances by restating foreign subsidiaries (in Vitro's case, principally
    US subsidiaries) using the current inflation rate in the foreign country and
    translating into pesos using the year end exchange rate.  The staff of the
    SEC has stated that the methodologies of Bulletin B-15 used to restate prior
    years' balances for comparative purposes do not conform to the requirements
    of SEC Rule 3-20e of Regulation S-X which requires all amounts in financial
    statements to be presented in the same reporting currency.  Accordingly, in
    filings with the SEC, the staff requires an adjustment for the difference
    in methodologies of restating prior year balances.  These amounts (Ps. 8 and
    Ps. 7 in 1999 and 2000, respectively, in the reconciliation of net income;
    and Ps. 193 and Ps. 132 in 1999 and 2000, respectively, in the reconciliation
    of stockholders' equity) represent the differences between (i) the balance
    if all amounts were adjusted by the Mexican inflation rate, and (ii) the balance
    used in the primary financial statements to comply with Bulletin B-15. k)Discontinued operations. Under
    Mexican GAAP, the Company is required to present the operations of a discontinued
    segment separately as discontinued operations in the consolidated statements
    of income for all periods presented once financial statements are presented
    that include the date that management commits itself to disposing of the segment.
    Under U.S. GAAP, the Company is required to reclassify the operations of a
    discontinued segment and present it separately as discontinued operations
    in the consolidated statements of income for all periods presented when the
    date that management commits itself to disposing of the segment is before
    the financial statements are issued.  As a result, for Mexican GAAP purposes,
    the Acros-Whirlpool segment has not been reflected as a discontinued segment,
    but for US GAAP purposes, the Acros-Whirlpool segment has been reflected as
    a discontinued segment.  This difference does not result in a difference
    in net income or equity, but only in the presentation of the statement of
    income. l)Summarized
    comparative consolidated financial statements - U.S. GAAP  CONDENSED
    CONSOLIDATED BALANCE SHEETS
    US GAAPS BASIS(Millions of constant Mexican pesos as of December 31, 2001) December
          31,2000
      2001ASSETSCash
        and cash equivalents
      Ps.
          689
      Ps.
          794Trade
        receivables, net of allowance for doubtful accounts of Ps. 48 and Ps.
        39
      1,705
      1,377Other
        receivables
      1,052
      875Inventories
      3,226
      2,913Discontinued
        operations
      1,005
      1,170Current
        assets
      7,677
      7,129Long-term
        investments
      463
      540Investment
        in associated companies
      1,086
      820Land
        and buildings
      8,481
      8,332Machinery
        and equipment
      10,095
      9,068Construction
        in progress
      647
      563Excess
        of cost over fair value of net assets acquired, net of accumulated amortization
        of Ps. 104 and Ps. 132
      282
      627Intangible
        pension assets
      756
      663Other
        assets
      380
      473Discontinued
        operations
      3,629
      3,438Total
        assets
      Ps.
          33,496
      Ps.
          31,653LIABILITIESShort-term
        borrowings
      Ps.
          2,951
      Ps.
          2,300Current
        portion of long-term debt
      858
      3,264Trade
        payables
      1,670
      2,249Accrued
        expenses payable
      397
      481Deferred
        taxes
      560
      623Other
        current liabilities
      1,274
      904Discontinued
        operations
      1,533
      1,692Current
        liabilities
      9,243
      11,51311,299
      7,917Long-term
        debtSeniority
        premiums, pensions and other long-term liabilities
      1,372
      1,257Deferred
        taxes
      1,814
      1,050Discontinued
        operations
      575
      782Long-term
        liabilities
      15,060
      11,006Total
        liabilities
      24,303
      22,519Minority
        interest in consolidated subsidiaries
      2,695
      2,988-STOCKHOLDERS'
        EQUITYMajority
        interest:Capital
        stock: no par value shares issued and outstanding, 324,000,000 in 2000
        and 2001
      324
      324Restatement
        of capital stock
      5,543
      5,543Capital
        stock restated
      5,867
      5,867Treasury
        stock (27,399,020 shares in 2000 and 46,148,270 in 2001)
      (327)
      (519)Paid-in
        capital
      840
      891Shortfall
        in restatement of capital
      (15,384)
      (16,286)Fair
        value of derivative financial instruments
      
      89Minimum
        pension liability adjustment
      (120)
      (181)Retained
        earnings reserved for reacquisition of shares of Vitro
      1,300
      1,300Retained
        earnings
      13,699
      14,619Net
        income for the year
      623
      366Total
        stockholders' equity
      6,498
      6,146Total
        liabilities and stockholders' equity
      Ps.
          33,496
      Ps.
          31,653  CONDENSED
    STATEMENTS OF INCOME
    US GAAPS BASIS(Millions of constant Mexican pesos as of December 31, 2001) Year
          Ended December 31,1999
      2000
      2001Net
        sales
      Ps.
          22,422
      Ps.
          22,149
      Ps.
          20,964Cost
        of sales
      15,020
      15,256
      14,915Gross
        profit
      7,402
      6,893
      6,049General,
        administrative and selling expenses
      5,187
      4,966
      4,615Operating
        income
      2,215
      1,927
      1,434Interest
        expense
      2,463
      2,134
      1,735Interest
        income
      41
      40
      31Exchange
        loss (gain), net
      (520)
      103
      (542)Gain
        from monetary position
      1,777
      1,222
      613Total
        financing cost
      125
      975
      549Income
        after financing
      2,090
      952
      885Other
        loss, net
      181
      43
      178Share
        in net income of unconsolidated associated companies
      156
      53
      87Income
        from continuing operations before income tax
      2,065
      962
      794Income
        tax expense
      1,389
      246
      197Net
        income from continuing operations before minority interest
      676
      716
      597Discontinued
        operations
      341
      202
      199Minority
        interest
      (606)
      (295)
      (430)Net
        income
      Ps.
          411
      Ps.
          623
      Ps.
          366  CONDENSED
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
    US GAAPS BASIS(Millions of constant Mexican pesos as of December 31, 2001) Capital
          stock
      Treasury
          Stock
      Paid-in
          capital
      Shortfall
          in restatement of capital
      Other
      Retained
          earnings
      Compre-
          hensive Income
      Stock-
          holders' equityBalance
        at December 31, 1998
      Ps.
          6,518
      Ps.
          (1,090)
      Ps.
          1,326
      Ps.
          (14,577)
      Ps.
          43
      Ps.
          14,955
      
      Ps.
          7,175Comprehensive
        income (loss):Net
        income
      
      
      
      
      
      411
      411
      411Bulletin
        B-15 adjustments
      
      
      
      (1,029)
      
      826
      
      (203)Other
        comprehensive income:Unrealized
        gain (loss) on long term investment
      
      
      
      
      (136)
      
      (136)
      (136)Minimum
        pension liability adjustment
      
      
      
      
      (37)
      
      (37)
      (37)Loss
        from holding non-monetary assets
      
      
      
      (798)
      
      
      (798)
      (798)Deferred
        taxes allocation
      
      
      
      7
      
      
      7
      7Effect
        of applying the Fifth Amendment
      
      
      
      757
      
      
      757
      757Deferred
        workers' profit sharing allocation
      
      
      
      (18)
      
      
      (18)
      (18)Other
        comprehensive income (loss)
      
      
      
      
      
      
      (225)Comprehensive
        income (loss)
      
      
      
      
      
      
      186Dividends
        (Ps. 1.10 pesos per share)
      
      
      
      
      
      (355)
      
      (355)Paid
        in capital
      
      
      15
      
      
      
      
      15Acquisition
        of treasury stock
      
      (187)
      
      
      
      
      
      (187)Capital
        stock redemption
      (651)
      806
      (155)Balance
        at December 31, 1999
      Ps5,867
      Ps.
          (471)
      Ps.
          1,186
      Ps.
          (15,658)
      Ps.
          (130)
      Ps.
          15,837
      
      Ps.
          6,631Comprehensive
        income:Net
        income
      
      
      
      
      
      623
      623
      623Bulletin
        B-15 adjustments
      
      
      
      445
      
      (515)
      
      (70)Other
        comprehensive income:Minimum
        pension liability adjustment
      
      
      
      
      (34)
      
      (34)
      (34)Loss
        from holding non-monetary assets
      
      
      
      (356)
      
      
      (356)
      (356)Deferred
        taxes allocation
      
      
      
      38
      12
      
      50
      50Effect
        of applying the Fifth Amendment
      
      
      
      188
      
      
      188
      188Deferred
        workers' profit sharing allocation
      
      
      
      (9)
      
      
      (9)
      (9)Other
        comprehensive income (loss)
      
      
      
      
      
      
      (161)Comprehensive
        income
      
      
      
      
      
      
      462Dividends
        (Ps. 1.00 pesos per share)
      
      
      
      
      
      (323)
      
      (323)Sales
        of  treasury stock
      
      958
      (296)
      
      
      
      
      662Paid
        in capital
      
      
      (50)
      
      
      
      
      (50)Acquisition
        of treasury stock
      
      (814)
      
      
      
      
      
      (814)Balance
        at December 31, 2000
      Ps5,867
      Ps.
          (327)
      Ps.
          840
      Ps.
          (15,352)
      Ps.
          (152)
      Ps.
          15,622
      
      Ps.
          6,498Comprehensive
        income:Net
        income
      
      
      
      
      
      366
      366
      366Bulletin
        B-15 adjustments
      
      
      
      (736)
      
      604
      
      (132)Other
        comprehensive income:Minimum
        pension liability adjustment
      
      
      
      
      (45)
      
      (45)
      (45)Loss
        from holding non-monetary assets
      
      
      
      (520)
      
      
      (520)
      (520)Deferred
        taxes allocation
      
      
      
      64
      (31)
      
      33
      33Effect
        of applying the Fifth Amendment
      
      
      
      278
      
      
      278
      278Deferred
        workers' profit sharing allocation
      
      
      
      (20)
      
      
      (20)
      (20)Fair
        value of financial instruments
      
      
      
      
      136
      
      136
      136Other
        comprehensive income (loss)
      
      
      
      
      
      
      (138)Comprehensive
        income
      
      
      
      
      
      
      Ps.
          228Dividends
        (Ps. 1.00 pesos per share)
      
      
      
      
      
      (307)
      
      (307)Paid
        in capital
      
      
      52
      
      
      
      
      52Acquisition
        of treasury stock
      
      (193)
      
      
      
      
      
      (193)Balance
        at December 31, 2001
      Ps5,867
      Ps.
          (520)
      Ps.
          892
      Ps.
          (16,286)
      Ps.
          (92)
      Ps.
          16,285
      
      Ps.
          6,146  CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOW
    US GAAPS BASIS(Millions of nominal pesos) Year ended December 31,1999
      2000
      2001OPERATING
        ACTIVITIES:Net
        income from continuing operations in constant pesos
      Ps.
          676
      Ps.
          716
      Ps.
          597Effect
        of constant pesos
      (168)
      (64)
      -Net
        income from continuing operations in nominal pesos
      508
      652
      597Add
        (deduct) non cash items:Depreciation
        and amortization
      1,585
      1,728
      1,807Provision
        for seniority premiums, pension
      56
      64
      196and
        other long-term liabilities
      42
      42
      54Amortization
        of debt issue cost
      (131)
      (48)
      (87)Share
        in net income of unconsolidated associated companies
      30Loss
        to reduce long-term investments to market value
      73
      (55)
      114(Gain)
        loss from sale of subsidiaries and associated companies
      743
      282
      348Write-off
        and loss from sale of fixed assets
      589
      (31)
      (310)Deferred
        income tax and workers' profit sharing
      (1,479)
      (1,122)
      (601)Gain
        from monetary position
      (428)
      104
      (530)Exchange
        loss (gain)
      1,588
      1,616
      1,588Increase
        in trade payables
      67
      170
      596Decrease
        (increase) in trade receivables
      (125)
      367
      277Increase
        in inventories
      (183)
      (323)
      11Change
        in other current assets and liabilities, net
      (240)
      398
      (306)Pension
        funding payments
      
      (498)
      (86)Cash
        provided by continuing operations
      1,107
      1,730
      2,080Net
        income from discontinued operations
      287
      186
      197Operating
        assets and liabilities from discontinued operations
      411
      209
      106Cash
        provided by operating activities
      1,805
      2,125
      2,383INVESTING
        ACTIVITIES:Sales
        of land and buildings and machinery and equipment
      307
      202
      184Investment
        in land and buildings and machinery and equipment
      (1,026)
      (724)
      (781)Investment
        in subsidiaries and associated companies
      (33)
      (510)
      (445)Sale
        of subsidiaries and associated companies
      149
      
      76Long
        -term receivables
      
      
      (137)Effect
        from discontinued operations
      (363)
      (128)
      (147)Other
      93
      (392)
      (50)Cash
        used in investing activities
      (873)
      (1,552)
      (1,300)FINANCING
        ACTIVITIES:Short-term
        borrowings
      5,699
      5,756
      4,039Issuance
        of long-term debt
      4,863
      5,914
      6,169Capital
        stock contributed by minority interest
      
      8
      97Payment
        of short-term borrowings
      (4,397)
      (4,381)
      (5,884)Payment
        of long-term debt
      (5,783)
      (6,557)
      (4,627)Acquisition
        of treasury stock
      (162)
      (744)
      (169)Sale
        of  treasury stock
      
      551Dividends
        paid to stockholders of Vitro
      (292)
      (292)
      (149)Dividends
        paid to minority interests
      (416)
      (308)
      (252)Effect
        from discontinued operations
      (335)
      (267)
      (156)Cash
        used in financing activities
      (823)
      (320)
      (932)Net
        increase in cash and cash equivalents
      109
      253
      151Monetary
        and exchange rate effect on cash and cash equivalents
      (42)
      (8)
      (17)Balance
        at beginning of year
      348
      415
      660Balance
        at end of year
      Ps.
          415
      Ps.
          660
      Ps.
          794Net
        cash provided by operating activities reflects netcash
        payments of interest and income taxes as follows:
      Ps.
          1,902
      Ps.
          1,801
      Ps.
          1,708Interest
      936
      332
      183Income
        taxes