UNITEDSTATES SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549 Form 20-F  [ ] REGISTRATION STATEMENT PERSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[X] ANNUAL REPORT PURSUANT TO
SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR
ENDED ON DECEMBER 31, 2006

OR

[ ] TRANSITION REPORT PERSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
________ TO ________

OR

[ ] SHELL COMPANY REPORT PERSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934


Date of event requiring this
shell company report



COMMISSION FILE NUMBER: 1-10905

Vitro, S.A.B. de C.V.

(Exact name of Registrant as
specified in its charter)

N/A

(Translation of
Registrant's name into English)

United
Mexican States

(Jurisdiction of
incorporation or organization)



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

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





Title of Each Class
  Name of Each Exchange on Which RegisteredShares of Series "A" common stock,
  no par value
  New York Stock Exchange*Ordinary Participation
  Certificate, each representing 
one share of Series "A" common stock
  New York Stock Exchange*American Depositary Shares,
  evidenced by American Depositary Receipts, each representing three Ordinary
  Participation Certificates
  New York Stock Exchange____________________

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



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

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

11.75% Guaranteed Senior Notes due 2013

The number of outstanding shares of each of the
issuer's classes of capital stock
as of December 31, 2006:
358,538,074 shares of Series "A" common stock, no par value

Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act

Yes   []
         No   [x]

If this report is an annual or transition report,
indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Yes   []
         No   [x]

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

Yes   [x]
         No   []

Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, or non-accelerated filer. See
definition of "accelerated files and large accelerated filer" in Rule 12b-2 of
the Exchange Act. (Check one):

Large accelerated
filer    []    Accelerated filer    [x] Non-accelerated filer    
[]

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

Item 17       []
         Item 18   [x]

If this is an annual report, indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).

Yes   []
         No   [x]



TABLE OF CONTENTS

Presentation
  of Certain InformationForward-Looking
  StatementsItem
  1.   Identity of Directors, Senior Management and AdvisersItem
  2.   Offer Statistics and Expected TimetableItem
  3.   Key InformationRecent
  DevelopmentsRisk
  FactorsExchange
  RatesSelected
  Consolidated Financial InformationItem 4.
    Information on the CompanyOrganizational
  StructureBusinessItem 4A.
    Unresolved Staff CommentsItem 5.
    Operating and Financial Review and ProspectsOperating
  ResultsLiquidity
  and Capital ResourcesOff-Balance
  Sheet ArrangementsTabular
  Disclosure of Contractual ObligationsAccounting
  ConsiderationsResearch
  and DevelopmentItem
  6.  Directors, Senior Management and EmployeesDirectors
  and Senior ManagementBoard
  PracticesShare
  OwnershipEmployeesItem
  7.  Major Shareholders and Related Party TransactionsMajor
  ShareholdersRelated
  Party TransactionsItem
  8.  Financial InformationItem
  9.  The Offer and ListingListing
  DetailsMarketsItem
  10.  Additional InformationMexican
  Corporate Law and By-LawsMaterial
  ContractsExchange
  ControlsMaterial
  Tax ConsequencesWhere
  You Can Find More InformationDifferences
  in Corporate Governance PracticesItem
  11.  Quantitative and Qualitative Disclosures About Market RiskItem
  12.  Description of Securities Other than Equity SecuritiesItem
  13.  Defaults, Dividend Arrearages and DelinquenciesItem
  14.  Material Modifications to the Rights of Security Holders and
  Use of ProceedsItem
  15T.  Controls and ProceduresItem
  16.  ReservedItem
  16A.  Audit Committee Financial ExpertItem
  16B.  Code of EthicsItem
  16C.  Principal Accountant Fees and ServicesItem
  16D.  Exemption from the Listing Standards for Audit CommitteesItem 16E.  Purchases
  of Equity Securities by the Issuer and Affiliated PurchasersItem
  17.  Financial StatementsItem
  18.  Financial StatementsItem 19.
    Exhibits
  PRESENTATION OF CERTAIN INFORMATION
  Vitro, S.A.B. de C.V., formerly Vitro, S.A. de C.V.,
    is a corporation (sociedad anonima bursatil de capital variable) organized
    under the laws of Mexico, and is a holding company that conducts substantially
    all of its operations through its subsidiaries. In this annual report, except
    when indicated or the context otherwise requires, (a) the words "Vitro" and
  "our holding company" refer to Vitro, S.A.B. de C.V., and not its consolidated
    subsidiaries and (b) the words "the Company," "we," "us," "our" and
  "ours" refer to Vitro, S.A.B. de C.V., together with its consolidated subsidiaries.
    References in this annual report to business units are to combinations of
    various consolidated entities that have been grouped together for management
    and presentation purposes.
  References in this annual report to
  "pesos" or "Ps."
    are to the lawful currency of the United Mexican States, which we refer to
    as "Mexico". References to "U.S. dollars," "dollars" or "$" are to dollars
    of the United States of America, which we refer to as the "United States" or
  "U.S."
  Our consolidated financial statements are expressed
    in constant Mexican pesos and are prepared in accordance with Mexican Financial
    Reporting Standards ("Mexican FRS") issued by the Mexican Board for Research
    and Development of Financial Reporting Standards (the "CINIF"), which differs
    in certain significant respects from accounting principles generally accepted
    in the United States, which we refer to as "U.S. GAAP." See
	Note 25 to
    our consolidated financial statements for the year ended December 31, 2006
    which provides a description of the principal differences between Mexican
    FRS and U.S. GAAP as they relate to us.
  On February 1, 2007, Vitro, S.A.B. de C.V. successfully
    closed an offering, of $1.0 billion of senior guaranteed notes principally
    to refinance existing third-party debt at the Vitro holding company level,
    substantially all of the third-party debt at its subsidiary Vitro Envases
    Norteamerica, S.A. de C.V. ("VENA") and certain third-party debt at some subsidiaries
    of Vimexico, S.A. de C.V. ("Vimexico").
  As a result of this transaction, as of December
    31, 2006, Ps. 4,220 million ($390 million) of short-term borrowings and current
    maturities were reclassified as long-term debt pursuant to Mexican FRS.
  On June 16, 2006, we completed the sale of our
    51% equity ownership interest in Vitrocrisa Holding, S. de R.L. de C.V. and
    its subsidiaries Crisa Libbey, S.A. de C.V. and Crisa Industrial, LLC (together,
    "Vitrocrisa") to Libbey, Inc. ("Libbey"), the owner of the remaining 49% equity
    interest. See "Item 4. Information on the Company-Business-Strategic Sale
    of Non-Core Businesses." Vitrocrisa, which was previously presented as one
    of our reportable segments is presented as a discontinued operation. Accordingly,
    all financial and operating information relating to Vitrocrisa in this annual
    report is presented as a discontinued operation. In addition, the discussion
    of our indebtedness in this annual report does not include the indebtedness
    of Vitrocrisa, which is presented on our consolidated balance sheets as a
    part of "current liabilities of discontinued operations" and "long-term liabilities
    of discontinued operations" for fiscal year 2005.
  Certain of our subsidiaries have been classified
    as discontinued operations as they meet the definition of held for sale for
    U.S. GAAP purposes. These subsidiaries did not meet the definition of discontinued
    operations for Mexican FRS purposes as they do not constitute the sale of
    a significant portion of our business. See note 25 k) to our consolidated
    financial statements for a description of those subsidiaries.
  In April 2006, Empresas Comegua, S.A. ("Comegua") acquired
  Vidrios Panamenos, S.A. ("VIPASA"), a glass container company located
    in Panama for a purchase price of $21 million. See "Item 4. Information
    on the Company-Business-Acquisitions."
  This annual report contains translations of certain
    constant peso amounts into U.S. dollars at specified rates solely for
    the convenience of the reader. These convenience translations should not be
    construed as representations that the constant peso amounts actually represent
    such U.S. dollar amounts or could be converted into U.S. dollars
    at the specified rate indicated or at all. The exchange rate used in preparing
    our consolidated financial statements and in preparing convenience translations
    of such information into U.S. dollars is the exchange rate calculated
    and published by the Banco de Mexico, or the Mexican Central Bank, in the Diario Oficial de la Federacion, Mexico's Daily Official Gazette of the Federal
    Government, for the conversion of U.S. dollar-denominated amounts into
    pesos, which we refer to as the "Free Exchange Rate." As of December 31,
    2006, the Free Exchange Rate was 10.8116 pesos per U.S. dollar.
  For purposes of this annual report, we consider our
  "export sales" to be (a) sales of products produced by our Mexican subsidiaries
    to third parties outside Mexico and to our foreign subsidiaries that do not
    act as our distributors and (b) sales of products by our foreign distributor
    subsidiaries. We recognize sales at the time of sale to third parties outside
    Mexico and to our foreign subsidiaries that do not act as our distributors
    (principally Vitro America, Inc., which we refer to as "Vitro America"), and
    at the time of sale of the product by our foreign subsidiaries that act as
    our distributors (principally Vitro Packaging, Inc., which we refer to as
    "Vitro Packaging") to third parties outside Mexico.
  Under Mexican corporate law, ordinary shares of our
    Series "A" common stock held by our Stock Option Trust (17,555,747 shares)
    are considered issued and outstanding and therefore are entitled to receive
    dividends and vote on matters on which our other shares are entitled to vote.
    However, for accounting purposes, our ordinary shares held by our Stock Option
    Trust are considered treasury stock and therefore not outstanding. Thus, for
    purposes of calculating net income (loss) from continuing operations per share,
    net income (loss) from discontinued operations per share, the cumulative effect
    of change in accounting principles per share and diluted and basic net income
    (loss) per share, as well as for purposes of determining shareholders' equity,
    we considered our ordinary shares held by our Stock Option Trust as treasury
    stock and not outstanding. As of December 31, 2006, 47,472,678 ordinary shares
    were held by our Pension Plan Trust. Those ordinary shares are treated as
    outstanding for all purposes.
  We use the term
  "joint venture" to refer to companies
    which are not our wholly-owned subsidiaries and in which we, directly or indirectly,
    either have management control or share management control with one third
    party as in the case of Vitro AFG, S.A. de C.V., which we refer to as ("Vitro AFG"). We believe that our use of the term
  "joint venture" is consistent with
    international business practices. However, our "joint ventures" are not necessarily
  "Joint Ventures" as defined in International Financial Reporting Standards.
  Certain amounts included in this annual report may
    not sum due to rounding.
  FORWARD-LOOKING STATEMENTS
  This annual report includes forward-looking statements
    within the meaning of the Private Securities Litigation Reform Act of 1995.
    These statements relate to our future prospects, developments and business
    strategies.
  These forward-looking statements are identified by
    our use of terms and phrases such as "anticipate," "believe," "could," "estimate,"
  "expect," "intend," "may," "plan," "predict," "project," "goals," "target,"
  "strategy" and similar terms and phrases, and may include references to assumptions.
    These statements are contained in the sections entitled "Item 3. Key Information-Risk
    Factors," "Item 4. Information on the Company," "Item 5. Operating and Financial
    Review and Prospects" and other sections of this annual report.
  These forward-looking statements reflect our best
    assessment at the time and thus involve uncertainty and risk. Therefore, these
    forward-looking statements are qualified by reference to the cautionary statements
    set forth in this annual report. It is possible that our future financial
    performance may differ materially from our expectations because of a variety
    of factors, some of which include, without limitation, the following:
  cost and availability of energy;
    transportation costs and availability;
    consolidation among competitors and customers;
    the general political, economic and competitive conditions
    in markets and countries where we have operations, including competitive pricing
    pressures, inflation or deflation and changes in tax rates;
    foreign currency exchange fluctuations relative to the
    U.S. dollar against the Mexican peso;
    changes in capital availability or cost, including interest
    rate or foreign currency exchange rate fluctuations;
    liquidity, debt repayment and access to credit;
    fluctuations in the price of raw materials and labor
    costs;
    capacity utilization of our facilities;
    availability of raw materials;
    the ability to integrate operations of acquired businesses;
    consumer preferences for forms of packaging that are
    alternatives to glass containers;
    the ability to hire and retain experienced management;
    the performance by customers of their obligations under
    purchase agreements;
    lifting of trade barriers and enforcement of measures
    against unfair trade practices;
    the enactment of stricter environmental laws; and
    the timing and occurrence of events which are beyond
    our control.Any forward-looking statements in this annual report
    are based on certain assumptions and analysis made by us in light of our experience
    and perception of historical trends, current conditions, expected future developments
    and other factors we believe are appropriate under the current circumstances.
    Forward-looking statements are not a guarantee of future performance and actual
    results or developments may differ materially from expectations. You are therefore
    cautioned not to place undue reliance on such forward-looking statements.
    While we continually review trends and uncertainties affecting our results
    of operations and financial position, we do not intend to update any particular
    forward-looking statements contained in this document.
  
  Item 1. Identity of Directors, Senior Management and Advisers
  Not applicable
  Item 2. Offer Statistics and Expected Timetable
  Not applicable
  Item 3. Key Information
  RECENT DEVELOPMENTS
  Corporate Restructuring and Recapitalization
  General
  Commencing in 2001, we began a corporate restructuring
    and recapitalization program focused primarily on the sale of non-core assets
    and assets no longer in line with the long-term strategy of our business with
    the aim of strengthening our core strategic businesses, Glass Containers
	and Flat Glass and reducing the overall debt and debt service levels of the
	Company. From May 2001 through April
    2005, we concentrated our divestiture efforts on rightsizing our two core
    businesses, Glass Containers and Flat Glass, and divesting of our interests
    in several joint ventures.
  As part of this program, we completed the following
    strategic transactions in 2006:
  Sale of non core businesses:
  sale of our 51% interest in Vitrocrisa, our glassware
    manufacturing joint venture with Libbey, and our exit from the manufacture
    of consumer glassware and home decor products, for $119 million and the assumption
    by Libbey of liabilities of $62 million;
    sale of our 51% interest in Quimica M, S.A. de C.V.,
    a subsidiary engaged in the manufacture of plastic film used in windshield applications, for $20 million;Sale of real estate:
  sale of real estate in Mexico City for $100 million;
    sales of corporate and non-corporate real estate for
	$42 million; andEquity offering:
  rights offering to our shareholders and to holders of
    our ADRs for an increase in our capital stock of 62,857,143 new ordinary shares
    in which we raised Ps.550 million (nominal) ($50 million).$1.0 Billion Financing
  Building on the successful completion of these transactions
    and supported by our improved operating results, on February 1, 2007 we completed
    the sale of $1.0 billion senior notes, comprised of $300 million 8.625% Senior
    Notes due 2012 (the "2012 Senior Notes") and $700 million 9.125% Senior Notes
    due 2017 (the "2017 Senior Notes"). Through the issuance of the 2012 Senior
    Notes and the 2017 Senior Notes, we achieved more favorable terms and conditions
    in our overall debt, including reduced interest rates, longer average maturity,
    a lower cost of capital, higher cash flow generation and a path for solid growth. Substantially all of the net proceeds from the financing were used to repay
    outstanding short-term indebtedness and substantially all of our long-term
    debt, other than our 11.75 Senior Notes due 2013 (the "2013 Senior Notes").
  Effects of the Financing
  The following table sets forth our consolidated capitalization
    under Mexican FRS as of December 31, 2006:
  on an actual basis, reflecting the reclassification
    of Ps. 4,220 million ($390 million) of short-term borrowings and current maturities
    to long-term debt, which were refinanced with the proceeds of the Offering
    of the 2012 Senior Notes and 2017 Senior Notes; and
    on
	an as adjusted basis to give effect to the offering
    of the 2012 Senior Notes and the 2017 Senior Notes and the use of proceeds
    thereof.As
              of December 31, 2006Actual
          Actual
          As
              Adjusted
          As
              Adjusted(Ps. millions)
          ($ millions)
          (Ps. millions)
          ($ millions)Total
            indebtednessShort-term debt(1)
        350
        32
        350
        328% VENA Secured Notes due February 2007
        811
        75
        - (2)
        -(2)10%
            VENA Unsecured Guaranteed Notes due August 2007.
        1,189
        110
        - (3)
        - (3)113⁄8%
            Vicap Notes due May 2007
        1,648
        152
        - (4)
        - (4)VENA
            Senior Secured Term Loan due 2010
        1,569
        145
        - (5)
        - (5)VENA
            10.75% Senior Guaranteed Notes due 2011
        2,703
        250
        327(6)
        30(6)11.75%
            2013 Senior Guaranteed Notes (7)
        2,433
        225
        2,433
        2258.625%
            2012 Senior Guaranteed Notes
        -
        -
        3,243
        3009.125%
            2017 Senior Guaranteed Notes.
        -
        -
        7,568
        700Long-term
            bank and other debt.
        1,632
        152
        815(8)
        76(8)Total
            Indebtedness
        12,335
        1,141
        14,736
        1,363
  
  (1) Includes current maturities of long-term debt.
  (2) Reflects repayment on February 7, 2007.
  (3) Reflects optional prepayment on May 9, 2007.
  (4) Reflects optional prepayment on March 5, 2007.
  (5) Reflects optional prepayment on February 26, 2007.
  (6) Reflects repayment of Ps. 2,376 million ($220 million)
    pursuant to a Tender Offer and Consent Solicitation, and a covenant defeasance
    of the remaining Ps. 327 million ($30 million), allowing us to release the
    collateral securing this debt. Funds to finance the defeasance were deposited
    in a trust and are reflected on our balance sheet as restricted cash. On July
    23, 2008, the restricted cash will be disbursed from the trust to repay all
    the outstanding principal plus accrued interest through the date of payment.
  (7) As part of the financing, the guarantees issued
    to support the 2012 Senior Notes and the 2017 Senior Notes were similarly
    extended to benefit the 2013 Senior Notes.
  (8) Reflects repayment of Ps. 225 million ($21 million)
    Inbursa Secured Loan, repayment of Ps. 302 million ($28 million) Flat Glass
    Credit Facilities and a repurchase of Ps. 350 million ($32 million) Certificados
    Bursatiles included in long-term debt. In addition , Ps. 60 million ($5 million)
    reflect the cancellation of issuance discounts on debt that was prepaid with
    the proceeds of the 2012 Senior Notes and the 2017 Senior Notes offering.
  Genesis Project
  We are transforming our management, operational and
    reporting processes through the implementation of an enterprise wide process
    model, which we refer to as the Genesis Project. The objective of the Genesis
    Project is to transform Vitro's global operating model to a results-oriented,
    client-focused model.
  As part of the Genesis Project, we plan to implement
    a fully integrated enterprise resource planning, or ERP, system using ERP
    software from SAP AG, or ("SAP").
  We believe the main strategic benefits of the Genesis
    Project will be to:
  Standardize and optimize our operating and administrative
    processes,
    Facilitate the integration of our operations globally,
    Improve and maintain compliance with regulatory requirements
    regarding effective internal control over financial reporting,
    Standardize management and operational information across
    our subsidiaries in Mexico and abroad, enhancing also its availability for
    decision making at all levels of the Vitro organization,
    Establish, integrate and apply best practices standards
    in our operations, and
    Continue our strategy of pursuing consistent and integrated
    growth globally.The Genesis Project that started in 2006, will be
    implemented throughout all the Company's businesses and will be completed
    in two phases.  For the initial phase we expect to invest approximately
    $ 27.5 million, while the second phase will have an estimated cost of no more
    than that incurred in the first phase.
  See "Item 5. Operating and Financial Review and Prospects-Liquidity
    and Capital Resources-Genesis Project" for a discussion of the costs of implementing
    this Project.
  RISK FACTORS
  You should carefully consider the following risk
    factors, as well as all of the other information presented in this annual
    report, including our consolidated financial statements and the notes thereto.
    In general, investing in the securities of issuers in emerging market countries
    such as Mexico involves certain risks not typically associated with investing
    in securities of U.S. companies.
  The risks and uncertainties described below are not
    the only risks and uncertainties affecting us. Additional risks and uncertainties
    that we do not know about or that we currently think are immaterial also may
    impair our business operations or our ability to make payments under our existing
    indebtedness.
  For purposes of this section, when we state that
    a risk, uncertainty or problem may, could or would have an "adverse effect" on us, we mean that the risk, uncertainty or problem may, could or would have
    an adverse effect on our business, financial condition, liquidity, results
    of operations or prospects, except as otherwise indicated or as the context
    may otherwise require.
  RISK FACTORS RELATING TO US
  We have high interest payment requirements.
  On February 1, 2007, we completed a major refinancing
    program by virtue of which we refinanced substantially all of our indebtedness
    under improved terms and conditions. See "Item 3. Key Information- Recent
    Developments-Corporate Restructuring and Recapitalization" and "Item 5. Operating
    and Financial Review and Prospects-Liquidity and Capital Resources-Financing
    Transactions." Although the refinancing program reduced our interest expense
    and extended our debt maturities, we continue to have high interest payment
    requirements. As of December 31, 2006, our total consolidated indebtedness
    was Ps. 12,335 million ($1,141 million) and our consolidated off-balance sheet
    financings, related to our receivable securitization and sale of receivable
    transactions, were Ps. 1,300 million ($120 million). Without giving effect
    to the refinancing program, our interest expense on debt for the year ended
    December 31, 2006 was Ps. 1,740 million ($161 million), while our operating
    income was Ps. 2,010 million ($186 million). After giving effect to the refinancing
    program, our average interest rate was reduced from 11% per annum to 9% per
    annum. See "Item 3. Key Information-Recent Developments-Corporate Restructuring
    and Recapitalization."
  Our ability to make scheduled interest payments when
    due depends on, and is subject to, several factors, including our financial
    and operating performance, which is subject to prevailing economic conditions
    and financial, business and other factors.
  The amount of our interest payment requirements could
    adversely affect our business in a number of ways, including but not limited
    to, the following:
  we may have less cash available to expand and improve
    our business, since we are required to dedicate a significant portion of our
    cash flow from operations to the payment of interest on our debt;
    our ability to obtain additional debt financing
    may be limited and the terms on which such financing is obtained may be negatively
    affected; and
    our ability to compete effectively against better-capitalized
    competitors and to withstand downturns in our business may be affected since
    a significant portion of our cash flow from operations is required to be dedicated
    to making interest payments. As a result, we may lose market share and experience
    lower sales, which, in turn, could result in a material adverse effect on
    our financial condition, results of operations and liquidity.Our indentures contain certain restrictive covenants.
  After giving effect to the refinancing program, our
    current indentures that govern the terms of our indebtedness contain certain
    covenants that are customary for similar indebtedness. Such covenants include
    restrictions on our ability to (i) incur additional indebtedness unless, at
    the time of incurrence, we satisfy certain conditions, (ii) pay dividends
    above a certain permitted amount or make other restricted payments, (iii)
    grant certain liens on our assets, (iv) make certain investments, and (v)
    take part in certain merger, consolidation, and asset sale transactions. As
    of December 31, 2006, under the restrictive covenants of our current indentures,
    we would be prohibited from incurring any additional debt other than certain
    limited permitted debt exceptions.
  The restrictions in our indentures could limit our
    flexibility to adjust to changes in our business and the industries in which
    we operate; and/or limit our ability to fund future operations, acquisitions
    or meet extraordinary capital needs.
  We have to pay interest and principal on our dollar-denominated
    debt with revenues generated in pesos or other currencies, as we do not generate
    sufficient revenue in dollars from our operations.
  As of December 31, 2006, after giving effect to our
    refinancing program, 92% of our outstanding debt was denominated in dollars.
    This debt must be serviced by funds generated from sales by our subsidiaries.
    We do not generate sufficient revenues in dollars from our operations to service
    our entire dollar denominated debt. Consequently, we have to use revenues
    generated in pesos or other currencies to service our dollar denominated debt.
    A devaluation of the peso against the dollar could adversely affect our ability
    to service our debt.
  In the ordinary course of business, we enter into
    currency swap and option agreements to hedge our exposure to foreign currency
    exchange rate variations. However we cannot assure that in the future these
    instruments will be available on favorable terms to us, if at all, to fully
    hedge our exposure. See "Item 11. Quantitative and Qualitative Disclosures
    About Market Risk."
  We have experienced rising operating costs in each of
    our businesses.
  Some of the components of our cost of goods sold
    are subject to significant market price variations. For instance, our total
    energy cost represented 14% of our consolidated cost of goods sold in 2006.
    Such cost is directly linked to the price of natural gas which has experienced
    significant increases in recent years due to, among other things, the effects
    of hurricanes in the production area of the Gulf of Mexico. NYMEX natural
    gas prices have increased from an average price of $3.22 per million British
    Thermal Units ("MMBTU"), during 2002 to an average price of $7.23 per MMBTU
    during 2006, representing an increase of 125%. Since the price of natural
    gas in Mexico is tied to the price of natural gas in Southern Texas, which
    in turn is fully exposed to market factors such as demand in the United States
    or the amount of available natural gas reserves, we are exposed to such price
    variations. As the price of natural gas has significantly increased in recent
    years, we have not been able to raise the prices of our products to fully
    reflect those increases, which have adversely affected our results of operations
    and liquidity. Other potential sources of significant variations in our costs
    are packaging and freight costs.
  In the ordinary course of business, we enter into
    forwards and other derivatives agreements to hedge our exposure to natural
    gas price variations. However, we cannot assure you that these instruments
    will be available on favorable terms to us, if at all, to fully hedge our
    exposure to such variations. See "Item 11. Quantitative and Qualitative Disclosures
    About Market Risk."
  We continue to experience competition from our global
    competitors and vertically integrated customers.
  Aggressive investment by our global competitors such
    as Saint Gobain and Guardian, and vertically integrated customers with glass
    manufacturing facilities in Mexico, coupled with the increased imports of
    low-cost competitive products into several of our important markets, has resulted
    in an increase in capacity that has brought significant pricing pressure on
    our products, particularly in our Flat Glass construction market where the
    industry is faced with over-capacity. Loss of existing or future market share
    to competitors or customers in any of our business units may adversely affect
    our performance and, to the extent that one or more of our competitors becomes
    more successful than us with respect to any key competitive factor, our results
    of operations, financial position and liquidity may be adversely affected.
  Difficult market conditions in the automotive industry
    may affect our operating margins and results of operations.
  The North American automotive industry is currently
    facing difficult market conditions. North American automobile manufacturers
    have experienced slower demand and increased pricing pressures on their products.
    These difficult market conditions in the automotive industry may continue
    to lead to additional pricing pressure on our products and may lead to loss
    of sales volume, either of which may have an adverse effect on us.
  Certain of our flat glass products sold to original
    equipment manufacturers, which we refer to as "OEMs", in the automotive industry
    are sold under global purchase agreements, which are entered into after completion
    of a bidding process. Such automotive OEMs have significant buying power which,
    coupled with substantial competition, puts pressure on prices and margins
    relating to products supplied under the global purchase agreements. As a result,
    even if we were awarded the right to sell to an automotive OEM under a global
    purchase agreement, we may sell at operating margins that are lower than margins
    generally achievable from sales to other flat glass customers. The automotive
    OEM business line represented 8% of our consolidated net sales for the year
    ended December 31, 2005 and for the year ended December 31, 2006.
  We have customers that are significant to us and the loss
    of all or a portion of their business would have an adverse effect on us.
  Because of the relative importance of our largest
    customers, our business is exposed to a certain degree of risk related to
    customer concentration. Although no single customer accounted for more than
    8% of our consolidated net sales in 2006, we have customers that are significant
    to our business units. Our three largest customers, who serve different markets,
    accounted for an aggregate of 15% of our consolidated net sales in 2006. Given
    that our profitability depends on our maintenance of a high capacity utilization
    rate, the loss of all or a portion of the sales volume from a significant
    customer would have an adverse effect on us. Among our most significant customers
    are automotive OEMs and beer and soft-drink bottlers. One of our main customers
    has vertically integrated operations and therefore, a capacity increase in
    its glass production could adversely affect our results of operations.
  Downturns in the economies in which we operate may negatively
    affect the demand for our products and our results of operations.
  Demand for our flat glass and glass containers products
    is affected by general economic conditions in the markets in which we operate,
    principally Mexico, the United States and Europe. As a result, demand for
    our products and, consequently, our results of operations have been and may
    be negatively affected by the downturn in the economies in which we operate.
  A downturn
  in the Mexican economy, from which we derived 42% and 43% of our consolidated
  net sales for the year ended December 31, 2005 and 2006, respectively, would
  reduce the demand for our products and negatively impact our results of
  operations. Similarly, a prolonged economic downturn in the United States,
  from which we derived 46% and 42% of our consolidated net sales in 2005 and
  2006, respectively, would have an adverse impact on the export and foreign
  subsidiary sales of our Flat Glass and Glass Containers business units.
  Furthermore, in recent years, economic conditions in Mexico have become
  increasingly correlated to economic conditions in the United States.
  Therefore, adverse economic conditions in the United States could have a
  significant adverse effect on the Mexican economy. Also, in the past, economic
  crises in Asia, Russia, Brazil, Argentina and other emerging market countries
  have adversely affected the Mexican economy and therefore our results of
  operations.
  Economic
  downturns in Mexico and the United States may also subject us to increased
  foreign currency exchange rate and interest rate risks and impair our results
  of operations and our ability to raise capital or service our debt.
  Inflation and foreign currency exchange rate fluctuations
    may have an adverse effect on our total financing cost.
  Our total financing cost includes (i) net interest
    expense, (ii) the net effect of inflation on our monetary assets and liabilities,
    (iii) the net effect of changes in nominal foreign currency exchange rates
    on monetary assets and liabilities denominated in foreign currencies and (iv)
    gains or losses related to some of our hedging transactions. Net interest
    expense is calculated as the nominal amount of interest expense incurred by
    us with respect to our short- and long-term debt and off-balance sheet financings
    minus the nominal amount of interest income generated by us with respect to
    our monetary assets.
  Inflation
  affects our total financing cost. During periods of inflation, the principal
  amount of our monetary debt will generally be reduced in real terms by the
  rate of inflation. The amount of such reduction will result in a gain from
  monetary position. This gain is offset by the reduction in real terms in the
  value of the monetary assets we held during such period. Historically, our
  monetary liabilities have exceeded our monetary assets and, thus, we have
  tended to experience monetary gains during periods of inflation. Declining
  levels of inflation in recent years have resulted in lower monetary gains.
  In
  addition, our total financing cost is impacted by changes in the nominal value
  of the peso relative to the U.S. dollar. Foreign currency exchange gains or
  losses included in our total financing cost result primarily from the impact
  of nominal changes in the U.S. dollar-peso exchange rate on our Mexican
  subsidiaries' U.S. dollar-denominated monetary liabilities (such as U.S.
  dollar-denominated debt and accounts payable arising from imports of raw
  materials and equipment) and assets (such as U.S. dollar-denominated cash,
  cash equivalents and accounts receivable). Because our U.S. dollar-denominated
  monetary liabilities have historically been significantly in excess of our
  U.S. dollar-denominated monetary assets, the nominal devaluation or
  appreciation of the peso relative to the U.S. dollar has historically resulted
  in foreign currency exchange losses and gains, respectively. Accordingly, in
  2002, 2003 and year ended December 31, 2006, the nominal devaluation of the
  peso relative to the U.S. dollar resulted in foreign currency exchange losses.
  The nominal appreciation of the peso relative to the U.S. dollar resulted in a
  foreign currency exchange gain in 2004 and 2005. We recorded a net exchange
  loss in May 2004 as a result of the unwinding of certain currency exchange
  swaps.
  In the
  ordinary course of business, we enter into currency swap and option agreements
  to hedge our exposure to foreign currency exchange rate variations. However,
  we cannot assure you that these instruments will be available at favorable
  terms to us, if at all, to fully hedge our exposure. See "Item 11.
  Quantitative and Qualitative Disclosures About Market Risk."
  Changes in the relative value of the peso to the U.S.
    dollar and the Euro may have an adverse effect on us.
  Changes in
  the relative value of the peso to the U.S. dollar have an effect on our
  results of operations. In general, as described more fully in the following
  paragraphs, a real devaluation of the peso will likely result in an increase
  of our operating margins and a real appreciation of the peso will likely
  result in a decrease in our operating margins, in each case, when measured in
  pesos. This is so because the aggregate amount of our consolidated net sales
  denominated in or linked to U.S. dollars exceeds the aggregate amount of our
  costs of goods sold and our general, administrative and selling expenses
  denominated in or linked to U.S. dollars.
  A substantial portion of the sales generated by our
    Mexican and U.S. subsidiaries are either denominated in or linked to the value
    of the U.S. dollar. The prices of a significant number of the products we
    sell in Mexico, in particular those of flat glass for automotive uses, capital
    goods and packaging products are linked to the U.S. dollar. In addition, substantially
    all of our export sales are invoiced in U.S. dollars and subsequently translated
    into pesos using the exchange rate in effect at the time of the transaction.
    The translated U.S. dollar sales of our Mexican subsidiaries are then restated
    into constant pesos using the Mexican Consumer Price Index, which we refer
    to as ("INPC"), as of the date of the most recent balance sheet presented.
    As a result, when the peso depreciates in real terms against the U.S. dollar,
    as was the case in 2002, 2003 and 2006, the same level of U.S. dollar sales
    as in a prior period will result in higher constant peso revenues in the more
    recent period. Conversely, when the peso appreciates in real terms against
    the U.S. dollar, as was the case in 2004 and 2005, the same level of U.S.
    dollar sales as in a prior period will result in lower constant peso revenues
    in the more recent period. Moreover, because a material portion of our cost
    of goods sold, including labor costs, and general, administrative and selling
    expenses are invoiced in pesos and are not directly linked to the relative
    value of the peso to the U.S. dollar, the real appreciation or devaluation
    of the peso relative to the U.S. dollar has a significant effect on our operating
    margins at least in the short term.
  Further, a
  strong peso relative to the U.S. dollar makes the Mexican market more
  attractive for importers and competitors that might not otherwise sell in the
  Mexican market. A strong peso relative to the U.S. dollar also makes those of
  our products whose prices are denominated in or are linked to the value of the
  U.S. dollar less competitive or profitable. When the peso appreciates in real
  terms, with respect to such products, we must either increase our prices in
  U.S. dollars, which make our products less price-competitive, or bear reduced
  operating margins when measured in pesos. Given the competitive nature of the
  industries in which we operate, in the past we have had to reduce our
  operating margins for such products in response to appreciation of the peso
  relative to the U.S. dollar.
  The sales
  generated by our Spanish subsidiary in our European operations are either
  denominated in or linked to the value of the Euro, while its cost of goods
  sold is denominated in or linked to U.S. dollars. Changes in the relative
  value of the U.S. dollar to the Euro may have an adverse effect on us in a
  similar fashion to those described with respect to the relative value of the
  peso above.
  We may be adversely affected by increases in interest
    rates.
  Interest rate risk exists primarily with respect
    to our floating-rate peso and our dollar-denominated debt, which generally
    bear interest based on the Mexican equilibrium interbank interest rate, which
    we refer to as the "TIIE," or the London interbank offered rate, which we
    refer to as "LIBOR." As of December 31, 2006, after giving effect to our refinancing
    program, our floating-rate peso and dollar-denominated debt amounted to Ps.
    366 million and $44 million. If the TIIE or LIBOR rates increase significantly,
    our ability to service our debt will be adversely affected.
  Additionally, in February 2007, we entered into a
    cross currency swap mainly to hedge future interest payments and our exposure
    to U.S. dollar exchange rate variations derived from the $1.0 billion financing
    transaction. See "Item 3. Key Information-Recent Developments-Corporate Restructuring
    and Recapitalization." Through this derivative financial instrument we exchange
    fixed rate payments denominated in US dollars for a floating rate (TIIE based)
    denominated in Mexican pesos and a fixed currency exchange, and the counterparty
    agreed to exchange fixed rate payments denominated in U.S. dollar.
  In the
  ordinary course of business, we enter into interest rate swap agreements to
  hedge future interest payments under floating and fixed rate debt. However, we
  cannot assure you that these instruments will be available at favorable terms
  to us, if at all, to fully hedge our exposure. See "Item 11. Quantitative and
  Qualitative Disclosures About Market Risk."
  The costs of complying with environmental protection and
    health and safety laws, and any liabilities arising thereunder, may increase
    and adversely affect our business, results of operations, cash flows or financial
    condition.
  We are
  subject to various environmental protection and health and safety laws and
  regulations governing, among other things, the generation, storage, handling,
  use, remediation, disposal and transportation of hazardous materials, the
  emission and discharge of hazardous materials into the ground, air or water,
  and the health and safety of our employees.
  We are also
  required to obtain permits from governmental authorities for certain
  operations. We cannot assure you that we have been or will be at all times in
  complete compliance with such laws, regulations and permits. If we violate or
  fail to comply with these laws, regulations or permits, we could be fined or
  otherwise sanctioned by regulators. We could also be held liable for any and
  all consequences arising out of human exposure to hazardous substances or
  other environmental damage.
  Since 1998, we have been participating in a voluntary
    audit program at our Mexican facilities. As a result of audits by and implementation
    of certain measures suggested by the Procuraduria Federal de Proteccion al
  Ambiente ("PROFEPA"), action plans are entered into, and costs are incurred,
    to make environmental investments and improvements required for PROFEPA Clean
    Industry certification.
  Environmental laws are complex, change frequently and have tended to become
  more stringent over time. While we have budgeted for future capital and
  operating expenditures to maintain compliance with environmental laws, we
  cannot assure you that environmental laws will not change or become more
  stringent in the future. Therefore, we cannot assure you that our costs of
  complying with current and future environmental and health and safety laws,
  and our liabilities arising from past or future releases of, or exposure to,
  hazardous substances will not adversely affect our business, results of
  operations, cash flow or financial condition. See "Item 4. Information on the
  Company-Business-Environmental Matters."
  Substitution trends in the glass container industry may
    continue to adversely affect our business.
  Glass
  containers have been, and continue to be, subject to competition from
  alternate forms of packaging, including plastic containers, aluminum cans and
  laminated paper containers. In mature glass containers markets, such as in the
  United States, demand for glass containers began a sustained long-term decline
  in the 1970s (although such decline has substantially diminished in recent
  years). In connection with such decline, the glass containers industry
  experienced a reduction in capacity and consolidation among glass container
  producers. The remaining glass containers producers in mature markets have
  faced, and may continue to face, pricing pressures as a result of competition
  from other forms of packaging. Mexico is becoming a mature market, with
  increased competition from alternate forms of packaging, particularly plastic,
  aluminum cans and laminated paper containers. Such products have adversely
  affected, and may continue to adversely affect, our prices and operating
  margins, principally with respect to glass containers for the beer, soft
  drinks and food industries. Our Glass Containers business unit represented 51%
  of our consolidated net sales in 2006.
  If we fail to maintain an effective system of internal
    control over financial reporting, we may not be able to accurately report
    our financial results or prevent fraud.
  In May
  2006, we filed an amended 2004 Annual Report on Form 20-F/A, in which we
  restated certain items in our U.S. GAAP consolidated financial statements. In
  addition, in our 2005 Annual Report on Form 20-F/A, we restated our U.S. GAAP
  consolidated statements of cash flows related the presentation of certain
  items. In the preparation of these restatements, which affected our U.S. GAAP
  financial statements, we identified certain deficiencies in our disclosure
  controls, specifically within the area of U.S. GAAP reporting.
  As required
  by Section 404 of the Sarbanes-Oxley Act, we have certified in this Annual
  Report on Form 20-F for the year ended December 31, 2006 as to whether the
  design or operation of our internal control over financial reporting is
  effective. See "Item 15T.Controls and Procedures." Based on its evaluation,
  management concluded that as of December 31, 2006, the Company's internal
  control over financial reporting was not effective as a result of certain
  material weaknesses identified in the financial reporting cycle, specifically
  with regards to the calculation of deferred income taxes and the conversion of
  financial statements of foreign subsidiaries to Mexican FRS.
  We are
  focused on improving and maintaining an effective internal control structure.
  In order to remediate the material weaknesses identified by us, we are in the
  process of implementing new controls and procedures related to the
  preparation, review and presentation of our financial information. These
  measures include the following modifications to our internal controls:
  reinforcement of personnel knowledge base regarding technical accounting
  matters;
    hiring a professional service firm to assist our accounting staff with the
  implementation of superior processes and new internal controls; and
    Genesis Project implementation, including the ERP
    conversion, across Vitro's global operating model. See "Item 3. Key Information-Recent
    Developments-Genesis Project" and "Item 15T. Controls and Procedures".There can be no assurance that the implementation
    of our new internal controls, including the ERP, will be completed without
    unforeseen challenges or significant additional expenditures that could result
    in delays in remedying the material weaknesses in our internal controls.
  Any such unremedied material weaknesses may reduce
    our ability to provide accurate financial information to our investors.
  We have a disagreement with our partner in our Flat Glass
    business unit about the merger of Vitro Plan into Vimexico, which may affect
    the value of the guaranty of the 2012 Senior Notes, 2017 Senior Notes, and
    2013 Senior Notes by our Flat Glass business unit.
  On December
  11, 2006 the shareholders of Vitro Plan concluded the extraordinary meeting
  upon a second call to approve the merger of Vitro Plan into Vimexico.
  Vimexico, a subsidiary of Vitro, held a $135 million loan receivable from
  Vitro Plan. At the meeting, resolutions were adopted approving (a) the merger
  of Vitro Plan into Vimexico based on financial information as of October 31,
  2006, with Vimexico as the surviving entity, and (b) the cancellation upon
  delivery of existing Vitro Plan stock certificates in exchange for Vimexico
  stock certificates, using a ratio of 7.19319816 shares of Vimexico common
  stock per share of Vitro Plan common stock.
  Prior to the merger, Vitro Plan was a direct 65%-owned
    subsidiary of Vitro. As a result of the merger, Vimexico is a direct 91.8%-owned
    subsidiary of Vitro. Prior to the merger, Pilkington Plc, which we refer to
  as "Pilkington", owned a 35% equity interest in Vitro Plan and, as a result
    of the merger, owns an 8.2% equity interest in Vimexico. Pilkington voted
    against the adoption of the shareholder resolutions approving the merger.
    Under the merger, the outstanding $135 million intercompany indebtedness owed
    by Vitro Plan was cancelled, reducing the debt of Vimexico, as the surviving
    party to the merger to a level that could more readily be supported by its
    cash flow from operations.
  On January
  16, 2007 we were served with a lawsuit from Pilkington filed with the
  competent court in Mexico that, among other claims, challenges the resolutions
  adopted at the shareholders' meeting at which the merger was approved.
  In the event the proceedings ultimately result in
    the merger being declared not effective, the guarantee by Vimexico of the
    2012 Senior Notes and the 2017 Senior Notes and the 2013 Senior Notes, could
    not include any of the assets owned by Vitro Plan. It is also possible that
    such determination could include a determination that the guarantees provided
    by the subsidiaries of Vitro Plan are also ineffective. Vitro believes, based
    on advice of Rivera, Gaxiola y Asociados, S.C. our Mexican special litigation
    counsel, that the merger of Vitro Plan into Vimexico complied with all applicable
    legal requirements, specifically: the by-laws of Vitro Plan and the Mexican
    General Law of Mercantile Corporations and, as a result, that the risk that
    the merger between Vitro Plan and Vimexico is reversed, nullified, voided
    or set aside is minimal. Even if the shareholder resolutions approving the
    merger were to be set aside and the guarantee by Vitro Plan determined to
    be ineffective, such Mexican special litigation counsel has advised us that
    it believes that it is likely that substantially all of the guarantees of
    the 2012 Senior Notes, the 2017 Senior Notes and the 2013 Senior Notes granted
    by the subsidiaries of Vitro Plan would nonetheless remain in effect.
  If any of
  the guarantees referred to above were to be determined to be ineffective or
  avoided, the 2012 Senior Notes, the 2017 Senior Notes, and the 2013 Senior
  Notes would be effectively junior to all liabilities of Vitro Plan and any of
  its subsidiaries whose guarantee was thereby avoided.
  RISK FACTORS RELATING TO MEXICO
  Economic developments in Mexico and the United States
    affect our business.
  The
  economies of Mexico and the United States-our two biggest markets-recorded
  actual GDP growth in 2006 of 4.7% and 3.3%, respectively, compared with growth
  of 3.0% and 3.2%, respectively, in 2005. Mexico's economic growth has been
  mainly driven by the increase in oil prices. Analysts, however, continue to
  view the pace of growth as weak, largely due to Mexico's lack of progress on
  structural reforms. Over the past few years, Mexico's rate of inflation has
  remained low, amounting to 3.3% in 2005 and 4.1% in 2006.
  The
  majority of our manufacturing facilities are located in Mexico. For each of
  the years ended December 31, 2004, 2005 and 2006, 44%, 42% and 43%,
  respectively, of our consolidated net sales resulted from sales to parties
  located within Mexico. In the past, inflation has led to high interest rates
  on peso-denominated obligations and devaluations of the peso.
  While
  helping the country to maintain low levels of inflation and a manageable
  deficit, the Mexican government's continued fiscal and monetary policy has not
  provided the flexibility necessary to support Mexico's economic improvement.
  As a result, new investment and growth in aggregate purchasing power have been
  marginal. Several factors could affect the growth of Mexico's economy and its
  industrial sector. These factors include the extent of the U.S. economic
  growth and the participation of Mexico's industrial sector in such growth; the
  Mexican government's approval and implementation of fiscal and other
  structural reforms such as the evolution of energy prices, particularly
  natural gas; and the current political environment.
  Future
  economic development in or affecting Mexico or the United States could
  adversely affect us and our ability to obtain financing.
  Developments in other emerging market countries may adversely
    affect our business or the market price of our securities.
  The market
  price of securities of Mexican companies is, to varying degrees, affected by
  economic and market conditions in other emerging market countries. Although
  economic conditions in such countries may differ significantly from economic
  conditions in Mexico, investors' reactions to developments in such countries
  may have an adverse effect on the market price of securities of Mexican
  companies, including ours.
  If foreign currency exchange controls and restrictions
    are imposed, we may not be able to service our debt in U.S. dollars, which
    exposes investors to foreign currency exchange risk.
  In the
  past, the Mexican economy has experienced balance of payments deficits,
  shortages in foreign currency reserves and other problems that have affected
  the availability of foreign currencies in Mexico. The Mexican government does
  not currently restrict or regulate the ability of persons or entities to
  convert pesos into U.S. dollars. However, it has done so in the past and could
  do so again in the future. We cannot assure you that the Mexican government
  will not institute a restrictive currency exchange control policy in the
  future. Any such restrictive foreign currency exchange control policy could
  prevent or restrict access to U.S. dollars and limit our ability to service
  our U.S. dollar-denominated debt.
  Political events in Mexico could affect Mexican economic policy and adversely
  affect us.
  The Mexican
  government has exercised, and continues to exercise, significant influence
  over the Mexican economy. Mexican governmental actions concerning the economy
  could have a significant impact on Mexican private sector entities in general,
  as well as on market conditions and prices and returns on Mexican securities,
  including our securities.
  Presidential and Federal Congressional elections
    were held in Mexico on July 2, 2006. After a highly contested election, on
    December 1, 2006 Felipe Calderon Hinojosa, the presidential candidate for Partido Accion Nacional ("PAN") was officially sworn in as President before
    the Mexican Congress. The Federal Congressional elections resulted in a Mexican
    Congress that is divided politically, with PAN representing the largest group
    but failing to obtain a majority of the seats in the Mexican Congress.
  The current
  legislature and Mr. Calderon's presidency may bring significant changes in
  laws, public policies and/or regulations that could adversely affect Mexico's
  political and economic situation, which could adversely affect our business.
  Social and political instability in Mexico or other adverse social or
  political developments in or affecting Mexico could adversely affect us and
  our ability to obtain financing. It is also possible that political
  uncertainty may adversely affect Mexican financial markets.
  We cannot
  provide any assurance that future political developments in Mexico, over which
  we have no control, will not have an unfavorable impact on Mexican private
  sector entities in general, as well as on market conditions and prices and
  returns on Mexican securities, including our securities.
  Our financial statements may not give you the same information
    as financial statements prepared under United States accounting rules.
  Mexican companies listed on the Bolsa Mexicana de
    Valores, which we refer to as the "Mexican Stock Exchange," including us,
    must prepare their financial statements in accordance with Mexican FRS. Mexican
    FRS differs in certain significant respects from the U.S. GAAP, including
    among others the treatment of minority interests, workers' profit sharing,
    capitalization of interest and consolidation of subsidiaries. In addition,
    under Mexican FRS, the effects of inflation must be reflected in accounting
    records and in published financial statements. Moreover, the effect of inflation
    accounting under Mexican FRS, except for the restatement of fixed assets purchased
    outside of Mexico and the restatement of prior period financial statements
    as they relate to foreign subsidiaries, are not adjusted for in the reconciliation
    to U.S. GAAP. For this and other reasons, the presentation of financial statements
    and reported earnings prepared in accordance with Mexican FRS may differ materially
    from the presentation of financial statements and reported earnings prepared
    in accordance with U.S. GAAP. See Note 25 to our audited consolidated financial
    statements included elsewhere in this annual report for a description of the
    principal differences between Mexican FRS and U.S. GAAP.
  EXCHANGE
  RATES
  The
  following table sets forth, for each year in the five year period ended
  December 31, 2006, the high, low, average and annual period-end Noon Buying
  Rates, all expressed in pesos per U.S. dollar. No representation is made that
  the peso or U.S. dollar amounts referred to in this annual report could have
  been or could be converted into U.S. dollars or pesos, as the case may be, at
  the rates indicated, at any particular rate or at all.
  Noon Buying Rate(1)Year
            ended December 31,
      High
      Low
      Average
      Period-End2002
      Ps. 10.43
      Ps. 9.00
      Ps. 9.75
      Ps.
          10.432003
      11.41
      10.11
      10.79
      11.242004
      11.64
      10.81
      11.29
      11.152005
      11.41
      10.41
      10.89
      10.632006
      11.46
      10.43
      10.91
      10.80
  (1) Source: Federal Reserve Bank of New York
  The
  following table sets forth, for each month in the six-month period ended on
  May 31, 2007 and the first 20 days of June, the high and low Noon Buying
  Rates, all expressed in pesos per U.S. dollar.
  Noon Buying Rate(1)High
      LowDecember
          2006
      Ps.11.46
      Ps.10.43January
          2007
      11.09
      10.77February
      11.16
      10.92March
      11.19
      11.01April
      11.03
      10.92May
      10.93
      10.74June
          (through June 20, 2007)
      10.98
      10.71
  (1) Source: Federal Reserve Bank of New York
  SELECTED CONSOLIDATED FINANCIAL INFORMATION
  The
  following table presents selected consolidated financial information and other
  data for each of the periods presented. This information and data should be
  read in conjunction with, and is qualified in its entirety by reference to,
  our consolidated financial statements and the notes thereto included elsewhere
  in this annual report and the information under the section entitled "Item 5.
  Operating and Financial Review and Prospects" as it relates to 2004, 2005 and
  2006. The years ended December 31, 2002 and 2003 are derived from our audited
  financial statements not included in this annual report. Our consolidated
  financial statements are prepared in accordance with Mexican FRS, which
  differs in certain significant respects from U.S. GAAP. Note 25 to our
  consolidated financial statements for the year ended December 31, 2006
  provides a description of the principal differences between Mexican FRS and
  U.S. GAAP as they relate to us.The Company restated its 2005 U.S. GAAP financial
	information as a result of an adjustment related to the calculation of its
	deferred income taxes (see note
	25 b).
  On February
  1, 2007, we issued the 2012 Senior Notes in an aggregate principal amount of
  $300 million and the 2017 Senior Notes in an aggregate principal amount of
  $700 million. As a result of this transaction, as of December 31, 2006, Ps.
  4,220 million ($390 million) of short-term borrowings and current maturities
  were reclassified as long-term debt on our consolidated financial statements
  as of December 31, 2006.
  We have completed a number of dispositions recently.
    See "Item 4. Information on the Company-Business-Strategic Sale of Non-Core
    Businesses."
  Financial
  data expressed in pesos and set forth in the following table for each year in
  the five year period ended December 31, 2006 has been restated in millions of
  constant pesos as of December 31, 2006.

  As of
		or for the year ended December 31,2002
		2003
		2004
		2005
		2006
		2006(Ps.
		millions)(1)
		($
		millions)(1)(2)Income Statement
		Data:Mexican FRS:Net sales
		Ps. 25,947
		Ps. 25,283
		Ps.  25,168
		Ps.  25,323
		Ps.  26,562
		$    2,457Cost of sales
		18,252
		18,047
		18,227
		18,298
		19,282
		1,784Gross profit
		7,695
		7,236
		6,941
		7,025
		7,280
		673Selling, general and administrative expenses
		5,549
		5,362
		5,383
		5,276
		5,270
		487Operating income
		2,146
		1,874
		1,558
		1,749
		2,010
		186Financing result:Interest expense, net
		1,693
		1,948
		2,123
		2,265
		2,073
		192Derivative financial
		instruments
		
		
		
		16
		325
		30Exchange loss (gain),
		net
		1,685
		813
		86
		(402)
		215
		20Gain from monetary
		position(3)
		865
		610
		748
		438
		424
		39Total financing cost
		2,513
		2,151
		1,461
		1,441
		2,189
		202Other expenses (income), net(4)
		462
		157
		143
		424
		(273)
		(25)Income (loss) before taxes and workers' profit sharing
		(829)
		(434)
		(46)
		(116)
		94
		9Income and asset tax expense (benefit)
		(558)
		40
		(9)
		(502)
		215
		20Workers' profit sharing
		56
		43
		124
		49
		53
		5Net
		income (loss) from continuing operations before changes in accounting
		principles
		(327)
		(517)
		(161)
		337
		(174)
		(16)Net
		income (loss) from discontinued operations(5)(6)
		(86)
		62
		93
		3
		(30)
		(3)Gain
		on sale of discontinued operations(5)
		545
		0
		0
		0
		463
		43Cumulative effect of changes in accounting principles(11)
		0
		0
		0
		(119)
		0
		0Net
		income (loss)(5)(6)
		132
		(455)
		(68)
		221
		259
		24Net
		income (loss) of majority interest(5) (6)
		(36)
		(662)
		(303)
		53
		373
		35Net
		income (loss) from continuing operations per share
		(1.19)
		(1.88)
		(0.59)
		1.23
		(0.60)
		(0.06)Net
		income (loss) from discontinued operations per share(5)(6)
		1.67
		0.23
		0.34
		0.01
		1.50
		0.14Diluted and basic net income (loss) of majority interest per share(5)
		(6)
		(0.12)
		(2.41)
		(1.12)
		0.19
		1.29
		0.12U.S. GAAP(6)(12)(13):Net sales
		Ps. 21,989
		Ps. 22,458
		Ps. 23,027
		Ps. 23,414
		Ps. 24,728
		$ 2,287Operating income
		887
		1,070
		697
		801
		1,473
		136Net loss from continuing operations(6)(12)
		(967)
		(1,038)
		(841)
		(176)
		(535)
		(49)Net loss(6)(12)
		(621)
		(809)
		(239)
		(277)
		(71)
		(7)Net income (loss) from continuing operations per
		share(6)(12)
		(3.51)
		(3.77)
		(3.09)
		(0.64)
		(1.85)
		(0.17)Net income (loss) from discontinued operations
		per share(6)(12)
		1.26
		0.83
		2.21
		(0.37)
		1.60
		0.15Diluted and basic net income (loss) per share(6)(12)
		(2.25)
		(2.94)
		(0.88)
		(1.01)
		(0.25)
		(0.02)Balance Sheet Data:Mexican FRS:Cash and cash
		equivalents
		2,024
		1,095
		2,730
		1,379
		1,172
		108Current assets
		9,778
		8,817
		10,225
		9,377
		8,745
		809Total
		assets from discontinued operations(5)(6)
		2,642
		2,490
		2,101
		1,947
		0
		0Total assets
		35,554
		34,472
		33,185
		31,476
		27,104
		2,507Current liabilities
		9,879
		8,864
		7,839
		8,260
		4,528
		419Total debt
		16,756
		16,985
		17,241
		15,339
		12,335
		1,141Total
		liabilities from discontinued operations(5)(6)
		2,164
		1,923
		1,587
		1,348
		0
		0Total liabilities
		25,323
		25,001
		24,679
		22,717
		18,229
		1,686Stockholders' equity(5)(6)
		10,231
		9,471
		8,506
		8,759
		8,875
		821Minority
		interest in consolidated subsidiaries(5)(6)
		3,204
		3,162
		2,928
		3,006
		1,738
		161Majority stockholders' equity(5)(6)
		7,027
		6,311
		5,574
		5,753
		7,137
		660U.S. GAAP(6)(12)(13):Total
		assets
		Ps. 33,728
		Ps. 33,293
		Ps. 32,517
		Ps. 29,474
		Ps. 25,153
		$ 2,326Total
		liabilities
		25,134
		24,939
		24,959
		22,340
		18,574
		1,718Net
		assets
		8,593
		8,354
		7,558
		7,134
		6,579
		609Capital stock
		7,292
		7,292
		7,292
		7,292
		7,356
		680Stockholders' equity
		6,551
		5,964
		5,181
		4,735
		5,504
		509Other Data:Mexican FRS:Capital expenditures
		1,088
		1,880
		1,431
		1,061
		1,198
		111Depreciation and
		amortization
		2,000
		1,947
		2,187
		1,778
		1,722
		159Total shares issued at
		end of period(7)
		324.0
		324.0
		324.0
		324.0
		386.9Total
		shares held in Stock Option Trust at end of period(7)
		24.7
		24.7
		22.8
		22.3
		17.6Total
		shares held as treasury stock at end of period(7)
		23.3
		28.2
		28.2
		28.2
		28.3Total
		shares issued and outstanding at end of period(7)
		276.0
		271.1
		273.0
		273.4
		341.0Average total shares outstanding during period(7)
		275.4
		275.2
		271.8
		273.1
		289.6Inflation and Foreign
		Currency Exchange Rate Data:Percentage of change in INPC(8)
		5.70%
		4.00%
		5.20%
		3.30%
		4.10%Peso/dollar exchange rate at the end of period(9)
		10.4393
		11.2372
		11.1495
		10.6344
		10.8116Average exchange rate(10)
		9.7455
		10.8251
		11.3091
		10.8786
		10.9034
(1) Except per share amounts, number of shares and inflation
    and foreign currency exchange rate data.
  (2) Peso amounts have been translated into U.S. dollars,
    solely for the convenience of the reader, at the rate of 10.8116 pesos per
    one U.S. dollar, the Free Exchange Rate on December 31, 2006.
  (3) The gain 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. See "Item
    5.Operating and Financial Review and Prospects."
  (4) Other expenses (income), net, reflects, among others,
    (i) impairment of long-lived assets for Ps. 453 million, Ps. 133 million,
    Ps. 338 million, Ps. 362 million, and Ps. 378 million for the years ended
    December 31, 2002, 2003, 2004, 2005, and 2006, respectively, (ii) loss
    (gain) from sale of assets for Ps. 24 million, Ps. 5 million, Ps. 10 million,
    Ps. 6 million and Ps. (766) million for the years ended
    December 31, 2002, 2003, 2004, 2005 and 2006 respectively, (iii) loss
    (gain) from the sale of subsidiaries and associated companies in the amount
    of Ps. (77) million, Ps. (40) million, Ps. (525) million, Ps. 132 million
    and Ps. (66) million for the years ended December 31, 2002, 2003,
    2004, 2005 and 2006, respectively, and (iv) restructuring charges for
    Ps. 80 million, Ps. 93 million, Ps. 256 million, Ps. 320 million and
    Ps. 59 million for the years ended December 31, 2002, 2003, 2004,
    2005 and 2006, respectively. The restructuring charges relate to the downsizing
    and streamlining of our corporate functions and organization at some of our
    business units and are part of an ongoing benefit arrangement. Also, during
    2005 the Company recorded a gain of Ps. 442 million, resulting from the designation
    of Vitro as the sole beneficiary of the Vitro Club assets held in trust.
  (5) On July 3, 2002, we sold our controlling 51% interest
    in Vitromatic, S.A. de C.V., which together with its subsidiaries we refer
    to as "Vitromatic", our joint venture with Whirlpool Corporation, which we
    refer to as "Whirlpool," that engaged in the production and distribution of
    household appliances, to Whirlpool for $148.3 million in cash. Our consolidated
    financial statements and all other financial and statistical data included
    in this annual report have been restated to reflect Vitromatic as a discontinued
    operation for 2002, unless otherwise indicated. Therefore, Vitromatic's results
    of operations are reflected in the line item entitled "Net income (loss) from
    discontinued operations" in our consolidated statement of operations. Financial
    and statistical data for all periods presented in this annual report do not
    include the results of operations of discontinued operations, except (i) for
    financial and statistical data relating to discontinued operations, (ii) net
    income and net income of majority interest and (iii) as otherwise specified.
  (6) On June 16, 2006, we completed the sale of
    our 51% equity ownership interest in Vitrocrisa to Libbey, the owner of the
    remaining 49% equity interest. See "Item 4. Information on the Company- Business-Strategic
    Sales of Non-Core Businesses." Vitrocrisa, which was previously presented
    as one of our reportable segments, under Mexican FRS is a discontinued operation
    as of December 31, 2005 as its disposition represents the exit of a significant
    activity of the Company. Accordingly, all financial and operating information
    relating to Vitrocrisa in this annual report are presented as a discontinued
    operation. In addition, the discussion of our indebtedness in this annual
    report does not include the indebtedness of Vitrocrisa, which is presented
    under Mexican FRS on our consolidated balance sheets as of December 31, 2005
    as a part of "Current liabilities of discontinued operations" and
    "Long-term liabilities of discontinued operations". Under U.S. GAAP,
    Vitrocrisa was not presented as a discontinued operation until 2006 as the
    divestiture hadn't been approved by our shareholders as of December 31, 2005.
    Such divestiture was approved at the annual shareholders' meeting held on
    April 27, 2006. Accordingly, all financial and operating information relating
    to Vitrocrisa in this annual report are presented as a discontinued operation.
  (7) Millions of shares.
  (8) Calculated using year-end INPC of the most
    recent year divided by the year-end INPC of the previous year.
  (9) Based on the Free Exchange Rate at the end of the
    period.
  (10) Calculated using the average of Free Exchange Rates
    on the last day of each month during the period.
  (11) Effective January 1, 2005, the Company adopted the
    provisions of Bulletin C-10, "Derivative Financial Instruments and Hedging
    Activities", which requires that all derivative instruments be recognized
    at fair value, sets the rules to recognize hedging activities and requires
    separation, if practical, of embedded derivative instruments. With respect
    to cash flow hedging, Bulletin C-10 establishes that the effective portion
    be recognized temporarily in other comprehensive income within stockholders'
    equity, with subsequent reclassification to current earnings at the time it
    is affected by the hedged item. The ineffective portion should be immediately
    recognized in current earnings. Through December 31, 2004, according to prior
    accounting standards (Bulletin C-2, "Financial Instruments"), the Company
    did not recognize the effect of hedging derivatives under financial expenses
    until the flow exchanges mentioned in the swap contract were actually executed.
    The effect of adopting Bulletin C-10, including the related tax effects resulted
    in (i) the recognition of a liability of Ps. 131 million; (ii) the recognition
    of an asset of Ps. 74 million; (iii) a charge to other comprehensive income
    in stockholders' equity of Ps. 10 million and; (iv) a credit to the cumulative
    effect of the change in accounting principle of Ps. 119 million and (v) a
    credit to financing cost of Ps. 101 million, net of the effect of deferred
    income tax of Ps. 29 million.
  (12) Certain of our subsidiaries have been classified
    as discontinued operations as they meet the definition of held for sale for
    U.S. GAAP purposes. These subsidiaries did not meet the definition of discontinued
    operations for Mexican FRS purposes as they do not constitute the sale of
    a significant portion of our business. See note 25 k) to our consolidated
    financial statements for a description of those subsidiaries.
(13)
The Company restated its 2005 U.S. GAAP financial
	information as a result of an adjustment related to the calculation of its
	deferred income taxes (see note
	25 b).
  Dividends per Share
  The
  following table sets forth, for each year in the five year period ended
  December 31, 2006, the dividends and dividends per share Vitro declared and
  paid with respect to such year, expressed in pesos and U.S. dollars. All peso
  amounts contained in the table below are stated in nominal pesos.
  Fiscal Year
            With Respect to Which Dividend Was Declared
      Month Dividend
            Was Declared
      Total Dividend
            Amount(1)
      Dividends
            per Share
      Dividend per
            Share(2)
      Month Dividend
            Was Paid(Ps. millions)
      (Pesos)
      (Dollars)2002
      March
          2003
      108
      0.36
      0.0338
      April
          20032003
      March
          2004
      89
      0.30
      0.0267
      April
          20042004
      March
          2005
      90
      0.30
      0.0268
      April
          20052005
      April 2006
      89
      0.30
      0.0270
      May 20062006
      March
          2007
      132
      0.37
      0.0334
      April
          2007
  
  (1) For purposes of calculating the dividends per
    share, we considered our total dividend amount. Shares held by the Stock
    Option Trust are not treated as treasury stock. Therefore, the total dividend
    amount includes dividends paid with respect to the shares held by the Stock
    Option Trust.
  (2) For purposes of calculating the dividends paid in
    U.S. dollars per share, we divided the dividends paid in Mexican peso per
    share by the Free Exchange Rate as of the date on which such dividend was
    declared.
  Item 4. Information on the Company
  ORGANIZATIONAL STRUCTURE
  The
  following chart presents the organizational structure of our business units,
  our principal subsidiaries and our direct or indirect percentage equity
  ownership in such subsidiaries as of May 31, 2007.


  BUSINESS
  Business Overview
  Vitro, S.A.B. de C.V. is a corporation with variable
    capital (sociedad anonima bursatil de capital variable) organized under the
    laws of Mexico and is a holding company that conducts substantially all of
    its operations through subsidiaries. Our predecessor was incorporated in Mexico
    in 1909 as Vidriera Monterrey, S.A. de C.V., which we refer to as "Vimosa," and, based on our consolidated net sales of Ps. 26,562 million ($2,457 million)
    in 2006, we believe that we are the largest manufacturer of flat glass and
    glass containers in Mexico. Our principal executive offices are located at
    Ave. Ricardo Margain 400, Col. Valle del Campestre, San Pedro Garza Garcia,
    Nuevo Leon, 66265 Mexico, telephone number (52-81) 8863-1200. Our agent
    for service of process, exclusively for actions brought by the Securities
    and Exchange Commission, which we refer to as the "SEC," pursuant to the requirements
    of the U.S. federal securities laws, is CT Corporation System, 111 Eighth
    Avenue, New York, New York 10011.
  On June 16, 2006, we completed the sale of our
    51% equity ownership interest in Vitrocrisa to Libbey, the owner of the remaining
    49% equity interest. See "Item 4. Information on the Company- Business-Strategic
    Sales of Non-Core Businesses." Vitrocrisa, which was previously presented
    as one of our reportable segments is presented as a discontinued operation
    as its disposition represents the end of a significant activity of the Company.
    Accordingly, all financial and operating information relating to Vitrocrisa
    in this annual report is presented as a discontinued operation. In addition,
    the discussion of our indebtedness in this annual report does not include
    the indebtedness of Vitrocrisa, which is presented on our consolidated balance
    sheets as a part of "Current liabilities of discontinued operations" and "Long-term
    liabilities of discontinued operations."
  Our
  consolidated net sales for the year ended December 31, 2006 totaled Ps.
  26,562 million ($2,457 million). As of December 31, 2006, our total assets
  were Ps. 27,104 million ($2,507 million). We have manufacturing facilities in
  eight countries, distribution centers throughout the Americas and Europe and
  export our products to over 40 countries. In 2006, 43% and 43% of our
  consolidated net sales were sales made in Mexico and the United States,
  respectively.
  Our
  operations are currently organized into two operating business units: the
  Glass Containers business unit (representing approximately 51% of our
  consolidated net sales in 2006) and the Flat Glass business unit (representing
  approximately 48% of our consolidated net sales in 2006).
  Our Glass Containers business unit manufactures and
    distributes soda lime glass containers for the soft drink, beer, food, liquor
    and wine, pharmaceutical and cosmetics industries, as well as raw materials,
    machinery and molds for the glass industry, and, based on its net sales of
    Ps. 13,518 million ($1,250 million) in 2006, we believe the Glass
    Containers business unit is the largest glass containers producer in Mexico
    and Central America. The Glass Containers business unit includes (i) Compania
    Vidriera, S.A. de C.V., which we refer to as "COVISA," our subsidiary that
    conducts a substantial majority of our glass containers operations in Mexico,
    (ii) Comegua, our joint venture with London Overseas and Golden Beer which,
    based on Comegua's net sales of Ps. 1,725 million ($159 million)
    in 2006, we believe is the largest glass containers producer in Central America
    (together, London Overseas and Golden Beer each hold 25.15% of Comegua's outstanding
    shares), (iii) Vitro Packaging, our glass containers distribution subsidiary
    in the United States, (iv) Vidrio Lux, S.A., which we refer to as "Vilux," our subsidiary engaged in the manufacturing and distribution of glass containers
    in Bolivia and neighboring countries, (v) Industria del Alcali, S.A. de C.V.,
    which we refer to as "Alcali," our subsidiary engaged in the manufacturing
    of soda ash, sodium bicarbonate, calcium chloride and salt, which are the
    main raw materials used in the manufacturing of glass containers (vi) Comercializadora
  Alcali, S. de R.L. de C.V., which we refer to as "Comercializadora," our subsidiary
    engaged in the distribution of the products manufactured by Alcali and (vii) Fabricacion de Maquinas, S.A. de C.V., which we refer to as "FAMA," our subsidiary
    engaged in the manufacturing of capital goods such as glass forming machines
    and molds.
  Our Flat Glass business unit focuses on the manufacturing,
    processing and distribution of flat glass for the construction and the automotive
    industry. Based on the Flat Glass business unit's net sales of Ps. 12,710
    million ($1,176 million) in 2006, we believe the business unit is the largest
    flat glass producer in Mexico, the second largest in Latin America, one of
    the largest distributors of flat glass products in the United States and a
    leading provider of insulated flat glass products in Spain and Portugal. The
    Flat Glass business unit also has joint ventures with AFG Industries through
    Vitro AFG. We have also partnered with groups of individual investors with
    respect to Cristales Automotrices, Vitro Cristalglass and Vitro Chaves.
  Our Flat Glass business unit includes (i) Vitro
    Vidrio y Cristal, S.A. de C.V., which we refer to as "Vidrio y Cristal," our
    subsidiary that manufactures and distributes a majority of our raw (float)
    flat glass products for the Mexican construction industry and to automotive
    safety glass manufacturers as raw material, (ii) Vitro Automotriz, S.A.
    de C.V., which we refer to as "VAU," our subsidiary that manufactures a majority
    of our flat glass products for the Mexican and the United States automotive
    industry and Distribuidora Nacional de Vidrio, S.A. de C.V., which we refer
    to as "Dinavisa," our subsidiary that distributes flat glass products for
    the Mexican automotive glass replacement, which we refer to as "AGR,"industry,
    (iii) Vitro Flex, S.A. de C.V., which we refer to as "Vitro Flex", (formerly
    a joint venture with Visteon Inc. ("Visteon") - see Acquisitions below), that
    is engaged in the manufacturing and distribution of flat glass products for
    the automotive market, (iv) Vitro AFG, our joint venture with AFG Industries
    Inc. a subsidiary of Asahi, Inc., which we refer to as "AFG Industries," that
    is engaged in the manufacturing of raw (float) flat glass products, which
    are sold on a 50-50 basis to AFG Industries and us and where AFG Industries
    holds a 50% interest in Vitro AFG, (v) Cristales Automotrices, S.A. de
    C.V., which we refer to as "Cristales Automotrices," our joint venture with
    a group of individual investors that own 49% interest in this business unit
    and that conducts our automotive replacement glass installation business in
    Mexico City and its surrounding states, (vi) Vitro America, our subsidiary
    that conducts a substantial majority of our flat glass operations in the United
    States, (vii) Vitro Cristalglass S.L., which we refer to as "Vitro Cristalglass", our joint venture with a group of individual investors that own 40% interest
    in this business unit and that is engaged in the manufacturing and distribution
    of flat glass products for the Spanish, French and Portuguese construction
    industry, (viii) Vitro Chaves Industria de Vidrio, S.A., which we refer
    to as "Vitro Chaves," a joint venture of Vitro Cristalglass with a group of
    individual investors that own 40% interest in this business unit and that
    is engaged in the manufacturing and distribution of flat glass products for
    the Portuguese construction industry and (ix) Vitro Colombia, S.A., which
    we refer to as "Vitro Colombia," our subsidiary that conducts our Colombian
    flat glass operations that is engaged in the manufacturing and distribution
    of flat glass products for the automotive and construction market.
  Acquisitions
  On April 20, 2006, our subsidiary, Comegua, announced
    that in a joint effort with its Central America partners, has completed the
    acquisition of VIPASA, a glass container company located in Panama for a purchase
    price of $21 million. We believe VIPASA is the largest and most important
    glass container manufacturer for the beverage, liquor, food and pharmaceutical
    industries in Panama and exports to more than 15 countries in the Americas.
    VIPASA's sales in 2005 reached approximately $23 million.
  On September 29, 2006, Vitro Plan, Vitro's flat glass
    division, and Visteon ended their joint venture agreement in Vitro Flex through
    a reimbursement and cancellation of Visteon's capital investment. Vitro Plan
    is now the sole owner of Vitro Flex. Vitro Flex was a joint venture formed
    in 1979 with Fairlane Holdings ("Fairlane"), a Visteon affiliate. Vitro Flex
    primarily manufactures tempered and laminated glass for use in Ford vehicles.
    Fairlane will receive $9.4 million for the 38% stake in Vitro Flex. An initial
    payment of $2 million was made on September 29, 2006, which will be followed
    by four annual payments of $1.85 million, starting on September 30, 2007.
    The transaction will be funded by Vitro Flex with cash from operations. The
    difference between the transaction value and the book value result in a credit
    of Ps. 67 registered in the majority stockholders' equity. Vitro Flex together
    with Vitro Automotriz will now directly manage their relationship with Ford
    and will serve all Vitro's automotive customers. Under the prior structure,
    contractual restrictions limited Vitro Flex's ability to use excess capacity
    for non Ford volumes.
  Strategic Sales of Non-Core Businesses
  Commencing
  in 2001, we began a corporate restructuring and recapitalization program
  focused primarily on the sale of non-productive assets and assets no longer
  integral to the long-term strategy of our business, with the aim of reducing
  our overall debt levels. During the period from 2001 through 2006, we
  concentrated our divestiture efforts on rightsizing our two core businesses,
  Glass Containers and Flat Glass.
  On June 16, 2006, we completed the sale of our
    51% ownership interest in Vitrocrisa to Libbey, the owner of the remaining
    49% equity interest. We received proceeds of $119 million from this divestiture,
    comprised of $80 million in cash from the sale of our equity interest,
    $28 million from the payment of intercompany receivables and $11 million
    from the repayment of intercompany debt. As a part of this transaction, all
    of the liabilities of Vitrocrisa were assumed by Libbey, including bank debt
    of $62 million as of May 31, 2006.
  On March 2, 2006, after the required approval
    of the stockholders meeting on March 1, 2006, we sold our 51% interest
    in Quimica M, our subsidiary engaged in the manufacture and distribution
    of polyvinyl butyral, which is an inner layer of plastic film used in the
    manufacture of clear and shaded windshields, to Solutia Inc., the other shareholder
    in Quimica M, for $20 million in cash. In 2005, Quimica M had
    consolidated net sales of Ps. 621 million ($57 million) and
    a consolidated operating income of Ps. 62 million ($6 million).
  On April 1, 2005, we sold 100% of our interest
    in Plasticos Bosco, S.A. de C.V. ("Bosco"), which consisted of two subsidiaries
    engaged in the manufacture and distribution of plastic tubes and disposable
    thermofoldware and industrial products, to Grupo Convermex, S.A. de C.V.,
    for Ps. 103 million ($10 million) in cash. In 2004, Bosco had
    consolidated net sales of Ps. 454 million ($42 million) and
    a consolidated operating loss of Ps. 10 million ($1 million).
    The consolidated net sales and operating loss of Bosco were Ps. 108 million
    ($10 million) and Ps. 7 million ($0.6 million), respectively,
    during the period beginning on January 1, 2005 and ending on April 1,
    2005. We recorded a loss for the sale of Bosco of Ps. 132 million
    ($12 million).
  On September 27, 2004, we sold our 50% interest
    in Vancan, S.A. de C.V. ("Vancan"), our joint venture with Rexam, Inc., engaged
    in the manufacture and distribution of aluminum containers, to Rexam, Inc.
    for $22.6 million in cash after certain price adjustments. In 2003, our
    50% interest in Vancan had consolidated net sales of Ps. 455 million
    ($42 million) and a consolidated operating income of Ps. 52 million
    ($5 million). The consolidated net sales and operating income of our
    50% interest in Vancan were Ps. 336 million ($31 million) and
    Ps. 34 million ($3 million), respectively, during the period
    beginning on January 1, 2004 and ending on September 30, 2004.
  On April 2, 2004, we sold our 60% interest in
    Vitro OCF, S.A. de C.V. ("Vitro OCF"), our joint venture with Owens Corning
    engaged in the manufacture and distribution of fiberglass and fiberglass products,
    to Owens Corning for $71.5 million in cash. Pursuant to the terms of
    the sale, we paid Vitro OCF's and its subsidiaries' bank debt (which was reflected
    on our consolidated balance sheet) of $22 million immediately prior to
    the sale. We used the remaining proceeds of the sale received by us at closing
    to reduce our consolidated indebtedness. The consolidated net sales and operating
    income of Vitro OCF were Ps. 217 million ($20 million) and
    Ps. 50 million ($5 million), respectively, during the period
    beginning on January 1, 2004 and ending on April 2, 2004. In 2003,
    Vitro OCF had consolidated net sales and operating income of Ps. 788 million
    ($73 million) and Ps. 193 million ($18 million), respectively.
    The gain on sale of this component was Ps. 438 million ($41 million).
    This business was previously included in our Flat Glass reportable segment.
  In March 2004, the board of directors of Vitro America authorized management to close all of its distribution and production facilities
    and to discontinue operations in the northwestern United States. The closing
    plan included operation of the facilities through June 30, 2004. As of
    December 31, 2004, all operations at these facilities had ceased. Vitro
    America conducts a substantial majority of our flat glass operations in the
    United States and is a subsidiary of Vimexico, which is included in our Flat
    Glass reportable segment.
  During 2004, the Company's management also decided
    to close two small facilities (the "PVA facilities") in Mexico dedicated to
    the manufacture of architectural value-added products. These closures were
    initiated and finalized during 2004 and as a result no liability has been
    accrued for as of December 31, 2004. The amount incurred for these closures
    was Ps. 21 million ($2 million). The PVA facilities were managed
    by Vitro Flotado Cubiertas, a subsidiary of Vimexico. This business was previously
    included in our Flat Glass reportable segment.
  On September 10, 2003, we sold 100% of the outstanding
    shares of ECSA, one of our subsidiaries engaged in the manufacture and distribution
    of plastic products, to a subsidiary of Phoenix Capital Limited for $18 million,
    $15 million of which we received at closing and the remainder was paid
    on May 20, 2005. The net sales and operating income of ECSA were Ps. 158 million
    ($15 million) and Ps. 10 million ($1 million), respectively,
    during the period beginning on January 1, 2003 and ending on September 10,
    2003. The gain on sale of this component was Ps. 40 million ($4 million).
    This business was previously included in our Glass Containers reportable segment.
  On July 3, 2002, we sold our controlling 51%
    interest in Vitromatic or the Acros-Whirlpool business unit, our joint venture
    with Whirlpool, engaged in the production and distribution of household appliances,
    to Whirlpool for $148.3 million in cash. At the time of the transaction,
    $67 million of our consolidated debt and $97 million of our consolidated
    off-balance sheet financings were obligations of Vitromatic. Consequently,
    upon the consummation of the sale of our interest in Vitromatic, our consolidated
    debt and off-balance sheet financings were reduced by $67 million and
    $97 million, respectively.
  On April 15, 2002, we sold our 51% interest
    in ASA to Gerresheimer Glass AG for $13.4 million in cash. ASA is engaged
    in the manufacture of borosilicate glass products for laboratory and pharmaceutical
    use, such as ampoules, vials and syringes.
  On May 21, 2001, we sold our 50% interest in Regioplast,
    our joint venture with Owens-Illinois, Inc., which we refer to as "Owens-Illinois," engaged in the production and distribution of plastic bottles and caps, including
    non-refillable closures, for $8 million in cash.
  Our Operating Business Units
  Our
  organizational structure, comprised of the Glass Containers and Flat Glass
  business units, allows us to focus on the needs of the distinct end markets we
  serve, which results in a diversified revenue base, and enables us to take
  advantage of our expertise in the efficient production and distribution of
  high quality glass products.
  Business Segment Data
  The
  following table sets forth business segment data for the year ended December
  31, 2006 in millions of constant pesos. See note 21 of our consolidated
  financial statements for business segment data for the years ended December
  31, 2004 and 2005.
  Glass
          Containers
      
      Flat
        Glass
      
      Corporate
          & Eliminations
      
      Consolidated
      Millions of US dollars,
        (Convenience Translation)December
          31, 2006Consolidated
          net sales
      
      Ps.
          13,435
      
      Ps.
          12,709
      
      Ps.
          418
      
      Ps.
          26,562
      $
          2,457Operating
          income
      
      1,782
      
      375
      
      (147)
      
      2,010
      186Total
          assets
      
      13,756
      
      10,735
      
      2,613
      
      27,104
      2,507Capital
          expenditures
      
      861
      
      318
      
      19
      
      1,198
      111
  The
  following table sets forth business segment data as percentage of consolidated
  data.
  Glass
          Containers
      
      Flat
        Glass
      
      Corporate
          & Eliminations
      
      ConsolidatedConsolidated
          net sales
      
      51%
      
      48%
      
      1%
      
      100%Operating
          income
      
      89%
      
      18%
      
      (7%)
      
      100%Total
          assets
      
      51%
      
      40%
      
      9%
      
      100%Capital
          expenditures
      
      72%
      
      27%
      
      1%
      
      100%
  Glass Containers
  Our Glass Containers business unit includes:
  COVISA, our subsidiary that conducts a substantial
    majority of our glass containers operations in Mexico;
    Comegua, our joint venture with London Overseas
    and Golden Beer, which we believe is the largest glass containers producer
    in Central America (London Overseas and Golden Beer each hold 25.1% of Comegua's
    outstanding shares);
    Vitro Packaging, our glass containers distribution subsidiary in the United
  States;
    Vilux, our subsidiary engaged in the manufacture
    and distribution of glass containers in Bolivia and neighboring countries;
    Alcali, our subsidiary engaged in the manufacture
    of soda ash, sodium bicarbonate, calcium chloride and salt, which are the
    main raw materials used in the manufacture of glass products;
    Comercializadora
  Alcali, our subsidiary engaged
    in the distribution of the products manufactured by Alcali and which leases
    machinery and equipment to COVISA; and
    FAMA, our subsidiary engaged in the manufacture
    of capital goods such as glass forming machines and molds.Based on
  the Glass Containers business unit's net sales of
  Ps. 13,518 million($1,250 million) in 2006, we believe it is the largest glass
  container producer in Mexico and Central America and the third-largest in the
  world. In 2006, this business unit accounted for 51% of our consolidated net
  sales. During the same period, 28% of the net sales of the Glass Containers
  business unit came from exports and 14% came from sales by our foreign
  subsidiaries that are part of the business unit.
  The Glass Containers business unit produces soda
    lime glass containers for the soft drink, beer, food, liquor and wine, pharmaceuticals
    and cosmetics industries and has a production capacity of approximately 5,400
    tons of glass per day. Its customers include leading companies such as The
    Coca-Cola Company, Pepsi Cola, Grupo Modelo, Nestle, Procter & Gamble,
    Gerber, Avon, Coty, Estee Lauder, Jafra, Grupo Domecq, Encore Glass, Herdez
    McCormick, Bruce Foods, Baumer Foods, Grupo Cuervo, Jugos del Valle, Tamazula
    and Bacardi. In addition, our Glass Containers business unit manufactures
    and distributes:
  soda ash, sodium bicarbonate, calcium chloride and salt, which are the main
  raw materials used in the manufacture of glass products, and
    capital goods such as glass forming machines and molds.The Glass Containers business unit operates eight
    manufacturing facilities in Mexico, three in Central America and one in Bolivia,
    and has two recycling plants in Mexico. The Glass Containers business unit,
    which exports to the United States mainly through our subsidiary Vitro Packaging,
    has five sales offices, two design centers and one distribution center in
    the United States. The Glass Containers business unit also includes Comegua,
    our joint venture with London Overseas and Golden Beer. Based on Comegua's
    net sales of Ps. 1,725 million ($159 million) in 2006, we believe
    it is the largest glass container producer in Central America.
  In April 2006, Comegua acquired VIPASA, a glass container
    company located in Panama for a purchase price of $21 million. We believe
    VIPASA is the largest and most important glass container manufacturer for
    the beverages, liquor, food and pharmaceuticals industries in Panama and exports
    to more than 15 countries in the Americas.
  Flat Glass
  The Flat
  Glass business unit is owned 91.8% by Vitro and is comprised of three main
  businesses: Float Glass manufacturing, Automotive Safety Glass manufacturing
  and distribution and our International Division, which is primarily focused on
  the distribution and manufacturing of flat glass products for the construction
  and architectural industries. The majority of our Flat Glass business unit's
  operations (approximately 65%) are dedicated to the building products
  industry, while the remainder of the unit's operations are concentrated in the
  automotive industry. In 2006, 45% of our Flat Glass business unit's sales
  derived from the United States, 40% derived from Mexico and 15% derived from
  other parts of the world.
  Based on
  the Flat Glass business unit's net sales of Ps. 12,710 million ($1,176
  million) in 2006, we believe the business unit is the largest flat glass
  producer in Mexico, the second-largest in Latin America, one of the largest
  distributors of flat glass products in the United States and a leading
  provider of insulated flat glass products in Spain and Portugal. In 2006, this
  business unit accounted for 48% of Vitro's consolidated net sales. During the
  same period, 19% of the net sales of the Flat Glass business unit came from
  exports and 56% came from sales by our Flat Glass foreign subsidiaries.
  Our Float
  Glass manufacturing business is conducted through the following subsidiaries:
  Vidrio y Cristal and Vitro Flotado Cubiertas, S.A.
    de C.V., our subsidiaries that manufacture and distribute a majority of our
    raw (float) flat glass products for the Mexican construction industry and
    to automotive safety glass manufacturers as raw material; and
    Vitro AFG, our joint venture with AFG Industries,
    a subsidiary of Asahi, Inc. that is engaged in the manufacture of raw (float)
    flat glass products, which are sold on a 50-50 basis to AFG Industries and
    us, and in which AFG Industries holds a 50% equity interest. One-half of the
    flat glass produced by this facility (approximately 150,000 tons per year)
    is sold to each of AFG Industries and us under take-or-pay agreements.Vidrio y Cristal and Vitro AFG focus on the manufacture,
    processing and distribution of float glass used as raw material for the construction
    and automotive industries and have a production capacity of over 625,000 tons
    of float glass per year, of which 75,000 tons are contributed by our 50% share
    of Vitro AFG.
  In 2006, the Float Glass manufacturing business represented
    17% of our Flat Glass business unit's total sales. We believe we are the leading
    float glass manufacturing business in Mexico on the basis of sales, with a
    45% market share in Mexico as of December 31, 2006. Approximately 54%
    of our Float Glass manufacturing sales derive from the building products industry
    and approximately 46% derive from the automotive safety glass manufacturing
    industry. As of December 31, 2006, the Float Glass manufacturing business
    owned four float glass furnaces (including the Vitro AFG furnace).
  At the
  beginning of April 2006, as part of the business strategy to reduce our
  reliance on the low-margin construction glass export market and to improve our
  cash flow through inventory reduction, we decided to shutdown our float
  furnace in Mexico City. We are evaluating and monitoring market conditions to
  determine when to reopen the float furnace.
  In
	2007, AFG Industries initiated discussions proposing the
    termination of the joint venture, which could lead to the closing of the float
    glass tank in Mexicali, Mexico owned by Vitro AFG, because of over capacity
    of float glass production in North America, mainly in the west coast, and
    the termination of the take-or-pay agreements that provide for each of us
    and AFG Industries to purchase one half of the flat glass produced by this
    facility (a total of approximately 150,000 tons per year). The Vitro AFG
    joint venture represents approximately 0.4% of the consolidated net sales,
    1.7% of our operating income and 1.6% of our consolidated total assets. In addition, we and AFG Industries each have outstanding loans to the joint venture
    of Ps. 148 million ($13.5 million). We are currently exploring various options
    to resolve the discussions that were initiated by AFG Industires concerning the future of this float glass,
	and one of them could be the exercise of the options that our joint venture
	agreement comptemplates.
    These options provide that each of Vitro and AFG Industries has the right to
	offer to buy or sell its equity participation in this float glass facility (offering
	partner) and the other partner (receiving partner) has the right to accept
	such proposal or to reject the same by way of buying or selling, the
	offering partner under the same terms of the offer that was submitted by the
	offering partner. We and AFG Industries have not reached an agreement on any of these options,
    nor can we predict at this time what the outcome
    of our discussions with AFG Industries will be.
  Our
  Automotive Safety Glass manufacturing and distribution business is conducted
  through the following subsidiaries:
  VAU, our subsidiary that manufactures a majority of
    our flat glass products for the Mexican and the United States' automotive
    industry;
    Vitro
        Flex, formerly a joint venture with Visteon, which together with VAU,
        also manufactures and distributes flat glass products for the automotive
        industry. See "Item 4, Information of the Company-Business-Acquisitions";
    Dinavisa, our subsidiary that distributes flat glass
    products for the Mexican and export AGR markets;
    Cristales Automotrices, our joint venture with a group
    of individual investors that owns a 49% equity interest in this business and
    operates a part of our AGR installation business, in Mexico City and its surrounding
    states; and
    Vitrocar, which is engaged in our AGR installation business
    in Mexico through distribution and installation centers strategically located
    throughout Mexico.In 2006,
  the Automotive Safety Glass manufacturing and distribution business
  represented 35% of our Flat Glass business unit's total sales, with sales
  primarily derived from the automotive OEM market in North America. On the
  basis of volume in pieces, we estimate we are the third-largest automotive
  safety glass manufacturing and distribution business in North America, with a
  16.4% market share as of December 31, 2006.
  Based on the number of molding furnaces the business
    unit currently operates in Mexico, we believe the Automotive Safety Glass
    manufacturing and distribution business is also a major manufacturer of safety
    glass products for the automotive OEM and AGR markets in Mexico. Our Automotive
    Safety Glass manufacturing and distribution business' customer base includes
    General Motors, Ford Motor Co., DaimlerChrysler, Volkswagen and Nissan.
  Our
  International Division is operated by the following subsidiaries:
  Vitro America, our subsidiary that performs a substantial majority of our flat
  glass operations in the United States, which derives 85% of its sales from the
  distribution of construction glass and 15% from the distribution and
  installation of auto glass;
    Vitro Cristalglass, our joint venture with a group
    of individual investors that owns a 40% equity interest in this business,
    and is engaged in the manufacture and distribution of value-added flat glass
    products for the Spanish, French and Portuguese construction industries, with
    specialties in value-added glass products and glass for landmark construction
    projects;
    Vitro Chaves, a joint venture of Vitro Cristalglass
    with a group of individual investors that owns a 40% equity interest in this
    business, and is engaged in the manufacture and distribution of glass and
    glazing products for the Portuguese construction industry; and
    Vitro Colombia, our subsidiary that conducts our Colombian flat glass
  operations and is primarily engaged in the manufacture and distribution of
  flat glass products for the automotive industry, with some activity in the
  construction market.Vitro
  America processes, distributes and installs flat glass products for the
  construction and automotive markets in the United States. It operates in
  26 states in the U.S. through 8 fabrication centers, 34 distribution centers
  and 104 installation centers. A portion of the glass processed by Vitro
  America is produced by the business unit in Mexico, and the balance is
  purchased from unaffiliated third parties. In 2006, a majority of Vitro
  America's glass purchases in terms of volume were supplied from our Flat Glass
  Mexican subsidiaries.
  In Europe, Vitro Cristalglass currently has seven
    processing facilities and two distribution centers in Barcelona, Spain. Vitro
    Chaves currently has one processing facility and one distribution center in
    Lisbon, Portugal.
  Our Products
  The
  following table sets forth our principal products, customers and end-users,
  sales regions and joint venture partners by business line within each of our
  two business units.
  Glass
        Containers:Business Line
      Products
      Customers and
          End-Users
      Sales Regions
      Joint Venture PartnersGlass
        Containers
    Soda
        lime glass containers
    Soft
        drink, beer, food, liquor and wine, pharmaceutical and cosmetics industries
    Mexico,
        the United States,
        the Caribbean, Central and South America and Europe
    London
        Overseas and Golden BeerRaw
        Materials
    Soda
        ash, sodium bicarbonate, calcium chloride and salt
    Glass
        manufacturers and detergent producers
    Mexico,
        the United States and
        South AmericaMachinery and Molds
    Glass
        forming machines, castings for glass molds, machinery parts and electronic
        controls
    Flat
        Glass business unit, Glass Containers business unit, glass manufacturers
        and other third-party manufacturers
    Mexico,
        the United States and
        Central and South America
  
  
  
  
  
  Flat
        Glass:Business Line
      Products
      Customers and
          End-Users
      Sales Regions
      Joint Venture PartnersConstruction
        Glass
    Float
        glass, architectural tempered safety glass, insulated glass units, laminated,
        table tops
    Construction
        industry, furniture manufacturers, distributors and installers
    Mexico,
        the United States,
        Canada, Europe and
        Central and South America
    Pilkington and AFG IndustriesAutomotive
        Glass
    Windshields,
        side laminated glass, rear and side tempered glass
    Automotive
        OEMs, automotive glass replacement (AGR) market, distributors and installers
    Mexico,
        the United States,
        Canada and Central
        and South America
    Pilkington / Cristales Automotrices
  See "Item 5. Operating and Financial Review and Prospects-Results
    of Operations", "Item 8. Financial Information-Export Sales" and note 21 to
    our consolidated financial statements included elsewhere in this annual report
    for a breakdown of our consolidated net sales by business unit and geographic
    market for each year in the three year period ended December 31, 2004, 2005
    and 2006.
  Our Operations
  Glass Containers Business Unit
  Our Glass
  Containers business unit, which accounted for 51% of our consolidated net
  sales in 2006, manufactures and distributes soda lime glass containers for the
  food, beverage, pharmaceutical and cosmetics industries, as well as raw
  materials, machinery and molds for the glass industry, and, based on its net
  sales of Ps. 13,518 million ($1,250 million) in 2006, we believe the Glass
  Containers business unit is the largest glass containers producer in Mexico
  and Central America.
  As of
  December 31, 2006, our Glass Containers business unit's total assets were
  Ps. 13,756 million ($1,272 million). The business unit owns eight
  manufacturing facilities in Mexico, three in Central America and one in
  Bolivia. In 2006, our Glass Container business unit's manufacturing facilities
  in Mexico produced approximately 4,400 tons of glass per day, which we believe
  represented approximately 85% of the non-captive glass container market in
  Mexico and approximately 3% of the glass container market in the United
  States, in each case in terms of units. We define a non-captive market to
  exclude buyers (such as beverage and beer bottlers) that are supplied glass
  containers by their affiliates. In Mexico, the Glass Containers business unit
  has four design centers, one of which specializes in the cosmetics and
  pharmaceuticals market.
  The Glass Containers business unit's business strategy
    is to consolidate its competitive position and grow regionally and in niche
    markets. Among the business unit's key competitive strengths are its productivity,
    quality levels, wide variety of glass colors and decorative alternatives,
    its versatile production processes and its vertical integration with respect
    to raw materials, machinery and molds. The business unit's high levels of
    productivity and quality, as well as its ability to rapidly meet changes in
    demand, allows it to aggressively compete with other container technologies
    in Mexico and offer value-added products at attractive prices in the United
    States and other export markets. The versatility and flexibility of the business
    unit's production processes are reflected in the business unit's ability to
    offer customers special glass colors and fast turnarounds on small production
    runs on a cost-efficient basis, as well as decorating and labeling processes,
    including ultraviolet organic paints, "plastishield," adhered ceramic labels
    and heat transfer labels. In addition, we believe that the location of the
    business unit's facilities is a competitive strength that has helped us implement
    our business strategy. The business unit's capacity to produce short runs
    with a wide variety of colors, shapes and decorations, its innovative designs
    and its "one-stop shop" concept, which provides its customers with a complete
    packaging solution, including glass containers, closures, carriers, labels
    and boxes, also enables it to compete effectively in value-added markets.
  Our Glass
  Containers business unit manufactures glass containers for both high-volume
  markets and value-added markets. We refer to markets that demand high volumes
  of standard products at competitive prices as high-volume markets, and we
  refer to markets that require shorter production runs of highly designed
  products and involve premium pricing as value-added markets. Recently, the
  business unit's business strategy has emphasized the introduction of products
  into value-added markets, in addition to retaining our market share in the
  Mexican high-volume markets. The specialty nature of the products sold in
  value-added markets allows the business unit to charge higher per unit prices
  for these products, resulting in higher margins.
  One of our Glass Containers business unit's competitive
    advantages is its time to market on the product development cycle for glass
    containers where we have a response time of two weeks for a prototype, which
    we believe is shorter than the response time of some of the other world-class
    producers of glass containers. Similarly, the business unit's technological
    expertise permits the introduction of new products with innovative customized
    images in order to meet the design requirements of its customers. By providing
    quality glass containers to its customers, the Glass Containers business unit
    has developed long-lasting relationships with leading customers such as Grupo
    Modelo, The Coca-Cola Company, Gerber, Bacardi, Nestle, Avon, Grupo Domecq,
    Procter & Gamble, Coty, Revlon, Estee Lauder and Jugos del Valle.
  Additionally, in January 2007 our Glass Containers
    business unit signed a three year take-or-pay contract with Grupo Modelo which
    includes pre-established volumes and a price adjustment formula. In addition,
    Vitro has been designated Grupo Modelo's preferred third party supplier.
  Traditionally, the Glass Containers business unit has had access to technology
  that we believe is state-of-the-art in the glass containers industry. For the
  production of glass bottles, the Glass Containers business unit utilizes its
  own technology, some of which has been patented, and technology provided by
  Owens-Illinois pursuant to a series of technical assistance agreements that
  began in 1964 and expired in September 1999. We currently have the right to
  use the technology provided to us by Owens-Illinois under these technical
  assistance agreements. Our glass containers labeling capability includes
  state-of-the-art technology in organic paints. This process, which is called
  ultraviolet cure, was developed to further our continuous efforts to grow in
  high-margin niche markets by providing value-added products. We hold the
  patent for this type of paint, which is more environmentally friendly than
  similar products in the market due to its organic nature. We have supplied
  this type of decoration for several years to customers such as The Coca-Cola
  Company.
  Sales of
  the Glass Containers business unit in the beer and soft drinks business lines
  in Mexico are seasonal, with hot weather positively affecting our sales. As a
  result, second and third quarter sales are typically higher than sales in the
  first and fourth quarters. Accordingly, the Glass Containers business unit
  generally builds its inventory of soda lime glass containers during the fourth
  and first quarters in anticipation of seasonal demand.
  In Mexico, the business unit has 22 furnaces in six
    glass container manufacturing facilities (Vidriera Monterrey, Vidriera Mexico,
    Vidriera los Reyes, Vidriera Queretaro, Vidriera Guadalajara and Vidriera
    Toluca), each located near a major customer. We estimate that in 2006 the
    business unit's manufacturing facilities produced approximately 47% of
    the glass tonnage melting capacity in Mexico, and that we sold 85% of the
    glass container units on the Mexican non-captive market in 2006.
  In accordance with the capital expenditures program,
    we are relocating the operations of Vidriera Mexico to the Vidrera Toluca
    facility. In addition, the Glass Containers business unit expects to apply
    Ps. 865 million ($80 million) of its Ps. 2,054 million ($190 million) estimated
    budget for capital expenditures in 2007 to expand its production capacity.
    These production capacity expansions are expected to take place at the Vidriera
    Monterrey, Vidriera Mexico (in its new location at the Vidriera Toluca facility)
    and Vidriera Queretaro facilities. These expansions are intended to help satisfy
    the increased volume of customer demand for our Glass Containers products.
  In the
  United States, the business unit's distributor, Vitro Packaging, has one
  design center, five sales offices and one distribution center, all
  strategically located to serve its target markets. In 2006, we believe the
  business unit's imports into the United States represented approximately 23%
  of all sales of imported glass containers into the United States, which would
  make it the largest glass container importer into the United States in terms
  of sales.
  In Central
  America, Comegua owns three manufacturing facilities, one located in Guatemala
  one in Costa Rica and one in Panama, with approximately 920 tons per day of
  melting capacity. Comegua also has a design center located in Guatemala. In
  Bolivia, the business unit owns and operates a facility with a glass melting
  capacity of approximately 80 tons per day.
  In April 2006, Comegua acquired VIPASA, a glass container
    company located in Panama for a purchase price of $21 million. VIPASA
    is the largest and most important glass container manufacturer for the beverages,
    liquor, food and pharmaceutical industries in Panama and exports to more than
    15 countries in the American continent.
  Mexican Operations
  We believe
  that the Glass Containers business unit is the largest glass containers
  producer in Mexico based on the business unit's net sales in 2006. In 2006 the
  Glass Containers business unit's sales to the Mexican market were
  Ps. 7,850 million ($726 million). The Glass Containers business unit produces
  soda lime glass containers at six manufacturing facilities located throughout
  Mexico and has a production capacity of 4,400 tons of glass per day in Mexico.
  The business unit's facilities are located in close proximity to major
  customers, ensuring heightened responsiveness to customer design and
  production requirements and optimizing transportation costs. All of the Glass
  Containers business unit's facilities in Mexico have obtained ISO 9001
  certification. During 2006, these facilities were operating at approximately
  98% of their capacity. We also own two cullet-processing plants, which
  supplies us the cullet. In the cullet processing plants, scrap or broken glass
  is gathered for re-melting and mixed with virgin raw materials in order to
  obtain cost reductions in the production process without affecting the quality
  of the products. Although there are currently no mandatory recycling laws in
  Mexico similar to those in force in the United States or in other countries,
  we conduct campaigns throughout Mexico to collect glass containers.
  The Glass Containers business unit's customers include
    leading companies such as The Coca-Cola Company, Grupo Modelo, Nestle, Procter &
    Gamble, Gerber, Avon, Coty, Grupo Domecq, Revlon and Estee Lauder. In
    Mexico, the Glass Containers business unit relies primarily on its own sales
    and marketing force, utilizing outside sales representatives to service customers
    with smaller volume demand. The business unit has implemented an online system
    for sharing information with customers. From their respective offices, the
    business unit's customers can access product information, place orders, check
    inventories, trace shipments and consult account statements. Our "one-stop
    shop" concept, which provides our customers with a complete packaging solution,
    including containers, closures, carriers, labels and boxes, enables us to
    compete effectively in value-added markets. We have selectively implemented
    this concept within Mexico, the United States and Central America.
  Exports and U.S. Operations
  Total
  export sales of the Glass Containers business unit, which do not include the
  sales of our Central and South American operations, amounted to $343 million
  in 2006. The large majority of the export sales of the business unit are made
  to the United States, principally through our distribution subsidiary in the
  United States, Vitro Packaging, which also sources a small amount of the glass
  containers it sells from third parties. The Glass Containers business unit
  increased export sales into the United States by offering value-added
  specialty products, particularly to the cosmetics market and to wine and
  liquor bottlers in the United States. The business unit also produces special
  promotional containers for soft drink bottlers in the United States. 39% of
  the Glass Containers business unit's net sales are made outside of Mexico.
  Central and South American Operations
  Comegua, a joint venture in which we hold a controlling
    49.7% interest, is a Panamanian holding company that operates manufacturing
    facilities in Guatemala and Costa Rica and supplies glass containers to the
    soft drink, food, beer and wine markets throughout Central America and the
    Caribbean. Comegua's consolidated net sales in 2006 were Ps. 1,725 million
    ($159 million).
  In April 2006, Comegua acquired VIPASA, a glass container
    company located in Panama for a purchase price of $21 million. VIPASA
    is the largest and most important glass container manufacturer for the beverages,
    liquor, food and pharmaceutical industries in Panama and exports to more than
    15 countries in the American continent.
  We also own 100% of the common stock of Vilux, a
    company that owns and operates the only glass container manufacturing facility
    in Bolivia. Vilux's net sales in 2006 were Ps. 106 million ($10 million)
    .Vilux distributes glass containers for the soft drinks, food, beer, wine
    and liquor industries throughout Bolivia, southern Peru and northern Argentina.
  Raw Materials, Machinery and Molds
  Our raw materials operations are carried out by our
    subsidiary Alcali. Alcali's net sales in 2006 were Ps. 1,191 million
    ($110 million). Alcali's principal products are soda ash, sodium bicarbonate,
    calcium chloride and salt for industrial and commercial consumption. Most
    of Alcali's soda ash production, which is used in the manufacture of glass,
    detergents and tripolyphosphates, is sold to third parties. Alcali competes
    in the soda ash sector with the American Natural Soda Ash Corporation ("Ansac"),
    a United States exporter of natural soda ash. Alcali maintains a separate
    sales and marketing force for its products, which are distributed directly
    to its customers.
  Our machinery and molds operations are conducted
    through our subsidiary FAMA. FAMA was founded in 1943 to source our needs
    for molds and machinery for our glass manufacturing operations. It had net
    sales of Ps. 570 million ($53 million) for the year ended December 31,
    2006. FAMA produces state-of-the-art glass-forming machines for our use. In
    addition, FAMA produces castings of special alloys for glass molds and for
    different types of machinery and parts for machinery used in the oil industry.
    FAMA also produces mold equipment for the glass industry and ancillary equipment
    for the glass, packaging and other industries, as well as electronic controls
    for machinery operating and process controls for glass-forming machines. Finally,
    FAMA manufactures annealing lehrs, which are ovens used to anneal glass, for
    the float and hollow glass industries. FAMA's products are mainly sold to
    us. FAMA generally competes with major international manufacturers of machinery
    and equipment for the glass industry.
  Competition
  Although based on the business unit's net sales in
    2006 of Ps. 13,518 million ($1,250 million) we believe the
    Glass Containers business unit is the principal supplier of glass containers
    in Mexico, it competes with various smaller domestic manufacturers as well
    as with the glass containers operations of the two major Mexican beer producers.
    The Glass Containers business unit in Mexico also competes with alternative
    forms of packaging, including metal, plastic, paper and aseptic containers.
    In the soft drinks industry, the Glass Containers business unit has faced
    increasing competition from polyethylene therephtalate containers ("PET"),
    as well as, to a lesser extent, from aluminum cans. In particular, since 1993
    the shift of soft drinks and food containers from glass to PET has continued,
    albeit at a slower rate in recent years. In response to the trend in soft
    drinks and food containers from glass to PET, we continue to implement measures
    to offset the effect of PET substitution, including improving operating efficiencies,
    new product presentations and customer service. In 2006 for the second time
    since 1997 the returnable soft drinks market increased versus previous year,
    and our overall sales in the Mexican soft drinks market increase 3% versus
    2005.
  In Mexico,
  the business unit competes for customers primarily on the basis of service
  (focusing on on-time deliveries and design), quality (including the ability to
  conform to a wide variety of specifications) and scale (including the ability
  to assure customers of the capacity necessary to support their growth).
  The Glass Containers business unit faces greater
    competition in the United States than in Mexico, mainly from Saint Gobain
    and Owens-Illinois. However, the business unit has utilized its competitive
    strengths to supply a variety of higher margin, value-added products, including
    specialty food, beverage, cosmetics, wine and liquor glass containers, and
    to increase its production expertise and flexibility, thereby allowing it
    to realize higher operating margins relative to traditional products. The
    business unit's ability to offer cost-effective short production runs, quick
    turn-around of new products, an extensive glass color selection, diverse labeling
    capabilities and unique container designs are all examples of the application
    of its competitive strengths. The Glass Containers business unit competes
    primarily on quality, design and price in the United States. In Central America,
    the Glass Containers business unit competes with a number of smaller regional
    manufacturers.
  Flat Glass Business Unit
  Flat Glass accounted for 48% of our consolidated
    net sales in 2006. In 2006, the Flat Glass business unit's net sales were
    Ps. 12,710 million ($1,176 million) and its export sales were
    $212 million. During 2006, 19% of the business unit's net sales were
    derived from export sales and 56% were derived from its foreign subsidiaries.
  The Flat Glass business unit's holding company is
    Vimexico. The Flat Glass business unit began operations in Mexico in 1936.
    Since 1965 and prior to the merger of Vitro Plan with Vimexico, Vitro Plan
    was jointly owned by Vitro (65%) and Pilkington (35%). On December 11,
    2006, Vitro Plan was merged with Vimexico, and as a result, the surviving
    entity is now jointly owned by Vitro (91.8%) and Pilkington (8.2)%.
  The business unit's customer base includes several
    large distributors and installers in the construction industry in Mexico and
    abroad, several automotive manufacturers such as General Motors, Ford Motor
    Co., DaimlerChrysler, Volkswagen and Nissan, several large furniture manufacturers,
    and distributors and installers in the automotive replacement industry.
  As of December 31, 2006, the Flat Glass business
    unit's total assets were Ps. 10,735 million ($993 million). The business unit
    owns over 250 operating centers, including four float glass furnaces and four
    automotive safety glass processing facilities in Mexico, eight fabrication
    facilities in the United States, seven processing facilities in Spain and
    one in Portugal. We believe our float glass capacity represented 57% of the
    float glass produced in Mexico and 3% of the total installed capacity in the
    NAFTA region.
  The Flat Glass business unit's strategy is to:
  reduce costs and enhance operating efficiencies;
    improve cash flow and optimizate of asset use;
    protect and increase our market share in the Mexican market for construction
  glass, reducing our reliance on the export market;
    maintain its leading position and growth trend in the OEM glass business
  through increasing participation with the Asian car manufacturers;
    consolidate and grow North American leadership of laminated window products
  for the OEMs and other value-added products;
    diversify client portfolio;
    increase fabrication of value-added products in the United States and Mexico;
    increase European presence through Vitro Cristalglass;
    and
    leverage the "Vitro" brand name.For the construction market, we launched a preferred
    client network, Vitromart, which consists of 216 of the business unit's largest
    distributors of flat glass for the construction industry. Additionally our
    Flat Glass business unit's strategy has emphasized production-retail integration
    for the Mexican auto glass replacement market. Vitrocar is the biggest automotive
    glass-replacement installation chain in Mexico. Vitrocar operates 173 installation
    centers throughout Mexico, of which 58 are owned by us in whole or in part
    and 115 are franchised. Vitrocar has agreements with the main insurance
    companies operating in Mexico in order to provide a complete service to such
    companies' clients.
  Mexican Operations
  We believe that the Flat Glass business unit is the
    largest flat glass producer in Mexico based on the business unit's net sales
    in Mexico in 2006. The business unit maintains seven distribution centers
    throughout Mexico where construction customers or automotive customers can
    access information about the availability of products on a real-time basis.
    44% of Flat Glass sales are from the Mexican Operations out of which Ps. 3,151
    million ($291 million) are done in Mexico and $212 million are exports. The
    majority of these export sales are made to automotive OEMs in the United States.
    The principal product that Vidrio y Cristal and Vitro AFG produce and distribute
    is float glass for the construction industry, principally for commercial and
    residential uses, as well as raw material for the automotive safety glass
    producers. Vidrio y Cristal also produces tabletops and coated glass. For
    the Mexican automotive industry, VAU and Vitro Flex produce safety glass products
    such as windshields, side and back lites, rear quarters and sunroofs.
  Vidrio
  y Cristal operates three float glass furnaces, two
    near Monterrey, Mexico and one in Mexico City, Mexico (currently not operating).
    Additionally we also operate one float glass furnace in Mexicali, Mexico,
    through Vitro AFG. Our total production capacity of float glass is over 625,000
    tons per year, of which 75,000 tons are contributed by our share of Vitro
    AFG. Products at these facilities are manufactured using the float method,
    which involves pouring molten glass over a molten tin bath. During 2006, the
    float glass facilities were operating at 94% of their capacity (not including
    the unused capacity of the Mexico City float glass furnace). See "Item 4. Information on the Company-Business-Our Property, Plant and Equipment." All
    but one of Vidrio y Cristal's and Vitro AFG's facilities have obtained ISO
    9001 Certification.
  Vidrio y Cristal and Vitro AFG sell raw glass to
    builders, glass installers and distributors in the construction segment and
    a small proportion to the automotive safety glass producers as raw material.
    Vidrio y Cristal's sales force markets its construction products to a large
    number of distributors and is supported by a technical support department
    that offers technical advice to construction glass installers. This subsidiary
    has designated commercial executives to serve as individualized customer service
    representatives for the business unit's principal purchasers of construction
    products.
  For the production of automotive safety glass, VAU
    and Vitro Flex, now operating together, operate four processing facilities
    in Mexico for the automotive OEM market and the automotive glass replacement
    (AGR) market. Sales are made directly to automotive OEMs in Mexico and the
    United States, while the automotive glass replacement (AGR) market is serviced
    through the business unit's distribution centers throughout Mexico, independent
    distributors and installers and our Vitrocar installation stores, which include
    our wholly owned stores, the Cristales Automotrices JV and our franchise network.
    Ford Motor Co. is the largest end customer of the business unit's automotive
    safety glass products, which purchases these products for use in Ford Motor
    Co.'s assembly plants in Mexico and the United States and to serve the AGR
    market through the Carlite brand. In addition, VAU and Vitro Flex sell
    automotive safety glass products to automobile manufacturers in Mexico, United
    States and other markets; main clients include GM, Ford, Chrysler, Nissan
    and Freightliner.
  In order to better serve their customers, VAU and
    Vitro Flex have established account plans for automotive OEMs. OEM account
    plans consist of staff whose time is exclusively dedicated to major OEMs and
    who provide specialized assistance in the areas of engineering, service and
    sales.
  United States Operations
  The United
  States operations of the Flat Glass business unit are conducted through Vitro
  America, which, based on its consolidated net sales in 2006, is one of the
  largest distributors of flat glass products in the United States. In 2006,
  Vitro America had consolidated net sales of $526 million, of which 85% were to
  the construction industry and 15% were to the automotive replacement market.
  Vitro America purchases flat glass as raw material
    from our Mexican subsidiaries and from United States manufacturers and uses
    it to process tempered, spandrel, insulated, laminated, mirrors and other
    products. The majority of the purchases of flat glass, in terms of volume,
    of Vitro America in 2006 related to products manufactured by our Mexican subsidiaries
    and the remainder related to products purchased from third parties. These
    products are sold directly to distributors as well as to end-buyers through
    Vitro America's own distribution centers and retail shops. Vitro America also
    distributes and sells to furniture manufacturers in the United States a significant
    number of custom-made glass tabletops produced by the Flat Glass business
    unit's manufacturing plants in Mexico. Additionally, Vitro America engages
    in the design, manufacture and installation of custom skylights in the United
    States and several other countries. Vitro America also distributes to the
    United States automotive replacement market a full line of automotive glass
    products, including windshields and side and back windows for American and
    foreign cars and trucks.
  Vitro
  America operates 8 fabrication facilities, 34 distribution centers and 104
  installation centers in the United States. Vitro America sells its
  construction products to builders and glass installers, who use its products
  in industrial and commercial projects such as skyscrapers and other buildings,
  through its own distribution network and retail stores. Vitro America sells
  its automotive products to the replacement market through its own distribution
  network and retail stores.
  European Operations
  The Flat Glass business unit competes in the European
    flat glass construction market through Vitro Cristalglass and Vitro Chaves,
    mainly with value added products. Vitro Cristalglass processes and distributes
    double glass, laminated glass and tempered glass mainly for the Spanish, French
    and Portuguese market. Vitro Cristalglass operates with seven insulated glass
    manufacturing centers and one distribution center, located in Barcelona. Additionally,
    Vitro Cristalglass has the biggest semi-finished manufacturing process center
    of Spain located in Ponferrada. Vitro Chaves manufactures and distributes
    insulated and laminated glass products in Portugal with their main facility
    located in Chaves (north of Portugal) and a distribution center located in
    Lisbon. In 2006, Vitro Cristalglass and Vitro Chaves had consolidated net
    sales of Ps. 1,752 million ($162 million) and Ps. 280 million
    ($25.9 million), respectively. Most of the sales of Vitro Cristalglass
    are of insulated glass windows, a value-added product, which are distributed
    to builders and distributors by Vitro Cristalglass' own sales force. Vitro
    Chaves' main products are insulated and laminated glass for the construction
    industry, which are distributed through its own and Vitro Cristalglass' distribution
    network.
  Central and South American Operations
  Through its
  Colombian subsidiary, Vitro Colombia, and, to a lesser extent, through its
  subsidiaries in Venezuela, Ecuador and Panama, the Flat Glass business unit
  processes tempered and laminated glass for the automotive replacement,
  construction and specialty markets in Central and South America. Vitro
  Colombia has one processing facility which is located in Colombia. In 2006,
  Vitro Colombia and its subsidiaries had consolidated net sales of
  Ps. 314 million ($29 million). Vitro Colombia is expanding into the OEM
  automotive glass market in Colombia and other Andean Pact nations as well as
  into the automotive replacement market in South America. Vitro Colombia
  markets its products through a network of independent distributors to small-
  and medium-sized builders.
  Competition
  In Mexico, Vidrio y Cristal faces competition in
    the construction industry mainly from Compagnie de Saint Gobain ("Saint Gobain"),
    Guardian Industries Corporation ("Guardian"), and from imports of glass products.
    Guardian, which since 1999 has competed with our Flat Glass business unit
    as an importer of raw flat glass products, completed the construction of a
    float glass furnace in Queretaro in 2004, which is estimated to produce 200,000
    tons of float glass per year. The local competition of Vidrio y Cristal competes
    primarily on price, service and quality. See "Item 3. Key Information-Risk
    Factors-Risk Factors Relating to Us-We continue to experience competition
    from our global competitors and vertically integrated customers."
  With respect to automotive safety glass, the business
    unit's principal competition includes Saint Gobain, PPG Industries, AGC Automotive,
    Pilkington and imports of low-volume automotive glass products that are being
    utilized in new automotive designs produced in Mexico. Saint Gobain operates
    an automotive glass manufacturing facility located in Cuautla, Mexico.
  Vitro
  America faces competition in the United States from a variety of flat glass
  manufacturers in the United States, as well as from a large number of medium-
  and small-sized producers and distributors of flat glass products. Vitro
  America competes in the United States primarily on the basis of breadth of
  geographic distribution capabilities, service (on a full line of products)
  price and quality.
  In Europe, Vitro Cristalglass, as an Insulated Glass
    Manufacturer, faces competition with regional competitors and integrated competitors
    like Saint Gobain. In Central and South America, its main competitors are
    Guardian, Pilkington and Saint Gobain.
  Our Raw Materials
  Soda Ash, Sand and Feldspar
  The most important raw materials we utilize are soda
    ash, which we largely purchase from Ansac; silica sand and feldspar. In 2005,
    we entered into a five-year supply agreement with Unimin Corporation ("Unimin"),
    whereby we have committed to purchase, and certain of Unimin's subsidiaries
    are committed to sell, our requirements of silica sand and feldspar at the
    current market prices. Alcali has, to a large extent, the production capacity
    to supply the soda ash required by our glass making operations in Mexico.
    To the extent that any of our Mexican subsidiaries require silica sand or
    soda ash of a different grade than that produced by Unimin or by Ansac and
    Alcali, such companies may acquire such silica sand or soda ash from various
    suppliers in the United States. We are not dependent on any single supplier
    for any of the raw materials utilized in our operations.
  Energy
  Certain of our subsidiaries agreed to purchase, in
    the aggregate, 90 megawatts of electrical power and 1.3 million tons
    of steam per year pursuant to a 15-year "take-or-pay" power purchase agreement
    with Tractebel Energia, S. de R.L. de C.V. ("Tractebel Energia"). This contract
    began in April 2003 and the price at which we are required to purchase electrical
    power and steam is based on variables such as inflation, the peso/U.S. dollar
    exchange rate and the price of natural gas, whose future value is uncertain.
  Fuel
  The percentage of estimated fuel consumption hedged
    can vary from 10% to 100%. The percentage of consumption hedged and the hedged
    prices change constantly according to market conditions based on the Company's
    needs and to the use of alternative fuels within its production processes.
    As of December 31, 2006, the Company had hedges equivalent to 57% of estimated
    natural gas consumption for 2007.
  In order to protect against the volatility of natural
    gas prices, as of December 31, 2006, we had hedges on the price of natural
    gas for 12.7 million MMBTUs or 57% of our estimated consumption needs
    in Mexico for the remainder of the year ending December 31, 2007. The
    hedges were entered into with Petroleos Mexicanos ("Pemex") and Cargill and
    entitle us to purchase gas at an average price of $6.72 per MMBTU. As of May
    31, 2007, the closing price of natural gas on the New York Mercantile Exchange
    was $7.94 per MMBTU. See "Item 11. Quantitative and Qualitative Disclosures
    About Market Risk - Natural Gas Price Risk." We have never suffered a material
    interruption in our natural gas supply from Pemex.
  Our Capital Expenditures
  Our capital
  expenditures program is currently focused on technological upgrades to and
  maintenance of, our manufacturing facilities. Our capital expenditures program
  also contemplates the purchase and maintenance of environmental protection
  equipment required to meet applicable environmental laws and regulations.
  The
  following table sets forth, for the periods presented, our capital
  expenditures by business unit. Financial data set forth in the following table
  has been restated in millions of constant pesos as of December 31, 2006.
  Year ended on December 31,Business Unit
      2004
      2005
      2006(Ps. millions)Glass
          Containers
      Ps. 715
      Ps.
          598
      Ps. 861Flat
          Glass
      591
      446
      318Corporate
          and other
      125
      17
      19Total
      Ps. 1,431
      Ps. 1,061
      Ps. 1,198
  During
  2007, we expect to make capital expenditures in the range of Ps. 2,487 million
  ($230 million) as follows:
  Our Glass Containers Business Unit expects to make capital
    expenditures of Ps. 2,054 million ($190 million), of which Ps. 1,189 million
    ($110 million) will be used to provide needed maintenance to certain of our
    furnaces and to the relocation of our Vidriera Mexico operation to the Vidriera
    Toluca facility. The remaining Ps. 865 million ($80 million) will be applied
    to expand production capacity. The production capacity expansion would take
    place within the Vidriera Monterrey, Vidriera Mexico (in its new location
    at the Vidriera Toluca premises), and Vidriera Queretaro facilities.
    Our Flat Glass Business Unit expects to make capital expenditures of Ps. 432
  million ($40 million), of which Ps. 216 million ($20 million) will be used by
  its foreign subsidiaries and the other Ps. 216 million ($20 million) will be
  used by its Mexican subsidiaries.We expect
  to finance the capital expenditures discussed above with cash flow generated
  by our operations and with current cash on hand.
  See "Item 5. Operating and Financial Review and
    Prospects-Liquidity and Capital Resources", for a discussion of our principal
    capital expenditures during the last three full fiscal years.
  Genesis
  Project
  During 2006, we invested approximately Ps. 137 million
    ($12.7 million) related to the implementation of the Genesis Project. During
    2007 and 2008, we expect to invest approximately Ps. 81 million ($7.5 million)
    and Ps. 72 million ($7.2 million), respectively, for a total investment of
    approximately Ps. 297 million ($27.5 million) for the implementation of the
    Phase I of the Genesis Project. The majority of the cost of the Genesis Project
    is being capitalized and will be amortized over the expected useful life of
    the asset. See "Item 3. Key Information-Recent Developments-Genesis
  Project."
  Our Property, Plant and Equipment
  All of our
  assets and property are located in Mexico, the United States, Central and
  South America and Europe. On December 31, 2006, the net book value of land and
  buildings, machinery and equipment and construction in progress was
  Ps. 15,659 million ($1,448 million), of which Ps. 13,318 million
  ($1,232 million) represented assets located in Mexico; Ps. 268 million
  ($25 million) represented assets located in the United States;
  Ps. 1,613 million ($149 million) represented assets located in Central and
  South America; and Ps. 460 million ($42 million) represented assets located in
  Europe.
  Our principal executive offices are located in the
    Monterrey, Mexico area. We own and operate 37 manufacturing facilities worldwide,
    of which our float glass furnaces are our largest facilities. Our subsidiary
    Comegua has granted a mortgage on one of its furnaces, and our subsidiary
    Vitro Cristalglass has granted a mortgage on one of its facilities.
  The following table sets forth, for the periods presented,
    the average capacity utilization and location of each of our business unit's
    principal manufacturing facilities.
  Business Unit
  
  Average Capacity
      Utilization(1) as of 
      December 31, 2005
  Average Capacity
      Utilization(2) as of 
      December 31, 2006
  Number of Facilities 
      by City or Country
  
  Glass Containers
  
  99%
  98%
  Monterrey(3)
      Guadalajara
      Mexico City(2)
      Queretaro
      Toluca
      Costa Rica
      Guatemala
    Panama
      Bolivia
  
  
  
  
  
  
  
  Flat Glass
    Float Furnaces (3) (4)
    101%
    94%
    Monterrey(4)
        Mexico City(3)
        Mexicali
        United States(8)
        Colombia
        Spain(7)
        PortugalAutomotive Facilities
    87%
    79%
  (1) Average for the twelve-month period ended December 31, 2005.
  (2) Average for the twelve-month period ended December
    31, 2006.
  (3) This capacity utilization was calculated on the
    basis of the facilities that are currently operating. Taking into account
    the effect of the shutdown of the furnace, located in Mexico City, the capacity
    utilization was 74% for 2006. See "Item 4. Information on the Company-Business-Flat
    Glass Business Unit."
  (4) Capacity utilization may sometimes be greater than
    100% because pulling capacity is calculated based on a certain number of changes
    in glass color and thickness, determined by historical averages.
  We also
  maintain over 60 sales offices and warehouses in Mexico and over
  165 warehouses, sales offices and retail shops in the United States, most of
  which are leased.
  We believe
  that all our facilities are adequate for our present needs and suitable for
  their intended purpose and that our manufacturing facilities are generally
  capable of being utilized at a higher capacity to support increases in demand.
  See "Item 4. Information on the Company-Our Capital
    Expenditures" and "Item 5. Operating and Financial Review and Prospects-Liquidity
    and Capital Resources-Capital Expenditures" for a discussion of our capital
    expenditures.
  Environmental Matters
  Our Mexican operations are subject to Mexican federal,
    state and municipal laws and regulations relating to the protection of the
    environment. The primary federal environmental law is the Ley General de Equilibrio
    Ecologico y la Proteccion al Ambiente ("LGEEPA" or the General Ecological
    and Environmental Protection Law) pursuant to which regulations have been
    promulgated concerning air pollution, noise pollution, environmental impact
    assessments, environmental audits and hazardous wastes and substances. LGEEPA
    sets forth the legal framework applicable to the generation and handling of
    hazardous wastes and substances, the release of contaminants into the air,
    soil and water, as well as the environmental impact assessment procedure.
    The Ley de Aguas Nacionales (National Water Law) and regulations thereunder
    govern the prevention and control of water pollution.
  The Ley General para la Prevencion y Gestion Integral
    de los Residuos (General Law for the Prevention and Integrated Management
    of Waste) regulates the generation, handling, transportation, storage and
    final disposal of hazardous waste, as well as the import and export of hazardous
    materials and hazardous wastes. The Mexican federal government has established
    a public registry where federally regulated emission sources report their
    air and water emissions, as well as information on the generation, handling,
    transportation and disposal of hazardous substances.
  In addition to the foregoing, Normas Oficiales Mexicanas
    (Mexican Official Standards), which are technical standards issued by regulatory
    authorities pursuant to the Ley General de Metrologia y Normalizacion (General Law of Metrology and Normalization) and other laws that include the aforementioned
    environmental laws, establish standards relating to air emissions (including
    air emissions for glass manufacturing operations), waste water discharges,
    the generation, handling and disposal of hazardous wastes and noise control,
    among others.
  The Mexican federal authority in charge of overseeing
    compliance with the federal environmental laws is the Secretaria del Medio
    Ambiente y Recursos Naturales (Secretary of Environment and Natural Resources),
    which we refer to as "SEMARNAT". An agency of SEMARNAT, the Procuraduria Federal
    de Proteccion al Ambiente (Federal Environmental Protection Agency), which
    we refer to as "PROFEPA", has the authority to enforce the Mexican federal
    environmental laws. As part of its enforcement powers, PROFEPA can bring administrative,
    civil and criminal proceedings against companies and individuals that violate
    environmental laws, regulations and Mexican Official Standards and has the
    authority to impose a variety of sanctions. These sanctions may include, among
    others, monetary fines, revocation of authorizations, concessions, licenses,
    permits or registries, administrative arrests, seizure of contaminating equipment,
    and in certain cases, temporary or permanent closure of facilities.
  Additionally, as part of its inspection authority, PROFEPA is entitled to periodically inspect the facilities of companies whose
    activities are regulated by the Mexican environmental legislation and verify
    compliance therewith. Furthermore, in special situations or certain areas
    where federal jurisdiction is not applicable or appropriate, the state and
    municipal authorities can administer and enforce certain environmental regulations
    of their respective jurisdictions.
  In 1998, our subsidiaries initiated a voluntary environmental
    auditing program implemented by PROFEPA. This program entails PROFEPA-approved
    auditors conducting environmental audits of the relevant facilities to determine
    if such facilities comply with applicable Mexican environmental laws. Once
    an audit is completed, the auditor issues a report of findings and recommendations,
    which must be delivered to PROFEPA. The audited facility thereafter enters
    into an agreement with PROFEPA on an action plan to be undertaken, pursuant
    to which, after being implemented to PROFEPA's satisfaction, the audited entity
    receives the Industria Limpia ("Clean Industry") certificate. The Clean Industry
    certificate is valid for two years and may be extended at the request of the
    audited entity, provided that an auditor reaudits and certifies that the relevant
    facility operates pursuant to the Clean Industry certificate that was previously
    granted. Obtaining this certificate implies that the audited facility is in
    compliance with applicable Mexican environmental laws at the time of receipt
    of the certificate.
  A PROFEPA-approved independent auditor has completed
    environmental audits at all 16 of our facilities in Mexico. Fifteen of these
    facilities have already obtained the Clean Industry certificate, and the remaining
    facility has satisfied all necessary conditions and made the required changes
    for such certification. We are in the process to obtain the certification
    for the remainig uncertified facility.
  Our foreign
  operations are subject to federal, state and local laws relating to the
  protection of the environment of the country in which such operations are
  conducted. From time to time, we conduct environmental assessments of our
  foreign operations, some of which are currently underway, to determine whether
  we are in compliance with applicable foreign environmental laws. We expect to
  spend approximately $1 million in capital expenditures over the next two years
  to comply with these and other environmental regulations as they become
  effective or are modified. We may, however, incur amounts greater than
  currently estimated due to changes in law and other factors beyond our
  control. Although there can be no assurance, we do not believe that continued
  compliance with Mexican and foreign environmental laws applicable to our
  operations will have a material adverse effect on our financial position or
  results of operations.
  Item 4A. Unresolved Staff Comments
  Not applicable
  Item 5. Operating and Financial Review and
    Prospects
  You should read this discussion in conjunction
    with, and this discussion is qualified in its entirety by reference to, our
    consolidated financial statements and notes thereto and other financial information
    included elsewhere in this annual report. Our consolidated financial statements
    are prepared in accordance with Mexican FRS, which differs in certain significant
    respects from U.S. GAAP. Note 25 to our consolidated financial statements
    for the year ended December 31, 2006 provides a description of the principal
    differences between Mexican FRS and U.S. GAAP as they relate to us. This section
    contains forward-looking statements that involve risks and uncertainties.
    Our actual results may differ materially from those discussed in the forward-looking
    statements as a result of various factors, including without limitation those
    set forth in "Item 3. Key Information-Risk Factors" and the other matters
    set forth in this annual report. See "Forward-Looking Statements."
  OPERATING
  RESULTS
  Factors Affecting Our Results of Operations
  Our statement of operations is affected by, among
    other factors, (i) the level of demand for our products in the countries
    in which we operate, (ii) our costs of production, which principally
    consist of costs of raw materials, labor, energy and depreciation, (iii) the
    relationship between the peso and the U.S. dollar, (iv) financing costs,
    which are incurred in both pesos and U.S. dollars and (v) increased competition
    in our domestic market and abroad. See "Item 3. Key Information-Risk Factors-Risk
    Factors Relating to Us-Difficult market conditions in the automotive industry
    may affect our operating margins and results of operations," "Item 3. Key
    Information-Risk Factors-Risk Factors Relating to Us-We have customers that
    are significant to us and the loss of all or a portion of their business would
    have an adverse effect on us," "Item 3. Key Information-Risk Factors-Risk
    Factors Relating to Us-Downturns in the economies in which we operate may
    negatively affect the demand for our products and our results of operations,"
  "Item 3. Key Information-Risk Factors-Risk Factors Relating to Us-Changes
    in the relative value of the peso to the U.S. dollar and the Euro may have
    an adverse effect on us," "Item 3. Key Information- Risk Factors-Risk Factors
    Relating to Us-Inflation and foreign currency exchange rate fluctuations may
    have an adverse effect on our total financing cost," "Item 3. Key Information-Risk
    Factors-Risk Factors Relating to Us-We may be adversely affected by increases
    in interest rates," and "Item 3. Key Information-Risk Factors-Risk Factors
    Relating to Us-Substitution trends in the glass container industry may continue
    to adversely affect our business."
  Trend Information
  Stronger growth in the Mexican and U.S. economies
    had a positive impact on our sales in 2006. Although the Mexican and U.S.
    economies continued to grow in the first quarter of 2007, we cannot predict
    how those economies will continue to perform. See "Item 3. Key Information-Risk
    Factors-Risk Factors Relating to Us-Downturns in the economies in which we
    operate or in other emerging markets may negatively affect the demand for
    our products and our results of operations" and "Item 3. Key Information-
    Risk Factors-Risk Factors Relating to Mexico-Economic developments in Mexico
    and the United States affect our business."
  Our Glass Containers business unit performed extremely
    well in 2006, with a record year in terms of sales. Domestic sales have been
    driven by increased volumes across all business lines. Higher sales in the
    beer, food, wine, and liquor, cosmetics, fragrances and toiletries ("CFT") business lines compensated for marginal lower sales in the soft-drink business
    line. Export sales continue to benefit from an increase in volumes as well
    as a better product mix at both the CFT and wine and liquor business lines.
    See "Item 3. Key Information-Risk Factors-Risk Factors Relating to Us-We have
    customers that are significant to us and the loss of all or a portion of their
    business would have an adverse effect on us."
  Sales at our Flat Glass Business unit decreased mainly
    as a result of lower sales volume in both the automotive and domestic construction
    business lines, which were partially offset by a better product mix. In the
    automotive business line, marginal lower sales were the result of reduced
    volumes in the auto glass replacement market, which were partially offset
    by increased volumes due to new platforms for the OEM market awarded to us
    in 2005, for which production began in 2006. However, the North American automotive
    industry is experiencing one of its worst crises in recent years. See "Item
    3. Key Information-Risk Factors-Risk Factors Relating to Us-Difficult market
    conditions in the automotive industry may affect our operating margins and
    results of operations." As a result, our sales to automobile manufacturers
    could lead to additional price pressures and a loss of sales volumes. At the
    same time, this business unit has shown some price stability in recent months
    in its Mexican construction glass markets, where in the past we experienced
    the greatest pricing pressures. Although these pricing pressures have receded
    to some extent, we cannot anticipate how the prices will fluctuate in the
    future. In the first quarter of 2007, higher construction-related export sales
    partially offset lower domestic construction-related volumes. In addition,
    automotive sales decreased driven by lower domestic and export OEM volumes
    due to a slowdown in purchases from one of our main clients, the available
    capacity was used to supply both the domestic and export AGR markets. This
    effect was partially compensated by the solid upward trend from the Flat Glass'
    foreign subsidiaries (Vitro America, Vitro Colombia and Vitro Cristalglass).
  The increase in the price of certain of our raw materials,
    in particular natural gas, could have a negative impact on our results of
    operations. NYMEX natural gas prices have increased from an average price
    of $3.22 per MMBTU during 2002 to an average price of $7.23 per MMBTU during
    2006, representing an increase of 125%. Furthermore, as the price of natural
    gas has significantly increased in recent years, we have not been able to
    raise our products' prices to fully reflect these increases, which in turn
    have adversely affected our results of operations and liquidity.
  Economic Developments in Mexico and the United States
    Affect our Business
  A
  substantial portion of our operations are in Mexico and a substantial majority
  of our consolidated net sales are made in Mexico and the United States.
  Therefore, economic conditions in Mexico and the United States have a
  significant effect on our business, results of operations and financial
  position.
  2006 was a year of moderate global economic growth.
    The economies of Mexico and the United States-our two biggest markets-recorded
    actual GDP growth in 2006 of 4.7% and 3.3%, respectively, compared with growth
    of 3.0% and 3.2%, respectively, in 2005. Mexico's economic growth was mainly
    driven by the increase in oil prices. Analysts, however, continue to view
    the pace of growth as weak, largely due to Mexico's lack of progress on structural
    reforms. Over the past few years, Mexico's rate of inflation has remained
    low, amounting to 3.3% in 2005 and 4.05% in 2006.
  The
  majority of our manufacturing facilities are located in Mexico. For each of
  the years ended December 31, 2004, 2005 and 2006, 44%, 42%, and 43%,
  respectively, of our consolidated net sales resulted from sales to parties
  located within Mexico.
  While helping the country to maintain low levels
    of inflation and a manageable deficit, the Mexican government's continued
    fiscal and monetary policy does not provide the flexibility necessary to support
    Mexico's economic improvement. As a result, new investment and growth in aggregate
    purchasing power have been marginal. Several factors could affect the growth
    of Mexico's economy and its industrial sector. These factors include (i) the
    extent of the U.S. economic recovery and the participation of Mexico's industrial
    sector in that recovery and (ii) the Mexican government's approval and
    implementation of fiscal and other structural reforms such as the evolution
    of energy prices, particularly natural gas. In spite of these political and
    economic dynamics, we will continue to focus on the factors within our control
    and position ourselves to take full advantage of new market opportunities.
  Inflation and Foreign Currency Exchange Rate Fluctuations
  The
  following table sets forth, for the periods presented, certain information
  relating to inflation and foreign currency exchange rates:
  For
            the Year Ended December 31,2004
        2005
        2006Nominal peso devaluation (appreciation) relative to the U.S.
          dollar(1)
      (0.8%)
      (4.6%)
      1.7%Mexican inflation (based on changes in INPC) (1)
      5.2%
      3.3%
      4.1%U.S. inflation
          (based on changes in Consumer Price Index)(2)
      3.3%
      3.5%
      2.5%Inflation
          differential (Mexican vs. U.S.)(1)(2)(3)
      1.8%
      (0.2%)
      1.6%Real peso devaluation (appreciation) relative to the U.S. dollar(4)
      (2.6%)
      (4.5%)
      0.1%Free Exchange Rate as of year end(1)
      Ps.11.1495
      Ps.10.6344
      Ps.10.8116Mexican GDP growth rate(5)
      4.2%
      3.0%
      4.7%Exchange rate euro per peso as of year end(6)
      Ps.15.0941
      Ps.12.5932
      Ps.14.2680
  (1) Source: Banco de Mexico.
  (2) Source: U.S. Bureau of Labor Statistics.
  (3) Compounded.
  (4) Peso devaluation (appreciation) in real terms =
    -((Nominal peso devaluation +1) / (Inflation differential + 1))-1.
  (5) Source: Instituto Nacional de Estadistica, Geografia
    e Informatica.
  (6) Source: Federal Reserve Bank of New York-Noon Buying
    Rates as to euro-to-dollar exchange rate and Banco de Mexico as to dollar-to-peso
    exchange rate.
  Effects of Inflation and Foreign Currency Exchange Rate
    Fluctuations on Operating Margins
  Changes in
  the relative value of the peso to the U.S. dollar have an effect on our
  results of operations. In general, as described more fully in the following
  paragraphs, a real devaluation of the peso will likely result in an increase
  in our operating margins and a real appreciation of the peso will likely
  result in a decrease in our operating margins, in each case, when measured in
  pesos. This is because the aggregate amount of our consolidated net sales
  denominated in or affected by U.S. dollars exceeds the aggregate amount of our
  cost of goods sold and our selling, general and administrative expenses
  denominated in or affected by U.S. dollars.
  A substantial portion of the sales generated by our
    Mexican and U.S. subsidiaries are either denominated in or affected by the
    value of the U.S. dollar. The prices of a significant number of the products
    we sell in Mexico, in particular those of flat glass for automotive uses and
    capital goods, are linked to the U.S. dollar. In addition, substantially all
    of our export sales are invoiced in U.S. dollars and subsequently translated
    into pesos using the exchange rate in effect at the time of the transaction.
    The translated U.S. dollar sales of our Mexican subsidiaries are then restated
    into constant pesos using INPC, as of the date of the most recent balance
    sheet included in those financial statements. As a result, when the peso devalues
    in real terms against the U.S. dollar, as was the case in 2003 and 2006, the
    same level of U.S. dollar sales as in a prior period will result in higher
    constant peso revenues in the more recent period. Conversely, when the peso
    appreciates in real terms against the U.S. dollar, as was the case in 2004
    and 2005, the same level of U.S. dollar sales as in a prior period will result
    in lower constant peso revenues in the more recent period. Moreover, because
    a material portion of our cost of goods sold, including labor costs, and selling,
    general and administrative expenses are invoiced in pesos and are not directly
    affected by the relative value of the peso to the U.S. dollar, the real appreciation
    or devaluation of the peso relative to the U.S. dollar has a significant effect
    on our operating margins, at least in the short term.
  Further, a strong peso relative to the U.S. dollar
    makes the Mexican market more attractive for importers and competitors that
    might not otherwise sell in the Mexican market. A strong peso relative to
    the U.S. dollar also makes those of our products whose prices are denominated
    in or are affected by the value of the U.S. dollar less competitive or profitable.
    When the peso appreciates in real terms, with respect to such products, we
    must either increase our prices in U.S. dollars, which make our products less
    price-competitive, or bear reduced operating margins when measured in pesos.
    Given the competitive nature of the industries in which we operate, in the
    past we have chosen to reduce our operating margins for such products in response
    to appreciation of the peso relative to the U.S. dollar. For the year ended
    December 31, 2005, the appreciation of the peso in real terms had an
    adverse effect on our operating margins and, while the peso did not appreciate
    in the year ended December 31, 2006, it may appreciate again in the future,
    potentially resulting in an adverse effect on our operating margins. Sales
    of products manufactured, processed or sold by us outside Mexico (principally
    by Vitro America, Vitro Packaging, Comegua, and Vitro Cristalglass), as well
    as such subsidiaries' expenses, are restated during a financial reporting
    period by adjusting such amount for the inflation observed in the country
    in which the subsidiary operates and then translated into pesos at the exchange
    rate in effect at the end of the period. Since such subsidiaries' revenues
    and expenses are generally both earned and incurred in the same currency,
    the devaluation or appreciation of the peso has a much more limited effect
    on the operating margins of such subsidiaries. However, profits, as reported
    in real peso terms, are substantially impacted by the devaluation or appreciation
    of the peso relative to the appropriate currency.
  Effect of Inflation and Foreign Currency Exchange Rate
    Fluctuations on Total Financing Cost
  Our total financing cost includes (i) net interest
    expense, (ii) the net effect of inflation on our monetary assets and
    liabilities, (iii) the net effect of changes in nominal foreign currency
    exchange rates on monetary assets and liabilities denominated in foreign currencies
    and (iv) since 2005, due to the implementation of Bulletin C-10, "Derivative Financial Instruments and Hedging Activities," of MIPA, gains or losses related
    to hedging transactions. Net interest expense is calculated as the nominal
    amount of interest expense incurred by us with respect to our short- and long-term
    debt and off-balance sheet financings, minus the nominal amount of interest
    income generated by us with respect to our monetary assets.
  Inflation
  affects our total financing cost. During periods of inflation, the principal
  amount of our monetary debt will generally be reduced in real terms by the
  rate of inflation. The amount of such reduction will result in a gain from
  monetary position. This gain is offset by the reduction in real terms in the
  value of the monetary assets we held during such period. Historically, our
  monetary liabilities have exceeded our monetary assets and, thus, we have
  tended to experience monetary gains during periods of inflation. Declining
  levels of inflation in recent years have resulted in lower monetary gains.
  Our total financing cost is also impacted by changes
    in the nominal value of the peso relative to the U.S. dollar. Foreign currency
    exchange gains or losses included in total financing cost result primarily
    from the impact of nominal changes in the U.S. dollar-peso exchange rate on
    our and our Mexican subsidiaries' U.S. dollar-denominated monetary liabilities
    (such as dollar-denominated debt and accounts payable arising from imports
    of raw materials and equipment) and assets (such as dollar-denominated cash
    and cash equivalents and accounts receivable from exports). Because our U.S.
    dollar-denominated liabilities have historically been significantly in excess
    of our dollar-denominated monetary assets, the devaluation or appreciation
    of the peso resulted in exchange losses and gains, respectively. Accordingly,
    in 2006, the nominal devaluation of the peso relative to the U.S. dollar resulted
    in foreign currency exchange losses. The nominal appreciation of the peso
    relative to the U.S. dollar resulted in a foreign currency exchange gain in
    2004 and 2005. In 2004, with the unwinding of certain currency exchange swaps
    in May 2004, we recorded a net exchange loss.
  Results of Operations
  On June 16, 2006, we completed the sale of our
    51% equity ownership interest in Vitrocrisa to Libbey, the owner of the remaining
    49% equity interest. Vitrocrisa, which was previously presented as one of
    our reportable segments is presented as discontinued operation as its disposition
    represents the end of a significant activity of the Company. Accordingly,
    all financial and operating information relating to Vitrocrisa in this annual
    report are presented as a discontinued operation.
  The
  following table sets forth, for the periods presented, selected items of our
  consolidated statement of operations calculated as a percentage of our
  consolidated net sales.
  For
            the year ended December 31,2004
      2005
      2006Net
          sales
      100.0%
      100.0%
      100.0%Cost
          of goods sold
      72.4
      72.3
      72.6Gross
          profit
      27.6
      27.7
      27.4General,
          administrative and selling expenses
      21.4
      20.9
      19.8Operating
          income
      6.2
      6.9
      7.6Total
          financing cost
      5.8
      5.7
      8.2Net
          income (loss)
      (0.3)
      0.8
      1.0
  The
  following table sets forth, for the periods presented, the consolidated net
  sales, export sales and operating income (before corporate and other
  eliminations) of each of our business units, as well as the contribution to
  our consolidated results of operations, in percentage terms, of the
  consolidated net sales, export sales and operating income (after corporate and
  other eliminations) of each of our business units. The following table does
  not include the results of discontinued operations. Peso amounts set forth in
  the following table have been restated in millions of constant pesos as of
  December 31, 2006.
  For the year ended December
              31,2004
        2005
        2006
        2006Amount
        % of
              Total
        Amount
        % of
              Total
        Amount
        % of
              Total
        Amount(Ps.
          millions, except for percentages)
      ($ millions)(1)Net salesGlass Containers
      Ps. 11,317
      45%
      Ps. 12,002
      48%
      Ps. 13,518
      52%
      $ 1,250Flat Glass
      13,293
      53%
      12,960
      51%
      12,710
      48%
      1,176Corporate and
          other eliminations
      558
      2%
      361
      1%
      334
      1%
      31Consolidated
          net sales
      Ps. 25,168
      100%
      Ps. 25,323
      100%
      Ps. 26,562
      100%
      $ 2,457($
          millions, except for percentages)Export salesGlass Containers
      $ 266
      47%
      $ 290
      49%
      $ 344
      62%Flat Glass
      294
      52%
      298
      51%
      212
      38%Other(2)
      2
      0%Consolidated
          export sales
      $ 562
      100%
      $ 588
      100%
      $ 556
      100%(Ps.
          millions, except for percentages)
      ($
          millions)(1)Operating income (loss)Glass Containers
      Ps. 841
      54%
      Ps. 1,277
      73%
      Ps. 1,782
      89%
      $  165Flat Glass
      901
      58%
      474
      27%
      375
      19%
      35Corporate and
          other eliminations
      (184)
      (12)%
      (2)
      0%
      (147)
      (7)%
      (14)Consolidated
          operating income
      Ps. 1,558
      100%
      Ps. 1,749
      100%
      Ps. 2,010
      100%
      $ 186
  
  (1) Peso amounts have been translated into U.S. dollars,
    solely for the convenience of the reader, at the rate of 10.8116 pesos per
    one U.S. dollar, the Free Exchange Rate on December 31, 2006.
  (2) Other is comprised by Bosco which we sold on April
    1, 2005, which was previously included in our Glassware reportable segment.
  Year Ended December 31, 2006 Compared to Year Ended December
    31, 2005
  Net Sales
  Our consolidated net sales increased 5.0% to Ps. 26,562 million
    ($2,457 million) for the year ended December 31, 2006 from Ps. 25,323 million
    ($2,342 million) for the year ended December 31, 2005. During the year
    ended December 31, 2006, domestic and foreign subsidiaries' sales grew 8.7%
    and 11.1%, respectively year-over-year, as a result of strong sales volumes
    at the Flat Glass and Glass Containers business units.
  For the year ended December 31, 2006, our consolidated
    export sales were $556 million (Ps. 6,127 million), a decrease
    of 5.4% when compared to $588 million (Ps.6,710 million) for the
    year ended December 31, 2005. The decrease in exports is mainly due to lower AGR and construction-related sales, as we plan to temporarily exit this export
    market. Our export sales represented 23.1% of our consolidated net sales for
    the year ended December 31, 2006.
  Glass Containers Business Unit
  Net sales of our Glass Containers business unit increased
    13% to Ps. 13,518 million ($1,250 million) for the year ended
    December 31, 2006 from Ps. 12,002 million ($1,110 million)
    for the year ended December 31, 2005. Strong volumes across all business lines
    in the domestic market continued to be the main driver behind the 7.9% increase
    year-over-year. In particular, sales volume of beverage containers including
    beer, wine, liquor and CFT were the largest contributors to the increase.
  Export sales grew 18.3% year-over-year due to a strong
    rise in sales volumes at the CFT business line as a result of increased demand
    in the South American and European markets and larger volumes coupled with
    an improved price mix at the wine and liquor business line.
  Flat Glass Business Unit
  Net sales
  of our Flat Glass business unit were Ps. 12,710 million ($1,176 million) for
  the year ended December 31, 2006, a decrease of 1.9% when compared to
  Ps. 12,960 million ($1,199 million) for the year ended December 31, 2005, due
  primarily to a decrease in export sales. This decrease was partially offset by
  an increase in domestic sales of 14.4% year-over-year, mainly as a result of
  higher automotive and construction-related sales. In addition,
  construction-related sales volume increased 12% year-over-year.
  Export sales decreased 30.3% year-over-year due to
    lower AGR and construction-related sales, as we plan to temporarily exit this
    lower margin export market and focus our efforts on domestic sales. The reduction
    in AGR export sales was driven by a decrease in volume as capacity was used
    to supply the OEM market, although this effect was partially offset by an
    improved product mix. Construction-related export sales decreased as we continued
    to focus on the Mexican market. Automotive sales decreased 2.1% year-over-year,
    driven by lower sales volume in the AGR market. This effect was partially
    offset by the success of current OEM platforms.
  Sales from foreign subsidiaries continued an upward
    trend, increasing 5.9% year-over-year to $662 million from $625 million.
    Sales at Vitro America rose 2.8% as a result of increased construction-related
    volumes. Sales at Vitro Colombia rose 1.2% while Vitro Cristalglass' sales
    rose 8.3% driven by incremental large-scale contracts coupled with an improved
    product mix.
  Operating Income
  Our
  consolidated operating income increased 14.9% to Ps. 2,010 million
  ($186 million) for the year ended December 31, 2006 from Ps. 1,749 million
  ($162 million) for the year ended December 31, 2005, mainly due to increased
  sales and production efficiencies in our Glass Containers business unit.
  Glass Containers Business Unit
  Operating
  income of our Glass Containers business unit increased 39.5% to
  Ps. 1,782 million ($165 million) for the year ended December 31, 2006 from
  Ps. 1,277 million ($118 million) for the year ended December 31, 2005. Growth
  in operating income was driven by higher sales volume, a better product mix
  due to unseasonably high demand for glass containers and improved production
  efficiencies which optimized fixed cost absorption. These factors more than
  offset higher maintenance costs associated with the utilization of all our
  furnaces to meet this demand, as well as higher energy costs. Additionally,
  all furnaces were ignited in the first quarter of 2006, compared to the second
  quarter of 2005. This had a positive effect on our operating income.
  Flat Glass Business Unit
  Operating income of our Flat Glass business unit
    was Ps. 375 million ($35 million) for the year ended December
    31, 2006, a decrease of 20.8% when compared to Ps. 474 million ($44 million)
    for the year ended December 31, 2005. This decrease was due to the temporary
    shutdown of the furnace located in Mexico City. Higher volumes in domestic
    construction and value-added automotive OEM products helped offset the decrease.
    Vitro America and Vitro Cristalglass also continued to generate strong operating
    income, with increases 36.3% and 53.2%, respectively.
  Total Financing Result
  Our total
  financing result increased 52% from Ps. 1,441 million ($133 million) for the
  year ended December 31, 2005 to Ps. 2,189 million ($202 million) for the year
  ended December 31, 2006. This increase was primarily due to a non-cash
  foreign-exchange loss of Ps. 215 million ($20 million) during the year ended
  December 31, 2006 compared to a non-cash foreign-exchange gain of
  Ps. 402 million ($37 million) in the year ended December 31, 2005, resulting
  from a depreciation of the peso by 1.7% during the year ended December 31,
  2006, compared with a 4.6% appreciation in the year ended December 31, 2005.
  Additionally, an increase in other financial expenses driven mainly by the
  negative effect of derivative transactions, which increased from a charge of
  Ps. 16 million ($1 million) for the year ended December 31, 2005 to Ps. 325
  million ($30 million) for the year ended December 31, 2006, which more than
  offset a 9.4% reduction in interest expense.
  Other (Income) Expenses, Net
  Other expenses, net decreased Ps. 697 million
    ($64 million) to a gain of Ps. (273) million ($(25) million)
    for the year ended December 31, 2006 from a loss of Ps. 424 million
    ($39 million) for the year ended December 31, 2005, mainly due to (i) the
    gain from sale of long-lived assets of Ps. (766) million ($(71) million);
    (ii) the gain from sale of other subsidiaries of Ps. (66) million ($(6) million)
    (see "Item 4. Information on the Company-Business-Strategic Sale of Non-Core
    Businesses."), compared to a loss of Ps. 132 million ($12 million) in 2005;
    and (iii) restructuring charges of Ps. 59 million ($5 million)in 2006 compared
    to Ps. 320 million ($30 million) in 2005. In 2005, we recorded a gain of
    Ps. (442) million ($41 million) resulting from the designation of Vitro as
    the sole beneficiary of the Vitro Club assets held in trust. See note 17 of
    our consolidated financial statements.
  Income Tax, Tax on Assets and Workers' Profit Sharing
  Income tax, tax on assets and workers' profit sharing
    for the year ended December 31, 2006 represented an expense of Ps. 268 million
    ($25 million) compared with a benefit of Ps. (453) million
    ($(42) million) for the year ended December 31, 2005. The difference
    was derived mainly from the recognition of a deferred tax benefit of Ps. 889 million
    ($82 million) in 2005 resulting from the recognition of the tax basis of the
    intangible assets of certain foreign subsidiaries subject to repatriation,
    which was partially offset by the tax effects of a higher foreign-exchange
    loss in 2006. Additionally, during the second quarter of 2006, a tax loss carryforward was generated by the sale of Vitrocrisa's shares, which resulted
    in a deferred tax benefit.
  Net Income
  For the year ended December 31, 2006, we generated
    consolidated net income of Ps. 259 million ($24 million) compared
    to a net income of Ps. 221 million ($20 million) for the year
    ended December 31, 2005. This resulted primarily from a gain on sale of Ps.
    463 million ($43 million) in connection with the sale of our stake in Vitrocrisa
    in June 2006, other income of Ps. 832 million ($77 million) related to
    a gain from the sale of subsidiaries and long-lived assets. The effect of
    these transactions was partially offset by an increase in financing costs
    due to higher non-cash foreign-exchange losses and by the negative effect
    of derivative transactions, in addition to an expense of Ps. 268 million
    ($25 million) related to income tax, tax on assets and workers' profit
    sharing for the year ended December 31, 2006 compared to a benefit of Ps. 453 million
    ($42 million) for the year ended December 31, 2005.
  Year Ended December 31, 2005 Compared to Year Ended
    December 31, 2004
  Net Sales
  Our consolidated net sales increased 0.6% to Ps.
    25,323 million for the year ended December 31, 2005 from Ps. 25,168 million
    for the year ended December 31, 2004. This increase was primarily attributable
    to (i) significant sales growth in our Glass Containers business unit
    as a result of greater economic activity in Mexico and overseas, as well as
    greater acceptance of our new products in the markets we serve, (ii) strong
    growth in the domestic beer and returnable soft-drink market segments, (iii) an
    increase in construction-related volumes at Vitro America and (iv) new monumental
    construction contracts won by Vitro Cristalglass. These increases were partially
    offset by the decline in sales prices in the construction business line of
    our Mexican flat glass business due to new competitors in Mexico and the divestitures
    of Vitro OCF and Vancan, which in 2004 had sales of Ps. 217 million and Ps.
    336 million, respectively. Additionally, the appreciation of the peso against
    the dollar affected our sales. See "Item 5. Operating and Financial Review
    and Prospects-Operating Results-Inflation and Foreign Currency Exchange Rate
    Fluctuations."
  For the year ended December 31, 2005, our consolidated
    export sales were $588 million, an increase of 5% when compared to approximately
    $562 million for the same period of 2004. The increase in exports mainly came
    from our wine and liquor bottles, as well as our cosmetic containers. Our
    export sales represented approximately 27% of our consolidated net sales for
    the year ended December 31, 2005. More than 59% of our consolidated net sales
    for the year ended December 31, 2005 were either denominated in or sensitive
    to the value of the U.S. dollar. This is due to the fact that, in addition
    to exports and foreign subsidiaries' sales, the prices of a significant portion
    of our products in Mexico are generally determined with reference to U.S.
    dollar-based prices.
  Glass Containers Business Unit
  Net sales of our Glass Containers business unit
    increased 6.0% to approximately Ps. 12,002 million for the year ended
    December 31, 2005 from approximately Ps. 11,317 million for the
    same period in 2004. This increase was driven by a 6.9% increase in domestic
    sales, with strong results in the beer and soft drink business lines. Our
    domestic volumes increased 11.6% in 2005. These increases were partially offset
    by the divestiture of Vancan, which during 2004 had sales of Ps. 336 million.
  For the
  year ended December 31, 2005, export sales of the Glass Containers business
  unit amounted to approximately $290 million, an increase of 9.0% from
  approximately $266 million for the same period in 2004. Our export volumes
  increased 4.8% due to an important rise in sales volume from our cosmetics and
  wine and liquor product lines in the United States.
  Flat Glass Business Unit
  Net sales of our Flat Glass business unit were
    approximately Ps. 12,960 million for the year ended December 31, 2005,
    a decrease of 2.5% from Ps. 13,293 million for the same period in 2004. This
    decrease was mainly driven by our construction glass business line in Mexico which
    experienced a decline in net sales due to pricing pressures from our
    competitors and the divestiture of Vitro OCF, which in 2004 had sales of Ps.
    217 million. This decrease was partially offset by an increase in our sales
    of automotive glass due to the launch of successful new OEM platforms during
    2005.
  Export
  sales of the Flat Glass business unit were approximately $298 million for the
  year ended December 31, 2005, an increase of 1.4% when compared to
  approximately $294 million for the same period in 2004. This increase was
  largely due to an increased sales volume of automotive business line,
  especially as it obtained new OEM contracts.
  Operating Income
  Our consolidated operating income increased 12.3%
    to Ps. 1,749 million for the year ended December 31, 2005 from Ps. 1,558
    million for the same period in 2004. The increase in operating income was
    mainly due to our glass containers business' record annual sales. In 2005
    we continued to make progress on reducing our corporate overhead and expenses,
    maintaining strict cost management across all of our businesses. In fact,
    selling, general and administrative expenses as a percentage of sales fell
    by one percentage point year over year. The increase in operating income was
    partially offset by higher energy costs and the divestitures of Vitro OCF
    and Vancan which during 2004 had operating income of Ps. 50 million and Ps.
    34 million, respectively. Additionally, the appreciation of the peso against
    the dollar affects our operating income levels. See "Item 5. Operating and
    Financial Review and Prospects-Operating Results-Inflation and Foreign Currency
    Exchange Rate Fluctuations."
  Glass
  Containers Business Unit
  The operating income of our Glass Containers business
    unit increased 52% to approximately Ps. 1,277 million for the year ended December 31,
    2005 from approximately Ps. 841 million for the same period in 2004. This
    significant increase was driven by higher sales volume, better product mix
    and improved production efficiency which allowed for favorable fixed-cost
    absorption. The increase in operating income was partially offset by the divestiture
    of Vancan which during 2004 had operating income of Ps. 34 million.
  Flat Glass Business Unit
  Operating income of the Flat Glass business unit
    amounted to Ps. 474 million for the year ended December 31, 2005, a decrease
    of 47.4% from Ps. 901 million for the same period in 2004. This decrease was
    due mainly to the decrease in sales in our construction business, lower sales
    volumes to the auto glass replacement market as well as higher energy costs
    and the divestiture of Vitro OCF which during 2004 had operating income of
    Ps. 50 million. The decrease was partially offset by strong sales to OEM's
    and increased operating income from our foreign subsidiaries Vitro America,
    Vitro Cristalglass and Vitro Colombia.
  Total Financing Cost
  Our total
  financing cost decreased by Ps. 20 million from approximately Ps. 1,461
  million for the year ended December 31, 2004 to approximately Ps. 1,441
  million for the same period in 2005. This decrease in total financing cost was
  primarily due to an exchange gain of Ps. 402 million in 2005 compared with an
  exchange loss in 2004 of Ps. 86 million. In 2005 the Mexican peso experienced
  a nominal appreciation against the U.S. dollar of 4.6% compared with 0.8% in
  2004. The nominal appreciation of the peso relative to the U.S. dollar would
  have resulted in a foreign currency exchange gain in 2004, but with the
  unwinding of certain currency exchange swaps in May 2004, we recorded a net
  exchange loss. This appreciation mostly impacted our sales prices and income
  levels. The decrease was partially offset by higher interest expense which
  increased from Ps. 1,702 million for the year ended December 31, 2004 to Ps.
  1,916 million for the year ended December 31, 2005 due to the increased cost
  of debt.
  Income Tax, Tax on Assets and Workers' Profit Sharing
  Income tax, tax on assets and workers' profit sharing
    for the year ended December 31, 2005 represented a benefit of Ps. 453 million
    compared with an expense of Ps. 115 million for the year ended December 31,
    2004. The primary difference was due to the recognition of a deferred tax
    benefit of approximately Ps. 609 million resulting from the recognition of
    the tax basis of intangible assets of certain foreign subsidiaries subject
    to repatriation.
  Other Expenses, Net
  Other
  expenses, net, increased approximately Ps. 281 million to Ps. 424 million for
  the year ended December 31, 2005 from Ps. 143 million for the same period in
  2004. During 2005 we continued the downsizing and streamlining of our
  corporate functions and organization at some of our business units resulting
  in a charge of Ps. 320 million, and write-off and loss from sale of assets
  resulting in a non-cash expense of Ps. 362 million. We also recorded a gain of
  Ps. 442 million in 2005, resulting from the designation of Vitro as the sole
  beneficiary of the Vitro Club assets held in trust.
  Net Income
  We
  recorded net income of Ps. 221 million for the year ended December 31, 2005
  compared to a net loss of Ps. 68 million for the year ended December 31, 2004.
  Our lower taxes contributed to our improved results while the cumulative
  effects of the changes in accounting principles for Ps. 119 million decreased
  our net income.
  
  LIQUIDITY AND CAPITAL RESOURCES
  As of
  December 31, 2006, we had cash and cash equivalents totaling Ps. 1,172 million
  ($108 million). Our policy is to invest available cash in short-term
  instruments issued by Mexican and international banks and securities issued by
  the governments of Mexico and the United States.
  Over the
  past three years, the principal source of our liquidity has generally been
  cash generated from operations in each of our business units and the sale of
  certain assets. Our principal uses of cash have generally been for capital
  expenditure programs, debt repayment and dividend payments. The following is a
  summary of the principal sources and uses of cash for the three years ended
  December 31, 2006:
  Principal
  Sources and Uses of Cash
  For the Year Ended December 31,2004
        2005
        2006(in millions of constant pesos)Net resources generated by operating activities
      Ps. 1,966
      Ps. 1,993
      Ps. 1,022Capital expenditures
      (1,431)
      (1,061)
      (1,198)Bank loans
      651
      (1,741)
      (3,005)Dividends declared and paid..
    (254)
    (187)
    (155)
    

    Issuance of capital stock
    
    
    556
    
    Proceeds from sale of long-lived assets
      976
      194
      2,799
  
As part of
  our corporate restructuring and recapitalization program, we completed the
  following strategic transactions in 2006 and for the first quarter 2007:
  Sale of non-core businesses which include the sale of
    our 51% interest in Vitrocrisa for $119 million and the assumption by Libbey
    of liabilities of $62 million, and the sale of our 51% interest in Quimica
    M, S.A. de C.V. for $20 million;
    Sale of real estate, which includes the sale of real estate in Mexico City for
  $100 million;
    Sales of corporate and non-corporate real estate for $47 million;
    Equity offering, rights offering to our shareholders
    and to holders of our ADRs for an increase in our capital stock in which we
    raised Ps.550 million (nominal) ($50 million); and
    $1.0 billion refinancing through which we achieved more favorable terms and
  conditions in our overall debt.As a result
  of the strategic transactions described above, we had cash on hand of $229
  million as of March 31, 2007. We believe that the cash on hand in conjunction
  with our expected cash flows from operations will be sufficient to meet
  current liquidity requirements.
  Changes in Working Capital
  Our working
  capital increased Ps. 49 million ($5 million) during the year ended December
  31, 2006. This increase was principally due to an increase in accounts
  receivable associated with higher sales volumes, payments of retained taxes
  and payments of employee retirement obligations, which was partially offset by
  reductions in inventory.
  In our
  opinion the amount of working capital as of March 31, 2007 is expected to
  remain approximately at the same level for the rest of 2007.
  Capital Expenditures
  We operate
  in capital-intensive industries and require ongoing investments to update our
  assets and technology. In prior years, funds for those investments and for
  working capital needs, joint venture transactions, acquisitions and dividends
  have been provided by a combination of cash generated from operations, short-
  and long-term debt and, to a lesser extent, divestitures.
  Our capital
  expenditures program is focused on new investments in, technological upgrades
  to and maintenance of, our manufacturing facilities, as well as expansion of
  our production capacity. Our capital expenditures program also contemplates
  the purchase and maintenance of environmental protection equipment required to
  meet applicable environmental laws and regulations, as such may be in effect
  from time to time.
  During the year ended December 31, 2006, we made
    aggregate capital expenditures of Ps. 1,198 million ($111 million)
    compared to aggregate capital expenditures of Ps. 1,061 million
    ($98 million) in the same period in 2005, primarily consisting of capital
    expenditures for furnace repairs and general maintenance.
  During
  2007, we expect to make capital expenditures of approximately Ps. 2,487
  million ($230 million) as follows:
  Our Glass Containers Business Unit expects to make
    capital expenditures of Ps. 2,054 million ($190 million), of which Ps. 1,189
    million ($110 million) will be used to provide needed maintenance to certain
    of our furnaces and to the relocation of the Vidriera Mexico operations to
    the Vidriera Toluca facility. The remaining Ps. 865 million ($80 million)
    will be applied to expand production capacity. The production capacity expansion
    would take place within the Vidriera Monterrey, Vidriera Mexico (in its new
    location at the Vidriera Toluca premises) and Vidriera Queretaro facilities.
    Our Flat Glass Business Unit expects to make capital expenditures of Ps. 432
  million ($40 million), of which Ps. 216 million ($20 million) will be used by
  its foreign subsidiaries and the other Ps. 216 million ($20 million) will be
  used by its Mexican subsidiaries.We expect
  to finance the capital expenditures discussed above with cash flows generated
  by our operations and with current cash on hand.
  For the
  year ended December 31, 2006, our capital expenditures totaled
  Ps. 1,198 million ($111 million). Our Glass Containers business unit accounted
  for 72% of our capital expenditures, which were primarily related to major
  furnace repairs, maintenance and investment in a new glass production line.
  The remaining 28% of our capital expenditures for the year ended December 31,
  2006 were incurred by our Flat Glass business unit, mainly for the
  refurbishment of one of our furnaces in Monterrey, Mexico and other major
  furnace repairs.
  For the year ended December 31, 2005, our capital
    expenditures totaled Ps. 1,061 million ($98 million), a decrease
    of 26% compared with the capital expenditures for the same period in 2004.
    Capital expenditures during 2005 were made primarily in our Flat Glass and
    Glass Containers business units. Our Flat Glass business unit accounted for
    57% of our total capital expenditures, which were primarily related to the
    refurbishment of one of our furnaces in Monterrey, Mexico (finished in mid-May
    of 2006), as well as the acquisition of tools and equipment to serve new platforms
    for the OEM auto-glass business line. 42% of our capital expenditures for
    the year ended December 31, 2005 were incurred by our Glass Containers
    business unit, mainly for maintenance in both its Mexican and Central American
    facilities and a partial investment for a major furnace repair initiated towards
    the end of 2005. The remaining amount was incurred for maintenance programs
    in our corporate offices and by our Bosco subsidiary which we sold in 2005
    and was previously included in our Glassware reportable segment. See "Item
    4. Information on the Company-Business-Strategic Sale of Non-Core Businesses."
  For the year ended December 31, 2004, our capital
    expenditures totaled Ps. 1,431 million ($132 million). Capital
    expenditures during 2004 were incurred primarily in our Flat Glass and Glass
    Containers business units. Our Flat Glass business unit accounted for 50%
    of our total capital expenditures, which primarily related to the refurbishment
    of one of our furnaces in Monterrey, Mexico; converting some of our furnaces
    to use alternative fuels; expanding our position as a distributor and processor
    of flat glass in Spain and Portugal; implementing new platforms and automating
    some of the automotive business line's processes. 41% of our capital expenditures
    for the year ended December 31, 2004 were incurred by our Glass Containers
    business unit, mainly for maintenance in both its Mexican and Central American
    facilities and the installation of a new bottle-production line for the cosmetics
    service line in response to growing demand. The remaining amount was incurred
    for maintenance programs in our corporate offices and by Bosco.
  Genesis Project
  During 2006, we invested approximately Ps. 137 million
    ($12.7 million) related to the implementation of the Genesis Project. During
    2007 and 2008, we expect to invest approximately Ps. 81 million ($7.5 million)
    and Ps. 78 million ($7.2 million), respectively, for a total investment of
    approximately Ps. 297 million ($27.5 million) for the implementation of the
    Phase I of the Genesis Project. The majority of the cost of the Genesis Project
    is being capitalized and will be amortized over the estimated useful life
    of the asset. See "Item 3. Key Information-Recent Developments-Genesis
  Project."
  Financing Transactions
  During the year ended December 31, 2006 and
    most importantly, during the first few months of 2007, we refinanced substantially
    all of our consolidated indebtedness. The refinancing transformed the Company's
    capital structure by concentrating the indebtedness at a single entity and
    eliminating structural subordination. Additionally the refinancing reduced
    the cost of debt and extended debt maturities to an average life of debt of
    nearly eight years. See "Item 3. Key Information-Recent Developments-Our Corporate
    Restructuring and Recapitalization Program."
  As part of our refinancing, on November 1, 2006,
    we announced the successful completion of a rights offering to our shareholders
    and to holders of our ADRs for an increase in our capital stock. Approximately
    95% of the 62,857,143 total new shares offered by us were subscribed by our
    existing shareholders and ADR holders through the exercise of preemptive rights,
    and the remaining portion was purchased by IXE Banco, S.A., Institucion de
    Banca Multiple, IXE Grupo Financiero, a Mexican financial institution, through
    a back stop facility that was arranged for such purpose. Our proceeds from
    the rights offering totaled Ps. 550 million (US$50 million),
    which was used to repay outstanding indebtedness.
  Indebtedness
  The
  following table sets forth the aggregate amounts of our outstanding short-term
  and long-term debt as of December 31, 2006, reflecting the reclassification of
  Ps. 4,220 million ($390 million) of short-term borrowings and current
  maturities to long-term debt, which was refinanced with the proceeds of the
  Notes Offering.
As of December 31, 2006(Ps. millions)
				($ millions)(1)Short-term debt(2)(3)
			Ps. 350
			$                     32Long-term debt(4)(5)
			11,985
			1,109

  (1) Peso amounts have been translated into U.S. dollars,
    solely for the convenience of the reader, at a rate of 10.8116 pesos per U.S.
    dollar, the Free Exchange Rate on December 31, 2006.
  (2) Includes the current portion of our long-term debt,
    which was Ps. 60 million ($6 million) as of December 31, 2006.
  (3) 40% and 48% of the aggregate amount of our short-term
    debt as of December 31, 2006 was denominated in U.S. dollars and euros, respectively.
  (4) Excludes the current portion of our long-term debt.
    If the current portion of our long-term debt were included, the aggregate
    amount of outstanding long-term debt as of December 31, 2006 was Ps. 12,046 million
    ($1,114 million).
  (5) 94% and 6% of the aggregate amount of our long-term
    debt as of December 31, 2006 was denominated in U.S. dollars and pesos, respectively.
  Short-Term Debt
  Our short-term debt consists primarily of unsecured
    and secured borrowing arrangements with foreign banks denominated in U.S.
    dollars and euros. We engage, from time to time, in the ordinary course of
    business, in a number and variety of short-term loan arrangements with a number
    of Mexican and foreign banks. Such loans generally have a maturity ranging
    from 30 to 180 days and have interest rates ranging from 1.5% to 3.0% above
    LIBOR, for the U.S. dollar-denominated loans from 0.5% to 2% above Euribor
    for our euro-denominated loans, and floating market rates for the peso-denominated
    loans.
  Long-Term Debt
  As of
  December 31, 2006, after giving effect to the reclassification of Ps.4,220
  million ($390 million) of short-term borrowings and current maturities to
  long-term debt, which was refinanced with the proceeds of the offering of the
  2012 Senior Notes and the 2017 Senior Notes, we had Ps. 12,046 million
  ($1,114 million) of long-term debt, including the current portion of long-term
  debt.
  The
  following is a brief summary of our significant long-term indebtedness
  outstanding as of December 31, 2006 after giving effect to the offering of
  the 2012 Senior Notes and 2017 Senior Notes and the use of proceeds. For further description of our
  long-term indebtedness, refer to note 11 to our annual consolidated financial
  statements included elsewhere in this annual report:
  Facility
        Outstanding
            Principal
            Amount as of
            December 31, 2006 as adjusted(1)
        Interest
            Rate and Payment Dates
        Final
          Amortization/
          Maturity2012 Senior Notes
        Guarantor: Wholly owned subsidiaries of
        Vitro, VENA and Vimexico
        Issuer:Vitro
      $300.0 million
      Interest Rate: 8.625% per annum.
        Interest Payment Dates:Semiannually on August
        1 and February 1 of each year.
      February 1, 20122017 Senior Notes
        Guarantor:Wholly owned subsidiaries of
        Vitro, VENA and Vimexico
        Issuer:Vitro
      $700.0 million
      Interest Rate: 9.125% per annum.
        Interest Payment Dates:Semiannually on August
          1 and February 1 of each year.
      February 1, 201711.75% 2013 Senior Notes
      $225 million
      Interest Rate: 11.75% per annum.
      November 1, 2013Guarantor:Wholly owned subsidiaries of
        Vitro, VENA and Vimexico
		Issuer:Vitro
      
      Interest Payment Dates: Semiannually on May 1
          and November 1 of each year.Certificados Bursatiles
      Tranche A:
        Ps. 10 million ($0.9 million)
        Tranche B:
        Ps. 206 million
        ($18.7 million)
        Tranche C:
        Ps. 150 million
        ($13.6 million)
      Interest Rate: Cetes + 3.25%
      Tranche A:
        October 2, 2008
        Tranche B:
        December 22, 2008
        Tranche C:
        February 5, 2009Issuer:
          Vitro
      Interest Payment Dates: Every 28th
          day from October 7, 2004 (Tranche A), from November 1, 2004
          (Tranche B), October 21, 2004 (Tranche C).10.75% Senior Secured Guaranteed Notes
      $30 million
        Defeased
      Interest Rate: 10.75% per annum.
      July 28, 2008Issuer:VENA
      
      Interest Payment Dates: Semiannually on January 23
          and July 23 of each year.
  (1)See "Item 3. Key Information-Recent Developments-Corporate Restructuring
	and Recapitalization."
Below is a
  summary of the terms of the foregoing facilities or securities.
  2012 Senior Notes and 2017 Senior Notes. On February
    1, 2007 we completed the sale of $1.0 billion of Senior Notes, comprised of
    $300 million of 2012 Senior Notes and $700 million of 2017 Senior Notes. The indenture governing the
	2012 Senior Notes and 2017 Senior
    Notes contains certain customary restrictive covenants, including restrictions
    on the ability of Vitro and certain of its subsidiaries to (i) incur
    additional indebtedness, (ii) pay dividends and make other restricted
    payments, (iii) grant certain liens on assets, (iv) make certain
    investments, (v) engage in transactions with affiliates and (vi) take
    part in certain merger, consolidation and asset sale activities. Through
    the issuance of the 2012 Senior Notes and the 2017 Senior Notes, we achieved
    more favorable terms and conditions in our overall debt, including reduced
    interest rates, longer average maturity, long-term funds and a lower cost
    of capital. The 2012 Senior Notes and the 2017 Senior Notes will pay interest
    semiannually and are guaranteed by VENA and its wholly-owned subsidiaries
    and Vimexico and its wholly-owned subsidiaries. The Notes offering was made
    to qualified institutional buyers in the United States in reliance on Rule
    144A under the Securities Act of 1933, as amended and to non-U.S. persons
    outside the United States in accordance with Regulation S under the Securities
    Act of 1933.
  We are
  required, pursuant to a registration rights agreement, to consummate a
  registered offer to exchange the 2012 Senior Notes and the 2017 Senior Notes
  for an issue of SEC-registered notes with terms substantially identical to the
  2012 Senior Notes and the 2017 Senior Notes, as applicable (except that the
  exchange notes will not be subject to transfer restrictions). Under the terms
  of the registration rights agreement, we must file a registration statement
  with the SEC and use our best efforts to cause such registration statement to
  be declared effective by the SEC no later than August 30, 2007. If we fail to
  satisfy this obligation, or the exchange offer is not consummated by the
  earlier of September 29, 2007 or 30 business days after the effectiveness
  date, the interest rate on the 2012 Senior Notes and the 2017 Senior Notes, as
  applicable, will be increased, in each case, by 0.50% per annum (up to a
  maximum increase of 1.00% per annum in total) until the exchange offer is
  consummated.
  2013 Senior
    Notes. On October 22, 2003, Vitro completed an offering of $225 million
    aggregate principal amount of 2013 Senior Notes. The 2013 Senior Notes are
    general unsecured obligations of Vitro. The indenture governing the 2013 Senior
    Notes contains certain customary restrictive covenants, including restrictions
    on the ability of Vitro and certain of its subsidiaries to (i) incur
    additional indebtedness, (ii) pay dividends and make other restricted
    payments, (iii) grant certain liens on assets, (iv) make certain
    investments, (v) engage in transactions with affiliates and (vi) take
    part in certain merger, consolidation and asset sale activities. Upon issuance
    of the 2012 Senior Notes and 2017 Senior Notes mentioned above, the holders
    of the 2013 Senior Notes have been extended the benefit of to a guarantee
    by the subsidiary guarantors substantially similar to the guarantee provided
    with respect to the 2012 Senior Notes and the 2017 Senior Notes.
  Certificados
  Bursatiles. On October 10, 2002, we
    issued Certificados Bursatiles or medium-term notes program under which we
    were able to issue up to an aggregate principal amount of Ps. 2.5 billion.
    The Certificados Bursatiles bear an annual floating interest rate of 3.25%
    over the 182-day CETES. The Certificados Bursatiles are senior unsecured obligations
    of Vitro and do not impose restrictive covenants on us. As of December 31,
    2006, the total amount outstanding for this program was Ps. 366 million ($34
    million).
  VENA's
    10.75% Notes due 2011. On January 10, 2007, concurrently with the 2012
    Senior Notes and 2017 Senior Notes offering, VENA launched an offer to purchase
    for cash (the "Tender Offer") any and all of its outstanding 10.75%
    senior secured guaranteed notes due 2011 (the "2011 Notes") and
    a solicitation of consents (the "Consent Solicitation") from the
    holders of the 2011 Notes. Pursuant to the terms of the Tender Offer and Consent
    Solicitation, 88% ($220 million) of the aggregate principal amount of 2011
    Notes were purchased. Pursuant to the Consent Solicitation, the restrictive
    covenants that were provided for in the indenture were removed from the 2011
    Notes. Thereafter, VENA executed a covenant defeasance with respect to the
    remaining 2011 Notes, and sufficient funds have been placed in trust in order
    to repay principal and interest on the $30 million aggregate principal amount
    of 2011 Notes remaining outstanding.
  Other
	Restrictions on Dividend Payments
  Pursuant to article 20 of the Mexican Ley General
    de Sociedades Mercantiles (the "Mexican General Law of Corporations"), 5% of the annual net income of Mexican corporations must be set aside to create
    or increase a mandatory legal reserve until such reserve amounts to not less
    than 20% of such corporation's outstanding equity capital. Thereafter, a majority
    of our shares present at such annual general ordinary shareholders' meeting
    may allocate all or a portion of the remainder of our net income to a reserve
    fund for the purchase of our shares or other reserve funds.
  Certain of the instruments governing our indebtedness,
    under certain circumstances, restrict our ability to pay dividends. See "Item
    5. Operating and Financial Review and Prospects-Liquidity and Capital Resources-Indebtedness."
  In addition
  to the foregoing restriction, our joint venture in Comegua requires the
  consent of our joint venture partners for the payment of dividends.
  Strategic Sales of Non-Core Assets
  From 2001 to 2006, we have received aggregate net
    proceeds in U.S. dollars of $558 million from divestitures and asset
    sales without including debt transferred to the acquirers. See "Item 4. Information
    on the Company-Business-Strategic Sales of Non-Core Businesses" for a description
    of these transactions. These transactions provided a non-recurring source
    of cash that were used primarily for debt reduction.
  Share Repurchases and Sales
  During
  2006, we did not repurchase or sell our shares.
  As of
  December 31, 2006, 28.3 million of our shares remained held as treasury stock.
  PBGC Matter
  As part of the disposal of Anchor Glass Container
    Corp. ("Anchor") in August 1996, in a transaction approved by the U.S. Bankruptcy
    Court, we entered into a term sheet which contemplated an agreement pursuant
    to which we would provide to the Pension Benefit Guaranty Corporation (the "PBGC"), a United States governmental agency that guarantees pensions, a limited
    guaranty of Anchor's unfunded pension liability. No payments would be made
    under such a guaranty unless the PBGC terminated any of the covered pension
    plans, and the guaranty would be payable only to the extent the PBGC could
    not otherwise recover the unfunded liabilities from the entity that purchased
    Anchor's assets, which we refer to as "New Anchor." The amount of the guaranty
    was originally limited to $70 million. Under the guaranty, payments would
    not begin until August 1, 2002, and would then generally be payable in
    equal semi-annual installments over the following 10 years. Payments would
    not bear interest. The amount and the term of the guaranty would be proportionately
    reduced if the pension plans were terminated after January 31, 2002.
    Beginning February 2002, the guaranty would be reduced by $7 million
    semiannually until August 1, 2006, when the guaranty would expire if
    the plans did not terminate.
  On April 15, 2002, New Anchor filed a pre-negotiated
    plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code.
    On August 8, 2002, an amended plan of reorganization was confirmed, pursuant
    to which the plan resulting from the merger of the covered pension plans was
    terminated and the obligations thereunder were assumed by the PBGC in exchange
    for cash, securities and a commitment of reorganized New Anchor to make certain
    future payments.
  On June 20, 2003, the PBGC wrote to us, asserting
    that the plan had been terminated effective as of July 31, 2002, with
    an estimated unfunded liability of $219 million. The PBGC stated that
    the value of the recovery from New Anchor and reorganized New Anchor amounts
    to no more than $122.25 million; it alleged that the recovery that it
    secured in the bankruptcy was insufficient and that an underfunding in excess
    of our limited guaranty had occurred. Accordingly, in its letter, the PBGC
    demanded payments pursuant to the term sheet of $7 million on or before
    August 1, 2003 and of $3.5 million semiannually through August 1,
    2011. We intend to contest this liability. There are various issues concerning
    such demand and certain defenses that may be asserted by us. Management is
    currently evaluating these issues and defenses. At this point, it is not possible
    to reasonably estimate the amounts that will ultimately be payable in response
    to such demand. When management is able to reasonably estimate those amounts,
    we will establish an appropriate accounting reserve. As of this date, we have
    not established any reserves in connection with such potential liability.
  Energy
  Certain of our subsidiaries agreed to purchase, in
    the aggregate, 90 megawatts of electrical power and 1.3 million tons
    of steam per year pursuant to a 15-year "take-or-pay" power purchase agreement
    with Tractebel Energia. This contract began in April 2003 and the price at
    which we are required to purchase electrical power and steam is based on variables
    such as inflation, the peso/U.S. dollar exchange rate and the price of natural
    gas, whose future value is uncertain.
  Call/Put on Shares of Vitro Cristalglass
  A group of individual investors owns a 40% interest
    in Vitro Cristalglass. We have the option of purchasing the 40% of the shares
    from the minority interest, which can be exercised beginning on May 1, 2005
    for fair value as calculated by independent appraisers and cannot be less
    than 28.9 million euros ($35 million as of December 31, 2006). Additionally,
    the minority interest has a put option pursuant to which they may require
    us to purchase all or part of their 40% interest in Vitro Cristalglass, which
    can be exercised beginning on May 1, 2003 for 24 million euros ($29 million
    as of December 31, 2006), as adjusted to reflect inflation in Spain from 2003
    through the time the put is exercised. As of December 31, 2006, our estimate
    of the fair value of the 40% interest is higher than the option price held
    by us.
  
  OFF-BALANCE SHEET ARRANGEMENTS
  Sales of receivables
  Vitro Cristalglass has entered into revolving factoring
    program agreements with several financial institutions to sell trade accounts
    receivable. In accordance with the terms of some of these agreements, Vitro
    Cristalglass has the obligation to reimburse uncollected receivables, in the
    case of non-payment by its customers. As of December 31, 2005 and 2006,
    the maximum capacity available under these programs is $31 million and
    $35 million, respectively. As of December 31, 2005 and 2006, Vitro
    Cristalglass had sold $18 million and $21 million of trade receivables,
    respectively.
  Securitization of trade receivables
  Securitization
    of VENA trade receivables.On March 31, 2005, COVISA, Alcali,
    and Comercializadora Alcali, all subsidiaries of VENA, closed a revolving
    accounts receivable facility, through which such companies obtained Ps. 550 million
    (nominal amount) and $19 million. The VENA subsidiaries entered into
    an agreement to sell all of their trade accounts receivable, on a revolving
    basis during four years, to a fideicomiso (the "Mexican Trust",
    a qualifying special purpose entity) that was formed prior to the execution
    of this agreement for the sole purpose of buying and selling accounts receivable
    and is designed to be bankruptcy-remote. The Ps. 550 million (nominal
    amount) was obtained through the issuance of certified preferred securities
    ("certificados bursatiles preferentes") that trade on the Mexican
    Stock Exchange issued by the Mexican Trust, and $19 million in subordinated
    notes, which have a payment guarantee by Vitro. The interest payments and
    eventual principal reimbursement on the certificados bursatiles preferentes
    and the subordinated notes are payable from the collection of the receivables
    originated by the VENA subsidiaries and sold to the Mexican Trust. At December 31,
    2005 and 2006, the gross receivables sold to the Mexican Trust totaled Ps. 772 million
    and Ps. 1,265 million, respectively, and are reflected as a reduction
    of trade accounts receivable. The estimated fair value of the retained undivided
    interests in securitized receivables at December 31, 2005 and 2006
    was Ps. 159 million and Ps. 510 million, respectively.
  Securitization
    of Vimexico (formerly Vitro Plan) trade receivables.On August 22,
    2005, Dinavisa, Vitro Flotado Cubiertas, S.A. de C.V. ("VFC"), Vidrio
    y Cristal and VAU, all subsidiaries of Vimexico, closed a five year revolving
    accounts receivables facility through which such companies obtained $21.5 million
    in cash. The Vimexico subsidiaries entered into an agreement to sell all of
    their trade account receivables, on a revolving basis, to a Mexican Trust
    that was formed prior to the execution of this agreement for the sole purpose
    of buying and selling accounts receivable and is designed to be bankruptcy
    remote. The $21.5 million was obtained through a private issuance of notes
    in the United States. The interest payments and eventual principal reimbursement
    will be provided from the collection of the receivables originated by four
    subsidiaries of Vimexico and sold to the Mexican Trust. At December 31,
    2005 and 2006, the gross receivables sold to the Trust totaled Ps. 704 million
    and Ps. 553 million, respectively, and are reflected as a reduction
    of trade accounts receivable. The estimated fair value of the retained undivided
    interests in securitized receivables at December 31, 2005 and 2006 was
    Ps. 328 million and Ps. 320 million, respectively.
  Securitization
    of Vitro America trade receivables.During 2004, Vitro America closed a contract for selling all its accounts
    receivable, on a revolving basis, to VVP Funding, a wholly-owned subsidiary
    of Vitro America. VVP Funding is a special-purpose entity that was formed
    prior to the execution of this agreement for the sole purpose of buying and
    selling accounts receivable and is designed to be bankruptcy-remote and self-liquidating.
    VVP and VVP Funding entered an agreement with an unrelated major financial
    institution whereby VVP Funding sells, on a revolving basis and subject to
    the maintenance of certain financial and receivables-based ratios, an undivided
    percentage ownership in all eligible accounts receivable, as defined, for
    consideration composed of cash up to a maximum revolving amount of $40 million
    and retained undivided interests in securitized receivables. The agreement
	which
    expired in May 2007 was renewed on April 16, 2007 through 2010. As part of
	the renewal the maximum amount of the facility was increased to $50 million. The transfer of undivided ownership interests from VVP Funding
    to the unrelated major financial institution for cash consideration is accounted
    for as a sale of receivables. As of December 31, 2004 and 2005 and 2006,
    the gross receivables sold totaled $63 million, $71 million and
    $76 million, respectively, and are reflected as a reduction of trade
    accounts receivable. The estimated fair value of the retained undivided interests
    in securitized receivables at December 31, 2004 and 2006 was $31 million
    and $35 million, respectively.
  TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
  The
  following table sets forth a summary of our contractual obligations and
  commercial commitments, in millions of constant pesos as of December 31, 2006.
  Contractual
            Obligations
      Total
      Less than 1 year
      1-3 years
      3-5 years
      More than 5 years(Ps. millions)Short- and long-term
          debt(1)(2) (3)
      Ps. 22,403
      Ps. 1,530
      Ps. 3,126
      Ps. 2,233
      Ps. 15,515Operating leases(4)
      1,493
      448
      603
      296
      146Unconditional
          purchase obligations(5)
      0
      0
      0
      0
      0Other long-term
          obligations(6)
      2,473
      289
      524
      528
      1,132Total contractual
          obligations
      Ps.
            26,369
      Ps. 2,267
      Ps.
            4,253
      Ps.
            3,057
      Ps.
            16,793
  
  (1) For a description of our most recent financing transactions,
    see "Item 3. Key Information-Recent Developments-Our Corporate Restructuring
    and Recapitalization Program" and "Item 5. Operating and Financial Review
    and Prospects-Liquidity and Capital Resources-Indebtedness."
  (2) Includes scheduled interest payments with fixed
    and variable rates. For our variable interest rate debt, we utilized the rates
    in effect as of December 31, 2006, as disclosed in Note 11 of our consolidated
    financial statements when estimating the scheduled interest payments.
  (3) Includes Ps.
	96 million of capital lease obligations.
  (4) The amounts set forth above under
  "Operating leases" include mainly payments that will be made under leases relating to three airplanes,
    warehouses, forklifts and computer equipment.
  (5) Certain of our subsidiaries agreed to purchase,
    in the aggregate, 90 megawatts of electrical power and 1.3 million tons
    of steam per year pursuant to a 15-year "take-or-pay" power purchase agreement
    with Tractebel Energia. This contract began in April 2003 and the price at
    which we are required to purchase electrical power and steam is based on variables
    such as inflation, the peso/U.S. dollar exchange rate and the price of natural
    gas, whose future value is uncertain.
  (6) Expected benefits payment regarding the company
    pension plans, seniority premium and severance indemnities.
  
  ACCOUNTING CONSIDERATIONS
  Critical Accounting Estimates
  We prepare
  our consolidated financial statements in conformity with Mexican FRS. As such,
  we are required to make certain estimates, judgments and assumptions that we
  believe are reasonable based on the available information. These estimates and
  assumptions affect the reported amounts of assets and liabilities at the date
  of the financial statements, the reported amounts of revenues and expenses
  during the periods presented and the related disclosures. The significant
  accounting policies that we believe are the most sensitive to such estimates
  and relevant to aid you in fully understanding and evaluating our reported
  financial statements are the following:
  Trade Receivables
  We perform ongoing credit evaluations of our customers
    and adjust credit limits based upon payment history and the customer's current
    creditworthiness, as determined by our review of their current credit information.
    We continually monitor collections and payments from customers and maintain
    an allowance for doubtful accounts based upon our historical experience and
    any specific customer collection issues that we have identified. While such
    credit losses have historically been within our expectations and the provisions
    established, we cannot guarantee that we will continue to experience the same
    credit loss rates that we have in the past. A significant change in our experience
    of credit losses could have a material adverse impact on our consolidated
    results of operations and financial position.
  Contingencies
  Contingencies, by their nature, relate to uncertainties
    that require management to exercise judgment both in assessing the likelihood
    that a liability has been incurred as well as in estimating the amount of
    potential loss. Provisions are recognized for current obligations that (i) result
    from a past event, (ii) are probable to result in the use of economic
    resources, and (iii) can be reasonably estimated. We believe the amounts
    recorded or disclosed in our financial statements are based on the best estimates
    and judgments of management. However, actual outcomes could differ from our
    estimates. See "Item 5. Operating and Financial Review and Prospects-Liquidity
  and Capital Resources-PBGC Matter."
  Financial Instruments
  Effective January 1, 2005, the Company adopted
    the provisions of Bulletin C-10, "Derivative Financial Instruments and Hedging
    Activities," of Mexican FRS, which requires that all derivative instruments
    be recognized at fair value, sets the rules to recognize hedging activities
    and requires separation, if practical, of embedded derivative instruments.
    With respect to cash flow hedging, Bulletin C-10 establishes that the effective
    portion be recognized temporarily in other comprehensive income within stockholders'
    equity, with subsequent reclassification to current earnings at the time it
    is affected by the hedged item. The ineffective portion should be immediately
    recognized in current earnings. Through December 31, 2004, according
    to accounting standards effective at that moment (Bulletin C-2, "Financial Instruments" of Mexican FRS), the Company did not recognize the effect of
    hedging derivatives under financial expenses until the flow exchanges mentioned
    in the swap contract were actually executed. Prior to the implementation of
    Bulletin C-10, financial instruments for hedging purposes were valued using
    the same criteria of valuation of the underlying assets or liabilities hedged,
    and the effect of such valuation is recognized in net income, net of costs,
    expenses or income from the assets or liabilities whose risks are being hedged.
  Fair values
  of financial instruments are estimated using available market information or
  other appropriate valuation methodologies that require considerable judgment
  in interpreting and developing estimates. The use of different market
  assumptions and/or estimation methodologies may have a material adverse effect
  on the estimated fair value amounts. See "Item 11. Quantitative and
  Qualitative Disclosures About Market Risk."
  Seniority Premiums and Pension Plans
  Seniority
  premiums and pension plans for all personnel are considered as costs in the
  periods in which the related services are rendered. Periodic costs are
  calculated in accordance with Bulletin D-3, "Labor Obligations," of Mexican
  FRS and the actuarial computations are made by an independent actuary, based
  on estimates of future compensation increases, inflation, investment returns,
  mortality, turnover and expected discount rates well into the future. While we
  have made such estimates based on published tables and current market
  conditions, significant variance in actual experience compared to our
  estimates could have a material adverse effect on our consolidated results of
  operations and financial condition.
  The table
  below presents the impact of a one-percentage-point increase and a
  one-percentage-point decrease in the assumed discount rate and expected rate
  of return on plan assets on the net periodic pension cost and on the net
  pension liability for the year ended December 31, 2006 in accordance
	with US GAAP:
  For
            the
            Year Ended
          December 31, 2006
          (Ps. millions)One-percentage-point increase in assumed discount rate
        + Effect on total net periodic cost.
        + Effect on net pension
          liability
      Ps.
		-
		(166)One-percentage-point decrease in assumed discount rate
        + Effect on total net periodic cost
        + Effect on net pension
          liability
      -
		189One-percentage-point increase in expected
          rate of return on plan assets
        + Effect on total net periodic cost
        + Effect on net pension
          liability
      (7 )
		-One-percentage-point decrease in expected
          rate of return on plan assets
        + Effect on total net periodic cost
        + Effect on net pension liability
      7
		-
  Environmental Obligations
  Our
  operations are subject to the environmental laws and regulations of the
  jurisdictions in which we conduct our operations. An environmental reserve is
  recorded to cover the costs of expected environmental obligations when we
  become aware that an expenditure may be required. We estimate the cost for the
  environmental obligations based on historical experience, results of
  monitoring and the known extent of exposure. We do not believe that continued
  compliance with these environmental laws will have a material adverse effect
  on our financial condition or results of operations. However, a significant
  change in laws, the discovery of previously unknown contamination and other
  factors beyond our control could result in expenditures that are materially
  greater than currently estimated or the reserves we have recorded.
  Impairment of Long-Lived Assets
  Long-lived
  assets, which include property, goodwill, intangible assets and certain other
  assets, comprise a significant portion of our total assets. We make judgments
  and estimate the carrying value of these assets, including amounts to be
  capitalized, depreciation and amortization methods and useful lives.
  Additionally, the carrying values of these assets are periodically reviewed
  for impairment or whenever events or circumstances indicate that the carrying
  amounts may not be recoverable. An impairment loss is recorded in the period
  in which it is determined that the carrying amount is not recoverable. This
  requires us to make long-term forecasts of our future revenues and costs
  relating to the assets under review. These forecasts require assumptions about
  demand for our products, future market conditions and technological
  developments. Significant and unanticipated changes to these assumptions could
  result in a determination that the value of these long-lived assets has been
  impaired in a future period.
  Certain
  material events or circumstances may indicate that carrying amounts of our
  long-lived assets may not be recoverable. Our policy is to review the carrying
  amounts of long-lived assets in use when an impairment indicator suggests that
  such amounts might not be recoverable. The impairment indicators considered
  for these purposes are, among others, as follows: operating losses or negative
  cash flows in the period if they are combined with a projection of losses,
  reduction in the demand for the products manufactured, competition, capacity
  utilization reduction, obsolescence or technological changes, decrease of
  market value of assets and other legal and economic factors.
  Deferred Taxes
  In assessing the realizability of deferred tax assets,
    management considers whether it is highly probable that some portion of the
    deferred tax assets will not be realized. The ultimate realization of deferred
    tax assets is dependent upon the generation of future taxable income. Management
    considers the scheduled reversal of deferred tax liabilities, projected future
    taxable income, and tax planning strategies in making this assessment. As
    of December 31, 2005, we had recorded a deferred tax asset of Ps. 1,991 million
    ($184 million) related to net operating loss carryforwards and asset taxes,
    net of a valuation allowance of Ps. 606 million ($56 million). As a result
    we were able to reduce the amount of expiring net operating loss carryforwards
    and asset taxes from Ps. 9,467 million ($874 million) as of December
    31, 2005 to Ps. 1,804 million ($167 million) as of December
  31, 2006. These carryforwards expire in 2016. As of December 31, 2006, we
    had recorded a deferred tax asset of Ps. 244 million ($23 million), net of
    a valuation allowance of Ps. 260 million ($24 million).
  We believe we will generate sufficient taxable income
    in future years that will allow us to utilize our remaining tax loss carryforwards.
    Our operating plans and future projections support this position. In addition,
    the Company has tax strategies which management believes are prudent and feasible,
    and, if required, would be implemented to prevent the tax loss carryforwards
    from expiring unused. Such tax strategies allow us to generate taxable income
    in the future in order to utilize our tax loss carryforwards.
  New Accounting Pronouncements
  Mexican FRS
  When Mexican FRS Series A went into effect on January
    1, 2006, which represents the Conceptual Framework described in Note 3, some
    of its provisions created divergence with specific Mexican FRS already in
    effect. Consequently, in March 2006, CINIF issued Interpretation Number 3
    (INIF No. 3), Initial Application of Mexican FRS, that provisions set forth
    in specific standards that have not been amended should be followed until
    their adaptation to the conceptual framework is complete.
  CINIF continues to pursue its objective of moving
    towards a greater convergence with international financial reporting standards.
    To this end, on December 22, 2006, it issued the following standards, which
    will become effective for fiscal years beginning on January 1, 2007:
  NIF B-3, Statement of Operations
    NIF B-13, Events Occurring after the Date of the Financial
    Statements
    NIF C-13, Related Party Transactions
    NIF D-6, Capitalization of Comprehensive Financing ResultSome of the
  significant changes established by these standards are as follows:
  NIF B-3, Statement of Operations, sets the general
    standards for presenting and structuring the statement of income, the minimum
    content requirements and general disclosure standards. Consistent with NIF
    A-5, Basic Elements of Financial Statements, NIF B-3 now classifies revenues,
    costs and expenses, into ordinary and non-ordinary. Ordinary items (even
    if not frequent) are derived from the primary activities representing an
    entity's main source of revenues. Non-ordinary items are derived from activities
    other than those representing an entity's main source of revenues. Consequently,
    the classification of certain transactions as special or extraordinary, according
    to former Bulletin B-3, was eliminated. As part of the structure of the statement
    of income, ordinary items should be presented first and, at a minimum, present
    income or loss before income taxes, income or loss before discontinued operations,
    if any, and net income or loss. Presenting operating income is neither required
    nor prohibited by NIF B-3. If presented, the line item other income (expense)
    is presented immediately before operating income. Cost and expense items
    may be classified by function, by nature, or a combination of both. When classified
    by function, gross income may be presented. Statutory employee profit sharing
    should now be presented as an ordinary expense (within other income (expense)
    pursuant to INIF No. 4 issued in January 2007) and no longer presented within
    income tax. Special items mentioned in particular standards should now be
    part of other income and expense and items formerly recognized as extraordinary
    should be part of non-ordinary items.
  NIF B-13,
  Events Occurring after the Date of the
    Financial Statements, requires that for (i) asset and liability restructurings
    and (ii) creditor waivers to their right to demand payment in case the entity
    defaults on contractual obligations, occurring in the period between the date
    of the financial statements and the date of their issuance, only disclosure
    needs to be included in a note to the financial statements while recognition
    of these items should take place in the financial statements of the period
    in which such events take place. Previously, these events were recognized
    in the financial statements in addition to their disclosure. NIF A-7, Presentation
    and Disclosure, in effect as of January 1, 2006, requires, among other things,
    that the date on which the issuance of the financial statements is authorized
    be disclosed as well as the name of authorizing management officer(s) or body
    (bodies). NIF B-13 establishes that if the entity owners or others are empowered
    to modify the financial statements, such fact should be disclosed. Subsequent
    approval of the financial statements by the stockholders or other body does
    not change the subsequent period, which ends when issuance of the financial
    statements is authorized.
  NIF C-13,
  Related Party Transactions, broadens
    the concept "related parties" to include a) the overall business in which
    the reporting entity participates; b) close family members of key or relevant
    officers; and c) any fund created in connection with a labor-related compensation
    plan. NIF C-13 requires the following disclosures: a) the relationship between
    the controlling and subsidiary entities, regardless of whether or not any
    intercompany transactions took place during the period; b) that the terms
    and conditions of consideration paid or received in transactions carried out
    between related parties are equivalent to those of similar transactions carried
    out between independent parties and the reporting entity, only if sufficient
    evidence exists; c) benefits granted to key or relevant officers; and d) name
    of the direct controlling company and, if different, name of the ultimate
    controlling company. Notes to comparative financial statements of prior periods
    should disclose the new provisions of NIF C-13.
  NIF D-6, Capitalization of Comprehensive Financing
    Result, establishes general capitalization standards that include specific
    accounting for financing in domestic and foreign currencies or a combination
    of both. Some of these standards include: a) mandatory capitalization of
    comprehensive financing cost ("RIF") directly attributable to the acquisition
    of qualifying assets; b) yields obtained from temporary investments before
    the capital expenditure is made are excluded from the amount capitalized;
    c) exchange gains or losses from foreign currency financing should be capitalized
    considering the valuation of associated hedging instruments, if any; d) a
    methodology to calculate capitalizable RIF relating to funds from generic
    financing; e) regarding land, RIF may be capitalized if development is taking
    place; and f) conditions that must be met to capitalize RIF, and rules indicating
    when RIF should no longer be capitalized. The entity may decide on whether
    to apply provisions of NIF D-6 for periods ending before January 1, 2007,
    in connection with assets that are in the process of being acquired at the
    time this NIF goes into effect.
  The Company is in the process of analyzing the
    impact of these new financial reporting standards and believes that they will
    not have a material effect on its consolidated financial position or results
    of operations.
  U.S. GAAP
  SFAS No. 155, "Accounting for Certain
    Hybrid Financial Instruments - an Amendment of FASB Statements No. 133 and
    140", issued in February 2006. This statement amends SFAS No. 133, and No.
    140. This statement resolves issues addressed in SFAS No. 133 Implementation
    Issue No. D1, "Application of Statement No. 133 to Beneficial Interests in Securitized
    Financial Assets." This statement permits fair value remeasurement for any
    hybrid financial instrument that contains an embedded derivative that otherwise
    would require bifurcation, clarifies which interest-only strips and principal-only
    strips are not subject to the requirements of SFAS No. 133, establishes a
    requirement to evaluate interests in securitized financial assets to identify
    interests that are freestanding derivatives or that are hybrid financial instruments
    that contain an embedded derivative requiring bifurcation, clarifies that
    concentrations of credit risk in the form of subordination are not embedded
    derivatives and amends SFAS No. 140 to eliminate the prohibition on a qualifying
    special-purpose entity from holding a derivative financial instrument that
    pertains to a beneficial interest other than another derivative financial
    instrument. This Statement is effective for all financial instruments acquired
    or issued after the beginning of an entity's first fiscal year that begins
    after September 15, 2006. The Company is currently evaluating the impact
    of adopting this statement on its consolidated results of operations and financial
    position.
  SFAS No. 156, "Accounting for Servicing
    of Financial Assets - an Amendment of FASB Statement No. 140" issued on March
    2006. This statement amends SFAS No. 140 with respect to the accounting for
    separately recognized servicing assets and servicing liabilities. This statement
    requires that all separately recognized servicing assets and servicing liabilities
    be initially measured at fair value, if practicable. This statement permits,
    but does not require, the subsequent measurement of servicing assets and servicing
    liabilities at fair value. This statement permits an entity to reclassify
    certain available-for-sale securities to trading securities, regardless of
    the restriction in paragraph 15 of SFAS No. 115 "Accounting for Certain Investments
    in Debt and Equity Securities", provided that those available-for-sale securities
    are identified in some manner as offsetting the entity's exposure to changes
    in fair value of servicing assets or servicing liabilities that a servicer
    elects to subsequently measure at fair value. This option is available only
    once, as of the beginning of the fiscal year in which the entity adopts this
    statement. An entity should adopt this statement as of the beginning of its
    first fiscal year that begins after September 15, 2006. Earlier adoption is
    permitted as of the beginning of an entity's fiscal year, provided the entity
    has not yet issued financial statements, including interim financial statements,
    for any period of that fiscal year. The effective date of this statement is
    the date an entity adopts the requirements of this statement. An entity should
    apply the requirements for recognition and initial measurement of servicing
    assets and servicing liabilities prospectively to all transactions after the
    effective date of this statement. The Company is currently evaluating the
    impact of adopting this statement on its consolidated results of operations and financial position.
  In September 2006,
	the FASB issued SFAS No. 157, "Fair Value Measurement". SFAS No. 157 defines
	fair value, establishes a framework for the measurement of fair value, and
	enhances disclosures about fair value measurements. The statement does not
	require any new fair value measures. The statement is effective for fair
	value measures already required or permitted by other standards for fiscal
	years beginning after November 15, 2007. The Company is required to adopt
	SFAS No. 157 beginning on January 1, 2008. SFAS No. 157 is required to be
	applied prospectively, except for certain financial instruments. Any
	transition adjustment will be recognized as an adjustment to opening
	retained earnings in the year of adoption. The Company is currently
	evaluating the impact of adopting this statement on its consolidated results of operations and financial
    position.
  In
    September 2006, the FASB issued SFAS No. 158, which requires companies to
    measure the fair value of its plan assets and benefit obligations as of the
    date of its year-end balance sheet. Companies no longer are permitted to measure
    the funded status of their plan(s) by being able to choose a measurement date
    up to three months prior to year end. This aspect of SFAS No. 158 is effective
    for all companies in fiscal years ending after December 15, 2008, but does
    not impact the Company, its results of operations or its cash flows, as its
    measurement date is the same as its fiscal year end. Retrospective application
    of SFAS No. 158 is not permitted.
  
  In
    February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial
    Assets and Financial Liabilities - Including an Amendment of FASB Statement
    No. 115", which provides a fair value option to measure many financial instruments
    and certain other assets and liabilities at fair value on an instrument-by-instrument
    basis. SFAS No. 159 is effective as of the beginning of an entity's first
    fiscal year that begins after November 15, 2007. Early adoption is permitted
    as of the beginning of a fiscal year that begins on or before November 15,
    2007, provided the entity also elects to apply the provisions of SFAS No.
    157. This statement is not expected to impact the Company's consolidated financial
    position or results of operations in future periods.
  In
    September 2006, the FASB issued FASB Staff Position ("FSP") No. AUG AIR-1,
    "Accounting for Planned Major Maintenance Activities". This guidance prohibits
    the use of the accrue-in-advance method of accounting for planned major activities
    because an obligation has not occurred and therefore a liability should not
    be recognized. The provisions of this guidance will be effective for reporting
    periods beginning after December 15, 2006. The Company is currently evaluating
    the impact of adopting this standard on its consolidated results of operations
    and financial position.
  In
    July 2006, the FASB issued FASB Interpretation ("FIN") No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109".
    FIN 48 clarifies the accounting for uncertainty in income taxes recognized
    in an enterprise's financial statements and prescribes a threshold of more-likely-than-not
    for recognition of tax benefits of uncertain tax positions taken or expected
    to be taken in a tax return. FIN 48 also provides related guidance on measurement,
    derecognition, classification, interest and penalties, and disclosure. The
    provisions of FIN 48 will be effective for the Company on January 1, 2007,
    with any cumulative effect of the change in accounting principle recorded
    as an adjustment to opening retained earnings. The Company is in the process
    of assessing the impact of adopting FIN 48 on its results of operations and
    financial position. However, the Company's current policy is to recognize
    tax benefits of uncertain tax positions only if it is probable that the positions
    will be sustained. The Company is currently evaluating the impact of adopting
    this standard on its consolidated results of operations and financial position.
  
  RESEARCH
  AND DEVELOPMENT
  In 1998, we formed a technology council to coordinate
    Vitro's research and development strategy with the goal of creating synergies
    between our business units and create Vitro's proprietary technology for use
    by our business units.
  In
  addition, in 2001 we incorporated several of our Mexican subsidiaries owning
  some of the intellectual property used by our Flat Glass and Glass Containers
  business units in Switzerland. These Swiss subsidiaries also conduct research
  and development jointly with our Mexican subsidiaries and our technology
  council license technology to our Mexican operating subsidiaries.
  Our Flat
  Glass business unit uses both its own technology, some of which has been
  patented, and also benefits significantly from the technology and technical
  information acquired from certain of our joint venture partners through
  technology licensing arrangements with them, which have since expired. In
  particular, the expired technology license agreement with Pilkington provided
  us with state-of-the-art float glass technology. We have negotiated an
  extended patent license for the remaining life of the patents we use from
  Pilkington. As we notified Pilkington in September 2005, the Automotive
  Technical Assistance Agreement was terminated effective as of September 2006.
  Our Glass
  Containers business unit also uses both its own technology, some of which has
  been patented, and also technology provided by Owens-Illinois pursuant to a
  series of technical assistance agreements, which have since expired. These
  technical assistance agreements were effective from 1964 to September 1999.
  Under the terms of these technical assistance agreements, we continue to have
  the right to free use of the technology provided to us by Owens-Illinois
  during the effective period of these agreements. We have an extended patent
  license for the remaining life of the patents we use from Owens. However, we
  do not currently have any rights to the technology developed by Owens-Illinois
  after September 1999.
  We own a
  number of trademarks and patents which, in the aggregate, are important to the
  conduct of our business. Except for our "Vitro" trademark, none of these
  trademarks and patents is individually material to our business as a whole.
  We did not have any material expenditures related
    to research activities during 2004, 2005 or 2006. One of our subsidiaries
    conducts a portion of its business through joint ventures or technology alliances
    with non-Mexican partners, and we expect to enter into other similar arrangements
    in the future. Certain of these partners also license technology, trademarks
    and trade names to our subsidiaries for use in the manufacture and sale of
    various flat glass products. We believe that these joint ventures, alliances
    and license arrangements provide us with important competitive advantages.
    We cannot be certain that these partners will not choose to conduct business
    directly in Mexico and to terminate their relationships with us in view of
    the easing of the limitations on foreign investments and the reduction of
    import duties and tariffs that has occurred under NAFTA, or for other reasons.
    In addition, there can be no assurance that we will be successful in renewing
    any joint venture, technical assistance, license or other agreements or arrangements
    upon their expiration, in renewing these agreements on terms as favorable
    as the present ones, in forming similar alliances with other partners or in
    developing equivalent technologies independently. See "Item 4. Information
    on the Company-Business-Our Operating Business Units."
  Item 6. Directors, Senior Management and Employees
  DIRECTORS AND SENIOR MANAGEMENT
  Unless the context otherwise requires, in the sections
    entitled "Directors and Senior Management," "Board Practices" and "Share of
    Ownership" of this Item 6, the words "we," "us," "our" and "ours" refer to
    Vitro, S.A.B. de C.V. and not its consolidated subsidiaries.
  Directors
  The following information relates to our directors
    (consejeros). There are no arrangements or understandings with major shareholders,
    customers, suppliers or others pursuant to which any of them was elected as
    a director.
  Our Board of Directors is responsible for the management
    of our business. Our by-laws provide that our Board of Directors will consist
    of the number of directors determined by our shareholders at the annual general
    ordinary shareholders' meeting, up to a maximum of 21 members, and that each
    member of our Board of Directors shall be elected at such shareholders' meeting
    for a renewable term of one year. Each director shall serve until his or her
    successor is duly elected and takes office. At our general ordinary shareholders'
    meeting held on March 28, 2007, our shareholders resolved that our Board of
    Directors would consist of 16 directors. We have no alternate directors.
  A list of
  our current directors, their principal occupations and directorships, the year
  they first became a director and the year of their birth are set forth below.
  Name
        Principal Occupation
        First
            Became
            a Director
        Year of
            BirthAdrian Sada Trevino
      Director and Honorary Chairman of the Board of
          Directors of Vitro, S.A.B. de C.V.
      1969
      1920Adrian Sada Gonzalez
      Chairman of the Board of
          Directors of Vitro, S.A.B. de C.V.
      1984
      1944Federico Sada Gonzalez
      President and Chief Executive
          Officer of Vitro, S.A.B. de C.V.
      1982
      1949Tomas Gonzalez Sada
      Chairman of the Board, President and Chief Executive Officer
          of Cydsa, S.A.B. de C.V.
      1980
      1943Andres Yarte Cantu
      Chief Executive Officer
          of Distribuidora de Productos Ceramicos, S.A.
      1991
      1941Gustavo Madero Munoz*
      Federal Congressman (Senator),
          Mexican Congress
      1996
      1955Carlos Eduardo Represas de Almeida*
      Chairman of the Board of
          Directors of Nestle Mexico S.A. de C.V.
      1998
      1945Jaime Serra Puche*
      Founder, SAI-Consultores, S.C.
      1998
      1951Carlos Munoz Olea*
      Private Investor
      2000
      1955Joaquin Vargas Guajardo*
      Chairman of the Board of
          Directors of Grupo MVS Comunicaciones, S.A. de C.V.
      2000
      1954Alejandro Garza Laguera*
      President of Desarrollo
          Inmobiliario Omega, S.A. de C.V.
      2001
      1926Eduardo G. Brittingham Sumner*
      Private Investor
      2001
      1926Manuel Guemez de la Vega*
      Chairman of the Board of
          Regio Empresas and Grupo PREZ
      2006
      1942Julio Escamez Ferreiro
      Member of the Board of Directors
          of Consorcio Industrial de Manufacturas, S.A.
      2006
      1934Carlos Bremer Gutierrez*
      President and CEO of Value
          Grupo Financiero, S.A. de C.V.
      2007
      1960Ricardo Martin Bringas*
      President and CEO of Organizacion
          Soriana
      2007
      1960
  * Independent non-management directors.
  The directors listed above were elected by our shareholders
    at the general ordinary shareholders' meeting held on March 28, 2007. Mexican
    securities law requires that at least 25% of the members of the Board of Directors
    be independent. Vitro's Board of Directors was comprised of approximately
    62.5% independent directors as of March 28, 2007. The directors receive directors'
    fees of three Centenarios, which are 37.5-gram gold coins, or its equivalent
    monetary value, per each meeting of our Board of Directors they attend and
    three Centenarios, or its equivalent monetary value, per each meeting of a
    committee of our Board of Directors they attend, except for the members of
    the Audit Committee who receive five Centenarios, or its equivalent monetary
    value, per each meeting of such committee they attend plus a monthly fee of
    Ps. 15,000.
  The
  following are brief descriptions of the current occupations and biographical
  information of each of our directors:
  Adrian Sada Trevino, Member and Honorary Chairman of the
    Board of Directors of Vitro, S.A.B. de C.V.:
  Mr. Sada is Chairman of the Board of Directors
    of the Fundacion Martinez Sada.
  Adrian Sada Gonzalez, Chairman of the Board of Directors
    of Vitro, S.A.B. de C.V.:
  Mr. Sada is a member of the Boards of Directors
    of Alfa, S.A.B. de C.V., Gruma, S.A.B. de C.V., Cydsa, S.A.B. de C.V., Regio
    Empresas, S.A. de C.V., the Latin American Executive Board for the Wharton
    School of Finance, the Mexican Businessmen Council, the Consejo de Industriales
    de Nuevo Leon. Mr. Sada is also President of our Finance and Planning
    Committee.
  Federico Sada Gonzalez, President and Chief Executive
    Officer of Vitro:
  Mr. Sada is currently a member of the Boards
    of Directors of the Instituto Tecnologico y de Estudios Superiores de Monterrey, Bombardier, Inc., Regio Empresas, S.A. de C.V. and The University of Texas,
    MD Anderson Cancer Center. Mr. Sada is the former Chairman of the Mexican
    Council for Foreign Trade. He serves as the Chairman of the Council of the
    National Museum of History and as the Chairman of the Board of Trustees of
    Chipinque Ecological Park Foundation. Mr. Sada is also a member of International
    Business Council of the World Economic Forum.
  Tomas Gonzalez Sada, Chairman of the Board, President
    and Chief Executive Officer of Cydsa, S.A.B. de C.V.:
  Mr. Gonzalez is the Vice-President of the Mexican
    Institute of Competitiveness, the Treasurer of the Fundacion Martinez Sada,
    a member of the Boards of Directors of Regio Empresas, S.A. de C.V. and the
    Mexican Businessmen Council and Honorary Consul-General of Japan in Monterrey,
    Mexico.
  Andres Yarte
  Cantu, Chief Executive Officer of Distribuidora
    de Productos Ceramicos, S.A.:
  Mr. Yarte is Chairman of the Boards of Directors
    and Chief Executive Officer of Distribuidora de Productos Ceramicos, S.A.
    and K-Inver, S.A.
  Gustavo Madero Munoz, Federal Congressman (Senator), Mexican
    Congress:
  Mr. Madero serves as a Representative in the
    Mexican Congress and is the Chairman of the Tax and Finance Committee of the
    Mexican Congress. He is also Chairman of the Board of Directors of Hermanos
    Madero. Mr. Madero is also the President of our Audit Committee.
  Carlos Eduardo Represas de Almeida, Chairman of the Board
    of Directors of Nestle Mexico S.A. de C.V.:
  Mr. Represas is Chairman of the Board of Directors
    of Nestle Mexico, S.A. de C.V., a member of the Boards of Directors of Dreyer's
    Grand Ice Cream Holdings, Inc. and Bombardier, Inc., a member of the Advisory
    Council of the Global Business Policy Council and Chairman of the Board of
    Trustees of the National Institute of Genomic Medicine of Mexico. He is also
    President of the Mexico Chapter of the Latin American Chamber of Commerce
    in Switzerland, member of the Boards of the Mexican Health Foundation and
    the Latin America Business Council (CEAL), Executive Vice President (Vevey,
    Switzerland) and President of the Americas of Nestle, S.A. (1994-2004).
  Jaime Serra Puche, Founder, SAI-Consultores, S.C.:
  Mr. Serra is President of SAI-Consultores, S.C.;
    founder of Aklara (Electronic auctions), Centro de Arbitraje de Mexico (CAM),
    and Mexico NAFTA Fund (Private Capital Fund); Member of the Boards of Chiquita
    Brands International, Fondo Mexico, Tenarias and Grupo Modelo; Mexico's Secretary
    of Finance (1994), Secretary of Trade and Industry (1988-1994), and Undersecretary
    of Revenue in the Ministry of Finance (1986-1988); Co-chair of the President's
    Council on International Activities of Yale University; and Member of the
    Trilateral Commission and the US-Mexico Bilateral Counsil.
  Carlos Munoz Olea, Private Investor:
  Mr. Munoz is Vice-President of Fomento Bursatil,
    Super Mart and Holding Fibsa. In addition, he is a member of the Board of
    Directors of Instituto Tecnologico y de Estudios Superiores de Monterrey,
    Chihuahua Campus and Banco Nacional de Mexico ("Banamex") (northern zone).
  Joaquin Vargas Guajardo, Chairman of the Board of Directors
    of Grupo MVS Comunicaciones, S.A. de C.V.:
  Mr. Vargas is Chairman of the Board of Directors
    of Corporacion Mexicana de Restaurantes, S.A. de C.V. In addition, he is a
    member of the Boards of Directors of Grupo Costamex, S.A. de C.V., Grupo
    Posadas and Medica Sur; and is a member of the Mexican Businessman Council.
  Alejandro Garza Laguera, Member of the Executive Committe
    of Desarrollo Inmobiliario Omega:
  Mr. Garza is President of Desarrollo Inmobiliario
    Omega and a member of the Board of Directors of Cydsa, S.A.B. de C.V., Instituto
    Tecnologico y de Estudios Superiores de Monterrey and the Centro de Estudios
    de Economia y Educacion. In addition, he is a member of the Latin American
    Board of the Wharton School of the University of Pennsylvania and the Joseph
    H. Lauder Institute of the University of Pennsylvania.
  Eduardo G. Brittingham Sumner, Private Investor:
  Mr. Brittingham is Chief Executive Officer of
    Laredo Autos, S.A. de C.V. and Corporacion Internacional de Manufacturas.
    He is also Member of the Board of Cemex S.A.B. de C.V.
  Manuel Guemez de la Vega, Chairman of the Board of Regio
    Empresas and Grupo PREZ:
  Mr. Guemez is Chairman of the Board of Regio
    Empresas, S.A. de C.V. and Grupo PREZ and member of the Board of Directors
    of Grupo de Seguiridad Integral and alternate director of Gruma. Mr. Guemez
    is also President of our Corporate Practices Committee.
  Julio Escamez Ferreiro, Member of the Board of Directors
    of Consorcio Industrial de Manufacturas, S.A.:
  Mr. Escamez is a member of the board of directors
    of Consorcio Industrial de Manufacturas, S.A.
  Carlos Bremer Gutierrez, President and CEO of Value Grupo
    Financiero:
  Mr. Bremer is the Chief Executive Officer and Member
    of the Board of Directors of Value Grupo Financiero, S.A. de C.V. and its
    subsidiaries, on which he has served for over 13 years. Mr. Bremer studied
    Business Management and Industrial and Systems Engineering at the Instituto
    Tecnologico de Estudios Superiores de Monterrey. Mr. Bremer served as Director
    of Operations and Marketing at Abaco Casa de Bolsa, S.A. de C.V., as Director
    of Operations and Marketing at Operadora de Bolsa, S. A. de C.V. and as Director
    of Operations at Casa de Bolsa Banpais, S.A.
  Ricardo Martin Bringas, CEO of Organizacion Soriana:
  Mr. Martin has held executive positions in the management
    and finance departments of several companies, such as Organizacion Soriana, S.A.B. de C.V., La Ciudad de Paris and Restaurantes Martin's. Mr. Martin is
    currently the Chief Executive Officer of Organizacion Soriana and member
    of the Board of Directors of HSBC Mexico, S.A. de C.V., Grupo Financiero
    Banamex, S.A. de C.V., Grupo Financiero Banorte, S.A. de C.V., Banco Mercantil
    del Norte, S.A. de C.V., Asociacion Nacional de Tiendas de Autoservicio y
    Departamentales (ANTAD), Instituto Tecnologico y de Estudios Superiores de
    Monterrey, Consejo Mexicano de Hombres de Negocios, Grupo de Empresarios de
    Nuevo Leon and Telefonos de Mexico, S.A.B. de C.V.
  Secretary and Surveillance
  On April 27, 2007, our Board of Directors appointed
    our General Counsel Alejandro Sanchez Mujica as the new Secretary of our Board
    of Directors.
  The Board
  of Directors, through the Audit and Corporate Practices Committees as well as
  the external auditor, conducts surveillance of Vitro and of the subsidiaries
  controlled by Vitro, taking into consideration the financial, administrative
  and legal circumstances of each entity.
  Senior Management
  The following table sets forth certain information
    with respect to our senior managers (directores). There are no arrangements
    or understandings with major shareholders, customers, suppliers or others
    pursuant to which any of them was selected as a member of the senior management.
  Name
    Title
    Current
        Position
        Held Since
    Year of
        Birth
    
    Federico Sada Gonzalez
    President and Chief Executive Officer
    1995
    1949
    

    Alejandro Sanchez Mujica
    General Counsel
    2005
    1954
    

    Claudio Del Valle Cabello
    Chief Administrative Officer
    2003
    1960
    

    Enrique Osorio Lopez
    Chief Financial Officer
    2007
    1951
    

    Hugo Lara Garcia
    President of the Flat Glass business unit
    2006
    1965
    

    Alfonso Gomez Palacio Gastelum
    President of the Glass Containers business unit
    2003
    1942
    

    David Gonzalez Morales
    Co-President of the Glass Containers business
        unit
    2007
    1955
  The
  following are brief biographies of each of our senior managers:
  Federico Sada Gonzalez, President and Chief Executive
    Officer:
  Mr. Sada received a Bachelor of Science in Business
    Administration from the Instituto Tecnologico y de Estudios Superiores de
    Monterrey and a Master of Business Administration from IMD in Lausanne, Switzerland.
    He also attended Harvard University's Advanced Management Program. Mr. Sada
    joined us in 1974. He became Planning and Finance Director of the Glass Containers
    business unit in 1978. In 1985, he was named President of the North American
    Glass Containers unit, our largest single business at that time. This business
    included the operations of the Glass Containers business unit in Mexico and
    our investments in North, Central and South America.
  On January 1, 1995, Mr. Sada was named
    our President and Chief Executive Officer. He is a member of the Boards of
    Directors of Vitro, S.A.B. de C.V., the Instituto Tecnologico y de Estudios
    Superiores de Monterrey, Bombardier, Inc., Regio Empresas, S.A. de C.V. and
    The University of Texas, MD Anderson Cancer Center.
  In addition to his responsibilities at Vitro, Mr. Sada
    is the Chairman of the Council of the National Museum of History and the Chairman
    of the Board of Trustees of Chipinque Ecological Park Foundation. He is a
    member of the International Business Council of the World Economic Forum.
  Alejandro Sanchez Mujica, General Counsel:
  Mr. Sanchez earned a law degree from the Escuela
    Libre de Derecho in Mexico City, where he graduated in 1978. In addition,
    he earned a Master of Comparative Jurisprudence degree from The University
    of Texas at Austin, School of Law in 1979 and a Master of Arts (Economics
    and Administration) also from the University of Texas at Austin in 1980. In
    1983, he worked at the Secretaria de Programacion y Presupuesto, as advisor
    to the Undersecretary of Regional Development. In 1983, Mr. Sanchez also
    joined the Instituto para el Deposito de Valores ("INDEVAL") as Legal Manager.
    In 1985 he joined DESC, Sociedad de Fomento Industrial, as Legal Manager of
    Industrias Negromex, S.A. de C.V. and later of Novum, S.A. de C.V., afterward
    becoming Executive Legal Director. In 1992, he became the Corporate Legal
    Director of Pulsar Internacional, S.A. de C.V. In 2003 he joined the law firm
    of Thompson & Knight, were he was made Senior Partner. In 2005, Mr. Sanchez
    joined us as our Executive Legal Vice-President.
  Claudio Del Valle Cabello, Chief Administrative Officer:
  Mr. Del Valle earned a Bachelor in Public Accounting
    at the Universidad Regiomontana in Monterrey, Mexico. In 1978, Mr. Del
    Valle began working for Gomez Morfin Meljem and Asoc. (now Galaz, Yamazaki,
    Ruiz Urquiza S.C., Member of Deloitte Touche Tohmatsu) as a Junior Auditor
    and later became Senior Supervisor. In 1985, Mr. Del Valle joined us
    as Chief of Special Studies for our former raw materials business. In 1986,
    he became our Tax Consolidation Manager. In 1992, Mr. Del Valle was appointed
    Vice President for Administration of Vitro Corporativo, S.A. de C.V. and in
    1995 was appointed Vice President of Finance and Controller of Anchor Glass
    Container Corp. In 1996, Mr. Del Valle was appointed our Vice President
    of Treasury and Administration. In 2002, Mr. Del Valle was appointed
    our Chief Financial Officer and, in August 2003, he was named our Chief Administrative
    Officer.
  Mr. Del Valle is a member of the Accounting
    Institute of the State of Nuevo Leon, Mexico. Also, in 2001 Mr. Del Valle
    was appointed Vice President of the Fiscal Committee of the Mexican Stock
    Exchange. Mr. Del Valle was the President of the Issuers' Committee
    of the Mexican Stock Exchange and as of today act as Tax Vice President of
    the Issuers' Committee of the Mexican Stock Exchange and is currently a member
    of the Board of Directors of Universidad Regiomontana and Gas Industrial
  Enrique Osorio Lopez, Chief Financial Officer:
  Mr. Osorio has served as President of the Board in
    several Financial Funds including Vector Divisas, S.A. de C.V. and Xella Mexicana,
    a German-Mexican co investment; Member of the Board of Desarrollos Comerciales
    y Habitacionales de Vallarta, S. de R.L., among others. In 1980, Mr. Osorio
    joined Grupo Alfa, S.A.B. de C.V., where he worked significantly on debt restructurings,
    within the Financing and Investors Relations departments. In 1990, Mr. Osorio
    joined Interacciones Casa de Bolsa, where he was appointed as Corporate Finance
    Advisor. In 1994, he joined Cigarrera La Moderna, where he was appointed as
    Treasurer. Mr. Osorio served as Chief Financial Officer of Savia, S.A. de
    C.V. and Seminis Inc. (in California) until 2007. Mr. Osorio joined us in
    2007 as our Chief Financial Officer.
  Hugo Lara Garcia, President of the Flat Glass business
    unit:
  Mr. Lara received a Bachelor in Chemical Engineering
    at La Salle University in Mexico City. Later, Mr. Lara received a Master
    in Business Administration, an International Business Diploma and a Master
    in International Business at the ITESM, Campus Estado de Mexico. In 1987,
    Mr. Lara joined Christianson Group, where he held several positions such
    as National Sales Manager, Account Manager, Research and Development Quality
    Assurance. In 1992, he joined Ceras Johnson, S.A. de C.V., where he held several
    positions such as Account Manager, Business Development Manager of Latin America
    and Group Manager. In 1999, Mr. Lara was appointed as Sales Manager and
    General Manager at Parmalat de Mexico, S.A. de C.V. Mr. Lara joined us
    in 2004 as Glass Containers business unit's Commercial Director and Vidrio
    y Cristal's Vice President and in 2006 was appointed President of the Flat
    Glass business unit.
  Alfonso Gomez Palacio Gastelum, President of the Glass
    Containers business unit:
  Mr. Gomez Palacio received a Bachelor and Master
    in Business Administration at the University of California at Berkeley. Later,
    Mr. Gomez Palacio received a degree in Advanced Studies in Business Administration
    and Commerce at the University of Bordeaux in France. He was appointed Commercial
    Vice President of the Glass Containers business unit in 1985 and Executive
    Vice President of the same business unit in 1992. Mr. Gomez Palacio was
    appointed Director of Marketing and Sales of the Glass Containers business
    unit in October 2002 and, in May 2003, he was appointed President of the Glass
    Containers business unit.
  On October 2006, Mr. Gomez Palacio announced
    his plan to retire on June 30, 2007. David Gonzalez Morales, current
    President of Vitro Cristalglass has been appointed as Co-President of the
    Glass Containers business unit from January 2007 to June 2007 when he will
    become the President of Glass Containers business unit.
  David Gonzalez Morales, Co-President of the Glass Containers
    business unit:
  Mr. Gonzalez received a Bachelor degree in Economics
    at the Universidad de Monterrey. Later, Mr. Gonzalez received a Master degree
    in Price Administration at the University of Missouri. In 1976 Mr. Gonzalez
    joined Grupo Alfa, S.A.B. de C.V., as an Economics Analyst. Mr. Gonzalez joined
    us in 1980 as Chief of Industrial Economics for our Glass Containers business
    unit and then held different managerial positions such as Price Manager, Administration
    Manager, North Zone Sales Manager, Strategic and Economics Planning Manager,
    and Business Development Manager. In 1994, he was appointed Vice President
    of Development Administration for our former Diverse Industries business and
    in 1999 was appointed as Vice President of Enbosa, S.A. de C.V. In 2002, he
    was appointed as International Vice President for our Glass Containers business
    unit. In 2003, Mr. Gonzalez was appointed as Vice President of our Value Added
    Business and then in 2004 as President of Vitro Cristalglass, both of which
    are part of our Flat Glass business unit.
  Family Relationship of Directors and Senior Management
  Seven of our 21 directors and senior managers are
    related by blood (including first cousins) or marriage to another member of
    this same group. Mr. Adrian Sada Trevino is the father of Messrs. Adrian
    Sada Gonzalez and Federico Sada Gonzalez. Mr. Tomas Gonzalez Sada is
    a cousin of Messrs. Adrian Sada Gonzalez and Federico Sada Gonzalez and
    a nephew of Mr. Adrian Sada Trevino. Mr. Andres Yarte Cantu is Mr. Adrian
    Sada Trevino's son-in-law and Messrs. Adrian Sada Gonzalez's and Federico
    Sada Gonzalez's brother-in-law, as well as a cousin by marriage of Mr. Tomas
    Gonzalez Sada. Mr. Gustavo Madero Munoz is a cousin of Mr. Carlos Munoz.
  Use of Certain Assets and Services
  Certain of our directors and senior managers use
    certain of our non-material and non-operating assets for personal purposes,
    and received personal services performed by certain of our personnel, a number
    of whom are exclusively dedicated to performing such services. See "Item 7. Major Shareholders and Related Party Transactions." The personal use of such
    properties and receipt of personal services was done in accordance with our Politica de Uso de Activos Restringidos, our use of restricted assets policy,
    and our Politica de Uso Especial de Servicios Corporativos y de Seguridad,
    our corporate and security services policy, approved by our Board of Directors
    with the opinion of the Audit Committee. The aggregate amount of compensation
    set forth in "Item 6. Directors, Senior Management and Employees-Directors
    and Senior Managements-Compensation" includes the cost of granting the use
    of assets and providing such services.
  Compensation
  For the year ended December 31, 2006, the aggregate
    compensation we paid to our directors and senior managers was approximately
    Ps. 192 million ($17.8 million). This amount includes directors' fees, salaries,
    the use of certain assets and services, as described above, and variable compensation.
  During 2006, we accrued amounts relating to pension
    and retirement benefits for our senior managers. Our directors were not entitled
    to pension or retirement benefits from us during 2006. In accordance with
    actuarial practices in Mexico, reserves for seniority premiums and pensions
    are determined in the aggregate for each one of our subsidiaries using average
    amounts for variables such as turnover, age and life expectancy. We therefore
    cannot determine the amount reserved for pension or retirement benefits for
    any individual employee, including our senior managers. The aggregate amount
    of compensation set forth in the previous paragraph does not include the cost
    of pension and retirement benefits for our senior managers. See "Item 6. Directors,
    Senior Management and Employees-Directors and Senior Management-Compensation-Pension
    Benefits."
  Directors' Compensation
  Pursuant to the Mexican General Law of Corporations,
    our shareholders, at our annual general ordinary shareholders' meeting held
    on March 28, 2007, agreed to compensate our directors with three Centenarios,
    or its equivalent monetary value, per each meeting of the Board of Directors
    they attend. Likewise, at such annual general ordinary shareholders' meeting,
    the shareholders resolved that the members of each of our Board of Director's
    committees, other than the Audit Committee's members, shall receive three Centenarios, or its equivalent monetary value, per each committee meeting
    they attend. In consideration of the Audit Committee's members' expanded responsibilities
    pursuant to recently enacted legislation, the members of such committee receive
    five Centenarios, or its equivalent monetary value, per each meeting they
    attend plus a monthly fee of Ps. 15,000. The aggregate amount of compensation
    set forth in "Item 6. Directors, Senior Management and Employees-Directors
    and Senior Management-Compensation" includes fees paid to our directors.
  Variable Compensation
  In 2005, we modified our variable compensation plan
    established in 2001 in order standardize and integrate our foreign subsidiaries
    to this scheme. This plan aligns the objectives of our employees with our
    business strategy and its purpose is to: (i) recognize the extraordinary performance
    of our employees, (ii) align the interests and incentives of our employees
    with those of our shareholders, (iii) focus on key priorities and (iv) attract
    and retain talented employees.
  In order to determine the variable compensation payable
    to employees under our variable compensation plan, we monitor the improvement
    of the following metrics: (i) cash flow from operations, (ii) compliance with
    the capital expenditures budget and (iii) individual performance. Depending
    on the results of such metrics, our employees are eligible to receive a bonus
    equal to an amount ranging between 1.2 and 6.0 times their monthly base salary.
  For the
  year ended December 31, 2006, we paid Ps. 86 million to our employees under
  our variable compensation plan mentioned above.
  Additionally, during 2006 the Company provided to
    certain key executives Vitro shares valued at Ps. 49 million ($4.5 million)
    at the grant date, for the successful completion of our corporate restructuring
    plan. See "Item 3. Key Information-Recent Developments-Our Corporate Restructuring
    and Recapitalization."
  Employee Stock Option Plan
  We maintain
  an Employee Stock Option Plan established in March 1998 (the "Plan"). The Plan
  specifies the amount of shares, time and initial exercise price, which is
  equal to the average closing price on the BMV of the common shares on the 20
  days prior to the grant date, except for options issued during 2000, 2001 and
  2002, which were Ps. 11.00, Ps. 8.27 and Ps. 7.53, respectively. The vesting
  period of the options is 5 years and the life of such options is 10 years.
  We have not
  granted any stock options for the last four years. Please refer to Note 15 of
  our Consolidated Financial Statements.
  The
  following table sets forth, for each of the periods presented, the number of
  options granted during such period and certain other information.
  For the year ended December 31,1998
      1999
      2000
      2001
      1998*
      2002
      Total
            outstandingOptions granted during the year
      2,813,300
      2,893,000
      4,851,900
      3,204,800
      940,950
      3,941,950Options cancelled or exercised at December 31,
          2006
      2,350,000
      1,051,500
      3,918,650
      2,825,625
      390,650
      3,195,225Options outstanding December 31, 2006
      463,300
      1,841,500
      933,250
      379,175
      550,300
      1,328,686
      4,914,250Initial Exercise
          Price
      Ps. 31.31(3)
      Ps. 14.88
      Ps. 11.00
      Ps. 8.27
      Ps. 13.00
      Ps. 7.53Adjusted Exercise Price at December 31,
          2006(2)
      Ps. 80.93
      Ps. 42.00
      Ps. 11.00
      Ps. 8.27
      Ps. 13.00
      Ps. 7.53
  * In 2001, we repriced 940,950 options granted in 1998
    to Ps. 13.00 per option.
  Compensation cost charged against income for the
    Plan was Ps. 12 million, Ps. 4 million and Ps. 1 million, for 2004, 2005 and
    2006, respectively. The aggregate amount of compensation set forth in "-Compensation" does not include the cost of the grant of options under the Plan.
  Pension Benefits
  Our pension benefit obligations and the related costs
    are calculated using actuarial models and assumptions applicable in the countries
    where the plans are located, principally in the United States and Mexico.
    Two critical assumptions, discount rate and expected return on assets, are
    important elements of plan expense and/or liability measurement. We evaluate
    these critical assumptions at least annually. Other assumptions involve demographic
    factors such as retirement, mortality and turnover rates, as well as the rate
    of increases in compensation. These assumptions are evaluated periodically
    and are updated to reflect our experience. Actual results in any given year
    will often differ from actuarial assumptions because of economic and other
    factors. The discount rate enables us to state expected future cash flows
    at a present value on the measurement date. We have little latitude in selecting
    this rate since it is determined jointly between us and the pension plan's
    actuary and is required to represent the market rate for high-quality fixed
    income investments. A lower discount rate increases the present value of benefit
    obligations and increases pension expense. Our weighted-average discount rate
    was 5.75% for 2004 and 2005 and 5.50% for 2006 as we consider that reflects
    market interest rate conditions. To determine the expected long-term rate
    of return on pension plan assets, we consider the current and expected asset
    allocations, as well as historical and expected returns on various categories
    of plan assets. We assumed that the weighted-average of long-term returns
    on our pension plans were 7.0% for 2004, 2005 and 2006. With respect to the
    pension plans in the United States, as of December 31, 2006, the assets set
    aside to satisfy the estimated obligations under such pension plans were sufficient
    to meet the estimated obligations as they come due. With respect to the pension
    plans in Mexico, as of December 31, 2006, the assets set aside to satisfy
    the estimated obligations under such pension plans were Ps. 1,243 million
    while the related estimated obligations were Ps. 2,041 million. Our aggregate
    pension expense in 2006 was approximately Ps. 412 million. Further information
    on our principal pension plans, including the assumptions used in calculating
    the referenced obligations, is provided in notes 12 and note 25 to our consolidated
    financial statements for the years ended December 31, 2005 and 2006.
  During 2003, we amended the terms of some of our
    employees' pension benefits. These changes consisted principally in paying
    the present value of life-time expectancy in a one-time payment at retirement,
    instead of monthly payments after retirement.
  The assets of our pension plans include 47,472,678
    Vitro shares. See "Item 7. Major Shareholders and Related Party Transactions-Major
    Shareholders."
  Severance Benefits
  Some of our senior managers are entitled to a severance
    payment equal to up to three times of their annual base salary, if they cease
    to be employed by us in connection with a change of control of Vitro, S.A.B.
    de C.V. This severance benefit is in addition to any severance payment due
    to such senior manager under Mexican law.
  Two of our
  senior managers are employed by us pursuant to a three-year guaranteed
  employment contract, one ending in August 2008 and the other on April 2010.
  
  BOARD
  PRACTICES
  According to our by-laws, our shareholders determine
    the number of directors that will constitute our Board of Directors at a general
    ordinary shareholders meeting. Our Board of Directors may consist of up to
    a maximum of 21 members and each member of our Board of Directors is elected
    at a general ordinary shareholders' meeting for a renewable term of one year.
    If at the end of the one-year term of office any of our directors is not reelected
    at a general ordinary shareholders' meeting or if a director resigns and there
    is no designation of a substitute director or the substitute director has
    not taken office, then such director will continue to serve for a maximum
    term of up to 30 calendar days. Thereafter, the Board of Directors may
    appoint provisional directors who will be ratified or substituted at the next
    general ordinary shareholders' meeting. At the general ordinary shareholders
    meeting held on March 28, 2007, our shareholders resolved that our Board of
    Directors would consist of 16 directors, 10 of whom are independent directors,
    which means that 62% of our directors are independent, notwithstanding that
    the Ley del Mercado de Valores, which we refer to as the "Mexican Law of the Securities
    Market" only requires that a minimum of 25% of directors must be independent. We
    have no alternate directors. We have not entered into a service contract with
    any of our directors to provide benefits to such director upon expiration
    of such director's term of office.
  Pursuant to
  our by-laws, our Board of Directors must meet at least four times per calendar
  year and must dedicate one such meeting to the analysis of our medium- and
  long-term strategies. Board meetings usually take place at our principal
  executive offices however, Board meetings may be held anywhere within or
  outside of Mexico. For a quorum to exist at a Board meeting, a majority of the
  directors must be in attendance. The affirmative vote of a majority of the
  directors present at a duly called Board meeting is required for the adoption
  of any resolution. Minutes must be prepared after every Board meeting to
  reflect the resolutions adopted and any relevant discussions that took place.
  Such minutes must be signed by the Chairman and the Secretary of the Board.
  Resolutions adopted at Board meetings not conducted in person have the same
  force and effect as those adopted at Board meetings conducted in person as
  long as such resolutions are unanimously adopted and confirmed in writing.
  Our Board
  of Directors is authorized to create as many committees as it deems
  appropriate for the discharge of its duties, in addition to the Corporate
  Practices Committee and the Audit Committee. To that effect, the Board of
  Directors has also constituted the Finance and Planning Committee. On April
  27, 2007 the Board of Directors reauthorized the charters for each of these
  Committees, all of which took effect on May 1, 2007.
  The Corporate Practices Committee and the Audit
    Committee must be comprised in their entirety by independent directors, whereas
    the Finance and Planning Committee may be comprised of any directors that
    the Board of Directors freely determines. The committees meet as often as
    necessary and must provide a report of their activities and findings to our
    Board of Directors either upon the Board's request or at any time the committee
    deems appropriate, in addition to the annual report of activities of each
    committee that must be submitted to the Board of Directors, which is subsequently
    presented to the general ordinary shareholders meeting that reviews the results
    at the end of every fiscal year.
  Consistent with our corporate by-laws, the Mexican
    Law of the Securities Market and the board and governance practices mandated
    by the Sarbanes-Oxley Act of 2002, we have established an Audit Committee
    that is exclusively comprised of members of our Board of Directors who are deem
    to be independent (as such term is defined under the Mexican Law of the Securities
    Market, as well as the U.S. federal securities law and the applicable rules
    and regulations thereunder and the corporate governance rules of the NYSE).
    Our Audit Committee is responsible for among other matters, verifying that
    our management is in compliance with its obligations regarding internal controls
    and the preparation of financial statements. In addition, our Audit Committee
    is responsible for the appointment, compensation and oversight of our independent
    external auditors. Our Audit Committee meets regularly with our management
    and our independent external auditors.
  The members of our Audit Committee are Messrs. Gustavo Madero, Jaime Serra Puche, Joaquin Vargas and Manuel Guemez de la Vega. Mr. Gustavo
    Madero is the President of our Audit Committee. Although none of the members
    of our audit committee qualifies as an "audit committee financial expert",
    as such term is defined under Item 401(e) of Regulation S-K,, the Audit Committee
    and its members are in compliance with Mexico's rules and practice for this
    type of committee. See "Item 16A. Audit Committee Financial Expert." Additionally
    the Audit Committee has retained Mr. Alfonso Gonzalez Migoya to serve as a
    financial expert to the Audit Committee.
  The charter of the Audit Committee provides that:
    (i) the members of the committee (except for its president) must be elected
    by our Board of Directors, as proposed by the Chairman of the Board of Directors,
    (ii) the committee must be comprised of at least three independent directors,
    (iii) the president of the committee must be appointed and can only be
    removed by shareholders' resolution at a general shareholders meeting, (iv) any
    two members of the committee may call a meeting through written notice given
    to the other members of the committee at least five days before such meeting,
    (v) the committee must meet at least three times per year, (vi) the
    committee must provide an annual report on its activities to our Board of
    Directors and to the general ordinary shareholders meeting that reviews the
    results at the end of every fiscal year, (vii) the attendance of at least
    a majority of the committee's members is required to constitute a quorum and
    resolutions shall be adopted by the vote of at least the majority of committee
    members present at the relevant meeting at which a quorum exists, (viii) resolutions
    may be adopted without a meeting, provided such resolutions are approved unanimously
    and confirmed in writing and (ix) the committee must perform such duties
    as required by law and by our Board of Directors. The charter also provides
    that the Audit Committee must verify that external audit duties are duly performed
    and must confirm our compliance with all laws and regulations regarding the
    reliability, sufficiency and transparency of Vitro's financial statements.
  Our Audit Committee has the authority to, among
    other things: (i) give opinions to the Board of Directors on the following
    matters, in addition to any other matters the Audit Committee is required
    to review pursuant to the Mexican Law of Securities Market or which the Board
    of Directors from time to time may request: a) unusual or sporadic transactions
    or transactions exceeding certain amounts specified by law, b) guidelines
    regarding the internal control and internal audit functions of Vitro and the
    companies controlled by Vitro, c) accounting policies of Vitro, to assure
    conformity with the accounting principles issued or recognized by the Comision
    Nacional Bancaria y de Valores, which we refer to as the "CNBV", through its
    general dispositions, d) Vitro's financial statements and e) engagement
    of Vitro's external auditor and additional or supplemental related services;
    (ii) evaluate the performance of the external auditor and analyze opinions
    (including opinion regarding the sufficiency on our internal control), or
    reports prepared and issued by the external auditor and supervise the outcome
    of the disagreements, if any, between Vitro's administration and the external
    auditor; (iii) discuss Vitro's financial statements with those responsible
	for
    preparing or reviewing the financial statements and advise the Board of Directors
	on
    its approval, as well as analyze the financial information that is annually
    rendered to the SEC in the Annual Report on Form 20-F; (iv) inform the
    Board of Directors of the status of Vitro's internal control and internal
    audit system, and that of the companies controlled by Vitro, including the
    identification of irregularities, if any; (v) draft the opinion that
    the Board of Directors renders regarding the Chief Executive Officer's Annual
    Report and submit it to the consideration of the Board of Directors for its
    subsequent presentation to the shareholders meeting, based upon, among other
    elements, in the opinion of the external auditor; (vi) support the Board of
    Directors in the preparation of the reports referred to in the Article 28,
    section IV, paragraphs d) and e) of the Mexican Law of the Securities Market;
    (vii) supervise the operations referred to in articles 28, section III, and
    47 of the Mexican Law of the Securities Market; (viii) request the opinion
    of independent experts in the cases it deems convenient, or when required
    pursuant to the Mexican Law of the Securities Market; (ix) request from management
    and employees of Vitro and of the companies controlled by Vitro, reports regarding
    the preparation of financial statements or any other as it deems necessary
    for the fulfillment of its functions; (x) investigate any potential violation
    that comes to its knowledge on the operations, guidelines and operational
    policies, internal controls, internal audit and accounting records of Vitro
    or the companies controlled by Vitro; (xi) receive comments from shareholders,
    directors, management, employees and in general by any third party regarding
    the subject matters referred to in (x) above, as well as take the actions
    that it deems necessary regarding those comments; (xii) supervise that
    procedures are adequate to receive, process and resolve complaints regarding
    accounting, internal control or audit, including proceedings for confidential
    and anonymous complaints of employees; (xiii) report to the Board of Directors
    any relevant irregularity detected in the course of the fulfillment of its
    functions and, in its case, of the corrective measures or, proposed measures
    which must be applied; (xiv) call shareholders meetings and request agenda
    items to be analyzed by the same, as it deems necessary; (xv) supervise
    that the Chief Executive Officer executes the resolutions adopted by the shareholders
    and the Board of Directors at their respective meetings; (xvi) supervise the
    mechanisms and internal controls that allow the verification of the acts and
    operations of Vitro and of the companies controlled by Vitro to ensure compliance
    with applicable law, as well as apply methodologies that allow supervision
    of such compliance; (xvii) follow up on relevant risks that Vitro and
    the companies controlled by Vitro are exposed to, based upon information provided to
    it by the Corporate Practices Committee, the Finance and Planning Committee
    and any additional committees that may be created by the Board of Directors,
    the Chief Executive Officer and Vitro's external auditor, as well as to the
    accounting systems, internal control and internal audit, registry, archive
    or information of the above; and (xviii) verify that each of the members of
    the Audit Committee complies at all times with the requirements for director
    independence.
  Our Finance and Planning Committee is currently
    formed by seven members of the Board: Messrs. Adrian Sada Gonzalez, Carlos
    Eduardo Represas de Almeida, Tomas Gonzalez Sada, Federico Sada Gonzalez,
    Jaime Serra Puche, Andres A. Yarte Cantu and Carlos Bremer Gutierrez. Mr.
    Adrian Sada Gonzalez is the President of our Finance and Planning Committee. Not all of the members of this Committee are
  "independent directors". The
    Finance and Planning Committee in accordance with its charter has to perform
    the following activities: i) Follow up on the compliance of Vitro's budget,
    ii) follow up on Vitro's Strategic Plan; (iii) analyze periodically the results
    of the investments made on projects previously approved by the Board of Directors,
    comparing their return against prior returns submitted to the Board of Directors;
    iv) support the Board of Directors in the supervision of compliance with investment
    and financing policies and in the review of financial projections; and (v)
    render an opinion to the Board of Directors on such matters as the Board of Directors
    and the Chief Executive Officer may request provided they do not relate to
    a matters that the Audit Committee and the Corporate Practices Committee must
    render an opinion, pursuant to the Mexican Law of the Securities Market or
    its regulations.
  Pursuant to the Mexican Law of Securities Market,
    we have amended our corporate by-laws to establish a Corporate Practices Committee.
    In accordance with its charter, this committee has to perform the following
    activities: (i) render an opinion to the Board of Directors about the following
    matters, in addition to any other matters the Corporate Practices Committee
    is required to review pursuant to the Mexican Law of the Securities Market
    or which the Board of Directors from time to time may request: a) determine
    the policies and guidelines for the use of assets owned by Vitro and the companies
    controlled by Vitro, b) related party transactions with Vitro and the companies
    controlled by Vitro, except those which do not require the prior approval
    of the Board of Directors pursuant to policies and guidelines previously approved
    by the Board of Directors and those established pursuant to the Mexican Law
    of the Securities Market, c) the appointment, election and dismissal of the
    Chief Executive Officer and determination of his or her total compensation,
    as well as the remuneration of the Chairman of the Board of Directors, d)
    the establishment of policies for the appointment and total compensation of
    key management (other than the CEO and the Chairman), e) waiver for a Director,
    manager or an officer, to engage any business opportunity for their own benefit
    or that of third parties, which involves Vitro or any companies controlled
    by Vitro or in which Vitro has a substantial influence, when the amount of
    the business opportunity is greater than 5% (five percent) of the consolidated
    assets of Vitro, based upon the figures of the immediately preceding quarter,
    f) mandatory public offerings of securities for percentages below those determined
    in section III of article 98 of the Mexican Law of the Securities Market,
    g) the execution of agreements related to mandatory public offerings with
    negative and affirmative covenants that benefit the issuer of such offer or
    Vitro, pursuant to article 100 of the Mexican Law of Securities Market, h)
    failure to execute mandatory public offerings if Vitro's economic viability
    is at risk pursuant to section III of article 102 of the Mexican Law of the
    Securities Market, and i) the determination of the tender price for Vitro's
    shares, due to the cancellation of the registry of Vitro's securities before
    the National Registry of Securities (Registro Nacional de Valores), which
    we refer to as "RNV", pursuant to article 108 of the Mexican Law of the Securities
    Market; additionally, in the event the Board of Directors adopts any resolutions
    regarding any of the foregoing matters that are not in accordance with the
    opinions rendered by the Corporate Practices Committee, this Committee, through
    its President, shall instruct the Chief Executive Officer to disclose such
    circumstances; (ii) support the Board of Directors in the preparation of the
    annual report, which pursuant to paragraph b), article 172 of the Mexican
    General Law of Corporations must disclose the main accounting and information
    policies, their rationale and the criteria used in the preparation of the financial
    information; (iii) support the Board of Directors in the preparation of the
    annual report that must be submitted at the general shareholder meeting relating
    to the operations and activities in which the Board of Directors participated
    during the corresponding fiscal year; (iv) render an opinion on the annual
    report prepared by the Board of Directors about the performance of key management;
    (v) approve the general increases in the wages and salaries of the employees
    and personnel of Vitro and of the companies controlled by Vitro; (vi) supervise
    the size and configuration of the Board of Directors to ensure that decision
    making is effective and in compliance with applicable legal provisions mandating
    that at least 25% of its members are independent and that its number shall
    not be greater than 21 members; (vii) supervise the compliance of Vitro's
    social responsibility policies and the disclosure of such compliance, including
    endowment policies; (viii) review and approve responses to the Questionnaire
    Regarding Compliance with Recommendations for Better Corporate Practices and
    informing the Board of Directors of its timely filing; (ix) supervise the
    application of Vitro's Code of Ethics and propose any amendments it deems necessary;
    (x) periodically review Vitro's corporate policies and the charters of the
    Committees to ensure that all of them are consistent and, if necessary, resolve
    any matter or conflict or inconsistency between any of them; (xi) support
    the Board of Directors in the development of policies regarding the distribution
    and communication of information to shareholders and the public markets, as
    well as the directors and managers of Vitro, that comply with the Mexican
    Law of the Securities Market; and (xii) coordinate and supervise, together with the
    support of the Chief Executive Officer, the training of newly-appointed directors
    to ensure they are provided with all information regarding the background
    and operations of Vitro, as well as an understanding of the legal and regulatory
    framework to which the Directors are subject, with a particular emphasis on
    his or her fiduciary duties of loyalty, diligence and confidentiality.
  The Corporate Practices Committee is currently comprised
    of four independent directors, Mr. Manuel Guemez de la Vega, who was appointed
    as President of the Committee in a resolution adopted by our shareholders
    at the general ordinary shareholders meeting held on March 28, 2007, and Messrs.
    Ricardo Martin Bringas, Carlos Munoz Olea and Alejandro Garza Laguera. Pursuant
    to the Mexican Law of the Securities Market and our corporate by-laws, this
    committee must be comprised of at least three independent directors appointed
    by the Board of Directors, except for its president, who can only be appointed and removed by a shareholders' resolution.
  
  SHARE
  OWNERSHIP
  The following table sets forth information regarding
    the beneficial ownership of our shares by each of our directors and senior
    managers as of March 28, 2007, the date of our most recent general ordinary
    shareholders' meeting.
  The voting power exercisable by our directors and
    senior managers may be greater than the percentage of our shares held by them.
    See "Item 7. Major Shareholders and Related Party Transactions-Major Shareholders."
  Name
        Number
              of Shares Owned
        Percentage
              of Shares Outstanding (5)
        Granted
              Options(6)
        Outstanding
              Options
        Exercise
              Price on Grant Date
        Adjusted
              Exercise Price
        Expiration
              DateAdrian Sada Trevino
    27,664,652(1)(3)
    8.14%
    90,400
    90,400
    13.00
    N/A
    March 2008
    
    Adrian Sada Gonzalez
      22,634,357(1)(2)
      6.98%
      90,400
      90,400
      13.00
      N/A
      March 2008225,000
      225,000
      14.88
      42.00
      March 2009430,000
      430,000
      11.00
      N/A
      June 2010550,000
      137,500
      8.27
      N/A
      March 2011550,000
      275,000
      7.53
      N/A
      March
          2012Federico Sada Gonzalez
      22,301,235(1)(4)
      6.78%
      90,400
      90,400
      13.00
      N/A
      March
          2008225,000
      225,000
      14.88
      42.00
      March 2009430,000
      107,500
      11.00
      N/A
      June 2010550,000
      137,500
      8.27
      N/A
      March 2011550,000
      275,000
      7.53
      N/A
      March 2012Tomas Gonzalez Sada
      *
      *
      -
      -
      -
      -
      -Andres Yarte Cantu
      *
      *
      -
      -
      -
      -
      -Gustavo Madero Munoz
      *
      *
      -
      -
      -
      -
      -Carlos Represas de Almeida
      *
      *
      -
      -
      -
      -
      -Jaime Serra Puche
      *
      *
      -
      -
      -
      -
      -Carlos Munoz Olea
      3,875,000
      1.14%
      -
      -
      -
      -
      -Joaquin Vargas Guajardo
      *
      *
      -
      -
      -
      -
      -Alejandro Garza Laguera
      *
      *
      -
      -
      -
      -
      -Eduardo Brittingham Summer
      *
      *
      -
      -
      -
      -
      -Manuel Guemez de la Vega
    
    
    
    
    
    
    
    

    Julio Escamez Ferreiro
    
    
    
    
    
    
    
    
    Carlos Bremer Gutierrez
      *
      *
      -
      -
      -
      -
      -Ricardo Martin Bringas
      *
      *
      -
      -
      -
      -
      -Claudio Del Valle Cabello
      *
      *
      15,100
      15,100
      13.00
      N/A
      March
          200828,000
      28,000
      14.88
      42.00
      March 200960,000
      15,000
      11.00
      N/A
      June 201059,000
      14,750
      8.27
      N/A
      March 201160,500
      30,250
      7.53
      N/A
      March 2012Enrique Osorio Lopez
      *
      *
      -
      -
      -
      -
      -Alejandro Sanchez Mujica
      *
      *
      -
      -
      -
      -
      -Hugo Lara Garcia
      *
      *
      -
      -
      -
      -
      -Alfonso Gomez Palacio Gastelum
      *
      *
      54,300
      54,300
      13.00
      N/A
      March 200890,000
      90,000
      14.88
      42.00
      March 2009120,000
      30,000
      11.00
      N/A
      June 2010130,000
      32,500
      8.27
      N/A
      March 2011150,000
      75,000
      7.53
      N/A
      March 2012
  * Beneficially owns less than one percent of our shares.
  (1) Beneficial ownership is determined in accordance
    with the rules and regulations of the SEC and generally includes voting or
    dispositive power with respect to securities. All such shares have the same
    voting rights as the shares held by any other shareholder.
  (2) Reported as a group with his wife, Mrs. Esther Cueva
    de Sada, and his son, Adrian Sada Cueva.
  (3) Reported as a group with his wife, Mrs. Maria Nelly
    Gonzalez de Sada.
  (4) Reported as a group with his wife, Mrs. Liliana
    Melo de Sada, his sons, Messrs. Federico Sada Melo and Mauricio Sada Melo,
    and his daughter, Ms. Liliana Sada Melo.
  (5) For purposes of calculating percentage of shares
    outstanding, we assumed that the number of our shares outstanding was 341.0
    million shares, which is the number equal to our issued shares minus the sum
    of (i) our shares held as treasury stock and (ii) our shares held by the Stock
    Option Trust. As of March 28, 2007, approximately 28.3 million of our shares
    were held as treasury stock and approximately 17.5 million of our shares were
    held by the Stock Option Trust. For an explanation of why we account for our
    shares held by the Stock Option Trust as not outstanding, see "Presentation
    of Certain Information."
  (6) The options listed below are options to purchase
    our shares.
  See "Item 6. Directors, Senior Management and Employees-Directors
    and Senior Management -Compensation-Employee Stock Option Plan" for a discussion
    of the only arrangement providing our employees with equity-based compensation.
  EMPLOYEES
  As of
  December 31, 2006, we employed 22,294 people, more than 70% of whom were
  located in Mexico.
  The
  following table sets forth, for the periods indicated, the period end and
  average number of employees of each of our two operating business units and
  our corporate offices.
  2004
      2005
      2006Business
            Unit
      Period End
      Average
      Period End
      Average
      Period End
      AverageGlass Containers
      9,997
      10,290
      10,296
      10,683
      12,426
      11,918Flat Glass
      9,850
      10,096
      9,664
      9,712
      8,998
      9,288Other(1)
      610
      573
      94
      210
      0
      69Corporate Offices
      806
      783
      823
      798
      870
      819Total
      21,263
      21,715
      20,877
      21,403
      22,294
      22,094
  (1) Other is comprised by Bosco which we sold on April
    1, 2005 and our metal flatware business, which were previously included in
    our Glassware reportable segment.
  The
  following table sets forth, for the periods indicated, our employees by
  geographic location.
  2004
      2005
      2006Business
            Unit
      Period End
      Average
      Period End
      Average
      Period End
      AverageMexico
      15,667
      16,196
      15,322
      15,902
      15,979
      16,101United States
      2,756
      2,790
      2,675
      2,684
      2,729
      2,716Rest of the
          world
      2,840
      2,729
      2,880
      2,817
      3,586
      3,277Total
      21,263
      21,715
      20,877
      21,403
      22,294
      22,094
  Relation
  with Labor Unions
  In Mexico, all of our workers (others than our empleados de confianza) are currently affiliated with labor unions. Labor
    relations in each manufacturing facility in Mexico are governed by separate
    collective bargaining agreements which were entered into between the relevant
    subsidiary and a union selected by the employees of the relevant facility.
    The terms of the collective bargaining agreements are renegotiated every two
    years, except for wages, which are negotiated every year. For over 60 years,
    we have not experienced any strikes that materially affected our overall operations
    in Mexico and management believes that it has a good relationship with its
    employees and the labor unions to which they are affiliated.
  In the
  United States, a majority of our workers are currently affiliated with labor
  unions. Management believes that it has a good relationship with its employees
  in the United States and the labor unions to which they are affiliated.
  
  Item 7.
    Major Shareholders and Related Party Transactions
  Unless the context otherwise requires, in the section
    entitled "Major Shareholders" of this Item 7 the words "we,", "us," "our," and
  "ours" refer to Vitro, S.A.B. de C.V. and not its consolidated subsidiaries.
  MAJOR
  SHAREHOLDERS
  As of March 28, 2007, the date of our most recent
    general ordinary shareholders' meeting, 386,857,143 of our shares were
    issued of which 358,538,074 of our shares were issued and outstanding.
    See "Item 10. Additional Information-Mexican Corporate Law and By-Laws-Capital
    Structure." As of such date, 28,319,069 of our shares were held as treasury
    stock and 17,511,203 of our shares were held by the Stock Option Trust.
    Under Mexican corporate law, our shares held by the Stock Option Trust are
    considered issued and outstanding and therefore are entitled to receive dividends
    and vote on matters on which other of our shares are entitled to vote. However,
    for accounting purposes, those of our shares held by the Stock Option Trust
    are considered treasury stock and therefore not outstanding.
  We have one class of American Depositary Shares,
    which we refer to as "ADSs," registered under the Securities Act. Our ADSs
    are evidenced by American Depositary Receipts, which we refer to as "ADRs," and each of our ADSs represents three Ordinary Participation Certificates,
    which we refer to as "CPOs." Each CPO represents one of our shares. Our ADSs
    and CPOs have no voting rights with respect to the underlying shares, but
    have all the economic rights relating to those shares. The trustee that holds
    our shares represented by CPOs is required to vote those shares in the same
    manner as the majority of our shares not so held that are voted in the relevant
    shareholders' meeting. This has the effect of increasing the voting power
    of holders of our shares (other than the trustee) in excess of the percentage
    of our shares held by such holders. Therefore, the voting power exercisable
    by our major shareholders may be greater than the percentage of our shares
    outstanding held by them. As of March 28, 2007, 86.2 million of our shares
    were represented by CPOs.
  In addition, for purposes of calculating the percentage
    of our shares outstanding that are held by any shareholder, we account for
    the shares held by our Stock Option Trust as not outstanding. For an explanation
    of why we account for our shares held by the Stock Option Trust as not outstanding,
    see "Presentation of Certain Information." However, our shares held by Vitro's
    Stock Option Trust may be voted by us, which, if voted affirmatively, would
    allow the requisite affirmative vote on a matter to be reached even if the
    percentage of our shares outstanding that voted affirmatively on that matter
    is less than the requisite affirmative vote.
  As of March
  28, 2007, 47,472,678 shares were held by our pension plan trust. Those shares
  are treated as outstanding for all purposes.
  The
  following table sets forth our major shareholders and their shareholdings as
  of March 28, 2007. The shares held by our major shareholders have the same
  voting as the shares held by any other shareholder.
  Name
        Shares
            Outstanding(1)
        % of Shares
            Outstanding(1)(2)Pension Plan Trust
      47,472,678
      13.92Mrs. Maria Nelly Gonzalez de Sada(3)(4)
      12,150,011
      3.56Mr. Adrian Sada Trevino(3) (4)
      15,514,641
      4.58Mr. Adrian Sada Gonzalez(5)
      22,634,357
      6.98Mr. Federico Sada Gonzalez(6)
      22,301,235
      6.78Ms. Alejandra Sada Gonzalez
      19,146,821
      5.61
  
  (1) For purposes of calculating our issued and outstanding shares, we
  included, when applicable, options granted to the applicable shareholders.
  (2) For purposes of calculating the percentage of shares
    outstanding, we assumed that the number of our shares outstanding was 341,026,871,
    which is the number equal to our issued shares minus the sum of (i) our
    shares held as treasury stock and (ii) our shares held by the Stock Option
    Trust. As of March 28, 2007, 28,319,069 of our shares were held as treasury
    stock and 17,511,503 of our shares were held by the Stock Option Trust.
    For an explanation of why we account for our shares held by the Stock Option
    Trust as not outstanding, see "Presentation of Certain Information."
  (3) Mr. Adrian Sada Trevino and his wife, Mrs. Maria
    Nelly Gonzalez de Sada, together hold 8.14% of our issued and outstanding
    shares.
  (4) Mrs. Maria Nelly Sada de Yarte, her children
    and her children's spouses collectively hold 10,270,807 of our shares, representing
    3.01% of our issued and outstanding shares. Mrs. Maria Nelly Sada de
    Yarte is the daughter of Mr. Adrian Sada Trevino and Mrs. Maria
    Nelly Gonzalez de Sada.
  (5) Reported as a group with his wife, Mrs. Esther
    Cueva de Sada, and his son Adrian Sada Cueva.
  (6) Reported as a group with his wife, Mrs. Liliana
    Melo de Sada, his sons Messrs. Federico Sada Melo and Mauricio Sada Melo,
    and his daughter, Ms. Liliana Sada Melo.
  RELATED PARTY TRANSACTIONS
  Corporate Airplanes and Certain Other Assets
  We lease certain assets, including three airplanes,
    which are primarily used by certain of our directors and senior managers for
    business purposes, including meeting with customers and suppliers. Our Politica
    de Uso de Activos Restringidos, our use of restricted asset policy, is a policy
    approved by our Board of Directors with the opinion of the Audit Committee
    which establishes guidelines under which certain of our assets can be used
    by our directors and senior managers for personal purposes. The Politica de
    Uso de Activos Restringidospermits certain of our directors and senior managers
    to use these assets for personal purposes for a specified number of hours
    per year, subject to certain limitations. If a director's or senior manager's
    use of these assets for personal purposes exceeds the specified number of
    hours, that director or senior manager must reimburse us for the cost of operating
    the assets he uses during the excess time of use. We do not expect that any
    reimbursement from our directors and senior managers will cover a significant
    portion of our expenses relating to these assets. See "Item 6. Directors,
    Senior Management and Employees-Directors and Senior Management-Use of Certain
    Assets and Services."
  Certain Arrangements with Respect to Real Estate
  From time
  to time, certain of our directors and senior managers use certain real estate
  owned by the families of certain of our directors and senior managers to meet
  with our customers or for other of our business purposes. We pay an annual fee
  for the right to use these properties for a specified number of days per year.
  In
  addition, we have agreed to pay the cost of maintaining (including providing
  the personnel necessary to manage and operate) certain real estate owned by
  the families of certain of our directors and senior managers in exchange for
  the right to use those properties for a specified number of days per year. We
  use these properties as a place to meet with our customers and for other of
  our business purposes.
  In 2005 and 2006, the aggregate amounts paid as annual
    fees for the use of the described real estate was Ps. 13 million
    ($1.2 million) and Ps. 19 million ($1.7 million), respectively.
  Goods Sold to or Purchased from Certain Companies
  In the ordinary course of business, we sell flat
    glass products and glass containers to Distribuidora Prez, S.A. de C.V., Promotora
    y Comercializadora de Occidente S.A. de C.V. and Nueva Mexicana de Vidrio
    y Aluminio, S.A. de C.V., whose shareholders are Mr. Manuel Guemez de
    la Vega and his family. All sales made to these entities are on an arm's-length
    basis on terms and conditions that are no less favorable to us than prevailing
    terms and conditions in the market. In 2006, the aggregate amount of these
    sales was Ps. 56 million ($5 million).
  From time to time, we purchase paint for industrial
    equipment from Regio Empresas, S.A. These purchases are made after arm's-length
    negotiations and on terms and conditions that are no less favorable to us
    than prevailing terms and conditions in the market. In 2006, the aggregate
    amount of these purchases was less than Ps. 2.2 million ($0.2 million).
    As a group, certain of our directors and senior managers own a minority interest
    of the outstanding shares of common stock of Regio Empresas, S.A. These directors
    and senior managers are also shareholders of Vitro.
  Sale of Real Estate
  Tomas Gonzalez Sada, a member of our Board of Directors,
    purchased an unused parcel of real estate from one of our subsidiaries. The
    price of the real estate was $5.4 million. We received several offers for
    the property and Mr. Gonzalez Sada made the highest offer. The decision to
    sell the property to Mr. Gonzalez Sada through this process was made by our
    Audit Committee in accordance with its charter at the time.
  
  Item 8. Financial Information
  Consolidated Financial Statements
  See "Item
  18. Financial Statements" and pages F-1 to [F-65] for a copy of our audited
  consolidated financial statements as of December 31, 2005 and 2006 and for the
  years ended December 31, 2004, 2005 and 2006.
  On June 16, 2006, we completed the sale of our
    51% ownership in Vitrocrisa to the 49% owner Libbey. Vitrocrisa, which was
    previously presented as one of our reportable segments, is presented as a
    discontinued operation. Accordingly, all financial and operating information
    relating to Vitrocrisa in this annual report are presented as a discontinued
    operation. In addition, the discussion of our indebtedness in this annual
    report does not include the indebtedness of Vitrocrisa, which is presented
    on our consolidated balance sheets as a part of "current liabilities of discontinued
    operations" and "long-term liabilities of discontinued operations".
  Export Sales
  The
  following table sets forth, for the periods presented, a breakdown of our
  domestic sales, export sales and sales attributable to our foreign
  subsidiaries. Financial data set forth in the following table has been
  restated in millions of constant pesos as of December 31, 2006.
  Glass
            Containers
      %
            of Consolidated Net Sales
      Flat
            Glass
      %
            of Consolidated Net Sales
      Corporate
            and other(1) eliminations
      %
            of Consolidated Net Sales
      Consolidated
      %
            of Consolidated Net Sales(Ps. millions)
      
      (Ps. millions)
      
      (Ps. millions)
      
      (Ps. millions)2006Domestic sales
      Ps. 7,850
      58%
      Ps. 3,151
      25%
      Ps. 418
      100%
      Ps. 11,419
      43%Export sales
      3,728
      28%
      2,399
      19%
      
      
      6,127
      23%Foreign subsidiaries
      1,857
      14%
      7,159
      56%
      
      
      9,016
      34%Total net sales
      Ps. 13,435
      100%
      Ps. 12,709
      100%
      Ps. 418
      100%
      Ps. 26,562
      100%2005Domestic sales
      Ps. 7,273
      61%
      Ps. 2,754
      21%
      Ps. 497
      100%
      Ps. 10,524
      41%Export sales
      3,266
      28%
      3,444
      27%
      
      
      6,710
      27%Foreign subsidiaries
      1,329
      11%
      6,760
      52%
      
      
      8,089
      32%Total net sales
      Ps. 11,868
      100%
      Ps. 12,958
      100%
      Ps. 497
      100%
      Ps. 25,323
      100%2004Domestic sales
      Ps. 6,806
      61%
      Ps. 3,391
      26%
      Ps. 756
      95%
      Ps. 10,953
      43%Export sales
      3,099
      28%
      3,601
      27%
      39
      5%
      6,739
      27%Foreign subsidiaries
      1,243
      11%
      6,233
      47%
      
      
      7,476
      30%Total net sales
      Ps. 11,148
      100%
      Ps. 13,255
      100%
      Ps. 795
      100%
      Ps. 25,168
      100%
  (1) Other is comprised by Bosco which we sold on April
    1, 2005 and our metal flatware business, which we previously included in our
    Glassware reportable segment.
  Legal Proceedings
  As part of
    the disposal in August 1996 of Anchor, in a transaction approved by the U.S.
    Bankruptcy Court, we entered into a term sheet which contemplated an agreement
    pursuant to which we would provide to the PBGC a limited guaranty of Anchor's
    unfunded pension liability. For more information regarding the terms of the
    guaranty, see "Item 5. Operating and Financial Review and Prospects-Liquidity
    and Capital Resources-PBGC Matter."
  On April 15, 2002, New Anchor filed a pre-negotiated
    plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code.
    On August 8, 2002, an amended plan of reorganization was confirmed, pursuant
    to which the plan resulting from the merger of the covered pension plans was
    terminated and the obligations thereunder were assumed by the PBGC in exchange
    for cash, securities and a commitment of reorganized New Anchor to make certain
    future payments.
  On June 20, 2003, the PBGC wrote to us, asserting
    that the plan had been terminated effective as of July 31, 2002, with
    an estimated unfunded liability of $219 million. The PBGC stated that
    the value of the recovery from New Anchor and reorganized New Anchor amounts
    to no more than $122.25 million; it alleged that the recovery that it
    secured in the bankruptcy was insufficient and that an underfunding in excess
    of our limited guaranty had occurred. Accordingly, in its letter, the PBGC
    demanded payments pursuant to the term sheet of $7 million on or before
    August 1, 2003 and of $3.5 million semiannually through August 1,
    2011. We intend to contest this liability. There are various issues concerning
    such demand and certain defenses that may be asserted by us. Management is
    currently evaluating these issues and defenses. At this point, it is not possible
    to reasonably estimate the amounts that will ultimately be payable in response
    to such demand. When management is able to reasonably estimate those amounts,
    we will establish an appropriate accounting reserve. As of this date, we have
    not established any reserves in connection with such potential liability.
  The Company is also involved in a legal proceeding
    initiated by Urbanizaciones Gamma, S.A. de C.V. ("Gamma") in May 2005 alleging
    failure on the part of Vitrocrisa, our former joint venture with Libbey, to
    vacate warehouse space, which was leased to Vitrocrisa by Gamma pursuant to
    a lease agreement, upon the expiration of the lease term. Pursuant to the
    terms of the lease agreement, Vitrocrisa vacated the premises upon the expiration
    of the lease term. Gamma's claim is in the amount of Ps. 2 million per month,
    starting from December 2003, plus standard penalties and interest as specified
    in the lease agreement. Pursuant to the sale agreement between the Company
    and Libbey executed in connection with the sale of Vitrocrisa, the Company
    agreed to assume responsibility for 81.625% of any damages arising from this
    legal proceeding, with Libbey assuming responsibility for the remainder of
    any such damages. We do not believe that the outcome of this litigation, even
    if not determined in our favor, will have a material adverse effect on our
    financial position and results of operations.
  On
  December 11, 2006 the shareholders of Vitro Plan concluded the extraordinary
  meeting upon a second call to approve the merger of Vitro Plan into Vimexico.
  Vimexico, a subsidiary of Vitro, held a $135 million loan receivable from
  Vitro Plan. At the meeting, resolutions were adopted approving (a) the merger
  of Vitro Plan into Vimexico based on financial information as of October 31,
  2006, with Vimexico as the surviving entity, and (b) the cancellation upon
  delivery of existing Vitro Plan stock certificates in exchange for Vimexico
  stock certificates, using a ratio of 7.19319816 shares of Vimexico common
  stock per share of Vitro Plan common stock.
  Prior to the merger, Vitro Plan was a direct 65%-owned
    subsidiary of Vitro. As a result of the merger, Vimexico is a direct 91.8%-owned
    subsidiary of Vitro. Prior to the merger, Pilkington owned a 35% equity interest
    in Vitro Plan and, as a result of the merger, owns an 8.2% equity interest
    in Vimexico. Pilkington voted against the adoption of the shareholder resolutions
    approving the merger. Under the merger, the outstanding $135 million intercompany
    indebtedness owed by Vitro Plan was cancelled, reducing the debt of Vimexico,
    as a surviving party to the merger (excluding any guarantees of the 2012 Senior
    Notes, the 2017 Senior Notes and the 2013 Senior Notes) to a level that could
    more readily be supported by its cash flow from operations.
  On January 16, 2007, we were served, with a lawsuit
    from Pilkington challenging the resolutions adopted at the shareholders' meeting
    at which the merger was approved.
  In its
  initial motion, Pilkington requested that the effectiveness of the merger be
  suspended pending resolution of the case. The court granted the motion to
  suspend conditioned upon Pilkington posting a significant bond. Pilkington did
  not post the bond and instead initiated an appeal seeking to reduce the amount
  of the bond. We appealed the decision of the court to grant the conditioned
  suspension. The court of appeals recently granted our appeal and denied the
  motion to suspend.
  The
  challenge by Pilkington as to the substance of the resolutions adopted by the
  shareholders is still under review and only the motion to suspend has been
  denied by appeal. It is likely that Pilkington will continue to pursue its
  challenge as to the substance of the resolutions until a final decision is
  issued by the court.
  Vitro believes, based on the advice of Rivera, Gaxiola
    y Asociados, S.C. (our Mexican special litigation counsel), that the merger
    of Vitro Plan into Vimexico complies with all applicable legal requirements,
    specifically the by-laws of Vitro Plan and the Mexican General Law of Mercantile
    Corporations, and that the risk that the merger between Vitro Plan and Vimexico
    will be voided is minimal.
  Litigation
  will continue until a final decision is issued by the corresponding court.
  Dividend Policy
  Holders of the majority of our issued and outstanding
    Shares, acting at a general ordinary shareholders' meeting, determine whether
    dividends are to be paid by Vitro and the amount and date of their payment.
    This decision is generally, but not necessarily, based on the recommendation
    of Vitro's Board of Directors. The Board of Directors, taking into account
    our financial position generally determines and proposes to the general ordinary
    shareholders meeting the timing for the payment of the dividends See "Item
    3. Key Information-Selected Consolidated Financial Information-Dividends per
    Share" for the dividends we have paid since 2002.
  Significant Changes
  Since the
  date of our annual financial statements no significant change in our financial
  information has occurred.
  
  Item 9.The Offer and Listing
  Unless the context otherwise requires, in this
    Item 9 the words "we," "us," "our" and "ours" refer to Vitro, S.A.B. de C.V.
    and not its consolidated subsidiaries or the entities with which it consolidated.
  LISTING
  DETAILS
  We are registered as a public company in Mexico.
    Our shares are listed on the Mexican Stock Exchange, where they trade under
    the symbol "VITROA." Our ADSs are listed on the NYSE and trade under the symbol
    "VTO." On November 29, 2006 Vitro changed its name as approved a general extraordinary
    stockholders' meeting from Vitro, S.A. de C.V. to Vitro, S.A.B. de C.V. due
    to a requirement of the Ley del Mercado de Valores, which we refer to as Mexican
    Law of Securities Market, issued on June 28, 2006. This new law requires every
    company that is listed on the Bolsa Mexicana de Valores, S.A. de C.V., the
    Mexican Stock Exchange, which we refer to as the "BMV", to include "Bursatil"
    (publicly traded) in their legal name or use the letter "B" after S.A.
  The following table sets forth, for each year in
    the five year period ended December 31, 2006, the reported highest and lowest
    market quotation in nominal pesos on the Mexican Stock Exchange for our shares,
    and the high and low sales price in nominal dollars on the NYSE for our ADSs.
    There is no public market outside of Mexico for our shares.
  BMV
            Pesos per Share(1)(2)
      NYSE
            U.S. dollars per ADS(2)(3)Year
      High
      Low
      High
      Low2002
      Ps. 14.09
      Ps. 6.47
      $ 4.54
      $ 2.082003
      11.63
      7.03
      3.10
      2.002004
      14.66
      9.75
      4.02
      2.472005
      14.58
      7.33
      4.08
      2.072006
      20.30
      8.35
      5.55
      2.19
  (1) Source: Infosel.
  (2) Not adjusted for dividends.
  (3) Each of our ADSs indirectly represents three
    of our shares.
  The following table sets forth, for each quarter
    in the three year period ended December 31, 2006, and for the first quarter
    of 2007, the reported highest and lowest market quotation in nominal pesos
    on the Mexican Stock Exchange for our shares and the high and low sales price
    in nominal dollars on the NYSE for our ADSs.
  BMV
              Pesos per Share(1)(2)
        NYSE
              U.S. dollars per ADS(2)(3)Year
        High
        Low
        High
        Low2004First
          Quarter
      Ps. 14.66
      Ps. 11.06
      $
          4.02
      $
          2.90Second
          Quarter
      14.15
      11.50
      3.76
      2.92Third
          Quarter
      11.45
      9.75
      3.02
      2.47Fourth Quarter
      12.90
      10.06
      3.38
      2.602005First Quarter
      Ps. 12.93
      Ps. 9.01
      $
          3.45
      $
          2.40Second Quarter
      9.90
      7.33
      2.63
      2.07Third Quarter
      14.07
      7.90
      3.88
      2.23Fourth Quarter
      14.58
      9.83
      4.08
      2.712006First Quarter
      Ps. 14.55
      Ps. 9.90
      $ 4.06
      $ 2.71Second Quarter
      11.32
      8.35
      3.10
      2.19Third Quarter
      13.62
      9.33
      3.70
      2.51Fourth Quarter
      20.30
      12.38
      5.55
      3.322007First Quarter
      Ps. 24.68
      Ps. 19.06
      $
          6.72
      $
          5.16
  (1) Source: Infosel.
  (2) Not adjusted for dividends.
  (3) Each of our ADSs indirectly represents three
    of our shares.
  The following table sets forth, for each month
    in the six-month period ended May 31, 2007 and for the first 20 days of
	June, the reported highest and lowest
    market quotation in nominal pesos on the Mexican Stock Exchange for our shares
    and the high and low sales price in nominal dollars on the NYSE for our ADSs.
  BMV
            Pesos per Share(1)(2)
      NYSE
            U.S. dollars per ADS(2)(3)Month
      High
      Low
      High
      LowDecember
          2006
      Ps. 20.30
      Ps. 14.14
      $ 5.55
      $ 3.84January
          2007
      Ps. 24.68
      Ps. 19.06
      $ 6.72
      $ 5.16February
      24.00
      21.79
      6.52
      5.50March
      24.50
      19.97
      6.56
      5.30April
      26.28
      24.47
      7.09
      6.63May
      28.82
      25.49
      7.98
      6.97June (through June 20, 2007)
      29.60
      28.18
      8.30
      7.82
  (1) Source: Infosel.
  (2) Not adjusted for dividends.
  (3) Each of our ADSs indirectly represents three
    of our shares.
  MARKETS
  Trading on the Mexican Stock Exchange
  The Mexican Stock Exchange, located in Mexico City,
    is the only stock exchange in Mexico. Operating continuously since 1907, it
    is organized as a corporation whose shares are held by brokerage firms, which
    are the sole authorized entities to trade on the exchange. Trading on the
    Mexican Stock Exchange takes place electronically through the centralized
    automated system of the exchange, which is open each business day between
    the hours of 8:30 a.m. and 3:00 p.m., Mexico City time. Most transactions
    in listed Mexican securities take place through the Mexican Stock Exchange.
    Trades on or off the Mexican Stock Exchange involving ten percent or more
    of an issuer's outstanding capital stock must be reported to the CNBV, which
    in turn must notify the Mexican Stock Exchange of such trade. Directors, officers
    and other insiders must report to the CNBV any and all transactions undertaken
    with respect to securities of the issuer with which they are related. In addition,
    directors, officers and other insiders holding stock representing 5% or more
    of the outstanding capital stock of the related issuer may not buy or sell
    such stock within a period of three months from the date of their last purchase
    or sale.
  The Mexican Stock Exchange publishes a daily official
    price list (Boletin Diario de Precios y Cotizaciones) that includes price
    information on each listed security traded that day. The Mexican Stock Exchange
    operates a system of automatic temporary suspensions of trading in shares
    of a particular issuer as a means of controlling excessive price volatility.
    Each day a price band is established with upper and lower limits. If during
    the day a bid or offer is accepted at a price outside this price band, trading
    in the shares is automatically suspended for one hour. Suspension periods
    in effect at the close of trading are not carried over to the next trading
    day. Our shares, as well as other securities of Mexican issuers that are publicly
    traded in the United States, however, are not subject to the above-described
    temporary suspension of trading rules dictated by the Mexican Stock Exchange.
    In addition, the Mexican Stock Exchange may also suspend trading of a security,
    including securities not subject to the automatic suspension systems, for
    up to five days if it determines that disorderly trading is occurring with
    respect to such security; such suspension may be extended beyond five days
    if so approved by the CNBV.
  Trading on the New York Stock Exchange
  Since November 19, 1991, our ADSs have been listed
    on the NYSE. Since May 6, 1992, each of our ADSs represents three CPOs issued
    by a Mexican trust, which we refer to as the "CPO Trust." Nacional Financiera
    is the trustee for the CPO Trust and we refer to it as the "CPO Trustee."
    Each CPO represents economic interests, but does not grant voting rights,
    in one of our shares held in the CPO Trust. The ADSs are evidenced by ADRs.
    ADRs evidencing ADSs are issued by Bank of New York, as depositary, which
    we refer to as the "Depositary", pursuant to the Deposit Agreement dated as
    of June 24, 2005 among Vitro, S.A.B de C.V., the CPO Trustee, the Depositary
    and all registered holders, from time to time, of the ADRs issued thereunder.
    An ADR may evidence any number of ADSs.
  As of March 28, 2007, approximately 13% of our outstanding
    shares were publicly held through CPOs and approximately 11% of our outstanding
    shares were publicly held through ADSs. Holders of ADSs and CPOs have no voting
    rights with respect to the underlying shares, but have all economic rights
    relating to those shares. Pursuant to the Trust Agreements dated as of November 24,
    1989 and November 28, 1990, Nacional Financiera, as CPO Trustee, is required
    to vote our shares held by the CPO Trust in the same manner as the majority
    of our shares that are not so held that are voted at the relevant meeting.
    Consequently, under Mexican law, holders of CPOs and ADSs are not able to
    exercise voting or other rights granted to minorities. However, if a Mexican
    national acquires CPOs, it may request from the CPO Trustee the cancellation
    of such CPOs and delivery of the underlying shares.
  
  Item 10.Additional Information.
  Unless the
    context otherwise requires, in this Item 10 the words "we," "us,"
    "our" and "ours" refer to Vitro, S.A.B. de C.V. and not
    its consolidated subsidiaries or the entities with which it consolidated.
  MEXICAN
  CORPORATE LAW AND BY-LAWS
  Set forth
  below is a brief summary of certain provisions of our by-laws and applicable
  Mexican law. This summary does not purport to be complete and is qualified by
  reference to our by-laws and applicable Mexican law.
  General Information and Corporate Purpose
  We were incorporated on August 27, 1936 as Fomento
    de Industria y Comercio, S.A., a corporation (sociedad anonima) formed under
    the laws of Mexico as the holding company for our then operating companies,
    among them Vidriera Monterrey, S.A., which was incorporated on December 6,
    1909. The incorporation deed was registered on October 3, 1936 in the Registro
    Publico de la Propiedad y del Comercio de Monterrey, which we refer to as
    the "Public Registry of Commerce of Monterrey," as entry number 139, volume
    82, book 3. On May 9, 1980, we changed our corporate name to Vitro, S.A. and
    the deed pursuant to which our name was changed was registered in the Public
    Registry of Commerce of Monterrey on June 9, 1980 as entry number 1,224, volume
    117, book 4. We adopted the variable capital corporate form on March 30, 1998
    and the deed pursuant to which we adopted such corporate form was registered
    in the Public Registry of Commerce of Monterrey on April 1, 1998 as entry
    number 2,091, volume 207-42, book 4. On December 7, 2006 we changed our corporate
    name to Vitro, S.A.B. de C.V., and the deed number 17,738, pursuant to which
    our name was changed was registered in the Public Registry of Commerce of
    Monterrey on December 15, 2006, with the electronic entry number 1062*9
  Our corporate domicile is San Pedro Garza Garcia,
    State of Nuevo Leon, Mexico and our principal executive offices are located
    at Ave. Ricardo Margain Zozaya 400, Col. Valle del Campestre, San Pedro Garza
    Garcia, Nuevo Leon, 66265 Mexico.
  Pursuant to the second clause of our by-laws, our
    principal corporate purposes are (i) to subscribe for, dispose of or acquire
    shares of capital stock, bonds, obligaciones, certificates, promissory notes,
    securities granting optional rights and other securities (titulos valor) and
    other documents issued in series or masa and, in general, to carry on all
    such transactions permitted by law, (ii) to acquire or offer the shares representing
    our capital stock in accordance with the applicable law and the policies and
    resolutions of our Board of Directors regarding the acquisition and placement
    of shares of our capital stock through the Mexican Stock Exchange or through
    any other markets in which such shares are listed, (iii) to enter into
    contracts and transactions of a civil, mercantile, credit or financial nature
    including derivative transactions, repurchase agreement (reportos) and trusts
    (fideicomiso) in accordance with applicable law, (iv) to enter into loan
    agreements and to guarantee (as surety or otherwise), and grant liens to secure,
    the indebtedness of our subsidiaries and our affiliated or associated companies
    and, with the approval of our Board of Directors, of any other person, (v) to
    issue, accept, endorse and guarantee "por aval" negotiable instruments issued
    by us, our subsidiaries and our associated or affiliated companies and, with
    the approval of our Board of Directors, of any other third party, (vi) to
    render all kinds of services and to carry out analyses and studies with respect
    to the promotion, enhancement and restructuring of our subsidiaries and our
    associated or affiliated companies, (vii) to acquire, transfer, enlarge, modify,
    repair, maintain, administer, dispose of and lease such tangible property,
    real estate or derechos reales and derechos personales necessary for our operation
    and (viii) generally, to enter into agreements, to carry out transactions
    and to perform all acts necessary or convenient for the achievement of our
    fundamental corporate purposes.
  Directors' and Shareholders' Conflict of Interest
  The
  provisions of Mexican law described below govern issues relating to conflicts
  of interests that may arise between us, on the one hand, and our directors,
  the Secretary of the Board of Directors, and shareholders, on the other.
  Clause 42 of our by-laws states that any issue not expressly provided for in
  our by-laws will be governed by the Mexican Law of the Securities Market and
  Mexican General Law of Corporations. Pursuant to article 34 of the Mexican Law
  of the Securities Market, any of our directors or the Secretary of the Board
  of Directors who has a conflict of interest with us with respect to a
  transaction must disclose such fact to our other directors, must not be part
  and abstain from any discussions or voting on such transaction. Article 37 of
  the Mexican Law of the Securities Market states that any of our directors that
  does not comply with the requirements described in the immediately foregoing
  sentence will be liable to us for any damages suffered by us arising out of
  such transaction.
  Under article 52 of the Mexican Law of Securities
    Market, any of our shareholders that has a conflict of interest with us with
    respect to a transaction must abstain from voting on such transaction. Any
    of our shareholders that does not comply with the requirement described in
    the immediately foregoing sentence will be liable to us for any damages suffered
    by us arising out of such transaction, but only if the transaction would not
    have been approved without such shareholder's favorable vote.
  Related Party Transactions and Certain Other Transactions
  Pursuant to
  article 28 of the Securities and Market Law and article 29 of our by-laws, our
  Board of Directors must approve, with the previous opinion of the Corporate
  Practices Committee the transactions between Vitro or its subsidiaries and our
  related parties.
  Pursuant to article 29 section 14 (c) of our by-laws,
    our Board of Directors must approve, with the previous opinion of the corresponding
    Corporate Practices Committee the unusual or sporadic transactions or the
    transactions involving (i) the acquisition or disposition of 5% or more of
    our consolidated assets, (ii) guarantees or loans in an amount exceeding 5% of our consolidated assets. Investments in debt securities will be excluded
    if they comply with the corresponding Board of Directors' policies. Pursuant
    to article 29 section 14 (b) of our by-laws, no Board of Directors' approval
    is needed in the following transactions, so long the policies and guidelines
    approved by the Board of Directors are followed: (i) transactions where the
    amount involved is not material to the Company or our subsidiaries, (ii) transactions
    among the Company and its subsidiaries made in the ordinary course of business,
    at fair market value or appraised by external independent appraisals and (iii)
    transactions with employees, so long as they are made on an arms length basis
    or as part of their labor fringe benefits.
  In
  addition, our by-laws require that our key executive directors ("Key Executive
  Directors") obtain the authorization from our Board of Directors with the
  prior approval of our Audit Committee to enter into any transaction with Vitro
  or its subsidiaries outside the ordinary course of business.
  Our
  Business Conduct and Professional Responsibility Code requires our employees
  to disclose any circumstance which is or appears to be a conflict of interest
  between our employees and us.
  Directors' Compensation
  Article 13 and 22 of our by-laws and article 181
    of the Mexican General Law of Corporations require that a majority of our
    shares present at the annual general ordinary shareholders' meeting determine
    our directors' compensation for the immediately subsequent year.
  Capital Structure
  As a
	sociedad anonima bursatil de capital variable,
    a portion of our capital must be fixed capital and we may have variable capital.
  Our fixed
  capital amounts to Ps. 324 million, represented by 324,000,000 of our class I
  Series A shares and our variable capital amounts to Ps. 63 million,
  represented by 62,857,143 of our class II Series A shares.
  Pursuant to our by-laws and Mexican law, our shares
    may be held only by Mexican investors. However, non-Mexican investors may
    acquire an economic interest in our shares by holding CPOs. Any acquisition
    of our shares by non-Mexican investors in violation of our by-laws or Mexican
    law would be null and void. See "Item 10. Additional Information-Mexican Corporate
    Law and By-Laws-Description of CPOs."
  Share Registration and Transfer
  Our shares are evidenced by share certificates in
    registered form. Our shareholders may hold their shares in the form of physical
    certificates or indirectly through institutions that have an account with
    S.D. Indeval Institucion para el Deposito de Valores, S.A. de C.V., which
    we refer to as "Indeval." Brokers, banks or other entities approved by the
    CNBV, which we collectively refer to as "Indeval Depositors," may maintain
    accounts at Indeval. We maintain a registry of our shareholders who have either
    received physical certificates evidencing our shares or are holding our shares
    through an Indeval Depositors. Only persons listed in such registry and persons
    holding statements issued by Indeval or an Indeval Depositor evidencing ownership
    of our shares will be recognized as our shareholders.
  Voting Rights; Preferences and Restrictions
  Although at least 50% of our outstanding shares acting
    at a general extraordinary shareholders' meeting must approve the issuance
    of new series or classes of our common stock, whose terms may contain certain
    preferences or impose certain restrictions, no such series of our common stock
    has been issued. Each of our shares entitles the holder thereof to one vote
    at each of our general shareholders' meetings. However, the holders of CPOs
    or ADSs are not entitled to the voting rights appurtenant to our shares underlying
    their CPOs or ADSs. For a detailed description of this limitation, see "Item
    10. Additional Information-Mexican Corporate Law and By-Laws-Description of CPOs."
  So long as our shares are registered at the Securities
    Section of the RNVwe may not issue shares of common stock that do not grant
    a right to vote or limit other corporate rights without the approval of (i) the
    CNBV and (ii) at least 50% of our outstanding shares acting at a general
    extraordinary shareholders' meeting. Pursuant to article 7 of our by-laws,
    there may not exist outstanding shares of our common stock whose terms are
    different than the terms of our shares in excess of 25% of outstanding capital
    stock provided however, that the CNBV may authorize the increase of the foregoing
    limit by an additional 25% of our outstanding capital stock, which the CNBV
    considers that are actually trading and provided further that such additional
    shares must be non voting or otherwise restricted shares and must be converted
    into our common shares within five years of their issuance.
  Dividends
  At each of our annual general ordinary shareholders'
    meeting, our CEO must submit our consolidated financial statements for the
    previous fiscal year, together with the external auditors' opinion, to our
    shareholders for their consideration and approval. If our shareholders approve
    such financial statements, they must determine, subject to the immediately
    following sentence, the allocation of our distributable earnings for the preceding
    fiscal year. Pursuant to our by-laws, 5% of our net income in any year must
    be allocated to a legal reserve fund until such fund reaches an amount equal
    to at least 20% of our capital. Allocation to the legal reserve is determined
    without reference to inflation adjustments required by Mexican FRS. Thereafter,
    a majority of our shareholders present at such annual general ordinary shareholders'
    meeting may allocate all or a portion of the remainder of our net income to
    a reserve fund for the repurchase of our shares or for the creation of other
    reserve funds.
  Those of our shares that are fully paid and outstanding
    at the time a dividend or other distribution is declared are entitled to share
    equally in such dividend or other distribution. Those of our shares that are
    partially paid are entitled to share in a dividend or distribution in the
    same proportion that such shares have been paid at the time of the declaration
    of such dividend or distribution. In accordance with the Codigo de Comercio, which we refer to as the "Mexican Code of Commerce," our shareholders have
    five years to claim their dividends, beginning on the date the dividends are
    declared payable. If the dividends are not claimed during such period, a shareholder's
    right to the dividend is extinguished. For a description of dividend rights
    applicable to holders of CPOs, see "Item 10. Additional Information-Mexican
    Corporate Law and By-Laws-Description of CPOs."
  Pursuant to
  article 17 of the Mexican General Law of Corporations, any agreement which
  excludes one or more of our shareholders from receiving its proportional share
  of our distributable net income is unenforceable.
  Liquidation
  Upon our dissolution, one or more liquidators, which
    will wind up our affairs, must be appointed by a majority of our shares present
    at a general extraordinary shareholders' meeting. Those of our shares that
    are fully paid and outstanding at the time of our dissolution will be entitled
    to share equally in any distribution upon liquidation. Those of our shares
    that are partially paid at the time of our dissolution will be entitled to
    share in a liquidation distribution in the same manner as they would in a
    dividend distribution.
  Employee's Mandatory Share in the Company's Profits
  Pursuant to Mexican law, each of us and our subsidiaries
    with employees must pay to such employees 10% of the previous year's taxable
    income of such entity (as computed for these purposes), pursuant to such
    law. Please refer to note 19 of our consolidated financial statements included
    elsewhere in this annual report.
  Capital Reduction
  Our shares are subject to redemption in connection
    with a reduction in our capital. Our capital may be reduced in the following
    situations: (i) to absorb losses, (ii) to return paid-in capital
    to shareholders, (iii) to redeem our shares with retained earnings, (iv) to
    release shareholders with respect to subscribed but unpaid shares, (v) upon
    the exercise of the right of severance (derecho de separacion) and (vi) upon
    a purchase of our shares conducted in accordance with article 8 of our by-laws.
    In each case, the fixed capital reduction must be approved by at least 50%
    of our outstanding shares acting at a general extraordinary shareholders'
    meeting. The reduction of variable capital must be approved by majority in
    the general ordinary shareholders'meeting.
  The capital reduction described in clause (i) of
    the foregoing paragraph must be on a pro rata basis among all of our outstanding
    shares. Upon such capital reduction, we are not required to cancel the redeemed
    shares.
  In the event of a capital reduction described in
    clause (ii) of foregoing paragraph, we will select which of our shares
    will be canceled by lot before a Notary Public or an authorized mercantile
    official (corredor titulado). Resolutions regarding any such capital reduction
    must be published three times in the official gazette of our corporate domicile,
    which currently is San Pedro, Garza Garcia, Nuevo Leon, allowing at least
    ten days after each publication.
  Pursuant to article 136 of the Mexican General Law
    of Corporation, ff we redeem our shares as described in clause (iii)
    of the foregoing paragraph, such redemption must be effected through: (i)
    the acquisition of such shares pursuant to public offer made on the Mexican
    Stock Exchange, or if a price and offer terms were determined by our shareholders,
    acting at a general extraordinary shareholders' meeting or, our Board of Directors
    acting on their behalf by lot before a Notary Public or an authorized mercantile
    official (corredor titulado) or (ii) pursuant to clause 9 of our bylaws, on
    a pro rata basis among all of our outstanding shares, so that after the redemption
    is made, each of our shareholders will have the same ownership percentage
    of our outstanding shares that he, she or it had before the redemption. The
    redeemed shares must be canceled and our capital stock must be reduced accordingly.
  A capital reduction described in clause (iv)
    of the foregoing paragraph must be published three times in the official gazette
    of our corporate domicile, which is currently San Pedro, Garza Garcia, Nuevo
    Leon, allowing at least ten days after each publication.
  In the
  event of a capital reduction described in clause (v) of the foregoing
  paragraph, such capital reduction must be made in accordance with article 206
  of the Mexican General Law of Corporations and at a price equal to the
  proportional value of our assets.
  Purchase by us of our Shares
  We may also decrease the number of outstanding shares
    by purchasing our shares in the Mexican Stock Exchange at prevailing market
    prices. Purchases would have the effect of reducing either (i) shareholders'
    equity or (ii) paid-in capital. In accordance with our by-laws and the terms
    of article 56 of the Mexican Securities Exchange Law, we may acquire our
    shares through the Mexican Stock Exchange, at the current market price, provided
    that such purchase is accounted for either (i) as a reduction of our shareholders'
    equity (if we choose to cancel the purchased shares) or (ii) as a reduction
    of our paid-in capital (if we choose to hold the purchased shares as treasury
    stock).
  Our shareholders, acting at our annual general ordinary
    shareholders' meeting, must resolve, for each year, the maximum amount we
    may use to purchase our shares. The aggregate amount we may use to purchase
    our shares may not exceed our cumulative retained earnings. Our Board of Directors
    may recommend to our annual general ordinary shareholders' meeting the maximum
    amount we may use to purchase our shares.
  Purchase
  Obligation
  In accordance with our by-laws, if our registration
    with the RNV is canceled, whether by request of the CNBV or by our initiative
    with the prior approval of an extraordinary shareholders' meeting, the shareholders
    holding a 95% of our shares (with or without the right to vote) must make
    a public offer to purchase all other outstanding shares prior to effectiveness
    of such cancellation. In addition, if less than all of the outstanding shares
    are sold pursuant to the public offer to purchase, such shareholders must
    place in trust, for at least six months, the amount necessary to purchase
    all other outstanding shares.
  The price at which such shares must be purchased
    is the higher of (i) the average closing quotation price made for the
    30 trading days prior to the date at which the purchase will become effective,
    during a period which shall not be greater than six months and (ii) the
    book value per share, as reflected in the last quarterly report filed with
    the CNBV and the Mexican Stock Exchange. If the numbers of days on which the
    shares have been traded during the period set forth in the preceding paragraph
    is less than 30 days, the number of days on which the shares were effectively
    traded shall be used instead for purposes of calculating the purchase price
    of the shares and if no trades were was made during such period the purchase
    must be done at book value. Notwithstanding the foregoing, the shareholders
    holding a majority of our shares having the right to make decisions, regardless
    their voting right at general shareholders' meetings are not required to make
    such public offer if 95% of our shares present at the relevant general shareholders'
    meeting approve the delisting of our shares from the Mexican Stock Exchange.
  If there is
  one or more series of shares trading, the average closing quotation price
  mentioned above must be calculated for each series and the price at which such
  shares must be purchased must be the highest average closing quotation price.
  Capital Increase; Preemptive Rights
  At least 50% of our outstanding shares acting at
    a general extraordinary shareholders' meeting may authorize an increase of
    the fixed portion of our capital and a majority of our shares present at a
    general ordinary shareholders' meeting may increase the variable portion of
    our capital. Capital increases and decreases must be recorded in our Libro
    de Variaciones de Capital, which we refer to as the "Variations of Capital
    Stock Book". An increase in our capital cannot be effected if the shares representing
    our then existing capital have not been paid in full. Our capital may be increased
    either through (i) contributions made by existing or new shareholders,
    (ii) the capitalization of share-related premiums or advances previously
    made by our shareholders, (iii) the capitalization of retained earnings
    or valuation reserves or (iv) the capitalization of our indebtedness.
  In the event of a capital increase, a holder of issued
    and outstanding shares has a preferential right to subscribe for a sufficient
    number of our shares to maintain such holder's existing proportional holdings
    of our shares. Preemptive rights must be exercised within 15 days following
    the publication of notice of the capital increase in the Periodico Oficial
    del Estado de Nuevo Leon. Under Mexican law, such preferential rights may
    be assigned.
  Pursuant to article 53 of the Mexican Law of Securities
    Market , our shareholders are not entitled to preferential rights to subscribe
    for our authorized but unissued shares issued in connection with a public
    offering.
  Appraisal Rights
  The Mexican General Law of Corporations provides
    that upon the adoption, at a general extraordinary shareholders' meeting,
    of any of the resolutions described in the following paragraph, dissenting
    shareholders will have the right to have the shares they hold appraised and
    to compel us to redeem such shares at the appraised price, subject to the
    satisfaction of certain terms and conditions. The appraisal price will be
    determined by the proportion of shares submitted for appraisal to our net
    worth as stated in our financial statements approved at the most recent general
    ordinary shareholders' meeting.
  Such appraisal rights are triggered by shareholders'
    resolutions approving (i) changes in our corporate purpose, (ii) our
    reincorporation in a jurisdiction other than Mexico or (iii) our transformation
    from one corporate form to another. Dissenting shareholders must perfect their
    appraisal rights by making a request for appraisal of their shares within
    15 days following the date on which the meeting adopting the relevant resolution
    adjourns.
  Modification of Shareholders' Rights
  The rights appurtenant to our shares may be modified
    only through a resolution adopted by at least 50% of our outstanding shares
    acting at a general extraordinary shareholders' meeting.
  Shareholders' Meetings and Resolutions
  General shareholders' meetings may be ordinary meetings
    or extraordinary meetings. General extraordinary meetings are those called
    to consider (i) those matters specified in Article 182 of the Mexican General
    Law of Corporations, (ii) redemption of our shares with retained earnings,
    (iii) approval of the maximum amount of capital increase and the terms of
    the issuance of treasury shares pursuant to the Mexican Law of the Securities
    Market (iv) cancellation of the registration of our shares with the Securities
    Section of the RNV, which shall be approved by at least 95% of our outstanding
    shares with or without vote and the previous approval of the CNBV (v) authorization
    of clauses that prevent the acquisition of shares that grant the control either
    directly or indirectly to third parties of our shares as established in the
    Mexican Law of the Securities Market so long as 5% of the present shares do
    not vote against it and (vi) any other matter stated in the applicable law
    and the bylaws. General shareholders' meetings called to consider all other
    matters, including increases and decreases of the variable portion of our
    capital, are ordinary meetings.
  A general ordinary shareholders' meeting must be
    held at least once a year within the first four months following the end of
    the prior fiscal year. The annual general ordinary shareholders' meeting is
    held every year to discuss (i) the annual reports of the Corporate Practices
    Committee, the Audit Committee and any other Committee of the Board of Directors,
    (ii) the CEO's annual report including the external auditors audited financial
    statements (iii) the Board of Directors opinion on the CEO's annual report,
    (iv) the report referred to in article 172 section b) of the Mexican General
    Law of Corporations, which shall include the principal policies and accounting
    criteria used in the preparation of the financial information, (v) the report
    on the activities and operations where the Board of Directors was involved
    pursuant to the Mexican Law of Securities Market, (vi) the application of
    the balance of the profit and loss statement, (vii) the maximum amount of
    resources that may be used for the acquisition of shares or negotiable instruments
    representing such shares with the limitation that the total amount may not
    exceed the total amount of net earnings, including the retained earnings,
    (viii) the appointment and removal of the members of our Board of Directors
    , the qualification of their independence and their compensation and (ix)
    the appointment or removal of the President of the Corporate Practices Committee
    and of the President of the Audit Committe A general ordinary shareholders'
    meeting may be called and held at any time to (i) to approve the transactions
    made by the Company or its subsidiaries during the fiscal year, if the transaction
    represents 25% or more of the consolidated assets according to the financial
    statements of the immediately previous quarter and that due to their terms
    may be consider as one transaction in the understanding that at such stockholders
    meeting all holders of shares may vote whether their vote is limited or not,
    (ii) to approve an increase or decrease of the variable portion of our capital,
    with the obligation of formalizing the resolution before the public notary,
    except as provided in clause eighth of our by-laws and (iii) any other matter
    where the General Extraordinary Shareholders Meeting is not competent or
    any matter established in the applicable law or our bylaws. At any such general
    ordinary shareholders' meeting, any shareholder or group of shareholders holding
    10% or more of our outstanding shares may appoint one of our directors. A
    majority of our shares present at the annual general ordinary shareholders'
    meeting must determine the number of directors that will comprise the Board
    of Directors for the immediately subsequent fiscal year. The directors elected
    at the annual general ordinary shareholders' meeting serve for a renewable
    term of one year. If at the end of the one year term of office any of our
    directors is not reelected at the annual general shareholders' meeting or
    if a director resigns and there is no designation of a substitute or the most
    recently elected one has not taken office, then the prior director will continue
    to serve for up to a maximum term of 30 calendar days. Thereafter, the Board
    of Directors may appoint provisional directors that will be ratified or substituted
    at the next shareholders' meeting.
  The quorum for a general ordinary shareholders' meeting
    convened at the first call is at least 50% of our outstanding shares entitled
    to vote at such meeting and action may be taken by holders of a majority of
    our shares present at such meeting. If a quorum is not present, a subsequent
    meeting may be called at which a quorum shall exist regardless of the number
    of our shares present at such subsequent meeting and action may be taken by
    a majority of our shares present at such subsequent meeting. The quorum for
    a general extraordinary shareholders' meeting convened at the first call is
    at least 75% of our shares entitled to vote at such meeting. If a quorum is
    not present, subsequent meetings may be called at which at least 50% of our
    shares entitled to vote at such subsequent meeting will constitute a quorum.
    Whether on first or subsequent calls to a meeting, actions at a general extraordinary
    shareholders' meeting may be taken only by at least 50% of our outstanding
    shares, except for the cancellation of the registration of our shares with
    the Securities Section of the RNV or the delisting of our shares from the
    Mexican Stock Exchange, which actions may only be taken by at least 95% of
    our outstanding shares.
  General shareholders' meetings may be called by (i) our
    Board of Directors through its President or Secretary, by the Corporate Practices
    Committee, or the Audit Committee , (ii) 10% of our shares entitled to
    vote at such meeting by means of a request to the President of our Board
    of Directors, the President of the Corporate Practices Committee or the President
    of the Audit Committee to call such a meeting, (iii) a Mexican court
    if our Board of Directors or the Corporate Practices Committee or Audit Committee does not comply with a request as described in clause (ii) above and
    (iv) any of our shareholders, if no general shareholders' meeting has
    been held for two consecutive years or if any of the following matters has
    not been addressed at a general shareholders' meeting within such two year
    period: (a) the annual report of our CEO regarding our financial statements,
    (b) the allocation of our net income, (c) the appointment of our
    directors and qualification of their independence (d) the compensation
    of our directors, (e) the annual reports on activities performed by the Committees,
    (f) Board of Directors' reports on operations and activities where the latter
    intervened during the year, (g) Board of Directors' report pursuant to article
    172 paragraph b) of the Mexican General Law of Corporations, (h) report on
    tax compliance and (i) appointment of the Presidents of the Audit and Corporate
    Practices Committees. Notice of general shareholders' meetings must be published
    in the Periodico Oficial del Estado de Nuevo Leonor in a newspaper of wide
    distribution in Monterrey, Mexico at least 15 calendar days prior to a general
    shareholders' meeting. Only shareholders who have either deposited shares
    at our offices or who present statements issued by Indeval or an Indeval Participant
    evidencing ownership by such person of our shares will be admitted as a shareholder
    to a general shareholders' meeting. In order to attend and participate in
    a general shareholders' meeting, each shareholder must obtain from our Secretary
    a certificate acknowledging his, her or its status as a shareholder at least
    48 hours before the date of the general shareholders' meeting. A shareholder
    may be represented by an attorney-in-fact who holds a duly granted proxy or
    power-of-attorney.
  Under article 51 of the Mexican Law of the Securities
    Market, at least 20% of our shares entitled to vote on a particular matter
    may oppose in court any shareholder action with respect to such matter, by
    filing a complaint with a court of law within 15 days after the adjournment
    of the general shareholders' meeting at which such action was adopted. Such
    relief is only available to holders (i) who were entitled to vote on,
    or whose rights as shareholders were adversely affected by, the challenged
    shareholder action and (ii) whose shares were not represented when the
    action was taken or, if represented, voted against it.
  Under
  article 38 of the Mexican Law of the Securities Market, we must initiate an
  action for civil liabilities against one or more of our directors upon the
  approval of a resolution of our shareholders to that effect. If our
  shareholders approve such a resolution, the persons against whom such action
  is brought will immediately cease to be one of our directors. Additionally, at
  least 5% of our outstanding shares may directly initiate such an action
  against our directors.
  Asset Acquisitions and Divestitures
  Pursuant to our by-laws, our Board of Directors has
    the exclusive and non assignable power to approve transactions involving (i)
    the acquisition or disposition of 5% or more of our total assets and (ii)
    guarantees by us in an amount exceeding 5% of our total assets.
  Description of CPOs
  The following is a description of certain provisions
    of (i) the Trust Agreement dated as of November 24, 1989, between Nacional
    Financiera, as CPO Trustee, and us, which we refer to as the "First Trust
    Agreement," (ii) the Trust Agreement dated as of November 28, 1990, between Nacional Financiera, as CPO Trustee, and us, which we refer to as the
  "Second
    Trust Agreement" and, together with the First Trust Agreement, the "CPO Trust
    Agreements," (iii) the public deed dated as of November 29, 1990, which evidences
    the issuance of CPOs by the CPO Trustee pursuant to the CPO Trust Agreements
    and which deed is registered with, and may be examined at, the Registro Publico
    del Comercio de la Ciudad de Mexico, D.F., which deed we refer to as the "First CPO Deed," (iv) the public deed dated as of June 24, 1998 which evidences
    the issuance of CPOs by the CPO Trustee pursuant to the CPO Trust Agreements
    and which deed is registered with, and may be examined at, the Registro Publico
    del Comercio de la Ciudad de Mexico, D.F., which deed we refer to as the "Second CPO Deed," and (v) applicable provisions of the
	Ley General de Titulos
    y Operaciones de Credito, which we refer to as the "Negotiable Instruments
    Law." We refer to the First CPO Deed and the Second CPO Deed together as the
    "CPO Deeds." This description does not purport to be complete and is qualified
    in its entirety by reference to the CPO Trust Agreements, the CPO Deeds and
    the provisions of Mexican law referred to in this description.
  The CPO Trust Agreements established a master trust
    that enables non-Mexican investors to acquire CPOs representing economic interests
    in our shares. The trust is necessary because, under our by-laws, our shares
    may not be purchased or held directly by non-Mexican investors.
  The terms of the CPO Trust Agreement were authorized
    by an official communication dated November 27, 1990 from the Direccion General
    de Inversiones Extranjeras de la Comision Nacional de Inversiones Extranjeras. The CPO Trust Agreement is registered with the Registro Nacional de Inversiones
    Extranjeras, which we refer to as the "National Registry of Foreign Investment."
    An official communication of the CNBV authorized the issuance of CPOs by the
    CPO Trustee pursuant to the CPO Trust Agreements.
  CPOs, which are negotiable instruments under Mexican
    law, have been issued by the CPO Trustee pursuant to the terms of the CPO
    Trust Agreements and the CPO Deeds and may be redeemed as described in "-Deposit
    and Withdrawal of our shares." Each CPO represents an economic interest in
    one of our shares held in the CPO Trust. Currently, the maximum number of
    CPOs that can be issued pursuant to the CPO Deeds is 200,000,000. Holders
    of CPOs are not entitled to exercise any voting rights with respect to our
    shares held in the CPO Trust. Such rights are exercisable by the CPO Trustee
    pursuant to the terms of the CPO Trust Agreements. Pursuant to the Ley de
    Inversion Extranjera, which we refer to as the "Foreign Investment Law," the CPO Trust Agreement qualifies as a
  "neutral investment" trust because, among
    other things, voting rights in respect of the underlying shares are exercisable
    only by the CPO Trustee and not by the holders of the CPOs.
  Deposit and Withdrawal of our Shares
  Holders of our shares may deliver such shares to
    the account of the CPO Trustee at Indeval and receive in return CPOs delivered
    by the CPO Trustee pursuant to the CPO Trust Agreements. All of our shares
    delivered to the CPO Trustee will be held in trust by the CPO Trustee in accordance
    with the terms and conditions of the CPO Trust Agreements. We will deem the
    CPO Trustee to be the holder of the shares delivered to the CPO Trustee. Transfer
    of ownership of those of our shares that underlie CPOs will be effected through
    the records maintained by Indeval and Indeval Participants.
  The CPO Trustee will deliver CPOs in respect of our
    shares transferred as described above. All of the CPOs are evidenced by a
    single certificate, which we refer to as the "Global CPO," which has been
    issued to and deposited with Indeval, acting as depositary. Ownership of CPOs
    deposited with Indeval will be shown on, and transfer of the ownership of
    such CPOs will be effected through, records maintained by Indeval and Indeval
    Participants. Holders of CPOs are not entitled to receive physical certificates
    evidencing such CPOs but may request statements issued by Indeval and Indeval
    Participants evidencing ownership of CPOs. Holders of CPOs that are non-Mexican
    investors are not entitled to withdraw the shares that are held in the CPO
    Trust and represented by CPOs.
  Holders of CPOs may sell their CPOs (i) to a non-Mexican
    investor, in which case the non-Mexican investor will become the transferee
    of such CPOs or (ii) to a Mexican investor, through the Mexican Stock Exchange,
    in which case the Mexican investor would be the transferee of the shares underlying
    such CPOs directly or, by keeping such shares deposited at an account at Indeval,
    such CPOs will be held by the CPO Trustee pending delivery.
  Dividends, Other Distributions and Preemptive and Other
    Rights
  Holders of CPOs are entitled to receive the economic
    benefits related to the shares underlying such CPOs, including those dividends
    or distributions approved by our shareholders, and to receive the proceeds
    from the sale of such shares at the termination of the CPO Trust Agreement.
    See "Item 10. Additional Information-Mexican Coporate Law and By-Laws-Termination
    of the CPO Trust." The CPO Trustee, through Indeval, will distribute cash
    dividends and other cash distributions received by it with respect to our
    shares held in the CPO Trust to the holders of the CPOs in proportion to their
    respective holdings in the same currency in which they were received. Dividends
    paid with respect to our shares underlying CPOs will be distributed to CPO
    holders by Indeval on the business day following the date on which Indeval
    receives the funds on behalf of the CPO Trustee.
  If a distribution by us consists of a stock dividend
    on our shares, such distributed shares will be transferred to Indeval on behalf
    of the CPO Trustee, and held in the CPO Trust. The CPO Trustee will distribute
    to the holders of outstanding CPOs, in proportion to their holdings, additional
    CPOs in an aggregate number equal to the aggregate number of our shares received
    by the CPO Trustee as the stock dividend. If the maximum amount of CPOs that
    may be delivered under the CPO Deeds would be exceeded as a result of a dividend
    on our shares, a new CPO deed will be entered into setting forth that new
    CPOs (including those CPOs exceeding the number of CPOs authorized under the
    CPO Deed) may be issued. If the CPO Trustee receives any distribution with
    respect to our shares held in the CPO Trust (other than in the form of cash
    or additional shares), the CPO Trustee will adopt such method as it may deem
    legal, equitable and practicable to effect the distribution of such property.
    If we offer, or cause to be offered, to the holders of our shares, the right
    to subscribe for additional shares, subject to applicable law, the CPO Trustee
    will offer to each holder of CPOs the right to instruct the CPO Trustee to
    subscribe for such holder's proportionate share of such additional shares
    (subject to such holder providing the CPO Trustee (through Indeval) with the
    funds necessary to subscribe for such additional shares). If an offering of
    rights occurs and CPO holders provide the CPO Trustee with the necessary funds,
    the CPO Trustee (through Indeval) will subscribe for the corresponding number
    of our shares, which will be placed in the CPO Trust (to the extent possible),
    and deliver additional CPOs (through Indeval) in respect of such shares to
    the applicable CPO holders pursuant to the CPO Deeds or, if applicable, through
    a new CPO deed.
  Holders of ADSs may exercise preemptive rights only
    if we register any newly issued shares under the Securities Act of 1933, as
    amended, or qualify for an exemption from registration. We intend to evaluate
    at the time of any offering of preemptive rights the costs and potential liabilities
    associated with registering additional shares and we may decide not to register
    any additional shares under the Securities Act of 1933. In such case, holders
    of our ADSs would not be able to exercise any preemptive rights.
  According to Mexican law, dividends or other distributions
    and the proceeds from the sale of our shares held in the CPO Trust that are
    not received or claimed by a CPO holder within three years from the receipt
    of such dividends or distributions by the CPO Trustee or ten years from such
    sale will become the property of the Mexican Secretaria de Salud.
  Changes Affecting our Shares
  With respect to our shares, upon any change in par
    value, a stock split, any other reclassification, a merger or consolidation
    affecting us, or if we pay dividends by distributing shares or other goods
    different from our shares, the CPO Trustee shall determine, in an equitable
    and proportional manner, any required amendments to be made to the CPO Trust,
    the CPO Deeds and the CPOs, as well as to the instruments representing such
    CPOs. If in connection with a redemption of our shares, any of our shares
    held in the CPO Trust are called for redemption, the CPO Trustee will, in
    accordance with the instructions of the CPO Technical Committee (as defined
    in "-Administration of the CPO Trust") determine, in any manner deemed to
    be legal, equitable and practicable, the CPOs that are to be redeemed (in
    a number equal to the number of our shares held in the CPO Trust called for
    redemption) and pay the holders of such CPOs their proportionate share of
    the consideration paid by us in respect thereof.
  Voting of our Shares
  Holders of CPOs are not entitled to exercise any
    voting rights with respect to our shares held in the CPO Trust. Such voting
    rights are exercisable only by the CPO Trustee, which is required by the terms
    of the CPO Trust to vote such shares in the same manner as a majority of our
    outstanding shares that are not held in the CPO Trust are voted at the relevant
    shareholders' meeting. Because CPOs grant no voting rights to holders thereof,
    such holders do not have the benefit of any rights (including minority protection
    rights) granted under applicable law or our by-laws to holders of our shares.
  Administration of the CPO Trust
  Pursuant to the terms of the CPO Trust Agreement,
    the CPO Trustee administers the CPO Trust under the direction of a technical
    committee. The technical committee of the CPO Trust, which we refer to as
    the "CPO Technical Committee," consists of five members and their respective
    alternates. Each of the following entities appoints one member of the CPO
    Technical Committee: the Comision Nacional de Inversiones Extranjeras, the
    Mexican Stock Exchange, the Asociacion Mexicana de Casas de Bolsa, the Common
    Representative (as defined below) and the CPO Trustee. Actions taken by the
    CPO Technical Committee must be approved by a majority of the members present
    at any meeting of such committee, at which at least the majority of the members
    are present. Banca Santander Serfin, Sociedad Anonima, Institucion de Banca
    Multiple, Grupo Financiero Serfin, has been appointed as the common representative
    of the holders of CPOs and we refer to it as the "Common Representative."
  Pursuant to the Negotiable Instruments Law, the duties
    of the Common Representative include, among others (i) verifying the
    due execution and terms of the CPO Trust Agreements, (ii) verifying the
    existence of our shares being held in the CPO Trust, (iii) authenticating
    the Global CPO, (iv) exercising the rights of the CPO holders in connection
    with the payment of any dividend or distribution to which such CPO holders
    are entitled, (v) undertaking any other action to protect the rights,
    actions or remedies to which CPO holders are entitled, (vi) calling and
    presiding over CPO holders' general meetings, each of which we refer to as
    a "CPO General Meeting," and (vii) carrying out the decisions adopted
    thereat. The Common Representative may request from the CPO Trustee all
    information and data necessary for the performance of its duties. The CPO
    holders, by a resolution adopted at a duly held CPO General Meeting, may (i) revoke
    the appointment of the Common Representative and appoint a substitute Common
    Representative and (ii) instruct the Common Representative to undertake
    certain actions.
  Holders of CPOs representing at least 10% of the
    aggregate number of outstanding CPOs may request that the Common Representative
    call a CPO General Meeting, including in such request the order of business
    for such meeting. Announcements of CPO General Meetings shall be published
    in the Diario Oficial de la Federacion and in one of the newspapers with the
    widest distribution in the domicile of the CPO Trustee, which is currently
    Mexico City, at least ten days in advance of the date on which the CPO General
    Meeting is scheduled. Announcements of CPO General Meetings shall include
    the order of business for such meetings.
  In order for holders of CPOs to be entitled to attend
    CPO General Meetings, such holders must request a statement from Indeval or
    an Indeval Participant, not less than two days prior to the date on which
    such meeting is scheduled evidencing their holdings of CPOs and must submit
    such statement to the institution designated for such purpose in the notice
    for such meeting on or before the day prior to the date on which such meeting
    is scheduled. Persons appointed by an instrument in writing as representatives
    for a holder of CPOs will be entitled to attend CPO General Meetings.
  At CPO General Meetings, each holder of a CPO will
    be entitled to one vote per CPO owned by him, her or it. Resolutions of the
    CPO holders must be approved by at least a majority of CPOs present at a CPO
    General Meeting at which there is a quorum. A quorum at a CPO General Meeting
    initially is constituted by holders of a majority of CPOs delivered and, if
    no quorum is present at such meeting, any CPOs present at a subsequently called
    CPO General Meeting shall constitute a quorum. Resolutions adopted by the
    required number of CPO at a duly convened CPO General Meeting will bind all
    CPOs, including absent and dissident holders.
  Certain matters must be approved at a special CPO
    General Meeting at which, for the first call, at least 75% of the CPOs delivered
    must be present, and resolutions with respect to such matters must be approved
    by a majority of CPOs present at such meeting. Such matters include appointment
    and revocation of the Common Representative and the granting of consents,
    waivers or grace periods to the CPO Trustee. If a quorum is not present with
    respect to a CPO General Meeting discussing any such matters, a subsequent
    meeting may be called at which action may be taken regardless of the percentage
    of delivered CPOs present at such meeting.
  Enforcement of Rights of CPO Holders
  In accordance with the Negotiable Instruments Law, CPO holders may, with certain limitations, individually and directly exercise
    certain rights with respect to CPOs. Such rights include the right to cause
    the CPO Trustee to distribute dividends or other distributions received by
    it (directly or through Indeval), to cause the Common Representative to protect
    the rights to which the CPO holders are entitled and to enforce such rights
    and to bring actions against the Common Representative for civil liabilities
    in the event of willful misconduct.
  Status of CPO Holders
  The CPO Trust Agreements and the CPO Deeds provide
    that any investor deemed a non-Mexican investor acquiring CPOs shall be considered
    under the CPO Trust Agreement, by virtue of its acquisition of CPOs, to be
    a Mexican national with respect to its holdings of CPOs and shall be deemed
    to have agreed not to invoke the protection of its own government. If such
    protection is invoked, such CPO holder will forfeit its CPOs to the Mexican
    government. A holder of CPOs is deemed to have invoked the protection of the
    home government of such holder by, for example, asking such government to
    interpose a diplomatic claim against the Mexican government with respect to
    the CPO holders' rights or by bringing suit in its home jurisdiction against
    the Mexican government with respect to such rights. CPO holders will not be
    deemed to have waived any of their other rights, including any rights such
    holders may have under the United States securities laws or pursuant to the
    terms and provisions of the CPOs.
  Termination of the CPO Trust
  The CPO Trust Agreement and the CPOs issued under
    the CPO Deeds will expire 30 years after the date of execution of the CPO
    Trust Agreement. The CPO Trustee will commence the procedure for the termination
    of the CPO Trust Agreement 12 months prior to its expiration. At the time
    of such termination, the CPO Trustee will sell our shares held in the CPO
    Trust and will distribute the proceeds of such sale to the holders of the
    CPOs on a pro rata basis in accordance with the number of CPOs owned by each
    holder. The CPO Trust may also be terminated upon a resolution approved by
    a majority of the CPOs present at a CPO General Meeting. Notwithstanding the
    foregoing, the CPO Trust Agreement cannot be terminated if any dividends or
    other distributions previously received by the CPO Trustee remain unpaid to
    the CPO holders.
  Upon the expiration of the CPO Trust Agreement, subject
    to obtaining the applicable authorizations from the Mexican government, the
    CPO Trustee and any CPO holder may execute a new trust agreement with the
    same terms as the CPO Trust Agreement. There can be no assurances that a new
    trust agreement will be executed. In such a case, our shares represented by
    the CPOs owned by any holder who executes the new trust agreement will be
    transferred by the CPO Trustee to the new trust created pursuant to such new
    trust agreement, and new ordinary participation certificates issued under
    the new trust agreement will be issued by the trustee and delivered to such
    holder.
  Limitations Affecting ADSs Holders
  Each of our shares is entitled to one vote at general
    shareholders' meetings. Holders of ADRs and CPOs are not entitled to vote
    the underlying shares. Voting rights with respect to the underlying shares
    are exercisable only by the CPO Trustee, which is required to vote all such
    shares in the same manner as the majority of our shares that are not held
    in the CPO Trust are voted at the relevant meeting.
  Our by-laws prohibit ownership of our shares by non-Mexican
    nationals. Any acquisition of our shares in violation of such provision would
    be null and void under Mexican law and such shares would be cancelled and
    our capital accordingly reduced. Non-Mexican nationals may, however, hold
    an economic interest in our shares through a neutral investment trust such
    as the CPO Trust.
  MATERIAL
  CONTRACTS
  Divestitures
  See "Item 4. Information on the Company-Business-Strategic
    Sales of Non-Core Businesses", for a summary of the terms of the agreements
    governing the divestiture of certain of our subsidiaries.
  Indebtedness
  See "Item 5. Operating and Financial Review
    and Prospects-Liquidity and Capital Resources-Indebtedness" and "Item 5. Operating
    and Financial Review and Prospects-Liquidity and Capital Resources-Off-Balance
    Sheet Arrangements" for a summary of the terms of the agreements and instruments
    governing our and our subsidiaries' material indebtedness.
  Off-Balance Sheet Arrangements
  See "Item 5. Operating and Financial Review and Prospects-Off-Balance
    Sheet Arrangements" for a description of our and our subsidiaries' off-balance
    sheet arrangements.
  ___________________
  EXCHANGE
  CONTROLS
  See
  "Item 3. Key Information-Risk Factors-Changes in the relative value of the
  peso to the U.S. dollar and the Euro may have an adverse effect on us."
  
  MATERIAL TAX CONSEQUENCES
  The following summary contains a description of material
    U.S. federal income tax and Mexican federal income tax consequences of the
    purchase, ownership, sale or other disposition of our ADSs or CPOs by a holder
    who or which is a citizen or resident of the United States, a U.S. domestic
    corporation or a person or entity that otherwise will be subject to U.S. federal
    income tax on a net income basis in respect of our ADSs or CPOs. This discussion
    does not purport to be a description of all of the possible tax considerations
    that may be relevant to the purchase, ownership, sale or other disposition
    of our ADSs or CPOs.
  Mexican Federal Income Taxation
  The following general summary of Mexican taxes is
    based on Mexican federal income tax laws in force on the date of this annual
    report, which laws are subject to change. It is not intended to constitute
    a complete analysis of the tax consequences under Mexican law of the purchase,
    ownership, sale or other disposition of our ADSs or CPOs by persons or entities
    which are not residents of Mexico for tax purposes.
  This summary is limited to non-residents of Mexico,
    as defined below, who own our ADSs or CPOs. Each prospective investor should
    consult his, her or its own tax adviser as to the tax consequences of an investment
    in, the ownership of, and the disposition of, our ADSs or CPOs, including
    the effects of any Mexican, United States or any other jurisdiction's federal,
    state or local tax laws (including, without limitation, income, estate and
    gift tax consequences in any of these jurisdictions).
  For purposes of this summary, the term
  "Non-Resident
    Holder" means a holder that is not a resident of Mexico and does not hold
    our ADSs or CPOs in connection with the conduct of a trade or business through
    a permanent establishment in Mexico. For purposes of Mexican tax law, an individual
    is a resident of Mexico if he or she has established his or her domicile in
    Mexico, or if he or she has another domicile outside Mexico but his or her "center of vital interest" (as defined under the Mexican Fiscal Code) is located
    in Mexico. In addition to certain other circumstances, it is considered that
    the "center of vital interests" of an individual is located in Mexico, if
    more than 50% of that person's total income during a calendar year originates
    from within Mexico and/or the individual's main center of professional activities
    is in Mexico. A Mexican citizen is presumed to be a resident of Mexico unless
    such person can demonstrate that he or she is not a tax resident. A legal
    entity is a resident of Mexico if it has its principal place of business or
    its place of effective management located in Mexico. If a legal entity or
    an individual is deemed to have a permanent establishment in Mexico for tax
    purposes, all income attributable to such a permanent establishment will be
    subject to Mexican taxes, in accordance with applicable tax laws.
  Our ADSs, CPOs and Shares
  Taxation
  of Cash Distributions
  Pursuant to
  the Mexican Income Tax Law, dividends or profits distributed by entities
  organized in Mexico will not be subject to income tax if such profits were
  previously taxed at the entity level. Otherwise such entities shall compute
  the income tax owed on such profits at the then effective tax rate and pay
  such taxes to the Ministry of Finance and Public Credit. In 2006 and 2007 and
  thereafter, the effective tax rate will be 29% and 28%, respectively.
  Non-residents of Mexico will not be subject to income tax on dividends or
  profits paid by a Mexican company.
  Taxation of Sale or Other Disposition
  For Non-Resident Holders, proceeds from the sale
    or disposition of ADSs or CPOs made through an authorized stock exchange (such
    as the NYSE) recognized under a tax treaty to which Mexico is a party and
    meeting certain additional requirements are exempt from Mexican tax, provided
    that the shares of the issuer of such stock are sold or disposed of through
    a stock market holding a concession under the Mexican Law of the Securities
    Market.
  In the case of a public offer to purchase shares,
    there is a taxation exemption of gains realized by stockholders who held the
    applicable shares at the time such securities were registered in the Registro
    Nacional de Valores. Such exemption shall only apply if five years have elapsed
    from the initial placement of such shares on an authorized stock exchange
    or on a stock exchange recognized under a tax treaty to which Mexico is a
    party. Shares are deemed placed on an authorized stock exchange when at least
    35% of the capital stock of such issuer have been placed on such authorized
    stock exchange. If a sale of our shares is made by a Non-Resident Holder on
    a stock exchange in Mexico, fails to satisfy the requirements mentioned in
    this paragraph, taxes will be withheld at a rate of 5%, with no deduction,
    on the gross revenue realized by the seller. Non-Resident Holders may instead
    elect to have tax withheld equal to 20% of the net profit realized from the
    sale of our shares. In either case, the tax would be withheld by the party
    selling the shares through a stock market holding a concession under the Mexican
    Law of the Securities Market.
  Non-Resident Holders are exempt from income tax in
    Mexico arising from the sale or other disposition of our ADSs or CPOs, provided
    the sale satisfies the requirements in the first paragraph of this section.
    If the sale of our ADSs or CPOs by a Non-Resident Holder fails to satisfy
    the requirements in that paragraph, the transaction will be subject to Mexican
    federal tax at a rate of 25% of the gross amount realized, with no deduction.
    If the Non-Resident Holder has a representative in Mexico according to the
    Income Tax Law, and such stockholder is a resident of a country which is not
    deemed subject to a territorial tax regime or a territory with a preferred
    tax regime, such stockholder may instead apply the tax rate of 30% on the
    net profit realized. In addition, such stockholder is required to file an
    opinion of a public accountant registered with the tax authorities setting
    forth such accountant's opinion that the tax was computed in accordance with
    the applicable provisions.
  According to the Tax Treaty (as defined below), gains
    realized by a resident of the United States (a "U.S. Stockholder") from the
    sale of stock (such as our CPOs or ADSs) may only be taxed in Mexico if, during
    the 12 month period preceding such sale, the U.S. Stockholder owned, directly
    or indirectly, at least 25% of our capital stock. Otherwise such gain to a
    U.S. Stockholder will not be subject to income tax in Mexico.
  United States Federal Income Taxation
  The following summary of United States federal
    income taxes is based on United States federal income tax laws in force
    on the date on which this annual report is filed, which laws are subject to
    change, possibly with retroactive effect. It describes the material United States
    federal income tax consequences of the purchase, ownership, sale or other
    disposition of our ADSs or CPOs, as the case may be, by:
  a citizen or resident of the United States;
    a corporation (or entity taxable as a corporation) organized or created in the
  United States, any of its constituent states or their respective political
  subdivisions, as the case may be;
    an estate the income of which is subject to United States federal income tax
  regardless of its source; or
    a trust if a court within the United States is able to exercise primary
  supervision over its administration and one or more United States persons have
  the authority to control all substantial decisions of the trust (each, a
  "United States Holder").This section applies only to holders who hold ADSs
    or CPOs as capital assets (generally, property held for investment) under
    the Internal Revenue Code of 1986, as amended, (the "Code"). This section
    does not provide a complete analysis, listing or other description of all
    of the possible tax consequences of the purchase, ownership, sale or other
    disposition of our ADSs or CPOs, as the case may be, and does not address
    tax consequences to persons with a special tax status such as dealers or traders
    in securities or currencies, United States Holders whose functional currency
    is not the U.S. dollar, persons holding our ADSs or CPOs as part of a hedge,
    straddle, conversion or other integrated transaction, banks, insurance companies,
    real estate investment trusts (REITs), regulated investment companies (RICs),
    tax-exempt entities, certain United States expatriates or corporations owning
    at least 10% of the total combined voting power of our capital stock.
  If a partnership holds our ADSs or CPOs, the tax
    treatment of a partner will generally depend upon the status of the partner
    and upon the activities of the partnership. A partner of a partnership holding
    our ADSs or CPOs should consult his, her or its own tax advisor.
  Investors should consult their tax advisors with
    respect to the tax consequences of the purchase, ownership, sale or other
    disposition of our ADSs or CPOs including consequences under foreign, state
    and local tax laws.
  For United States federal income tax purposes, a
    United States Holder of one of our ADSs generally will be treated as the beneficial
    owner of three CPOs. Each of our CPOs will represent an economic interest
    in one of our shares. The ADSs are evidenced by ADRs (see "Item 9. The Offer
    and Listing-Markets-Trading on the New York Stock Exchange").
  Our ADSs, CPOs and Shares
  Taxation
  of Cash Distributions and Distributions of Stock
  The gross amount of any distribution (other than
    in liquidation), including the fair market value of all distributions of our ADSs or CPOs whenever a holder may elect to receive cash distributions in
    lieu of distributions of our ADSs or CPOs, that you receive with respect to
    our ADSs or CPOs (before reduction for any Mexican tax, if any, withheld from
    such distributions) generally will be includible in your gross income on the
    day on which the Depositary receives such distribution on behalf of the holder
    of the applicable ADSs or CPOs. Depending on the amount of the dividend and
    the amount of the United States Holder's tax basis in the applicable ADSs
    or CPOs, distributions will be taxed in the following manner.
  To the extent that distributions paid by us with
    respect to the underlying shares do not exceed our earnings and profits ("E&P"),
    as calculated for United States federal income tax purposes, such distributions
    will be taxed as dividends. To the extent that distributions by us exceed
    our E&P, such distributions will be treated as a tax-free return of capital
    by both individual and corporate United States Holders to the extent of each
    such United States Holder's basis in our ADSs or CPOs they hold, and will
    reduce such United States Holder's basis in such ADSs or CPOs on a dollar-for-dollar
    basis (thereby increasing any gain or decreasing any loss on a disposition
    of such ADSs or CPOs). To the extent that the distributions exceed the United
    States Holders' basis in our ADSs or CPOs they hold, each such individual
    or corporate United States Holder will be taxed as having recognized gain
    on the sale or disposition of such ADSs or CPOs. See "Item 9. The Offer and
    Listing-Markets-Our ADSs, CPOs and shares-Taxation of Sale or Other
  Disposition."
  We anticipate that any distributions on our ADSs
    and CPOs will be made in pesos, and any dividends so paid generally will be
    includible in a United States Holder's gross income in a U.S. dollar amount
    calculated by reference to the exchange rate in effect on the day the CPO
    Trustee or Depositary, as applicable, receives the dividend. It is expected
    that the Depositary will, in the ordinary course, convert pesos received by
    it as distributions on our ADSs or CPOs into U.S. dollars. To the extent that
    the Depositary does not convert the pesos into U.S. dollars at the time that
    such United States Holder is required to include the distribution into gross
    income for United States federal income tax purposes, such United States Holder
    may recognize foreign exchange gain or loss, taxable as ordinary income or
    loss, on the later conversion of the pesos into U.S. dollars. The gain or
    loss recognized will generally be based upon the difference between the exchange
    rate in effect when the pesos are actually converted and the "spot" exchange
    rate in effect at the time the distribution is included in such United States
    Holder's gross income and any gain will generally be treated as United States-source
    income for United States foreign tax credit limitation purposes.
  Dividends paid by us will generally be treated as
    foreign source income for United States foreign tax credit limitation
    purposes. Subject to certain limitations, United States Holders generally
    may elect to claim a foreign tax credit against their United States federal
    income tax liability for foreign tax withheld (if any) from dividends received
    in respect of our ADSs or CPOs, as applicable. The limitation on foreign taxes
    eligible for credit is calculated separately with respect to specific classes
    of income. For this purpose, dividends paid in respect of our ADSs or CPOs,
    as applicable, generally will be "passive income" and therefore any United States
    federal income tax imposed on these dividends cannot be offset by excess foreign
    tax credits that such United States Holders may have from foreign source income
    not qualifying as passive income, respectively. United States Holders
    that do not elect to claim a foreign tax credit may instead claim a deduction
    for foreign tax withheld (if any).
  Distributions of our shares to the CPO Trustee with
    respect to its holdings of our shares and distributions of our ADSs and CPOs
    to United States Holders with respect to their holdings of our ADSs and
    CPOs, as the case may be (such previously held ADSs or CPOs, "Old Stock"),
    that are pro rata with respect to their holdings of Old Stock will generally
    not be subject to United States federal income tax (except with respect
    to cash received in lieu of fractional shares, CPOs and ADSs). The basis of
    our CPOs and ADSs so received will be determined by allocating the United States
    Holder's adjusted basis in the Old Stock between the Old Stock and the CPOs
    and ADSs so received.
  Taxation
  of Sale or Other Disposition
  Unless a nonrecognition provision applies, a United States
    Holder will recognize capital gain or loss upon a sale or other disposition
    of our ADSs or CPOs in an amount equal to the difference between the amount
    realized on their disposition and such United States Holder's basis in
    our ADSs or CPOs. Under current law, capital gains realized by corporate and
    individual taxpayers are generally subject to United States federal income
    taxes at the same rate as ordinary income, except that long-term capital gains
    realized by individuals, trusts and estates are subject to federal income
    taxes at a maximum rate of 15% currently. Certain limitations exist on the
    deductibility of capital losses by both corporate and individual taxpayers.
    Capital gains and losses on the sale or other disposition by a United States
    Holder of our ADSs or CPOs generally should constitute gains or losses from
    sources within the United States.
  For cash basis United States Holders who receive
    foreign currency in connection with a sale or other taxable disposition of
    our ADSs or CPOs, as applicable, the amount realized will be based on the
    U.S. dollar value of the foreign currency received with respect to such ADSs
    or CPOs as determined on the settlement date of such sale or other taxable
    disposition.
  Accrual basis United States Holders may elect
    the same treatment required of cash basis taxpayers with respect to a sale
    or other taxable disposition of our ADSs or CPOs, as applicable, provided
    that the election is applied consistently from year to year. Such election
    may not be changed without the consent of the United States Internal Revenue
    Service. Accrual basis United States Holders who or which do not elect
    to be treated as cash basis taxpayers (pursuant to the United States Treasury
    Department Regulations applicable to foreign currency transactions) for this
    purpose may have a foreign currency gain or loss for United States federal
    income tax purposes because of differences between the U.S. dollar value of
    the foreign currency received prevailing on the date of the sale or other
    taxable disposition of our ADSs or CPOs, as applicable, and the date of payment.
    Any such currency gain or loss generally will constitute gain or loss from
    sources within the United States and generally will be treated as ordinary
    income or loss and would be in addition to gain or loss, if any, recognized
    on the sale or other taxable disposition of our ADS or CPOs, as applicable.
  Passive Foreign Investment Company Considerations
  We believe that we are not currently, and we do not
    expect to become, a passive foreign investment company ("PFIC") for U.S. federal
    income tax purposes. Because this determination is made annually at the end
    of each of our taxable years and is dependent upon a number of factors, some
    of which are beyond our control, including the value of our assets and the
    amount and type of our income, there can be no assurance that we will not
    become a PFIC. In general, a corporation organized outside the United States
    will be treated as a PFIC for United States federal income tax purposes in
    any taxable year in which either (a) at least 75% of its gross income is "passive
    income" or (b) on average at least 50% of the value of its assets is attributable
    to assets that produce passive income or are held for the production of passive
    income. If a United States Holder owns our ADSs or CPOs at a time when we
    become a PFIC and is not eligible to make or does not make certain elections
    with respect to our ADSs or CPOs, such United States Holder could be liable
    for additional taxes and interest charges upon certain distributions by us
    or upon a sale, exchange or other disposition of such shares at a gain, whether
    or not we continue to be a PFIC.
  Deposits, Withdrawals and Pre-Releases
  Deposits and withdrawals by United States Holders
    of our CPOs in exchange for our ADSs and of our ADSs in exchange for our CPOs
    will not be subject to any United States federal income tax. The United
    States Treasury Department, however, has expressed concerns that parties involved
    in transactions where depositary shares are pre-released may be taking actions
    that are not consistent with the claiming of foreign tax credits by the holders
    of the applicable ADSs. Accordingly, the analysis of the credibility of Mexican
    taxes described above could be affected by future actions that may be taken
    by the United States Treasury Department.
  United States Backup Withholding and Information
    Reporting
  In general, information reporting requirements will
    apply to payments of dividends on our ADSs or CPOs and the proceeds of certain
    sales of our ADSs or CPOs in respect of United States Holders other than
    certain exempt persons (such as corporations). A 28% backup withholding tax
    will apply to such payments if the United States Holder fails to provide
    a correct taxpayer identification number or other certification of exempt
    status or, with respect to certain payments, the United States Holder
    fails to report in full all dividend and interest income and the United States
    Internal Revenue Service notifies the payer of such under-reporting. Amounts
    withheld under the backup withholding rules may be credited against a holder's
    United States federal tax liability, and a refund of any excess amounts
    withheld under the backup withholding rules may be obtained by filing the
    appropriate claim form with the United States Internal Revenue Service.
  Tax Treaties
  The
  benefits of treaties for avoidance of double taxation shall only be applicable
  to taxpayers who can demonstrate that they are tax residents in the applicable
  country for tax purposes and who comply with the conditions of the respective
  treaty.
  A
  Convention for the Avoidance of Double Taxation and the Prevention of Fiscal
  Evasion with Respect to Taxes on Income and a Protocol thereto (as amended by
  two additional Protocols, the "Tax Treaty") between the United States and
  Mexico became effective on January 1, 1994. Provisions of the Tax Treaty that
  may affect the taxation of certain United States Holders are included above.
  The United States and Mexico have also entered into an agreement that covers
  the exchange of information with respect to tax matters.
  In
  addition, Mexico has in effect similar tax treaties with Argentina, Australia,
  Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, Denmark,
  Ecuador, Finland, France, Germany, Greece, Indonesia, Ireland, Israel, Italy,
  Japan, Korea, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania,
  Singapore, Spain, Sweden, Switzerland and the United Kingdom.
  WHERE YOU CAN FIND MORE INFORMATION
  We are
  subject to the informational reporting requirements of the Securities Exchange
  Act of 1934, as amended, which we refer to as the "Exchange Act," and file the
  following with the SEC:
  annual reports on Form 20-F;
    certain other reports or information that we make public under Mexican law,
  file with the CNBV and the Mexican Stock Exchange or distribute to our
  shareholders; and
    other information.You may access and read our SEC filings through the
    SEC's Internet site at http://www.sec.gov. This site contains reports and
    other information that we file electronically with the SEC.
  You may also read and copy any reports or other information
    that we file with the SEC at the SEC's public reference room at 100 F Street,
    N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
    information on the public reference room. In addition, materials filed by
    us may also be inspected at the offices of the NYSE at 20 Broad Street, New
    York, New York 10005.
  As a
  foreign private issuer, we are exempt from the rules under the Exchange Act
  prescribing the furnishing and content of proxy statements and are not
  required to file proxy statements with the SEC. In addition, our officers,
  directors and principal shareholders are exempt from the reporting and "short
  swing" profit recovery provisions contained in Section 16 of the Exchange Act.
  You may
  obtain copies of any of our SEC filings or any other document described in
  this annual report by requesting them in writing or by telephone at the
  following address and phone number:
  Vitro, S.A.B. de C.V.
  Ave. Ricardo Margain Zozaya 400,
  Col. Valle del Campestre, San Pedro Garza Garcia,
  Nuevo Leon, 66265 Mexico
  Attention: Investor Relations Department
  Telephone number: (52-81) 8863-1200
  You may obtain additional information about us through
    our web site at http://www.vitro.com. The information contained therein is
    not part of this annual report.
  
  DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES
  Pursuant to
  Section 303A.11 of the Listed Company Manual of the New York Stock Exchange
  (NYSE), we are required to provide a summary of the significant ways in which
  our corporate governance practices differ from those required for U.S.
  companies under the NYSE listing standards.
  The table
  below discloses the significant differences between our corporate governance
  practices and the NYSE standards.
  NYSE
              Standards
        Our
              Corporate Governance PracticesDirector  Independence. Majority of board of directors
          must be independent. 303A.01
      Director
          Independence. Pursuant
          to the Mexican Securities Market Law, our shareholders are required
          to appoint a Board of Directors in which at least 25% of its members
          must be independent as defined under the Mexican Securities Market Law.
          However, Vitro has a Board of Directors composed of sixteen members,
          out of whom ten are independent, this is, 62.5% are considered independent
          directors. The Ordinary Shareholders Meeting is required to make a determination
          as to the independence of our directors and the CNBV has a term of 30
          days to challenge such determination. The definition of independence
          under Mexican law differs from the NYSE standards. Under Article 26
          of the Mexican Securities Market Law, a director is not independent
          if such director is:(i) Key Executive Directors, an employee
          or the subsidiaries of the Company (one year cooling off period); ;(ii) a person who has a significant influence
          or authority over the Company or the Company's subsidiaries;(iii) a shareholder who is part of the control
          group of the Company(iv) an important client, supplier, debtor
          or creditor (or a partner, director or employee thereof). A client and
          supplier is considered important where its sales to or purchases from
          the company represents more than 10% of the client's or supplier's total
          sales or purchases. A debtor or creditor is considered important whenever
          its loan or credit from to the company represents more than 15% of the
          debtor's or creditor's total assets;(v) an employee of a non-profit entity that
          receives contributions from the company that represent more than 15%
          of the total contributions received;(vi) a CEO or other high ranking officer
          of another company in which the issuer's CEO or other high ranking officer
          is a member of the Board of Directors; or(vii) a "family member" related to any of
          the persons mentioned above in (i) through (iv)."Family member"
          includes a person's relative of up to four degrees of consanguinity,
          affinity or civil, or a person's spouse or partner, in the case of (i)
          and (iv) above.Executive Sessions.Non-management directors must meet regularly in executive sessions without
          management. Independent directors should meet alone in an executive
          session at least once a year. Also,  303A.03requires a process for interested
          parties to communicate their concerns to non-management directors.
      Executive
          Sessions. Our non-management directors have not held executive
          sessions without management in the past, and under our bylaws and applicable
          Mexican law, they are not required to do so.Nominating/Corporate Governance
          Committee.Nominating/corporate
          governance committee of entirely independent directors is required.
          The committee must have a written charter specifying the purpose, duties
          and evaluation procedures of the committee.  303A.04
      Nominating
          Committee. We do not have a nominating committee or corporate
          governance committee. We are not required to have a nominating/corporate
          governance committee, and it is not expressly recommended by the Mexican
          Securities Market Law. However the charter of the Corporate Practices
          Committee provides that this Committee shall supervise the composition
          of the Board and ensure compliance with the maximum number of members
          and with the minimum number of independent directors, as provided by
          Mexican law.Compensation Committee.Compensation committee of independent directors is required, which must
          evaluate and approve executive officer compensation. The committee must
          have a charter specifying the purpose, duties and evaluation procedures
          of the committee.  303A.05
      Compensation
          Committee. The relevant compensation matters are brought to
          the attention of the Corporate Practices Committee, such as the (i)
          appointment and removal of the CEO and his or her total compensation,
          as well as the total compensation of the Chairman of the Board of Directors;
          (ii) approval of the policies for the appointment and total compensation
          of the other Key Executive Directors and (iii) approval of the maximum
          percentage of wages and salary increases per year.Our committee
          does not produce a report on executive compensation.Audit Committee.Audit committee satisfying the independence and other requirements of
          Rule 10A-3 under the Exchange Act and the more stringent requirements
          under the NYSE standards is required.  303A.06, 303A.07.
        The audit committee must be composed of a minimum of three independent
          drectors, one of whom must have accounting or related financial management
          expertise. The committee must have written charter specifying the purpose,
          duties and evaluation procedures of the committee. Additionally, listed
          a company must have an internal audit function to assess risk management
          processes and the company's system of internal control.
      Audit
          Committee. We have an audit committee of four members plus a
          non-member financial expert. Each member of the audit committee is independent,
          as independence is defined under the Mexican Securities Market Law,
          and also meets the independence requirements of Rule 10A-3 under the
          U.S. Securities Exchange Act of 1934, as amended. Our audit committee
          operates primarily pursuant to a written charter adopted by our Board
          of Directors.Equity Compensation Plans.Equity compensation plans require shareholder approval, subject to limited
          exemptions.  303A.08 , 312.03 & 312.04
      Equity
          Compensation Plans.Shareholder approval is not expressly required
          under Mexican law or our bylaws for the adoption and amendment of an
          equity-compensation plan. However, regulations of the Mexican Banking
          and Securities Commission require shareholder approval under certain
          circumstances.Shareholder
          Approval for Issuance of Securities.Shareholder approval is required, subject
          to limited exceptions, for issuance of common stock, or of any securities
          convertible into or exercisable for common stock (even if not listed
          on the NYSE), (1) to a director, officer or substantial security holder
          of the company (each, a "Related Party"), (2) to a subsidiary, affiliate
          or other closely-related person of a Related Party, (3) to a company
          or entity in which a Related Party has a substantial interest, if the
          number of shares of common stock, or securities convertible or exercisable
          for common stock exceeds one percent of the nymber of shares of common
          stock or one percent of the voting power outstanding before such issuance,
          (4) that have voting power equal to at least 20% of the outstanding
          common stock voting power before such issuance, (5) that will increase
          the number of outstanding shares of common stock by at least 20% of
          the number of outstanding shares before such issuancer or (6) that will
          result in a change of control of the issuer.  312.03(b)-(e) & 312.04
      Shareholder Approval for Issuance of Securities. Mexican law
          and our bylaws require us to obtain shareholder approval of the issuance
          of equity securities.Code of Business Conduct and Ethics.Corporate governance guidelines and a code of business conduct and
          ethics are required, with prompt disclosure of any waiver for directors
          or executive officers. The guidelines and code must be disclosed and
          publicly available and the code must contain compliance standards and
          procedures that will facilitate the effective operation of the code.

          303 A.09 & 303A.10
      Code
          of Business Conduct and Ethics. We have adopted a code of ethics,
          which has been accepted by all of our directors and executive officers
          and other personnel. Our Corporate Practices Committee monitors the
          applicability of our code of ethics, and may propose amendments to the
          same, according to its charter. A copy of our code of ethics is available
          on our web site: www.vitro.com.Solicitation of Proxies.Solicitation of proxies and provision for proxy materials is required
          for all meetings of shareholders. Copies of such proxy solicitations
          are to be provided to NYSE. 402.01 & 402.04-.06
      Solicitation
          of Proxies. Pursuant to the provisions of the Mexican Securities
          Law, beginning on the date when the notice to the shareholders meeting
          is published, we immediately and free of any charge, make available
          to the shareholders the documents and information related to each item
          of the meeting agenda.
        Likewise,
          pursuant to the Mexican Securities Law, in order for the shareholders
          to be represented in the shareholders meetings, we elaborate and make
          available to them power of attorney forms that contain at least: a) The name of the Company, the items of the agenda and some blank spaces
          to be filled in by the shareholders to instruct their representatives
          how to exercise such power of attorney.Website Requirements.The
          company must maintain a website that includes printable versions of
          board committee charters, corporate governance guidelines and the code
          of business conduct and ethics. Additionally, a foreign private issuer
          must include on its website English language disclosure of significant
          differences between its corporate governance practices and the NYSE
          standards.
      Website
          Requirements. Pursuant to the applicable Mexican Law, we are
          not required to maintain printable versions of any document at our website
          nor information of significant differences between our corporate practices
          and NYSE standards. Additionally, we are not required to have information
          available other than in Spanish.  Under Mexican Law, we are required
          to maintain an updated website in Spanish that includes our current
          bylaws, our annual and quarterly reports and compliance report with
          the corporate governance code (codigode mejores practicas corporativas), material corporate restructuring
          and information about relevant events. Additionally, our
          website contains Spanish printable versions of the charters of the Corporate
          Practices Committee, the Audit Committee and the Finance and Planning
          Committee as well as of the compliance report with the corporate governance
          code and of the code of ethics. We also have available at our website
          the English version of the significant differences between our corporate
          governance practices and the NYSE standards.
  AVAILABLE INFORMATION
  We file reports, including annual reports on Form
    20-F, and other information with the SEC pursuant to the rules and regulations
    of the SEC that apply to foreign private issuers. You may read and copy any
    materials filed with the SEC at its Public Reference Room at 100 F Street, N.E.,
    Washington, D.C. 20549. You may obtain information on the operation of the
    Public Reference Room by calling the SEC at 1-800-SEC-0330. As a foreign private
    issuer, we have been required to make filings with the SEC by electronic means
    since November 2002. Any filings we make electronically will be available
    to the public over the Internet at the SEC's web site at www.sec.gov and at
    our web site at http://www.vitro.com. (This URL is intended to be an inactive
    textual reference only. It is not intended to be an active hyperlink to our
    web site. The information on our web site, which might be accessible through
    a hyperlink resulting from this URL, is not and shall not be deemed to be
    incorporated into this Annual Report.)
  
  Item 11.Quantitative and Qualitative Disclosures
    About Market Risk
  Quantitative and Qualitative Disclosures About Market
    Risk
  Our
  business activities require that we hold or issue financial instruments which
  expose us to market fluctuations of interest rates and foreign currency
  exchange rates. To minimize our exposure to these risks, we utilize financial
  derivative instruments. We enter into derivative transactions for periods and
  amounts consistent with related underlying exposures. We do not enter into
  derivative transactions for arbitrage or speculative purposes. See note 3 h)
  and 9 to our consolidated financial statements.
  Debt Subject to Market Risk
  The table below sets forth information, as of December 31,
    2006, regarding our debt obligations with maturities originally extending
    for more than one year and that are sensitive to changes in interest rates
    or foreign currency exchange rates. For these debt obligations, the table
    presents scheduled principal payments according to their respective maturity
    dates. The fair value of long-term fixed-rate debt is based on (i) if there
    is an observable market, the quoted market prices for the debt instrument
    (for example, the 2013 Senior Notes) or (ii) if there is not an observable
    market, the present value of future cash flows, discounted back using the
    yield curve that applies to the most recent issuance of a comparable instrument.
    The financial data set forth in the following table has been restated in millions
    of constant pesos as of December 31, 2006.
  Expected
            Maturity Date
      2007
      2008
      2009
      2010
      2011
      Thereafter
      Total
      Fair Value(million, except for percentages)Fixed-Rate Debt:Dollar-denominated(1)
      Ps.
        5
      Ps.
        6
      Ps.
          7
      Ps.
        7
      Ps.
        8
      Ps. 8,767
      Ps.
          8,801
      Ps. 9,310Weighted-average
          coupon
      10.81%Floating-Rate Debt:Dollar-denominated(1)
      Ps. 20
      Ps. 37
      Ps.
          87
      Ps. 34
      Ps. 35
      Ps. 2,257
      Ps.
          2,470
      Ps. 2,470Weighted-average interest rate...
      LIBOR plus 4.82%Euro-denominated(2)
      Ps. 24
      Ps. 20
      Ps.
          0
      Ps.
        2
      Ps.
        2
      Ps. 10
      Ps. 58
      Ps.
          58Weighted-average interest rate
      Euribor plus 1.02%Peso-denominated
      Ps.
        0
      Ps. 567
      Ps.
          150
      Ps.
        0
      Ps.
        0
      Ps.
        0
      Ps. 717
      Ps.
          717Weighted-average interest rate
      CETES plus 4.10%
  
  (1) The principal amount of our dollar-denominated debt
    was translated to pesos at Ps.10.8116 per U.S. dollar, the Free Exchange Rate
    as of December 31, 2006.
  (2) The principal amount of our euro-denominated debt
    was translated at 14.2680 per euro, the exchange rate as of December 31, 2006.
  Interest Rate Risk
  Our
  exposure to market risk associated with changes in interest rates relates
  primarily to our floating-rate debt obligations. In the ordinary course of
  business, we enter into interest rate swap agreements to hedge future interest
  payments under floating-rate debt.
  On June
  2005, we entered into two new interest rate swaps with a starting nominal
  amount of $282 million, which will decrease quarterly as agreed with our
  counterparty. The swaps will hedge the average of our Libor based debt with
  the effect of converting it into fixed interest rate debt at an average rate
  of 4.0535% starting January 2006 through December 2007. This swap has an
  extendible option that our counterparty can exercise for two more years. As of
  December 31, 2006, the fair value of these instruments was an asset of $2.0
  million.
  Notional
        Amount
        (million)
      Company
        pays
          interest
        rate
      Company
        receives
          interest
        rate
      Period
      Fair
          valueLibor interest rate options:
      
      
      
      
      (million)Purchase
          calls
      $
          154.5
      4.10
          %
      Libor
          3M
      January
          to December 2007
      $ 1.7Purchase calls
      $
          42.2
      4.10
          %
      Libor
          6M
      January
          to December 2007
      $ 0.3Total interest rate options
      
      
      
      
      $ 2.0
  In July 2006, we entered into an interest rate swap,
    in which the Company exchanged fixed rate payments denominated in US dollars
    at 10.75% for a floating rate (TIIE + 2.79%) denominated in Mexican pesos,
    for a nominal amount of $250 million, starting July 2006 through July 2011.
    As of December 31, 2006, the fair market value of this instrument was an asset
    of $6.2 million.
  In July 2006, we entered into an interest rate swap,
    in which the Company exchanged fixed rate payments denominated in US dollars
    at 11.75% for a floating rate (TIIE + 3.90%) denominated in Mexican pesos,
    for a nominal amount of $225 million, starting July 2006 through November
    2013. As of December 31, 2006, the fair market value of this instrument was
    an asset of $7.8 million.
  Notional
        Amount
        (million)
      Company
        pays
          interest
        rate
          (MXN)
      Company
        receives
          interest
        rate
          (USD)
      Period
      Fair
          valueCross Currency Swaps:
      
      
      
      
      (million)Purchase
          of swaps
      $
          250.0
      TIIE
          + 2.79 %
      10.75
          %
      January
          2006 to July 2011
      $
          6.2Purchase
          of swaps
      $
          225.0
      TIIE
          + 3.90 %
      11.75
          %
      January
          2006 to November 2013
      $
          7.8Total cross currency swaps
      
      
      
      
      * $ 14.0
  *Amounts net of payment provisions from the counterparty of
    $13.2 million
  In February 2007, we entered into a cross currency
    swap mainly to hedge future interest payments and our exposure to U.S. dollar
    exchange rate variations derived from the $1.0 billion financing transaction.
    See "Item 3. Key Information-Recent Developments-Corporate Restructuring and
  Recapitalization." Through this derivative financial instrument we exchange
    fixed rate payments denominated in US dollars for a floating rate (TIIE based)
    denominated in Mexican pesos and a fixed currency exchange, and the counterparty
    agreed to exchange fixed rate payments denominated in U.S. dollar.
  Foreign Currency Exchange Rate Risk
  Our
  exposure to market risk associated with changes in foreign currency exchange
  rates. In the ordinary course of business, we enter into currency swap and
  option agreements to hedge our exposure to foreign currency exchange rate
  variations. The table below sets forth information, as of December 31, 2006,
  regarding our currency swaps and options, which expire in 2007 used to hedge
  our exposure to U.S. dollar exchange rate risk.
  Currency
            Exchange Options
      Notional Amount
      Fair Value(million)Options covering dollar-denominated debt:Receive
          in USD
      $
          21
      $
          0.1Pay in pesos
      Ps. 227
      Ps. 1.2
  In August
  2006, we entered into a structured collar, with a floor at a price of 10.28
  pesos per dollar and a cap at 11.28 pesos per dollar, starting March 2007
  through November 2007. As of December 31, 2007, the fair value of this
  instrument was zero.
  In October
  2006, we entered into a structured collar, with a floor at a price of 10.40
  pesos per dollar and a cap at 11.45 pesos per dollar, starting March 2007
  through November 2007. As of December 31, 2007, the fair value of this
  instrument was a liability of $0.03 million.
  In October
  2006, we entered into a currency cap, with cap price at $11.31 pesos per
  dollar, starting March 2007 through November 2007. As of December 31, 2007,
  the fair value of this instrument was an asset of $0.05 million.
  In October
  2006, we entered into a currency cap, with cap price at $11.16 pesos per
  dollar, starting March 2007 through November 2007. As of December 31, 2007,
  the fair value of this instrument was an asset of $0.08 million.
  In February 2007, we entered into a cross currency
    swap mainly to hedge future interest payments and our exposure to U.S. dollar
    exchange rate variations derived from the $1.0 billion financing transaction. Through this derivative financial instrument we exchange fixed rate payments
    denominated in US dollars for a floating rate (TIIE based) denominated in
    Mexican pesos and a fixed currency exchange, and the counterparty agreed to
    exchange fixed rate payments denominated in U.S. dollar.
  Natural Gas Price Risk
  The Company enters into different swap and derivative
    agreements with different counterparties to protect ourselves against the
    volatility of natural gas prices. NYMEX natural gas prices have increased
    from an average price of $3.22 during 2002 to an average price of $7.23 during
    2006, representing a cumulative increase of 125%. During 2005, hurricanes
    Katrina and Rita made landfall within the production area of the Gulf of Mexico,
    curtailing production by approximately 20.5% of the yearly production of gas
    in the Gulf of Mexico.
  The Company's natural gas consumption during 2006
    was 20.2 million MMBTUs.
  The purchase price for the natural gas that the Company
    utilized during 2006 was $8.40 per MMBTU. This price reflects the effects
    of: a) The Presidential Decree in effect from September 2005 through January
    2006, which established that 79% of natural gas prices for industrial use
    would be $7.253 per MMBTU, and 21% of natural gas prices would be the market
    price as of Canasta Reynosa, and b) hedges that the Company had during 2006,
    which were equivalent to 93% of the Company's natural gas consumption in 2006.
  In order to try to limit our exposure to the volatility
    of natural gas prices, we entered into hedges with several financial and other
    institutions, including Cargill, as well as with Pemex. As of December 31,
    2006, we had hedges on the price of natural gas for 12.7 million MMBTUs or
    57% of our expected consumption needs in Mexico for the year ending December
    31, 2007. As of December 31, 2006, the fair market value of these hedges was
    a liability of $9.1 million.
  Notional
        Amount
        (MMBTUs)
      Period
      Fair
          valueNatural Gas Hedge Contracts
      
      
      (million)Purchase
          of swaps
      5,500,000
      January
          to December 2007
      $ (5.2)Structured
          collars
      4,800,000
      January
          to December 2007
      $ (0.4)Structured
          collars
      2,400,000
      January
          to December 2007
      $ (3.5)Total Natural gas hedge contracts
      
      
      $ (9.1)
  Item 12.Description of Securities Other than
    Equity Securities
  Not
  applicable.
  Item
  13.Defaults, Dividend Arrearages and Delinquencies
  Covenant Compliance
  The indentures governing a substantial portion of
    our indebtedness contain certain customary restrictive covenants, including
    restrictions on our ability to (i) incur additional indebtedness, unless,
    at the time of the incurrence, we satisfy certain conditions, (ii) pay dividends
    above a certain permitted amount or make other restricted payments, (iii)
    grant certain liens on our assets, (iv) make certain investments and (v) take
    part in certain merger, consolidation and asset sale transactions.
  As of
  December 31, 2006, under the restrictive covenants of our current
  indebtedness, we would be prohibited from incurring any additional debt other
  than certain limited permitted debt exceptions. However, as of such date our
  creditors were not allowed to call any of our outstanding debt.
  
  Item 14.Material Modifications to the Rights
    of Security Holders and Use of Proceeds
  Not
  applicable.
  Item 15T.Controls and Procedures
  We have evaluated, with the participation of our
    Chief Executive Officer, Chief Financial Officer and Chief Administrative
    Officer, the effectiveness of our disclosure controls and procedures as of
    December 31, 2006. There are inherent limitations to the effectiveness
    of any system of disclosure controls and procedures, including the possibility
    of human error and the circumvention or overriding of the controls and procedures.
    Accordingly, even effective disclosure controls and procedures can only provide
    reasonable assurance of achieving their control objectives. Based upon our
    evaluation as described below, our Chief Executive Officer, Chief Financial
    Officer and Chief Administrative Officer concluded as of December 31 2006,
    that the Company's disclosure controls and procedures were not effective to
    provide reasonable assurance that information required to be disclosed by
    us in the reports that we file or submit under the Exchange Act is recorded,
    processed, summarized and reported, within the time periods specified in the
    applicable rules and forms, and that it is accumulated and communicated to
    our management, including our Chief Executive Officer, Chief Financial Officer
    and Chief Administrative Officer, as appropriate to allow timely decisions
    regarding required disclosure. Our conclusion was impacted by the material
    weakness described below.
  The management of Vitro, S.A.B. de C.V. is responsible
    for establishing and maintaining an adequate internal control over financial
    reporting. With the participation and under the supervision of the Chief Executive
    Officer, the Chief Financial Officer and the Chief Administrative Officer,
    our management conducted an evaluation of the effectiveness of the Company's
    internal control over financial reporting as of December 31, 2006, based on
    the framework and criteria established in Internal Control - Integrated Framework,
    issued by the Committee of Sponsoring Organizations of the Treadeway Commission
    (COSO).
  The assessment included the documentation and understanding
    of the Company's internal control over financial reporting. Management evaluated
    the design effectiveness and tested the operating effectiveness of internal
    controls over financial reporting to form its conclusion.
  Based on its evaluation, management concluded that
    as of December 31, 2006, the Company's internal control over financial reporting
    was not effective as a result of certain material weaknesses identified in
    the financial reporting cycle, specifically with regards to the calculation
    of deferred income taxes and the conversion of financial statements of foreign
    subsidiaries to Mexican FRS.
  During 2006, there have not been any changes in the
    Company's internal control over financial reporting that have materially affected,
    or are reasonably likely to materially affect, the Company's internal control
    over financial reporting, except for the implementation of new internal controls
    regarding our U.S. GAAP financial reporting.
  We are
  focused on improving and maintaining an effective internal control structure.
  In order to remediate the material weaknesses identified by us, we are in the
  process of implementing new controls and procedures related to the
  preparation, review and presentation of our financial information. These
  measures include the following modifications to our internal controls:
  reinforcement of personnel knowledge base regarding technical accounting
  matters;
    hiring a professional service firm to assist our accounting staff with the
  implementation of superior processes and new internal controls; and
    Genesis Project implementation, including ERP conversion
    across Vitro's global operating model. See "Item 3. Key Information-Recent
  Developments-Genesis Project."This annual
  report does not include an attestation report of the Company's registered
  public accounting firm regarding internal control over financial reporting.
  Management's report was not subject to attestation by the company's registered
  public accounting firm pursuant to temporary rules of the Securities and
  Exchange Commission that permit the Company to provide only management's
  report in this annual report.
  Item 16.
    Reserved
  Item 16A.
    Audit Committee Financial Expert
  As required by the regulations issued by the CNBV,
    on August 26, 2004, the Audit Committee engaged Mr. Alfonso Gonzalez Migoya
    as the experto financiero (financial expert), serving as advisor to the Audit
    Committee of our Board of Directors. Although the attributes necessary to
    be an experto financiero for purposes of the CNBV's regulation are not the
    same attributes necessary to be an "audit committee financial expert" under
    the rules and regulations issued by the SEC and the listing standards of the
    NYSE, Mr. Alfonso Gonzalez meets all the requisite qualifications to be an "audit committee financial expert", except that he is not a member of our
    Board of Directors. He receives compensation from us for his services rendered
    to the Audit Committee.
  None of our directors meet the qualifications to
    be an "audit committee financial expert" (as defined under the rules and regulations
    of the SEC and the listing standards of the NYSE). We consider that the current
    number and composition of our Board of Directors is appropriate to effectively
    govern us and set our strategic direction. In addition, in accordance with
    the guidelines of the Mexican Codigo de Mejores Practicas Corporativas, or
    best corporate practices code, we have decided not to increase the size of
    our Board of Directors, which would have allowed us to include a Director
    meeting the qualifications to be an "audit committee financial expert" on
    our Board of Directors and Audit Committee.
  Item 16B.
    Code of Ethics
  We have adopted a code of ethics (as defined under
    the rules and regulations of the SEC) that applies to our principal executive
    officer, principal financial officer and principal accounting officer, among
    others. The code of ethics became effective on February 1, 2004 and is available
    on our website at www.vitro.com. If the provisions of the code of ethics that
    applies to our principal executive officer, principal financial officer or
    principal accounting officer are amended, or if a waiver therefrom is granted,
    we will disclose such amendment or waiver on our website at the same address.
    As part of our Code of Ethics, on March 2005, we launched our anonymous internet
    submission system where all of our employees can denounce violations to the
    Code of Ethics, the website of this system is www.resultor.com/vitro/. On
    the same date, a toll free number was enabled to also receive such complaints;
    this toll free number is 001-877-LEALTAD (532-5823).
  Since the
  effectiveness of the code of ethics, it has not been amended nor have any
  waivers therefore been granted.
  Item
    16C. Principal Accountant Fees and Services
  The following table sets forth, for the periods indicated,
    the aggregate fees billed to us by Galaz, Yamazaki, Ruiz Urquiza, S.C., Member
    of Deloitte Touche Tohmatsu, which we refer to as "Deloitte," our independent registered public accounting firm for (i) Audit Fees, (ii) Audit-Related
    Fees, (iii) Tax Fees and (iv) Other Fees.
  For the year ended December 31,2005
      2006(Ps.
          Millions)Audit
          Fees
      Ps. 17.6
      62%
      Ps. 55.0
      88%Audit-Related
          Fees
      7.7
      27%
      5.4
      9%Tax
          Fees
      2.6
      9%
      2.3
      4%Other
          Fees
      0.6
      2%
      0.0
      0%Total
      Ps. 28.5
      100%
      Ps. 62.8
      100%
  Audit Fees. The amount set forth as Audit Fees in
    the table above represents fees billed to us by Deloitte in connection with
    their audit of our annual consolidated financial statements and the audit
    of the financial statements of each one of our subsidiaries.
  Audit-Related Fees. The amount set forth as Audit-Related Fees in the
  table above represents fees billed to us by Deloitte in connection with
  attestation services related to the issuance of comfort letters related with
  our financing activities during 2005 and 2006 and services related to the
  review of our disclosure controls and procedures.
  Tax Fees. The amount set forth as Tax Fees in the
    table above represents fees billed to us by Deloitte in connection with tax
    advice and compliance services.
  Other Fees. The amount set forth as Other Fees
    in the table above represents fees billed to us by Deloitte in connection
    with the auditing of payments made to the workers' social security system
    (seguro social) and foreign trade services.
  Audit Committee Pre-Approval Policies and Procedures
  Our Audit Committee is responsible for hiring, compensating
    and supervising the work of Deloitte, our independent auditor. Generally,
    all services that Deloitte performs for us have to be authorized by our Audit
    Committee before the performance of those services begins. In some instances,
    however, we may use the de minimis exception provided for in the SEC regulations
    for non-auditing services. In any case, those amounts have never constituted
    more than 5% of such services. In each such instance, we will inform our Audit
    Committee regarding, and present for ratification, such services at the next
    meeting of our Audit Committee.
  Item 16D.
    Exemption from the Listing Standards for Audit Committees
  Not
  applicable.
  Item 16E.
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  During
  2006, we did not repurchase any of our shares.
  As of December 31, 2006 approximately 28.3 million of
    our shares remained held as treasury stock.
  Item 17.
    Financial Statements
  We are
  furnishing financial statements pursuant to the instructions of Item 18 of
  Form 20-F.
  Item 18.
    Financial Statements
  The consolidated
    financial statements of Vitro, S.A.B. de C.V. and its subsidiaries for the
    years ended December 31, 2004, 2005 and 2006, attached to this annual report
    have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., Member of Deloitte
    Touche Tohmatsu, independent registered public accountants, as stated in their
    report with respect to our audited consolidated financial statements.


Index
            to Financial Statements:
        PageReport of
          Independent Registered Public Accounting Firm
      F-1Consolidated
          Balance Sheets as of December 31, 2005 and 2006
      F-3Consolidated
          Statements of Operations for the years ended December 31, 2004, 2005
          and 2006
      F-5Consolidated
          Statements of Changes in Financial Position for the years ended December
          31, 2004, 2005 and 2006
      F-6Consolidated
          Statements of Stockholders' Equity for the years ended December 31,
          2004, 2005 and 2006
      F-7Notes to
          Consolidated Financial Statements
      F-8






REPORT OF
	INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board of Directors
	and Stockholders of Vitro, S.A.B. de C.V. Garza Garcia, N. L., Mexico (Amounts in millions of Mexican
	pesos)  We have audited the
	accompanying consolidated balance sheets of Vitro, S.A.B. de C.V. (formerly
	Vitro, S.A. de C.V.) and Subsidiaries (the "Company") as of December 31,
	2005 and 2006, 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, 2006 (all expressed in millions of
	constant Mexican pesos as of December 31, 2006). 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. We conducted our audits in
	accordance with auditing standards generally accepted in Mexico and with the
	standards of the Public Company Accounting Oversight Board ( United States
	).  Those standards require that we plan and perform the audit to obtain
	reasonable assurance about whether the financial statements are free of
	material misstatement.  The Company is not required to have, nor were we
	engaged to perform, an audit of its internal control over financial
	reporting.  Our audits included consideration of internal control over
	financial reporting as a basis for designing audit procedures that are
	appropriate in the circumstances, but not for the purpose of expressing an
	opinion on the effectiveness of the Company's internal control over
	financial reporting.  Accordingly, we express no such opinion.  An audit
	also includes examining, on a test basis, evidence supporting the amounts
	and disclosures in the financial statements, assessing the accounting
	principles used and significant estimates made by management, as well as
	evaluating the overall financial statement presentation.  We believe that
	our audits provide a reasonable basis for our opinion. In our opinion, such
	consolidated financial statements present fairly, in all material respects,
	the financial position of Vitro, S.A.B. de C.V. and Subsidiaries as of
	December 31, 2005 and 2006, and the results of their operations, changes in
	their stockholders' equity and changes in their financial position for each
	of the three years in the period ended December 31, 2006 in conformity with
	Mexican Financial Reporting Standards. Effective January 1, 2005,
	as mentioned in Note 3 a) to the accompanying financial statements, the
	Company adopted the provisions of certain accounting standards resulting in
	the following changes in accounting: The effect of adopting Bulletin C-10, "Derivative Financial
	Instruments and Hedging Activities", including the related tax effects
	resulted in (i) the recognition of a liability of Ps. 131; (ii) the
	recognition of an asset of Ps. 74; (iii) a charge to other comprehensive
	income in stockholders' equity of Ps. 10 and; (iv) a charge to the
	cumulative effect of the change in accounting principle of Ps. 119; and (v)
	a credit to financing cost of Ps. 101, net of the effect of deferred income
	tax of Ps. 29.
		The Company discontinued amortizing goodwill as of January 1,
	2005 and now performs an annual impairment test in accordance with Bulletin
	B-7, "Business Acquisitions". The amount of goodwill amortization in 2004
	was Ps. 4 Mexican Financial
	Reporting Standards 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, 2006,
	and the determination of stockholders' equity as of December 31, 2006 and
	2005, to the extent summarized in Note 25. As disclosed in Note 25 m)
	to the accompanying consolidated financial statements, the Company adopted
	the recognition and disclosure provisions of Statement of Financial
	Accounting Standards No. 158, "Employers' Accounting for Defined Benefit
	Pension and Other Postretirement Plans-an amendment of FASB Statements No.
	87, 88, 106, and 132(R)", effective December 31, 2006. As discussed in Note 25 to
	the accompanying consolidated financial statements, the reconciliation to
	U.S. GAAP as of December 31, 2005 and for the year then ended has been
	restated. Our audits also
	comprehended the translation of the Mexican peso amounts into U. S. dollar
	amounts and, in our opinion, such translation has been made in conformity
	with the basis stated in Note 2 a).  The translation of the financial
	statement amounts into U.S. dollars and the translation of the financial
	statements into English have been made solely for the convenience of
	readers.  Galaz, Yamazaki, Ruiz Urquiza, S.C. Member of Deloitte Touche Tohmatsu     /s/  Ernesto Cruz Velazquez de Leon C.P.C. Ernesto Cruz Velazquez de Leon Monterrey, N.L. Mexico March 15, 2007, June 21, 2007 as to Note 25
  Vitro, S.A.B. de C.V. and Subsidiaries Consolidated Balance Sheets (Millions of constant Mexican pesos
    as of December 31, 2006)  December
          31,
      Millions
          of
        US
          dollars
        (Convenience
          Translation)
        December
          31,2005
      2006
      2006ASSETSCash and cash equivalents
      Ps.
          1,379
      
      Ps.

          1,172
      
      US$ 108Trade receivables, net
      1,283
      
      1,293
      
      120Retained undivided interests
          in securitized receivables
      825
      
      1,204
      
      111Other receivables
      1,436
      
      1,282
      
      119Inventories, net
      4,027
      
      3,794
      
      351Land and buildings held for
          sale
      427Current assets of discontinued
          operations
      773Current assets
      10,150
      
      8,745
      
      809Land and buildings, net
      8,806
      
      8,409
      
      778Machinery and equipment, net
      7,681
      
      6,445
      
      596Construction in progress
      603
      
      805
      
      74Goodwill
      696
      
      697
      
      65Intangible employee retirement
          obligations asset
      442
      
      344
      
      32Deferred taxes
      932
      
      545
      
      50Other assets
      992
      
      1,114
      
      103Non-current assets of discontinued
          operations
      1,174Long-term assets
      21,326
      
      18,359
      
      1,698Total assets
      Ps.
          31,476
      
      Ps.

          27,104
      
      US$2,507 The
    accompanying notes are an integral part of these consolidated financial statements.  Vitro, S.A.B. de C.V. and Subsidiaries Consolidated Balance Sheets (Millions of constant Mexican pesos
    as of December 31, 2006)  December
          31,
      Millions
          of
        US
          dollars (Convenience Translation)
        December
          31,2005
      2006
      2006LIABILITIESShort-term borrowings
      Ps.
          1,256
      
      Ps.
          289
      
      US$ 27Current maturities of long-term
          debt
      2,444
      
      61
      
      5Trade payables
      1,941
      
      2,084
      
      193Tax liabilities
      151Accrued expenses
      1,038
      
      1,013
      
      94Other current liabilities
      1,430
      
      1,081
      
      100Current liabilities of discontinued
          operations
      360Current liabilities
      8,620
      
      4,528
      
      419Long-term debt
      11,639
      
      11,985
      
      1,108Employee retirement obligations
      1,315
      
      1,507
      
      140Other long-term liabilities
      155
      
      209
      
      19Long-term liabilities of discontinued
          operations
      988Long-term liabilities
        Long-term liabilities
      14,097
      
      13,701
      
      1,267Total liabilities
      22,717
      
      18,229
      
      1,686Commitments and contingencies
          (Note 13)STOCKHOLDERS'
          EQUITYCapital stock: no par value,
          324,000,000 shares in 2005 and 386,857,143 shares in 2006 issued and
          outstanding
      324
      
      387
      
      36Restatement of capital stock
      6,968
      
      6,969
      
      644Restated capital stock
      7,292
      
      7,356
      
      680Treasury stock (50,553,528
          shares in 2005 and 45,874,816 in 2006)
      (631)
      
      (599)
      
      (55)Additional paid-in capital
      1,092
      
      2,348
      
      217Shortfall in restatement of
          capital
      (20,177)
      
      (20,387)
      
      (1,885)Cumulative initial effect
          of deferred taxes
      (1,745)
      
      (1,745)
      
      (161)Minimum labor liability adjustment
      (435)
      
      (474)
      
      (44)Retained earnings reserved
          for reacquisition of Vitro shares
      2,000
      
      2,000
      
      184Retained earnings
      18,357
      
      18,638
      
      1,724Total majority interest
      5,753
      
      7,137
      
      660Minority interest in consolidated
          subsidiaries
      3,006
      
      1,738
      
      161Total stockholders' equity
      8,759
      
      8,875
      
      821Total liabilities and stockholders'
          equity
      Ps.
          31,476
      
      Ps.
          27,104
      
      US$ 2,507 The
    accompanying notes are an integral part of these consolidated financial statements.   Vitro, S.A.B. de C.V. and Subsidiaries Consolidated Statements of Operations (Millions of constant Mexican pesos
    as of December 31, 2006, except per share amounts)  Year ended December
          31,
      Millions
          of
        US
          dollars (Convenience Translation)
        December
          31,2004
      2005
      2006
      2006Net
          sales
      
      Ps. 25,168
      
      Ps. 25,323
      
      Ps. 26,562
      
      US$ 2,457Cost
          of sales
      
      18,227
      
      18,298
      
      19,282
      
      1,784Gross profit
      
      6,941
      
      7,025
      
      7,280
      
      673Selling,
          general and administrative expenses
      
      5,383
      
      5,276
      
      5,270
      
      487Operating income
      
      1,558
      
      1,749
      
      2,010
      
      186Total financing cost
      
      1,461
      
      1,441
      
      2,189
      
      202Operating income (loss) after financing cost
      
      97
      
      308
      
      (179)
      
      (16)Other expenses (income), net
      
      143
      
      424
      
      (273)
      
      (25)Income (loss) from continuing
          operations before taxes and workers' profit sharing
      
      (46)
      
      (116)
      
      94
      
      9Income and asset tax (benefit) expense
      
      (9)
      
      (502)
      
      215
      
      20Workers'
          profit sharing
      
      124
      
      49
      
      53
      
      5Net income (loss) from
          continuing operations before change in accounting principle
      
      (161)
      
      337
      
      (174)
      
      (16)Gain on sale of discontinued
          operations
      
      
      
      
      
      463
      
      43Income (loss) from discontinued
          operations
      
      93
      
      3
      
      (30)
      
      (3)Cumulative effect of change
          in accounting principle, net of tax
      
      
      
      (119)Net income (loss) for the
          year
      
      Ps. (68)
      
      Ps. 221
      
      Ps. 259
      
      US$ 24Net minority income (loss)
      
      Ps. 235
      
      Ps. 168
      
      Ps. (114)
      
      US$ (11)Net majority income (loss)
      
      (303)
      
      53
      
      373
      
      35Ps. (68)
      
      Ps. 221
      
      Ps. 259
      
      US$ 24Earnings
          per common share (based on weighted averageshares outstanding of 271,840,010 for 2004,273,116,069 for
          2005 and 289,636,496 for 2006):Income
          (loss) from continuing operations before change in accounting principle
      
      Ps. (0.59)
      
      Ps.
          1.23
      
      Ps. (0.60)
      
      US$ (0.06)Gain on sale of discontinued operations
      
      
      
      
      
      1.60
      
      0.15Income
          (loss) from discontinued operations
      
      0.34
      
      0.01
      
      (0.10)
      
      (0.01)Cumulative effect of change in accounting principle, net
          of tax
      
      
      
      (0.43)Minority (income)loss
      
      (0.87)
      
      (0.62)
      
      0.39
      
      0.04Net majority (loss) income
      
      Ps. (1.12)
      
      Ps. 0.19
      
      Ps. 1.29
      
      US$ 0.12 The
    accompanying notes are an integral part of these consolidated financial statements.  Vitro, S.A.B. de C.V. and Subsidiaries Consolidated Statements of Changes in
    Financial Position (Millions of constant Mexican pesos
    as of December 31, 2006)  Year
          ended December 31,
      Millions of US dollars,
        (Convenience Translation)
        Year ended December 31,2004
      
      2005
      
      2006
      
      2006OPERATING
          ACTIVITIES:Net income (loss) from continuing
          operationsbefore change in accounting
          principle
      
      Ps. (161)
      
      Ps. 337
      
      Ps. (174)
      
      US$ (16)Add (deduct) non-cash items:Depreciation and amortization
      
      2,187
      
      1,778
      
      1,722
      
      159Provision for employee retirement
          obligations
      
      277
      
      335
      
      404
      
      37Amortization of debt issuance
          costs
      
      129
      
      211
      
      192
      
      18(Gain) loss from sale of subsidiaries
          and associated companies
      
      (525)
      
      132
      
      (66)
      
      (6)Impairment of long-lived assets
      
      338
      
      362
      
      378
      
      35Loss (gain) from sale of long-lived
          assets
      
      10
      
      6
      
      (766)
      
      (71)Gain on execution of Vitro
          Club's trust
      
      
      
      (442)Mark-to market of derivative
          financial instruments
      
      
      
      (125)
      
      (105)
      
      (10)Deferred taxes and workers'
          profit sharing
      
      (97)
      
      (716)
      
      47
      
      42,158
      
      1,878
      
      1,632
      
      150(Increase) decrease in trade
          receivables
      
      (254)
      
      696
      
      (10)
      
      (1)(Increase) decrease in inventories
      
      (237)
      
      (158)
      
      215
      
      20(Decrease) increase in trade
          payables
      
      (9)
      
      14
      
      163
      
      15Change in other current assets
          and liabilities
      
      187
      
      (426)
      
      (417)
      
      (38)Employee retirement obligations
      
      (220)
      
      (282)
      
      (560)
      
      (51)Gain (loss) from discontinued
          operations
      
      93
      
      3
      
      (30)
      
      (3)Discontinued operations
      
      248
      
      268
      
      29
      
      3Net resources generated by
          operating activities
      
      1,966
      
      1,993
      
      1,022
      
      95FINANCING
          ACTIVITIES:Proceeds from short-term bank
          loans
      
      3,645
      
      2,962
      
      4,701
      
      435Proceeds from long-term bank
          loans
      
      5,746
      
      5,652
      
      1,423
      
      132Amortization in real terms
          of bank loans
      
      (844)
      
      (529)
      
      (543)
      
      (50)Payment of short-term bank
          loans
      
      (3,949)
      
      (4,230)
      
      (3,319)
      
      (307)Payment of long-term bank
          loans
      
      (3,947)
      
      (5,596)
      
      (5,267)
      
      (487)Debt issuance costs
      
      (214)
      
      (191)
      
      (23)
      
      (2)Issuance of capital stock
      
      
      
      
      
      556
      
      51Dividends paid to stockholders
          of Vitro, S.A.B. de C.V.
      
      (99)
      
      (96)
      
      (92)
      
      (9)Dividends paid to minority
          interest
      
      (155)
      
      (91)
      
      (63)
      
      (6)Issuance of treasury stock
      
      16
      
      7
      
      67
      
      6Other financing activities
      
      (11)
      
      (22)
      
      73
      
      7Discontinued operations
      
      (201)
      
      (87)
      
      (19)
      
      (2)Net resources used in financing
          activities
      
      (13)
      
      (2,221)
      
      (2,506)
      
      (232)INVESTING ACTIVITIES:Investments in land, buildings, machinery
          and equipment
      
      (1,431)
      
      (1,061)
      
      (1,198)
      
      (111)Proceeds from sale of land, buildings,
          machinery and equipment
      
      21
      
      30
      
      1,628
      
      151Restricted cash
      
      292
      
      1
      
      404
      
      37Investment in subsidiaries
      
      
      
      
      
      (208)
      
      (19)Proceeds from sale of subsidiaries and
          associated companies
      
      955
      
      164
      
      1,171
      
      108Capital distribution to minority interest
      
      
      
      
      
      (105)
      
      (10)Other long-term assets
      
      5
      
      
      
      (346)
      
      (32)Deferred charges
      
      (76)
      
      (73)
      
      (89)
      
      (8)Discontinued operations
      
      (140)
      
      (184)
      
      20
      
      2Net resources (used in) generated
          by investing activities
      
      (374)
      
      (1,123)
      
      1,277
      
      118Net increase (decrease) in
          cash and cash equivalents
      
      1,579
      
      (1,351)
      
      (207)
      
      (19)Balance at beginning of year
      
      1,151
      
      2,730
      
      1,379
      
      127Balance at end of year
      
      Ps. 2,730
      
      Ps. 1,379
      
      Ps. 1,172
      
      US$ 108 The
    accompanying notes are an integral part of these consolidated financial statements. Vitro, S.A.B. de C.V. and Subsidiaries Consolidated Statements of Stockholders'
    Equity (Millions of constant Mexican pesos
    as of December 31, 2006)  Restated
          capital
          stock
      Treasury
          stock and additional paid-in
          capital
      Shortfall
          in restatement
          of capital
      Cumulative
          initial 
          effect of 
          deferred
          taxes
      Minimum
          
          labor 
          liability 
          adjustment
      Retained
          
          earnings
      Minority
          
          interest
      Stockholders'
          equityBalance
          atJanuary
          1, 2004
      Ps. 7,292
      Ps. 438
      Ps.
          (19,947)
      Ps. (1,745)
      Ps. (373)
      Ps. 20,644
      Ps. 3,162
      Ps. 9,471Dividends
          (Ps. 0.33 per share)
      
      
      
      
      
      (99)
      
      (99)Decrease in minority interest
      
      
      
      
      
      
      (332)
      (332)Issuance of treasury stock
      
      16
      
      
      
      
      
      16Comprehensive loss
      
      
      (269)
      
      (76)
      (303)
      98
      (550)Balance
          atDecember 31, 2004
      7,292
      454
      (20,216)
      (1,745)
      (449)
      20,242
      2,928
      8,506Dividends
          (Ps. 0.31 per share)
      
      
      
      
      
      (96)
      
      (96)Revoked dividend
      
      
      
      
      
      158
      
      158Decrease in minority interest
      
      
      
      
      
      
      (82)
      (82)Issuance of treasury stock
      
      7
      
      
      
      
      
      7Comprehensive income
      
      
      39
      
      14
      53
      160
      266Balance
          atDecember 31, 2005
      7,292
      461
      (20,177)
      (1,745)
      (435)
      20,357
      3,006
      8,759Dividends
          (Ps. 0.31 per share)
      
      
      
      
      
      (92)
      
      (92)Decrease
          in minority interest
      
      67
      
      
      
      
      (597)
      (530)Dilution
          of minority interest
      
      662
      
      
      
      
      (662)
      0Issuance of treasury stock
      
      67
      
      
      
      
      
      67Issuance of capital stock
      64
      492
      
      
      
      
      
      556Comprehensive income
      
      
      (210)
      
      (39)
      373
      (9)
      115Balance atDecember 31, 2006
      Ps. 7,356
      Ps. 1,749
      Ps. (20,387)
      Ps.
          (1,745)
      Ps. (474)
      Ps. 20,638
      Ps. 1,738
      Ps.
          8,875  The accompanying notes are an integral
    part of these consolidated financial statements.   Vitro, S.A.B. de C.V. and Subsidiaries Condensed Notes to Consolidated Financial
    Statements (Millions of constant Mexican pesos
    as of December 31, 2006) 1.
    Activities of the Company Vitro,
    S.A.B. de C.V. ("Vitro") is a Mexican holding company, and together
    with its subsidiaries serve multiple product markets, including construction
    and automotive glass; food and beverage, wine, liquor, cosmetics and pharmaceutical
    glass containers, Vitro and subsidiaries also produce raw materials and equipment
    and capital goods for industrial use which are vertically integrated in the
    Glass Containers business unit. On November 29, 2006 Vitro changed its name
    as approved a general extraordinary stockholders' meeting from Vitro, S.A.
    de C.V. to Vitro, S.A.B. de C.V. due to a requirement of the Mexican Securities
    Law ("Ley del Mercado de Valores") issued on June 28, 2006. This
    new law requires every company that is listed on the Bolsa Mexicana de Valores,
    S.A. de C.V. ("BMV" Mexican Stock Exchange) to include "Bursatil"
    (publicly traded) in their legal name or use the letter "B" after
    S.A. 2.
    Basis of presentation and principles of consolidation a)
    Basis of presentation The
    accompanying consolidated financial statements of Vitro and its subsidiaries
    (the "Company") are prepared on the basis of Mexican Financial Reporting
    Standards ("Mexican FRS"). The
    consolidated financial statements presented herein are expressed in millions
    of constant Mexican pesos as of December 31, 2006. However, solely for the
    convenience of users, the consolidated financial statements as of and for
    the year ended December 31, 2006, have been translated into United States
    of America ("US") dollars at the rate of Ps. 10.8116 per one dollar,
    the rate of exchange determined by the Banco de Mexico (Mexico's Central Bank)
    on December 31, 2006. Such arithmetical translation should not be construed
    as a representation that the peso amounts shown could be converted into US
    dollars at such rate or at any other rate. All
    references to dollars, in the financial statements and these notes, correspond
    to dollars of the United States of America (the "United States"). 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. This method consists of consolidating on a proportionate
    basis the assets, liabilities, stockholders' equity and revenues and expenses.
    All significant intercompany balances and transactions have been eliminated
    in consolidation. At December 31, 2006, the main subsidiaries the Company
    consolidates are: FLAT GLASS
          Vimexico
            S.A. de C.V.**
          (91.8%)
        GLASS CONTAINERS
          Vitro Envases Norteamerica,
        S.A. de C.V. (100%)
        CORPORATEVitro
            Vidrio y Cristal, S.A. de C.V
          Vitro Automotriz, S.A. de C.V.
          Distribuidora Nacional de Vidrio,
            S.A. de C.V.
          Vidrio Plano de Mexico, S.A. de
            C.V.
          Vitro Flex, S.A. de C.V.*
          Vitro AFG, S.A. (50%)
          Cristales Automotrices, S.A. de
            C.V. (51%)
          Vitro Flotado Cubiertas, S.A. de
            C.V.
          Vitro America, Inc.
          Vitro Colombia, S.A.
          Vitro Cristalglass, S.L. (60%)
          Vitro Chaves Industria de Vidro,
            S.A. (60%)
        Compania Vidriera, S.A. de C.V.
          Vidriera Monterrey, S.A. de C.V.
          Vidriera Guadalajara, S.A. de C.V.
          Vidriera Los Reyes, S.A. de C.V.
          Vidriera Mexico, S.A. de C.V.
          Vidriera Queretaro, S.A. de C.V.
          Vidriera Toluca, S.A. de C.V.
          Vitro Packaging, Inc.
          Empresas Comegua S.A. (49.7%)
          Vidrio Lux, S.A.
          Industria del Alcali, S.A. de C.V.
          Comercializadora Alcali, S. de
            R.L. de C.V.
          Fabricacion de Maquinas, S.A. de
            C.V.
        Vitro Corporativo, S.A. de C.V.
          Servicios y Operaciones Financieras
            Vitro, S.A. de C.V.
          Aerovitro, S.A. de C.V.
  *On
    September 29, 2006, Vitro Plan, S.A. de C.V. ("Vitro Plan") assumed
    100% control of Vitro Flex. (see Note 20 d). **
    On December 11, 2006, the merger of Vitro Plan with Vimexico S.A. de C.V.
    ("Vimexico") was approved (see below). Merger
        of Vitro Plan with Vimexico.- On October 18, 2006, Vitro and its subsidiary
        Vitro Corporativo, S.A. de C.V. ("Vicorp") incorporated Vimexico
        as a Mexican corporation and, on October 30, 2006, Vitro transferred,
        as a capital contribution to Vimexico, an account receivable from Vitro
        Plan in the amount of US$ 135 million. Following the capital contribution,
        on December 8, 2006, Vicorp and Vitro, as shareholders of Vimexico, adopted
        a unanimous resolution approving the merger of Vitro Plan into Vimexico.
        On December 11, 2006, the shareholders of Vitro Plan concluded an extraordinary
        general shareholders' meeting approving the merger of Vitro Plan into
        Vimexico based on financial information as of October 31, 2006, with Vimexico
        as the surviving entity. This merger became effective as of December 2006. As
    a consequence of the merger, all assets, rights, liabilities and obligations
    of Vitro Plan were assumed by Vimexico and all agreements, contracts and proceedings
    (legal or otherwise) to which Vitro Plan was a party were assumed by Vimexico,
    resulting in Vimexico's total indebtedness of US$ 228 million as of the date
    of the merger. Prior to the merger, Vitro Plan was a direct 65% owned subsidiary
    of Vitro and Pilkington Group LTD ("Pilkington") owned a 35% in
    Vitro Plan. As a result of the merger, Vimexico is now a direct 91.8% owned
    subsidiary of Vitro and Pilkington owns an 8.2% equity interest in Vimexico.
    Pilkington voted against the adoption of the shareholder resolutions to approve
    the merger. Due to the merger, the above mentioned account receivable for
    US$135 million was cancelled in its entirety. c)
    Recognition of the Effects of Inflation in Financial Information In
    order to consolidate the financial statements of foreign subsidiaries, the
    effects of inflation were taken into consideration in accordance with Bulletin
    B-10, "Recognition of the Effects of Inflation in Financial Information",
    as amended. Such companies' financial statements are translated into Mexican
    pesos using the current rate method. The assets, liabilities, stockholders'
    equity and the statement of operations 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 in shortfall
    in restatements of capital as a component of stockholders' equity. d)
    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 but
    does not control the entity. Such investments are accounted for by the equity
    method. e)
    Comprehensive income (loss) Represents
    changes in stockholders' equity during the year, for concepts other than distributions
    and activity in contributed common stock, and is comprised of the net income
    (loss) of the year, plus other comprehensive income (loss) items of the same
    period, which are presented directly in stockholders' equity without affecting
    the consolidated statements of income. Other comprehensive income (loss) items
    consist of the shortfall in restatement of capital, the translation effects
    of foreign subsidiaries and the additional minimum labor liability adjustment. 3.
    Summary of significant accounting policies New
    financial reporting standards - As of June 1, 2004, the function of establishing
    and issuing Mexican FRS became the responsibility of the Mexican Board for
    Research and Development of Financial Reporting Standards ("CINIF").
    CINIF renamed the accounting principles generally accepted in Mexico (MEX
    GAAP), previously issued by the Mexican Institute of Public Accountants ("IMCP"),
    as Mexican Financial Reporting Standards. As of December 31, 2005, eight Series
    A standards had been issued (NIF A-1 to NIF A-8), representing the Conceptual
    Framework, intended to serve as the supporting rationale for the development
    of such standards, and as a reference to resolve issues arising in practice;
    NIF B-1, Accounting Changes and Correction of Errors, was also issued. The
    Series A NIFs and NIF B-1 went into effect as of January 1, 2006. Application
    of the new Mexican FRS did not have a material impact on the Company's financial
    position, results of operations or related disclosures. The
    accompanying consolidated financial statements have been prepared in conformity
    with Mexican FRS, which require that management make certain estimates and
    use certain assumptions that affect the amounts reported in the financial
    statements and their related disclosures; however, actual results may differ
    from such estimates. The Company's management, upon applying professional
    judgement, considers that estimates made and assumptions used were adequate
    under the circumstances. The significant accounting policies of the Company
    are as follows: a)
    Changes in accounting policies: Business
    acquisitions.- As of January 1, 2005, the Company adopted the provisions
    of Bulletin B-7, "Business Acquisitions". Bulletin B-7 provides
    rules for the accounting treatment of business acquisitions. The effect of
    adopting Bulletin B-7 in 2005 was to discontinue the amortization of goodwill
    on acquisition of subsidiaries and is now subject to impairment tests annually.
    Amortization of goodwill in 2004 was Ps. 49. Derivative
    financial instruments and hedging operations.- Effective January 1, 2005,
    the Company adopted the provisions of Bulletin C-10, "Derivative Financial
    Instruments and Hedging Activities", which requires that all derivative
    instruments be recognized at fair value, sets the rules to recognize hedging
    activities and requires separation, if practical, of embedded derivative instruments.
    Through December 31, 2004, according to prior accounting standards (Bulletin
    C-2, "Financial Instruments"), the Company did not recognize the
    effect of hedging derivatives under financial expenses until the flow exchanges
    mentioned in the swap contract were actually executed. The effect of adopting
    Bulletin C-10, including the related tax effects resulted in (i) the recognition
    of a liability of Ps. 131; (ii) the recognition of an asset of Ps. 74; (iii)
    a charge to other comprehensive income in stockholders' equity of Ps. 10 and;
    (iv) a charge to the cumulative effect of the change in accounting principle
    of Ps. 119 and (v) a credit to financing cost of Ps. 101, net of the effect
    of deferred income tax of Ps. 29. b)
    Recognition of the effects of inflation.- The Company restates its consolidated
    financial statements to Mexican peso purchasing power of the most recent balance
    sheet date presented. Accordingly, the consolidated financial statements of
    the prior year, which are presented for comparative purposes, have also been
    restated to Mexican pesos of the same purchasing power and, therefore, differ
    from those originally reported in the prior year. Vitro's
    Mexican subsidiaries use the "Indice Nacional de Precios al Consumidor"
    (Mexican National Consumer Price Index, or "NCPI"), published by
    Banco de Mexico. For Vitro's foreign subsidiaries the Consumer Price Index
    - All Urban Consumers - All Items, Unadjusted ("CPI") published
    by the US Labor Department is used to restate the financial statements, and
    the restated financial statements are translated into Mexican pesos using
    the applicable exchange rate at the end of the last period presented, except
    in the case of the Company's subsidiaries located in Spain for which it applies
    the Price Consumption Index ("PCI"), published by the National Institute
    of Statistics of Spain before translation into Mexican pesos using the exchange
    rate of the Euro. Recognition
    of the effects of inflation results mainly in inflationary gain or losses
    on monetary and nonmonetary items that are presented in the financial statements
    as follows: Shortfall in restatement of capital.- This item, which is an element
        of stockholders' equity, represents the accumulated effect of holding
        nonmonetary assets and the effect of the initial monetary position gain
        or loss. The cumulative effect of holding nonmonetary assets represents
        the difference between the specific values of nonmonetary assets in excess
        of or below the increase attributable to general inflation.
    Monetary position result.- Monetary position result reflects the
        result of holding monetary assets and liabilities during periods of inflation.
        Values stated in current monetary units decrease in purchasing power over
        time. This means that losses are incurred by holding monetary assets 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 foreign subsidiaries the result from monetary
        position is calculated using the CPI, except in the case of the Company's
        subsidiaries located in Spain for which it applies the PCI. Statement
    of Changes in Financial Position.- Bulletin B-12 "Statement of Changes
    in Financial Position" requires presentation of 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
    considered cash items in the determination of resources generated from operations
    due to the fact they affect the purchasing power of the entity. c)
    Cash and cash equivalents.- Consists mainly of bank deposits in checking
    accounts and readily available investments of highly liquid short-term investments.
    They are valued at the lower of acquisition cost plus accrued yields or estimated
    net realizable value and are recognized in results of operations as they accrue. d)
    Financial instruments.- According to its intent, from the date of acquisition,
    the Company classifies investments in financial instruments in any of the
    following categories: (1) trading, when the Company intends to trade debt
    and equity instruments in the short-term, before their maturity, if any. These
    investments are stated at fair value; any fluctuations in the value of these
    investments are recognized in current earnings; (2) held-to-maturity, when
    the Company intends to and is financially capable of holding financial instruments
    until their maturity. These investments are recognized and maintained at amortized
    cost; and (3) available-for-sale, investments, which include those that are
    classified neither as trading nor held-to-maturity. These investments are
    stated at fair value; any unrealized gains and losses resulting from valuation,
    net of income tax, are recorded as a component of other comprehensive income
    within stockholders' equity and reclassified to current earnings upon their
    sale or maturity. The monetary position resulting from the effects of inflation
    on available-for-sale investments is recorded as a component of other comprehensive
    income. Fair value is determined using prices quoted in recognized markets.
    If such instruments are not traded, fair value is determined by applying recognized
    technical valuation models. Financial
    investments classified as held-to-maturity and available-for-sale are subject
    to impairment tests. If there is evidence that the reduction in fair value
    is other than temporary, the impairment is recognized in current earnings. Financial
    liabilities derived from the issuance of debt instruments are recorded at
    the value of the obligations they represent. Any expenses, premiums and discounts
    related to the issuance of debt financial instruments are amortized over the
    life of the instruments. e)
    Inventories and cost of sales.- Inventories are stated at replacement cost
    using the latest purchase price method without exceeding net realizable value.
    Cost of sales is restated using replacement cost or the latest production
    cost at the time of the sale. f)
    Land, buildings, machinery and equipment.- Expenditures for land, buildings,
    machinery and equipment, including renewals and improvements that extend useful
    lives, are capitalized and restated using the NCPI. The initial balance to
    apply the NCPI was the net replacement value of the Company's long-lived asset
    as of December 31, 1996. The restatement of the value of machinery and equipment purchased in a foreign
	country is based on the consumer price index of the country of origin and
	the period-end exchange rate. Depreciation
    is calculated using the straight-line method based on the remaining useful
    lives of the related assets. Depreciation begins in the month in which the
    asset is placed in service. The estimated useful lives of the assets are as
    follows: YearsBuildings
      20 to 50Machinery and equipment
      3 to 30
 Maintenance
    and repair expenses are recorded as costs and expenses in the period incurred. g)
    Impairment of long-lived assets in use.- The Company reviews the carrying
    amounts of long-lived assets in use when an impairment indicator suggests
    that such amounts might not be recoverable, considering the greater of the
    present value of future net cash flows or the net sales price upon disposal.
    Impairment is recorded when the carrying amounts exceed the greater of the
    amounts mentioned above. The impairment indicators considered for these purposes
    are, among others, the operating losses or negative cash flows in the period
    if they are combined with a history or projection of losses, depreciation
    and amortization charged to results, which in percentage terms in relation
    to revenues are substantially higher than that of previous years, obsolescence,
    reduction in the demand for the products manufactured, competition and other
    legal and economic factors. h)
    Derivative financial instruments.- The Company states all derivatives
    at fair value in the balance sheet, regardless of the purpose for holding
    them. Through December 31, 2004, derivatives were valued using the same valuation
    criteria used for the hedged item. Beginning in 2005, when derivatives are
    entered into, they are recorded at their fair value and classified as either
    a fair value hedge or a cash flow hedge. Fair
    value is determined using prices quoted in recognized markets. If such instruments
    are not traded, fair value is determined by applying recognized technical
    valuation models. Changes
    in the fair value of derivative instruments designated as hedging for accounting
    purposes are recognized as follows: (1) for fair value hedges, changes in
    both the derivative instrument and the hedged item are recognized in current
    earnings; (2) for cash flow hedges, changes are temporarily recognized as
    a component of other comprehensive income and then reclassified to current
    earnings when affected by the hedged item. The ineffective portion of the
    change in fair value is immediately recognized in current earnings, within
    comprehensive financing cost, regardless of whether the derivative instrument
    is designated as a fair value hedge or a cash flow hedge. The
    Company uses interest rate swaps, foreign currency forward contracts and different
    natural gas derivative instruments to manage its exposure to these market
    risks. The Company formally documents all hedging relationships, including
    their objectives and risk management strategies to carry out derivative transactions. While
    certain derivative financial instruments are contracted for hedging from an
    economic point of view, they are not designated as hedges for accounting purposes.
    Changes in fair value of such derivative instruments are recognized in current
    earnings as a component of total financing cost. The
    Company reviews all contracts entered into to identify embedded derivatives
    that should be segregated from the host contract for purposes of valuation
    and recording. When an embedded derivative is identified and the host contract
    has not been stated at fair value and adequate elements for its valuation
    exist, the embedded derivative is segregated from the host contract, stated
    at fair value and classified as trading or designated as a financial instrument
    for hedging. Initial valuation and changes in the fair value of the embedded
    derivatives at the closing of each period are recognized in current earnings. i)
    Provisions.- Provisions are recognized for current obligations that, result
    from a past event, are probable to result in the use of economic resources,
    and can be reasonably estimated. j)
    Goodwill.- Through December 31, 2004, goodwill represented the excess
    of cost over recorded value of subsidiaries as of the date of acquisition
    and was restated using the NPCI and amortized using the straight-line method
    over 20 years. Beginning on January 1, 2005, goodwill represents the excess
    of cost over fair value of subsidiaries as of the date of acquisition. It
    is restated using the NPCI and at least once a year is subject to impairment
    tests. k)
    Employee retirement obligations.- Seniority premiums and pension plans,
    and beginning in 2005, severance payments at the end of the work relationship,
    are recognized as costs over of the expected service period of employees and
    are calculated by independent actuaries using the projected unit credit method
    at net discount rates. Accordingly, the liability is being accrued which,
    at present value, will cover the obligation from benefits projected to the
    estimated retirement date of the Company's employees. Through December 31,
    2004, severance payments at the end of the work relationship were charged
    to results when the liability was determined to be payable. l)
    Equity incentive plans.- The Company has equity incentive plans that permit
    the Company to grant stock options and nonvested shares ("equity awards")
    to certain employees and directors of the Company. The Company recognizes
    the fair value of equity awards computed at the award's grant date over the
    period in which the requisite service is rendered. m)
    Foreign currency balances and transactions for Mexican subsidiaries.-
    Foreign currency transactions are recorded at the applicable exchange rate
    in effect at the transaction date. Monetary assets and liabilities denominated
    in foreign currency are translated into Mexican pesos at the applicable exchange
    rate in effect at the balance sheet date. Exchange fluctuations are recorded
    as a component of net comprehensive financing cost in the consolidated statements
    of operations. n)
    Revenue recognition.- Revenues and related costs are recognized in the
    period in which risks and rewards of ownership of the inventories are transferred
    to customers, which generally coincides with the shipment of products to customers
    in satisfaction of orders. o)
    Income tax, tax on assets and workers' profit sharing.- Income taxes ("ISR")
    and statutory workers' profit sharing ("PTU") are recorded in results
    of the year in which they are incurred. Deferred ISR assets and liabilities
    are recognized for temporary differences resulting from comparing the accounting
    and tax bases of assets and liabilities plus any future benefits from tax
    loss carryforwards. Deferred ISR assets are reduced by any benefits about
    which there is uncertainty as to their realizability. Deferred PTU is derived
    from temporary differences between the accounting result and income for PTU
    purposes and is recognized only when it can be reasonably assumed that such
    difference will generate a liability or benefit, and there is no indication
    that circumstances will change in such a way that the liabilities will not
    be paid or benefits will not be realized. Tax
    on assets ("IMPAC") paid that is expected to be recoverable is recorded
    as an advance payment of ISR and is presented in the balance sheet increasing
    the deferred ISR asset. p)
    Earnings (loss) per share.- Basic earnings (loss) per common share are
    calculated by dividing consolidated net income (loss) of majority stockholders
    by the weighted average number of shares and equivalent common shares outstanding
    during the year. Diluted earnings per share are determined by adjusting consolidated
    net income and common shares on the assumption that the entity's commitments
    to issue or exchange its own shares would be realized. Diluted earnings per
    share is not presented for periods in which the effect of including common
    stock equivalents is anti-dilutive or periods in which the Company records
    a net loss from continuing operations. In 2005 diluted earnings per share
    was not presented as it is the same as basic earnings per share. q)
    Foreign subsidiaries as economic hedges.- The Company's management designated
    some of its foreign subsidiaries as economic hedges. The result from exchange
    rate fluctuation is presented in the shortfall in restatement of capital within
    stockholders' equity to the extent the net investment in the foreign subsidiary
    covers the debt. The result from monetary position is measured using inflation
    factors from the designated subsidiary's country of origin. The effect related
    to this change on the results of operations for 2004, 2005 and 2006 was a
    credit (charge) of Ps. 2, Ps. (91) and Ps. (13), respectively. 4.
    Discontinued operations On
    June 16, 2006, the Company completed the sale of its 51% equity ownership
    interest in Vitrocrisa Holding, S. de R.L. de C.V. and subsidiaries, Crisa
    Libbey S.A. de C.V. and Crisa Industrial, LLC, (together "Vitrocrisa")
    to Libbey, Inc. ("Libbey"), the owner of the other 49% equity interest,
    recognizing a gain on sale of Ps. 463. The Company received proceeds of approximately
    US$ 119 million from this divestiture, comprised of US$ 80 million in cash
    from the sale of its equity interest, approximately US$ 28 million from the
    payment of intercompany receivables and US$ 11 million from the repayment
    of intercompany debt. As a part of this transaction, all of the liabilities
    of Vitrocrisa were assumed by Libbey, including bank debt of US$ 62 million
    as of May 31, 2006, except for labor liabilities of approximately US$ 27 million.
    Vitrocrisa, which was previously presented as one of the Company's reportable
    segments, under Mexican FRS is presented as a discontinued operation as its
    disposition represents the end of a significant activity of the Company. The
    following table discloses Vitrocrisa's condensed balance sheet and condensed
    statements of operations for the periods presented: December
            31,Condensed
            balance sheet:
        2005Assets:Cash and cash equivalents
        Ps. 58Trade receivables
        285Inventories, net
        430Current assets
        773Property, plant and equipment andother long-term assets
        1,174Total assets
        Ps. 1,947
 Liabilities :Trade payables
        Ps. 262Short-term borrowings
        98Current liabilities
        360Long-term debt andother long-term liabilities
        988Total liabilities
        Ps. 1,348
  Period fromYear ended December 31,
      January 1, toCondensed
          statements of operations:
      
      2004
      
      2005
      June 16,
          2006Net sales
      Ps.
      2,416
      Ps.
      2,260
      Ps.
      996Cost of
          sales
      
      2,038
      
      1,932
      
      830Gross profit
      
      378
      
      328
      
      166Selling,
          general and administrative expenses
      
      278
      
      267
      
      125Operating
          income
      
      100
      
      61
      
      41Total financing
          cost
      
      52
      
      50
      
      98Other expenses
          (income), net
      
      (1)
      
      11
      
      (5)Income tax
          (benefit)
      
      (44)
      
      (3)
      
      (22)Net income (loss)
      Ps.
      93
      Ps.
      3
      Ps.
      (30)
 5.
    Trade receivables a)
    Trade receivables are recorded net of an allowance for doubtful accounts and
    other discounts of Ps. 219 and Ps. 259 at December 31, 2005 and December 31,
    2006, respectively. b)
    At December 31, 2005 and 2006, the Company recorded Ps. 190 and Ps. 55, respectively,
    as restricted cash. The amount represents the collateral held with one of
    its counterparties in its natural gas hedges for the year ended 2006. Restricted
    cash is included in other current receivables. c)
    Sales of receivables.- Vitro Cristalglass, S.L. ("Vitro Cristalglass")
    a subsidiary of the Company, has entered into a revolving factoring program
    agreements to sell trade accounts receivable with several financial institutions.
    In accordance with the terms of some of these agreements, the Company has
    the obligation to reimburse for uncollected receivables in the case of non-compliance
    of clients. As of December 31, 2005 and 2006 the maximum capacity available
    under these programs was US$ 31 million and US$ 35 million, respectively.
    As such dates Vitro Cristalglass had sold approximately US$ 18 million and
    US$ 21 million of trade receivables, respectively. d)
    Securitization of trade receivables: Securitization
        of VENA trade receivables.- On March 31, 2005, Compania Vidriera, S.A.
        de C.V., Industria del Alcali, S.A. de C.V. and Comercializadora Alcali,
        S. de R.L. de C.V., all subsidiaries of VENA, closed a revolving accounts
        receivable facility, through which such companies obtained Ps. 550 (nominal
        amount) and US$ 19 million. The VENA subsidiaries entered into an agreement
        to sell all of their trade accounts receivable, on a revolving basis during
        four years, to a fideicomiso (the "Mexican Trust", a qualifying
        special purpose entity) that was formed prior to the execution of this
        agreement for the sole purpose of buying and selling accounts receivable
        and is designed to be bankruptcy remote. The Ps. 550 (nominal amount)
        was obtained through the issuance of certified preferred securities ("certificados
        bursatiles preferentes") that trade on the Mexican Stock Exchange
        issued by the Mexican Trust, and US$ 19 million in subordinated notes,
        which have a payment guarantee by Vitro. The interest payments and eventual
        principal reimbursement on the certificados bursatiles preferentes and
        the subordinated notes are payable from the collection of the receivables
        originated by the VENA subsidiaries and sold to the Mexican Trust. At
        December 31, 2005 and 2006 the gross receivables sold to the Mexican Trust
        totaled Ps. 772 and Ps. 1,265, respectively, and are reflected as a reduction
        of trade accounts receivable. The estimated fair value of the retained
        undivided interests in securitized receivables at December 31, 2005 and
        2006 was Ps. 159 and Ps. 510, respectively.
    Securitization
        of Vimexico (formerly Vitro Plan) trade receivables.- On August 22, 2005,
        Dinavisa, Vitro Flotado Cubiertas, S.A. de C.V. ("VFC"), Vidrio
        y Cristal and VAU, all subsidiaries of Vimexico, closed a five year revolving
        accounts receivables facility through which such companies obtained US$
        21.5 million. The Vimexico subsidiaries entered into an agreement to sell
        all of its trade accounts receivable, on a revolving basis, to a Mexican
        Trust that was formed prior to the execution of this agreement for the
        sole purpose of buying and selling accounts receivable and is designed
        to be bankruptcy remote. The US$21 million was obtained through a private
        issuance of notes in the United States. The interest payments and eventual
        principal reimbursement will be provided from the collection of the receivables
        originated by four subsidiaries of Vimexico and sold to the Mexican Trust.
        At December 31, 2005 and 2006, the gross receivables sold to the Trust
        totaled Ps. 704 and Ps. 553, respectively, and are reflected as a reduction
        of trade accounts receivable. The estimated fair value of the retained
        undivided interests in securitized receivables at December 31, 2005 and
        2006 was Ps. 328 and Ps. 320, respectively.
    Securitization
        of Vitro America trade receivables.- During 2004, Vitro America, Inc.
        ("Vitro America") closed a contract for selling all their accounts
        receivable, on a revolving basis, to VVP Funding, a wholly-owned subsidiary
        of Vitro America. VVP Funding is a special-purpose entity that was formed
        prior to the execution of this agreement for the sole purposes of buying
        and selling accounts receivable and is designed to be bankruptcy remote.
        VVP and VVP Funding entered an agreement with an unrelated major financial
        institution whereby VVP Funding sells, on a revolving basis and subject
        to the maintenance of certain financial and receivables-based ratios,
        an undivided percentage ownership in all eligible accounts receivable,
        as defined, for consideration composed of cash up to a maximum account
        of US$ 40 million and retained undivided interests in securitized receivables.
        The contract expires in May 2007 and is subject to annual renewal approval
        by the financial institution. The transfer of undivided ownership interests
        from VVP Funding to the unrelated major financial institution for cash
        consideration is accounted for as a sale of receivables. As of December
        31, 2005 and 2006, the gross receivables sold totaled approximately US$
        71 million and US$ 76 million, respectively and are reflected as a reduction
        of trade accounts receivable. The estimated fair value of the retained
        undivided interests in securitized receivables at December 31, 2005 and
        2006 was US$ 31 million and US$ 35 million, respectively. 6.
    Inventories Inventories
    are summarized as follows: December
            31,2005
        
        2006Semi-finished
            and finished products
        
        Ps.
            2,876
        
        Ps.
            2,717Raw materials
        
        598
        
        558Packaging
            materials
        
        65
        
        683,539
        
        3,343Spare parts
        
        237
        
        249Refractory
        
        8
        
        33Merchandise in transit
        
        182
        
        122Other
        
        61
        
        47Ps.
            4,027
        
        Ps.
            3,794
 7.
    Land and buildings held for sale At
    December 31, 2005, the Company had classified one of its corporate buildings
    and a parcel of land with a book value of Ps. 427 as held for sale, which
    are recorded at their fair value less estimated costs to sell. As a result
    of writing the assets down to their fair value, less costs to sell, the Company
    recorded an impairment charge of Ps. 184. During 2006, the parcel of land
    was sold for Ps. 186 and the corporate building was reclassified as held and
    used. 8.
    Land, buildings, machinery and equipment a)
    Land, buildings, machinery and equipment are summarized as follows: December
            31,2005
        
        2006Land
        
        Ps.
            3,653
        
        Ps.
            3,515Buildings
        
        10,731
        
        10,129Accumulated
            depreciation
        
        5,578
        
        5,235Ps.
            8,806
        
        Ps.
            8,409Machinery and equipment
        
        Ps.
            25,267
        
        Ps.
            24,190Accumulated depreciation
        
        17,586
        
        17,745Ps.
            7,681
        
        Ps.
            6,445
 b)
    Sale of real estate.- On December 14, 2006, Vitro sold real estate
    located in Mexico City used by Compania Vidriera S.A. de C.V. ("COVISA")
    for US$ 100 million, 80% payable on the date of sale and the remainder payable
    on the delivery date of the property. COVISA uses these premises to manufacture
    glass containers for cosmetics and perfume products. The Company plans to
    relocate this production to another facility in Toluca, Mexico. In connection
    with the sale of the property, the Company has agreed to deliver the real
    estate within 24 months following the sale, free and clear of all buildings
    and fixtures, as well as any environmental claims, recording reserves of Ps.
    54 for the estimated asset retirement costs and prepaid rent of Ps. 60 for
    the estimated fair value of the rental expense over the 24 months. The Company
    also has an option to extend the delivery date for an additional 12 months
    for an annual rental payment of US$ 11.2 million. Vitro has also granted a
    guarantee for up to US$ 80 million in favor of the purchaser payable in the
    event that the property is not delivered to the purchaser within 36 months
    following the sale. c)
    Sale of corporate building.- In 2006 Vitro decided to sell one of the
    buildings located at its corporate headquarters in Garza Garcia, N.L., Mexico.
    November 18, 2006 the Company sold the buildings and received cash of Ps.
    123. 9.
    Trade Derivative Instruments Derivative
    financial instruments are contracted for hedging from an economic point of
    view, they are not designated as hedges because they do not meet all of the
    standards' requirements and are instead classified as trading for accounting
    purposes. At
    December 31, 2006, the Company's derivative financial instruments had the
    following positions: Derivative
            financial instruments
        Notional
          Amount
          (million)
        Average
          Foreign
            Exchange Rate
        Period
        Fair
            value
          asset
          (liability)Foreign exchange options:Purchase
            of calls
        US$
            21.0
        11.30
        March
            to November 2007
        Ps. 2Written puts
        US$
            15.6
        10.34
        March
            to November 2007
        (1)Total foreign exchange option
        
        
        
        Ps. 1
   Derivative
            financial instruments
        Notional
          Amount
          (million)
        Company
          pays
            interest
          rate
        Company
          receives
            interest
          rate
        Period
        Fair
            value
          asset
          (liability)Libor interest rate options:Purchase
            of calls
        US$
            154.5
        4.10
            %
        Libor
            3M
        January
            to December 2007
        Ps. 18Purchase of calls
        US$
            42.2
        4.10
            %
        Libor
            6M
        January
            to December 2007
        3Total interest rate options
        
        
        
        
        Ps. 21
   Derivative
            financial instruments
        Notional
          Amount
          (million)
        Company
          pays
            interest
          rate
            (MXN)
        Company
          receives
            interest
          rate
            (USD)
        Period
        Fair
            value
          asset
          (liability)Cross Currency Swaps:Purchase
            of swaps
        US$
            250.0
        TIIE
            + 2.79 %
        10.75
            %
        January
            2006 to July 2011
        Ps.
            185Purchase
            of swaps
        US$
            225.0
        TIIE
            + 3.90 %
        11.75
            %
        January
            2006 to November 2013
        109Total cross currency swaps
        
        
        
        
        Ps. 294
   Derivative
            financial instruments
        Notional
          Amount
          (MMBTUs)
        Period
        Fair
            value
          asset
          (liability)Natural Gas Hedge ContractsPurchase
            of swaps
        5,500,000
        January
            to December 2007
        Ps. (56)Structured
            collars
        4,800,000
        January
            to December 2007
        (5)Structured
            collars
        2,400,000
        January
            to December 2007
        (38)Total Natural gas hedge contracts
        
        
        Ps. (99)
   Summary of derivative financial
        instruments
        Fair value
          asset
          (liability)Foreign exchange
            options
        Ps.
            1Libor
            interest rate options
        21Cross
            Currency Swaps
        294Natural
            Gas Hedge Contracts
        (99)Total derivative financial instruments
        Ps. 217
 a)
    Trade Derivative Instruments: The
    realized instruments during 2006 were recorded as a charge of Ps. 430 in total
    financing cost, this amount considers the accrued portion of the cross currency
    swaps that has not been received for Ps. 143. b)
    Embedded derivatives.- The Company identified embedded derivatives within
    certain supply contracts. As of December 31, 2006, the amount recognized for
    these instruments was a credit to total financing cost of Ps. 7. 10.
    Short-term borrowings At
    December 31, 2005, short-term borrowings denominated in Mexican pesos totaled
    Ps. 92, and short-term borrowings denominated in foreign currency (US dollars
    and Euros) totaled Ps. 1,164 in 2005 and Ps. 289 in 2006. During 2006, the
    Company's weighted average interest rate for short-term borrowings denominated
    in US dollars was 8.85%. As
    disclosed in Note 23, the Company issued US$700 million of senior guaranteed
    notes due February 1, 2017 and US$300 million of senior guaranteed notes due
    February 1, 2012. Upon completion of this transaction, Ps. 2,294 of short-term
    borrowings were refinanced and have therefore been reclassified as long-term
    debt. 11.
    Long-term debt a)
    Long-term debt consists of the following: December 31,2005
			
			December 31, 2006I. Foreign Subsidiaries (payable in US
			dollars):Secured debt, floating interest rate based on
			LIBOR plus a spread of 3.15%, principal payable in
			several installments through 2009.
			
			Ps. 68
			
			Ps. 59Unsecured debt, floating interest rate based on
			LIBOR plus a spread between 1.25% and 1.75%,
			principal payable in several installments through 2016.
			
			50
			
			307II. Foreign Subsidiaries (payable in Euros):Secured debt, floating interest rate based on EURIBOR plus a spread of 1.25%, principal payable in several installments through 2008.
			
			10
			
			6Unsecured debt, floating interest rate based on
			EURIBOR plus a spread ranging from 0.75% to 2.5%,
			principal payable in several installments through 2011.
			
			78
			
			47III. Vitro and Mexican Subsidiaries (payable
			in US Dollars):Secured debt, floating interest rate based on
			LIBOR plus a spread ranging from 2.5 to 4.0%,
			principal payable in several installments through 2007.
			
			1,195
			
			309Unsecured debt, floating interest rate based on
			LIBOR plus a spread ranging from 0.25% and 2.95%,
			principal payable in several installments through 2009.
			
			58
			
			1010.75% Senior secured guaranteed notes due in
			2011.
			
			2,714
			
			2,662Senior secured term loan, floating interest
			rate based on LIBOR plus a spread of 6.25%, principal payable in
			several installments through 2010.
			
			1,660
			
			1,569Unsecured debt, floating interest rate based on
			LIBOR plus a spread ranging from 10% and 11%, principal payable in
			2007.
			
			1,162Secured debt, floating interest rate based on
			LIBOR plus a spread ranging from 10% and 11%, principal payable in
			2007.
			
			498Secured debt, fixed interest rate of 11.50%,
			principal payable in 2009.
			
			24011.375% Guaranteed senior
			unsecured notes due in 2007.
			
			1,686
			
			1,64811.75% Guaranteed senior
			unsecured notes due in 2013.
			
			2,470
			
			2,418IV. Vitro and Mexican Subsidiaries (payable
			in Mexican pesos):Unsecured medium-term notes, floating interest rate based on 182-day Mexican treasury bonds
			(CETES) plus a spread of 3.25%, principal payable in 2008 and 2009.
			
			745
			
			717Secured debt, floating interest rate based on
			28-day interbank interest rate (TIIE) plus a spread ranging from
			2.0% and 2.38% principal payable in several installments through
			2007.
			
			359V. Vitro and Mexican Subsidiaries
			denominated ininvestment units (UDI's) payable in Mexican
			pesos:Unsecured debt, interest rate of UDI's plus
			8.75%, principal payable in several installments
			through 2006.
			
			6Unsecured medium term notes, fixed interest
			rate ranging from 9.0% and 9.9%, principal payable in 2006.
			
			1,084Refinanced Short-term borrowings (Note 10)
			
			
			
			2,294Ps.      14,083
			
			Ps.        12,046Less current maturities*
			
			2,444
			
			61Ps.      11,639
			
			Ps.        11,985*
    As a result of the debt issuance disclosed in Note 23, a portion of the long-term
    debt was refinanced and therefore Ps. 1,926 of current maturities have been
    reclassified as long-term debt.
  As
    of December 31, 2006, the interest rates of EURIBOR, CETES, TIIE and LIBOR
    were 3.73%, 7.04%, 7.66% and 5.36%, respectively.
  The
    schedule of contractual principal payments of long-term debt as of December
    31, 2006 is as follows (revised to reflect the refinancing disclosed above):
  Year
          ending December 31,2008
      
      Ps.
      6362009
      
      
      2482010
      
      
      432011
      
      
      452012
          and thereafter
      
      
      11,013Ps.
      11,985
  b)
    Certain of the Company's long-term debt agreements contain restrictions and
    covenants that require the maintenance of various financial ratios.
  In
    addition, under certain of our subsidiaries' credit agreements; if the subsidiary
    does not meet certain financial ratios or other conditions, its ability to
    pay dividends is restricted. During 2006, certain subsidiaries were restricted
    from paying dividends by the credit agreements. The failure to comply with
    such financial ratios or other conditions did not represent an event of default
    on the credit facilities nor did it allow the lenders to accelerate the maturity
    of the debt under such credit facilities. These restrictions have subsequently
    been removed as a result of the refinancing discussed in Note 23.
  Additionally,
    in some of the Company's credit facilities, if it does not meet certain financial
    ratios at a consolidated level, its ability to incur additional debt is restricted.
    As of December 31, 2006, the Company is restricted to a maximum of US$ 75
    million of additional debt for working capital needs, capital expenditures
    and interest payments and an additional US$ 25 million for any other purpose.
  c)
    Debt of the Company totaling Ps. 5,413 is collateralized by fixed assets,
    inventory, machinery, equipment, trade receivables and a first priority lien
    on its 49.7% equity interest in Comegua with a book value of Ps. 12,055 as
    of December 31, 2006. Such assets of Ps. 11,815 were released from collateral
    as a result of the refinancing discussed above in Note 23.
  12.
    Employee retirement obligations
  The
    disclosures relating to the Company's pension plans, seniority premiums and
    severance payments at the end of the work relationship required by Bulletin
    D-3, calculated as described in note 3 k), together with certain actuarial
    assumptions utilized, are presented below as of December 31, 2005 and 2006:
  December
            31,2005
        
        2006Accumulated benefit obligation
        
        Ps. 1,915
        
        Ps. 2,041Projected
            benefit obligation
        
        Ps. 2,432
        
        Ps. 2,674Plan
            assets at fair value
        
        (694)
        
        (1,243)Unfunded
            status
        
        1,738
        
        1,431Unrecognized
            items:Prior
            service costs and plan amendments
        
        (180)
        
        (168)Unrecognized
            transition obligation
        
        (336)
        
        (240)Changes
            in assumptions and adjustments from experience
        
        (898)
        
        (509)Projected
            net liability
        
        Ps. 324
        
        Ps. 514Additional
            minimum liability adjustment
        
        Ps. 991
        
        Ps. 993
  At
    December 31, 2006, the plan assets presented above, include 47.5 million shares
    of Vitro.
  Assumptions:
        
        December
            31,2005
        2006Discount rate
        
        5.75%
        5.50%Expected rate of return on
            plan assets
        
        7.0%
        7.0%Rate of compensation increase
        
        0.0%
        0.0%
  
  
  Net
          periodic cost:
      December
          31,2004
      2005
      2006Service cost
      
      Ps. 44
      Ps. 58
      Ps. 70Interest cost
      
      129
      131
      138Amortization of transition obligation
      
      76
      94
      96Amortization of prior service costs
      
      15
      14
      11Amortization of unrecognized losses
      
      55
      97
      144Actual return on plan assets
      
      (42)
      (42)
      (47)Net periodic cost
      
      Ps. 277
      Ps.
          352*
      Ps. 412*
  *2005
    and 2006 includes Ps. 17 and Ps. 8 for the reduction and anticipated extinguishment
    of obligations and also includes Ps. 66 and Ps. 104 for indemnification of
    personnel at the end of the work relationship, respectively.
  13.
    Commitments and contingencies
  a)
    Several subsidiaries of Vitro, which have facilities throughout Monterrey,
    Mexico and the Mexico City area, entered into a 15-year energy purchase agreement
    for approximately 90 Megawatts of electricity and 1.3 million tons of steam
    per year with Tractebel Energia de Monterrey, S. de R.L. de C.V. ("Tractebel").
  b)
    The Company uses derivative instruments to manage its exposure to the volatility
    of natural gas prices. The portfolio is dynamically managed, in accordance
    with the guidelines and policies set by management.
  The
    Company's natural gas consumption during 2006 was approximately 20,212,472
    million British Thermal Units ("MMBTUs"). During 2006, the Company
    hedged approximately 92% of its consumption of natural gas at an average price
    of US$ 8.40 dollars per MMBTU.
  The
    market average price per MMBTU during 2006 was US$ 7.23 dollars.
  The
    Company's percentage of hedged consumption can vary from 10% to 100% of the
    estimated consumption. The percentage of hedged consumption and the hedged
    prices change constantly based on market conditions and according to the Company's
    needs as well as the use of alternative fuels within its production process.
  As
    of December 31, 2006, the Company had hedges equivalent to approximately 47%
    of expected consumption for the next twelve months at prices ranging between
    of US$ 4.65 and US$8.50 per MMBTU. At March 12, 2007, the market price per
    MMBTU was US$ 7.56.
  c)
    The Company has several non-cancelable operating lease agreements for the
    rent of warehouses and equipment. Rental expense for the years ended 2004,
    2005 and 2006 was Ps. 570, Ps. 664 and Ps. 502, respectively.
  Future
    minimum lease payments under these agreements are as follows:
  2007
      Ps.
      4482008
      
      3492009
      
      2542010
      
      1752011
      
      1212012
          and thereafter
      
      146
  d)
    The Company is not a party to, and none of its assets are subject to, any
    pending legal proceedings, nor is the Company subject to any contingent liabilities,
    other than as described in Note 13 e) and g) and legal proceedings and contingent
    liabilities arising in the ordinary course of business and against which the
    Company is adequately insured or indemnified or which the Company believes
    are not material in the aggregate.
  e)
    As part of the disposal of Anchor Glass Containers Corporation ("Anchor")
    in August 1996, in a transaction approved by the U.S. Bankruptcy Court, the
    Company entered into a term sheet which contemplated an agreement pursuant
    to which the Company would provide to the Pension Benefit Guaranty Corporation
    "PBGC," a United States governmental agency that guarantees pensions,
    a limited guaranty of Anchor's unfunded pension liability. No payments would
    be made under such a guaranty unless the PBGC terminated any of the covered
    pension plans, and the guaranty would be payable only to the extent the PBGC
    could not otherwise recover the unfunded liabilities from the entity that
    purchased Anchor's assets "New Anchor." The amount of the guaranty
    was originally limited to US$ 70 million. Under the guaranty, payments would
    not begin until August 1, 2002, and would then generally be payable in equal
    semi-annual installments over the following 10 years. Payments would not bear
    interest. The amount and the term of the guaranty would be proportionately
    reduced if the pension plans were terminated after January 31, 2002. Beginning
    February 2002, the guaranty would be reduced by US$ 7 million semiannually
    until August 1, 2006, when the guaranty would expire if the plans did not
    terminate.
  On
    April 15, 2002, New Anchor filed a pre-negotiated plan of reorganization under
    Chapter 11 of the U.S. Bankruptcy Code. On August 8, 2002, an amended plan
    of reorganization was confirmed, pursuant to which the plan resulting from
    the merger of the covered pension plans was terminated and the obligations
    thereunder were assumed by the PBGC in exchange for cash, securities and a
    commitment of reorganized New Anchor to make certain future payments.
  On
    June 20, 2003, the PBGC wrote to the Company, asserting that the plan had
    been terminated effective as of July 31, 2002, with an estimated unfunded
    liability of US$ 219 million. The PBGC stated that the value of the recovery
    from New Anchor and reorganized New Anchor amounts to no more than US$ 122.25
    million; it alleged that the recovery that it secured in the bankruptcy was
    insufficient and that an underfunding in excess of the Company's limited guaranty
    had occurred. Accordingly, in such letter, the PBGC demanded payments pursuant
    to the term sheet of US$ 7 million on or before August 1, 2003 and of US$
    3.5 million semiannually through August 1, 2011. The Company intends to contest
    this liability. There are various issues concerning such demand and certain
    defenses that may be asserted by the Company. Management is currently evaluating
    these issues and defenses. At this point, it is not possible to reasonably
    estimate the amounts that will ultimately be payable in response to such demand.
    When management is able to reasonably estimate those amounts, the Company
    will establish an appropriate accounting reserve. As of this date, the Company
    has not established any reserves in connection with such potential liability.
  f)
    Call/Put on shares of Vitro Cristalglass.-A group of individual investors
    owns a 40% interest in Vitro Cristalglass. The Company has the option of purchasing
    the 40% of the shares from the minority interest, which can be exercised beginning
    on May 1, 2005 for fair value as calculated by independent appraisers and
    cannot be less than 28.9 million euros ($ 35 million as of December 31, 2006).
    Additionally, the minority interest has a put option pursuant to which they
    may require the Company to purchase all or part of their 40% interest in Vitro
    Cristalglass, which can be exercised beginning on May 1, 2003 for 24 million
    euros ($ 29 million as of December 31, 2006), as adjusted to reflect inflation
    in Spain from 2003 through the time the put is exercised. As of December 31,
    2006, the estimated fair value of the 40% interest is higher than the option
    price held by Vitro.
  g)
    As disclosed in Note 2b), Vitro Plan, approved on second call at a general
    extraordinary shareholders' meeting held in December 2006 its merger into
    Vitro's subsidiary Vimexico.
  Notwithstanding
    that this merge has become full effective, since all the approvals were granted
    and the corresponding filings were made, Vitro has been notified that Pilkington,
    who voted against said merge, has filled a lawsuit against Vitro Plan, opposing
    the merge. Vitro believes that this lawsuit is without merit and expects to
    obtain a favorable resolution. Based on advise from its Mexican special litigation
    counsel, Vitro believes that this lawsuit is without merit and expects to
    obtain a favorable resolution.
  14.
    Foreign currency operations
  a)
    At December 31, 2006, the foreign currency denominated assets and liabilities
    of the Company's Mexican subsidiaries consist of the following:
  US
          dollars
      
      Mexican
          pesosMonetary
          assets
      $
      193
      
      Ps. 
          2,082Inventories
      
      22
      
      239Fixed assets
      
      299
      
      3,238Monetary liabilities
      
      1,101
      
      11,903
  b)
    Foreign currency operations of the Company's Mexican subsidiaries during the
    year ended December 31, 2006, consisted of the following:
  US
          dollars
      
      Mexican
          pesosExports
      
      $ 556
      
      Ps. 6,127Imports
      
      313
      
      3,482Interest expense, net
      
      137
      
      1,529
  c)
    The condensed financial information of the principal foreign subsidiaries
    of the Company at December 31, 2006, consisted of the following:
  Central
          andUnited States
      
      South America
      
      EuropeNet
          sales
      
      Ps. 8,937
      
      Ps. 2,147
      
      Ps.
          1,752Operating
          income
      
      283
      
      189
      
      161Total
          assets
      
      2,800
      
      2,855
      
      1,677Total
          liabilities
      
      820
      
      1,013
      
      706Capital
          expenditures
      
      40
      
      120
      
      62
  d)
    The exchange rates of the Mexican peso against the US dollar and the Euro,
    used for purposes of the Company's consolidated financial statements at the
    following dates were:
  US
          dollar
      
      EuroDecember 31, 2004
      
      Ps.
          11.1495
      
      Ps.
          15.0941December 31, 2005
      
      10.6344
      
      12.5932December 31, 2006
      
      10.8116
      
      14.2680
  On
    March 12, 2007, the exchange rate was Ps. 11.1483 per US dollar and Ps. 14.7001
    per Euro.
  15.
    Stockholders' equity
  a)
    The capital stock of the Company consisted of 324,000,000 and 386,857,143,
    ordinary, nominative, fully paid common shares, without par value, at December
    31, 2005 and 2006, respectively.
  b)
    Capital stock increase.- On September 27, 2006, at an ordinary shareholder's
    meeting, the Company's shareholders approved an increase in the variable portion
    of the Company's capital stock, totaling Ps. 550 (nominal). This capital increase
    was completed on October 31, 2006, through the issuance of 62,857,143 new
    shares, which were issued at a price of Ps. 8.75 pesos per share including
    paid-in capital. The offering was made primarily to current shareholders and
    holders of the Company's ADR's.
  c)
    The Company maintains an Employee Stock Option Plan established in March 1998
    (the "Plan"). The Plan specifies the amount of shares, time and
    initial exercise price, which is equal to the average closing price on the
    BMV of the common shares on the 20 days prior to the grant date, except for
    options issued during 2000, 2001 and 2002, which were Ps. 11.00, Ps. 8.27
    and Ps. 7.53, respectively. The vesting period of the options is 5 years and
    the life of such options is 10 years.
  The
    following table summarizes the activity relating to the Plan:
  1998
      1999
      2000
      2001
      1998
      2002
      Total
          outstandingOptions
          granted during
          the year
      2,813,300
      2,893,000
      4,851,900
      3,204,800
      940,950
      3,941,950Options cancelled or exercised
          at
        December
          31, 2006
      2,350,000
      1,051,500
      3,918,650
      2,825,625
      390,650
      3,195,225Options outstanding at December 31, 2006
      463,300
      1,841,500
      933,250
      379,175
      550,300
      746,725
      4,914,250Initial
          exercise price
      Ps. 31.31
      Ps. 14.88
      Ps. 11.00
      Ps.
          8.27
      Ps. 13.00
      Ps. 7.53Exercise
          price at December
          31, 2006
      Ps. 80.93
      Ps. 42.00
      Ps. 11.00
      Ps. 8.27
      Ps. 13.00
      Ps. 7.53
  The
    closing price of the Company's shares on the BMV on December 31, 2006 was
    Ps. 20.30.
  The
    estimated fair value of the options was made on the grant date using the Black-Scholes
    option-pricing model with the following assumptions:
  1999 - 2001
        
        2002Risk-free
            interest rate
        15%
        
        3%Expected
            life in years
        5
        
        8Price
            volatility
        44%
        
        45%Dividend
            yield
        0
        
        0
  Compensation
    cost charged to operations for the Plan was Ps. 12, Ps. 4 and Ps. 1 for 2004,
    2005 and 2006, respectively.
  d)
    Retained earnings includes the statutory legal reserve. Mexican General Corporate
    Law requires that at least 5% of net income of the year be transferred to
    the legal reserve until the reserve equals 20% of capital stock at par value
    (historical pesos). The legal reserve may be capitalized but may not be distributed
    unless the entity is dissolved. The legal reserve must be replenished if it
    is reduced for any reason. At December 31, 2005 and 2006, the legal reserve,
    in historical pesos, was Ps. 72.
  e)
    At December 31, 2005 and 2006, the treasury shares held by the Company, which
    reduced the amount of total shares outstanding, were 50,553,528 and 45,874,816,
    respectively, which included the shares held by the Stock Option Trust (see
    Note 15 c), which were 22,281,437 and 17,555,747 at December 31, 2005 and
    2006, respectively.
  f)
    Stockholders' equity, except restated paid-in capital and tax retained earnings,
    will be subject to income tax at the rate in effect when a dividend is distributed.
    Any tax paid on such distribution may be credited against annual and estimated
    income taxes of the year in which the tax on dividends is paid and the following
    two fiscal years.
  At
    December 31, 2006, the majority interest stockholders' equity tax account,
    corresponding to the contributed capital account and the net tax income account
    was Ps. 2,186 and Ps. 1,065, respectively.
  g)
    Dividends declared and paid:
  Dividend amountStockholders' meeting date
        Nominal Value
        Restated Value
        Payment DateApril
            5, 2001
        Ps. 149
        Ps. 158
        (1)March
            25, 2004
        89
        99
        April 2004March
            17, 2005
        90
        96
        April 2005April
            27, 2006
        89
        92
        May 2006
  (1)
    On March 17, 2005, the shareholders of Vitro revoked the payment of this dividend.
  h)
    Minority interest in consolidated subsidiaries consists of the following:
  December
          31,2005
      
      2006Capital stock
      
      Ps. 2,289
      
      Ps.
          435Shortfall in restatement of
          capital
      
      (3,222)
      
      (207)Retained earnings
      
      3,939
      
      1,510Ps. 3,006
      
      Ps. 1,738
  i)
    Majority stockholders' equity consists of the following:
  December
          31, 2006Nominal
      
      
      
      Restatedvalue
      
      Restatement
      
      ValueCapital
          stock
      
      Ps. 387
      
      Ps.
          6,969
      
      Ps. 7,356Treasury stock
      
      (297)
      
      (302)
      
      (599)Additional paid-in capital
      
      1,147
      
      1,201
      
      2,348Shortfall in restatement
          of capital
      
      
      
      (20,387)
      
      (20,387)Cumulative effect of deferred
          taxes
      
      (1,259)
      
      (486)
      
      (1,745)Minimum labor liability adjustment
      
      (474)
      
      
      
      (474)(Accumulated deficit) retained
          earnings
      
      (3,001)
      
      23,639
      
      20,638Ps. (3,497)
      
      Ps.
          10,634
      
      Ps. 7,137
  j)
    At December 31, 2006, stockholders' equity includes Ps. 718 of retained earnings
    and other undistributed capital items of subsidiaries.
  16.
    Total financing cost
  The
    following represents a summary of the Company's total financing cost for the
    periods presented:
  Year ended December 31,2004
      2005
      2006Interest expense on debt denominated in dollars
      Ps. 1,312
      Ps. 1,558
      Ps. 1,567Interest expense on debt denominated in pesos
      277
      233
      112Interest expense on debt denominated in UDI's
      113
      125
      61Restatement
          of UDI's
      9
      36
      20Interest
          income
      (133)
      (165)
      (128)Mark
          to market of derivative financial instruments
      
      (102)
      (105)Realization
          of derivative financial instruments
      
      118
      430Exchange
          loss (gain)
      86
      (402)
      215Gain
          from monetary position
      (748)
      (438)
      (424)Other
          financing expenses, net
      545
      478
      441Ps. 1,461
      Ps. 1,441
      Ps. 2,189
  17.
    Other expenses (income), net
  The
    following represents a summary of the Company's other expenses (income), net
    for the periods presented:
  Year ended December 31,2004
        2005
        2006Restructuring
            charges (1)
        Ps. 256
        Ps.
            320
        Ps. 59Impairment
            of long-lived assets
        338
        362
        378Loss (gain) from sale of long-lived assets
        10
        6
        (766)Loss (gain) from sale of subsidiaries
        (525)
        132
        (66)Vitro Club
            trust (2)
        
        (442)Other
        64
        46
        122Ps. 143
        Ps.
            424
        Ps.
            (273)
  (1)
    During 2004, 2005 and 2006 the Company downsized its corporate services at
    its headquarters and certain business units, which resulted in charges of
    Ps. 126, Ps. 146 and Ps. 26, respectively.
  (2)
    The Vitro Club holds land and facilities for our employees' recreational activities,
    which are held in a trust (the "Trust"). The Trust can only be executed
    if all of the participants name one entity as the sole beneficiary. In 2005,
    all the participants named the Company as the sole beneficiary and therefore
    the Company has the right to take control of the Trust. The Company recorded
    the fair value of the assets and recognized other income of Ps. 442.
  18.
    Tax loss carryforwards
  At
    December 31, 2006, tax loss carryforwards and the recoverable asset tax consist
    of the following:
  Tax
          loss carryforwards
      
      Asset taxExpiration
          Year
      
      Majority
          interest
      
      Minority
          interest
      
      Majority
          interest
      
      Minority
          interest2008
      
      Ps.
      
      Ps.
      1
      
      Ps.
      
      Ps.2010
      
      59
      
      292011
      
      156
      
      252012
      
      1,061
      
      192013
      
      136
      
      2
      
      12014
      
      264
      
      26
      
      3
      
      12015
      
      
      
      12016
      
      
      
      15
      
      3
      
      1Ps. 1,676
      
      Ps.
          118
      
      Ps.
      7
      
      Ps.
      2
  19.
    Income tax, asset tax and workers' profit sharing
  a)
    The Company is subject to income tax and asset tax for consolidation purposes
    in proportion to the number of the subsidiary's voting shares that Vitro owns.
    ISR is computed taking into consideration the taxable and deductible effects
    of inflation, such as depreciation calculated on restated asset values. Taxable
    income is increased or reduced by the effects of inflation on certain monetary
    assets and liabilities through the inflationary component, which is similar
    to the gain or loss from monetary position. In 2005 and 2006, the tax rate
    was 30% and 29%, respectively, and as of 2007, the tax rate will be 28%. Due
    to changes in the tax legislation effective January 1, 2007, taxpayers who
    file tax reports and meet certain requirements may obtain a tax credit equivalent
    to 0.5% or 0.25% of taxable income. In addition, as a result of changes in
    the tax law effective in 2005, cost of sales is deducted instead of inventory
    purchases. As of 2006, PTU paid is fully deductible. The PTU rate is 10%.
  Through
    2006, IMPAC was calculated by applying 1.8% on the net average of the majority
    of restated assets less certain liabilities, including liabilities payable
    to banks and foreign entities. IMPAC is payable only to the extent that it
    exceeds ISR payable for the same period; any required payment of IMPAC is
    creditable against the excess of ISR over IMPAC of the following ten years.
    As of January 1, 2007, the IMPAC rate will be 1.25% on the value of assets
    for the year, without deducting any liabilities.
  b)
    The income tax, asset tax and workers' profit sharing included in the Company's
    results are:
  Year
            ended December 31,2004
        
        2005
        
        2006Income
            tax:Current
        
        Ps. 117
        
        Ps. 110
        
        Ps. 168Deferred
        
        (145)
        
        (889)
        
        (201)(28)
        
        (779)
        
        (33)Asset
            tax
        
        19
        
        277
        
        248Ps. (9)
        
        Ps. (502)
        
        Ps. 215Workers' profit sharing:Current
        
        Ps. 76
        
        Ps.
            93
        
        Ps. 53Deferred
        
        48
        
        (44)Ps. 124
        
        Ps.
            49
        
        Ps. 53
  To
    determine deferred income tax at December 31, 2004, 2005 and 2006, the Company
    applied the different tax rates that will be in effect to temporary differences
    according to their estimated dates of reversal.
  c)
    Net deferred tax assets presented in the consolidated balance sheets consist
    of the following:
  December
            31,2005
        
        2006Assets:Allowance
            for doubtful accounts
        
        Ps. 106
        
        Ps. 91Reserve
            for seniority premiums and pension plans
        
        411
        
        480Tax
            loss carryforwards and capital losses, net of valuation allowance
            of Ps. 606 in 2005 and Ps. 260 in 2006
        
        1,991
        
        244Intangible
            asset
        
        609
        
        528Asset
            tax credit carryforwards
        
        225
        
        9Derivative
            financial instruments
        
        92
        
        1Other
        
        57
        
        1173,491
        
        1,470Liabilities:Inventories
        
        27
        
        (18)Fixed assets
        
        2,508
        
        926Exchange rate fluctuations
        
        24
        
        172,559
        
        925Ps. 932
        
        Ps. 545
  d)
    Following is a reconciliation between the Company's effective income tax rate
    and the statutory rate:
  Year
            ended December 31,2004
        
        2005
        
        2006Effective
            income tax rate
        
        20%
        
        432%
        
        229%Asset tax
            included as income tax
        
        35
        
        218
        
        (226)Intangible
            asset
        
        
        
        (627)Sale of subsidiaries
        
        (202)
        
        (50)
        
        346Difference
            between tax andaccounting
            basis for monetary gain
        
        25
        
        (2)
        
        (17)Foreign
            subsidiaries
        
        (2)
        
        
        
        10Effect of reduction in statutory rate
            on deferred ISR
        
        (209)
        
        (27)
        
        (105)Valuation
            allowance
        
        262
        
        76
        
        (148)Nondeductible
            expenses
        
        23
        
        12
        
        (17)Other
        
        81
        
        (2)
        
        (43)Statutory
            income tax rate
        
        33%
        
        30%
        
        29%
  e)
    Changes in stockholders' equity for shortfall in restatement of capital and
    the minimum labor liability adjustment are presented net of the deferred tax
    effect as follows:
  Year
            ended December 31,2004
        2005
        2006Income
            tax effect of:Shortfall in restatement of capital
        
        Ps. (56)
        Ps. 19
        Ps. 25Minimum
            labor liability adjustment
        
        40
        (6)
        18Ps. (16)
        Ps. 13
        Ps. 43
  20.
    Business dispositions and acquisitions
  a)
    Sale of Quimica M, S.A. de C.V. ("Quimica M").- On March 2,
    2006, the Company sold its 51% interest in Quimica M, to Solutia Inc. for
    US$ 20 million in cash. Solutia is now the sole owner of this Mexican operation
    which was formed in 1995. Quimica M was a joint venture between Vitro Plan
    and Solutia and is located near the city of Puebla, Mexico. Quimica M is engaged
    in the production of PVB (polyvinyl butyral) interlayer, which is used by
    major glass producers such as Vitro to make laminated glass for use in automobiles
    and buildings.
  b)
    Acquisition of Vidrios Panamenos, S. A. ("VIPASA").- On April
    20, 2006, the Company announced that in a joint effort with its Central American
    partners and through its subsidiary Empresas Comegua, S.A., it has completed
    the acquisition of VIPASA, a glass container company located in Panama for
    a purchase price of US$ 21 million. VIPASA is the largest and most important
    glass container manufacturer for the beverage, liquor, food and pharmaceutical
    industries in Panama and exports to more than 15 countries in the American
    continent. VIPASA's sales in 2005 reached approximately US$ 23 million.
  c)
    Sale of Vitrocrisa.- As disclosed in Note 4, on June 16, 2006 the Company
    announced that it completed the sale of its 51% interest in Vitrocrisa to
    Libbey recognizing a gain on sale of Ps. 463.
  d)
    Visteon Corporation's retirement from Vitro Flex, S.A. de C.V. ("Vitro
    Flex").- On September 29, 2006, Vitro Plan, Vitro's flat glass division,
    and Visteon Inc. ("Visteon") ended their joint venture agreement
    in Vitro Flex through a reimbursement and cancellation of Visteon's capital
    investment. Vitro Plan is now the sole owner of Vitro Flex. Vitro Flex was
    a joint venture formed in 1979 with Fairlane Holdings ("Fairlane"),
    a Visteon affiliate. Vitro Flex primarily manufactures tempered and laminated
    glass for use in Ford vehicles. Fairlane will receive US$ 9.4 million for
    the 38% stake in Vitro Flex. An initial payment of US$ 2 million was made
    on September 29, 2006, which will be followed by four annual payments of US$
    1.85 million, starting on September 30, 2007. The transaction will be funded
    by Vitro Flex with cash from operations. The difference between the transaction
    value and the book value result in a credit of Ps. 67 registered in the majority
    stockholders' equity. Vitro Flex together with Vitro Automotriz ("VAU")
    will now directly manage their relationship with Ford and will serve all Vitro's
    automotive customers. Under the prior structure, contractual restrictions
    limited Vitro Flex's ability to use excess capacity for non Ford volumes.
  21.
    Business segment data
  The
    accounting policies of the Company's segments are the same as those disclosed
    by Vitro. 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.
  The
    Company has two reportable segments: Glass Containers and Flat Glass. The
    principal products of each of the segments are summarized below:
  Segment
      Principal
          productsGlass
          Containers
      Glass
          containers, sodium carbonate and bicarbonate, capital goods, precision
          components and molds for glass industry.Flat Glass
      Flat glass for the construction
          and automotive industries.
  The
    segment data presented below does not include discontinued operations for
    any of the periods presented.
  Glass Containers
        
        Flat
          Glass
        
        Corporate & Eliminations
        
        ConsolidatedDecember 31, 2004:Net
            sales
        
        Ps.
            11,317
        
        Ps.
            13,293
        
        Ps. 795
        
        Ps. 25,405Intersegment
            sales
        
        169
        
        68
        
        
        
        237Consolidated
            net sales
        
        11,148
        
        13,225
        
        795
        
        25,168Operating
            income
        
        841
        
        901
        
        (184)
        
        1,558Total
            assets
        
        13,566
        
        12,839
        
        4,581
        
        30,986Capital
            expenditures
        
        715
        
        591
        
        125
        
        1,431Depreciation and amortization
        
        1,341
        
        757
        
        89
        
        2,187Goodwill
        
        
        
        743
        
        
        
        743Impairment
        
        21
        
        88
        
        229
        
        338December 31, 2005:Net
            sales
        
        Ps. 12,002
        
        Ps. 12,960
        
        Ps. 497
        
        Ps. 25,459Intersegment
            sales
        
        134
        
        2
        
        
        
        136Consolidated
            net sales
        
        11,868
        
        12,958
        
        497
        
        25,323Operating
            income
        
        1,277
        
        474
        
        (2)
        
        1,749Total
            assets
        
        14,079
        
        12,743
        
        2,707
        
        29,529Capital
            expenditures
        
        598
        
        446
        
        17
        
        1,061Depreciation and amortization
        
        1,097
        
        635
        
        46
        
        1,778Goodwill
        
        
        
        696
        
        
        
        696Impairment
        
        
        
        178
        
        184
        
        362December 31, 2006:Net
            sales
        
        Ps. 13,518
        
        Ps. 12,710
        
        Ps. 418
        
        Ps. 26,646Intersegment
            sales
        
        83
        
        1
        
        
        
        84Consolidated
            net sales
        
        13,435
        
        12,709
        
        418
        
        26,562Operating
            income
        
        1,782
        
        375
        
        (147)
        
        2,010Total
            assets
        
        13,756
        
        10,735
        
        2,613
        
        27,104Capital
            expenditures
        
        861
        
        318
        
        19
        
        1,198Depreciation and amortization
        
        1,116
        
        566
        
        40
        
        1,722Goodwill
        
        
        
        697
        
        
        
        697Impairment
        
        52
        
        323
        
        3
        
        378
  Export
    sales from Mexico, substantially all of which are denominated in US dollars,
    are mainly to the United States, Canada and Europe and were as follows (in
    million of US dollars):
  Year ended December 31,2004
      2005
      2006$ 562
      $ 588
      $ 556
  Certain
    geographic information about the Company's operations is summarized as follows:
  Year ended December 31,2004
        
        2005
        
        2006Net
            sales(1)to customers in:Mexico
        
        Ps. 10,953
        
        Ps.
            10,524
        
        Ps.
            11,419All
            foreign countries, mainly theUnited States,
            Canada and Europe
        
        14,215
        
        14,799
        
        15,143Consolidated
        
        Ps. 25,168
        
        Ps.
            25,323
        
        Ps.
            26,562
  (1)
    Net sales are attributed to countries based on the location of the customer.
  Consolidated
    net sales to any single external customer did not exceed more than 7% of Vitro's
    total consolidated net sales in a year presented.
  Land
    and buildings, machinery and equipment geographical information is summarized
    as follows:
  December
            31,2004
        
        2005
        
        2006Land
            and buildings, machineryand
            equipment:Mexico
        
        Ps. 15,882
        
        Ps. 14,643
        
        Ps. 13,318All
            foreign countries, mainly theUnited States, Europe,Central
            and South America
        
        2,577
        
        2,447
        
        2,341Consolidated
        
        Ps. 18,459
        
        Ps. 17,090
        
        Ps. 15,659
  22.
    New accounting principles
  When
    Mexican FRS Series A went into effect on January 1, 2006, which represents
    the Conceptual Framework described in Note 3, some of its provisions created
    divergence with specific Mexican FRS already in effect. Consequently, in March
    2006, CINIF issued Interpretation Number 3 (INIF No. 3), Initial Application
    of Mexican FRS, that provisions set forth in specific. standards that have
    not been amended should be followed until their adaptation to the conceptual
    framework is complete.
  CINIF
    continues to pursue its objective of moving towards a greater convergence
    with international financial reporting standards. To this end, on December
    22, 2006, it issued the following standards, which will become effective for
    fiscal years beginning on January 1, 2007:
  NIF
        B-3, Statement of Operations
    NIF
        B-13, Events Occurring after the Date of the Financial Statements
    NIF
        C-13, Related Party Transactions
    NIF
        D-6, Capitalization of Comprehensive Financing ResultSome
    of the significant changes established by these standards are as follows:
  NIF
    B-3, Statement of Operations, sets the general standards for presenting
    and structuring the statement of income, the minimum content requirements
    and general disclosure standards. Consistent with NIF A-5, Basic Elements
    of Financial Statements, NIF B-3 now classifies revenues, costs and expenses,
    into ordinary and non-ordinary. Ordinary items (even if not frequent) are
    derived from the primary activities representing and entity's main source
    of revenues. Non-ordinary items are derived from activities other than those
    representing an entity's main source of revenues. Consequently, the classification
    of certain transactions as special or extraordinary, according to former Bulletin
    B-3, was eliminated. As part of the structure of the statement of income,
    ordinary items should be presented first and, at a minimum, present income
    or loss before income taxes, income or loss before discontinued operations,
    if any, and net income or loss. Presenting operating income is neither required
    nor prohibited by NIF B-3. If presented, the line item other income (expense)
    is presented immediately before operating income. Cost and expense items may
    be classified by function, by nature, or a combination of both. When classified
    by function, gross income may be presented. Statutory employee profit sharing
    should now be presented as an ordinary expense (within other income (expense)
    pursuant to INIF No. 4 issued in January 2007) and no longer presented within
    income tax. Special items mentioned in particular standards should now be
    part of other income and expense and items formerly recognized as extraordinary
    should be part of non-ordinary items.
  NIF
    B-13, Events Occurring after the Date of the Financial Statements,
    requires that for (i) asset and liability restructurings and (ii) creditor
    waivers to their right to demand payment in case the entity defaults on contractual
    obligations, occurring in the period between the date of the financial statements
    and the date of their issuance, only disclosure needs to be included in a
    note to the financial statements while recognition of these items should take
    place in the financial statements of the period in which such events take
    place. Previously, these events were recognized in the financial statements
    instead in addition to their disclosure. NIF A-7, Presentation and Disclosure,
    in effect as of January 1, 2006, requires, among other things, that the date
    on which the issuance of the financial statements is authorized be disclosed
    as well as the name of authorizing management officer(s) or body (bodies).
    NIF B-13 establishes that if the entity owners or others are empowered to
    modify the financial statements, such fact should be disclosed. Subsequent
    approval of the financial statements by the stockholders or other body does
    not change the subsequent period, which ends when issuance of the financial
    statements is authorized.
  NIF
    C-13, Related Party Transactions, broadens the concept "related
    parties" to include a) the overall business in which the reporting entity
    participates; b) close family members of key or relevant officers; and c)
    any fund created in connection with a labor-related compensation plan. NIF
    C-13 requires the following disclosures: a) the relationship between the controlling
    and subsidiary entities, regardless of whether or not any intercompany transactions
    took place during the period; b) that the terms and conditions of consideration
    paid or received in transactions carried out between related parties are equivalent
    to those of similar transactions carried out between independent parties and
    the reporting entity, only if sufficient evidence exists; c) benefits granted
    to key or relevant officers; and d) name of the direct controlling company
    and, if different, name of the ultimate controlling company. Notes to comparative
    financial statements of prior periods should disclose the new provisions of
    NIF C-13.
  NIF
    D-6, Capitalization of Comprehensive Financing Result, establishes
    general capitalization standards that include specific accounting for financing
    in domestic and foreign currencies or a combination of both. Some of these
    standards include: a) mandatory capitalization of comprehensive financing
    cost ("RIF") directly attributable to the acquisition of qualifying
    assets; b) yields obtained from temporary investments before the capital expenditure
    is made are excluded from the amount capitalized; c) exchange gains or losses
    from foreign currency financing should be capitalized considering the valuation
    of associated hedging instruments, if any; d) a methodology to calculate capitalizable
    RIF relating to funds from generic financing; e) regarding land, RIF may be
    capitalized if development is taking place; and f) conditions that must be
    met to capitalize RIF, and rules indicating when RIF should no longer be capitalized.
    The entity may decide on whether to apply provisions of NIF D-6 for periods
    ending before January 1, 2007, in connection with assets that are in the process
    of being acquired at the time this NIF goes into effect.
  The
    Company is in the process of analyzing the impact of these new financial reporting
    standards and believes that they will not have a material effect on its consolidated
    financial position or results of operations.
  23.
    Subsequent events
  Vitro
    debt issuance.- On February 1, 2007, Vitro S.A.B. de C.V. successfully closed
    an offering, of US$1.0 billion of senior guaranteed notes (the "Notes")
    principally to refinance existing third-party debt at the Vitro holding company
    level, substantially all of the third-party debt at its subsidiary VENA and
    certain third-party debt at some of Vimexico's subsidiaries .
  The
    Notes were issued in two tranches: US$ 700 million of senior guaranteed notes
    due February 1, 2017 callable after year 2012, at a coupon of 9.125% and US$300
    million of senior unsecured notes due February 1, 2012, non-callable for life,
    at a coupon of 8.625%. The Notes will pay interest semiannually and will receive
    guarantees from VENA and its wholly-owned subsidiaries and Vimexico and its
    wholly-owned subsidiaries.
  24.
    Authorization of financial statements issuance
  On
    February 23, 2007 the issuance of the consolidated financial statements was
    authorized by:
  Federico
    Sada G.
  President
    and Chief Executive Officer
  
  Claudio
    L. Del Valle C.
  Chief
    Administrative Officer
  
  Alvaro Rodriguez A.
  Chief
    Financial Officer
  These
    consolidated financial statements are subject to approval at the ordinary
    stockholders' meeting, who may modify the financial statements, based on provisions
    set forth by the Mexican General Corporate Law.
	

25. Differences between accounting principles in

  Mexico
    and in the

  United States
    of America
  The Company's consolidated financial statements
    are prepared in accordance with Mexican FRS, which differ in certain significant
    respects from accounting principles generally accepted in the


  United
    States of America ("U.S. GAAP"). The Mexican FRS consolidated
    financial statements include the effects of inflation as provided for under Bulletin B-10, (see note 3b), whereas financial statements prepared
    under U.S. GAAP are presented on a historical basis. However, the following
    reconciliation to U.S. GAAP does not include the reversal of the adjustments
    required under Bulletin B-10, permitted by the rules and regulations
    of the Securities and Exchange Commission (the "SEC"). The application of
    Bulletin B-10 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 Company restated its 2005 U.S. GAAP financial
	information as a result of an adjustment related to the calculation of its
	deferred income taxes.  The U.S. GAAP financial information within this note
	has been presented both as previously reported in 2005 (including the effects of
	the discontinued operations and the effects of inflation as required by
	Bulletin B-10) and as restated (see note
	25 b).
  The other differences between
	Mexican FRS and U.S.
    GAAP and the effect on consolidated net income (loss) and consolidated stockholders' equity are presented below:
  Reconciliation of Net Income (Loss):
		Year ended December 31,
		20062004
		As Presented 2005
		As Restated 2005
		2006
		(US$ millions)(Ps. millions)
		(Convenience Translation)Net income (loss) of majority interest as reported under Mexican FRS
		Ps.  (303)
		Ps.   53
		Ps. 53
		Ps.  373
		US$ 35U.S. GAAP Adjustments:Effect of the adjustments below on minority interest (See a)
		(55)
		(59)
		(59)
		25
		2Deferred income taxes (See b)
		43
		196
		(420)
		52
		5Negative goodwill and reduction in depreciation expense (See c)
		25
		108
		108
		29
		3Deferred workers' profit sharing (See d)
		52
		41
		41
		(49)
		(5)Monetary position result on deferred income taxes and deferred workers'
		profit sharing (See e)
		38
		26
		26
		42
		4Capitalization of interest (See f)
		56
		54
		54
		69
		6Amortization of capitalized interest (See f)
		(8)
		(27)
		(27)
		(35)
		(3)Goodwill (See g)
		53
		-
		
		-
		-Effect of applying Bulletin B-10 (See h)
		(190)
		(177)
		(177)
		(180)
		(17)Effect of applying Bulletin B-15 (See i)
		10
		(5)
		(5)
		48
		4Derivative financial instruments (See j)
		(5)
		173
		173
		-
		-Discontinued operations (See k)
		27
		(1)
		(1)
		(55)
		(5)Employee retirement obligations (See m)
		7
		38
		38
		30
		3Purchase of Visteon's capital investment (See n)
		-
		-
		
		1
		-Sale of real estate (See o)
		-
		-
		
		(786)
		(73)Impairment of long-lived assets (See p)
		11
		(81)
		(81)
		365
		34Total U.S. GAAP adjustments
		64
		286
		(330)
		(444)
		(42)Net income (loss) under U.S. GAAP
		Ps.  (239)
		Ps.  339
		Ps.  (277)
		Ps. (71)
		US$ (7)
   Reconciliation of Stockholders' Equity:
		Year ended December 31,As Presented 2005
		As Restated 2005
		2006
		2006
		(US$ millions)(Ps. millions)
		(Convenience Translation)Total stockholders' equity reported under Mexican FRS
		Ps. 8,759
		Ps.
		8,759
		Ps. 8,875
		US$ 821Less minority interest included as stockholders' equity   under Mexican
		FRS (See note a)
		(3,006)
		(3,006)
		(1,738)
		(161)Majority stockholders' equity under Mexican FRS
		5,753
		5,753
		7,137
		660U.S. GAAP adjustments:Effect of the adjustments below on minority interest (See a)
		(177)
		(177)
		(61)
		(6)Deferred income taxes (See b)
		(548)
		(1,164)
		(828)
		(77)Negative goodwill and reduction in depreciation expense (See c)
		(30)
		(30)
		-
		-Deferred workers' profit sharing (See d)
		56
		56
		-
		-Capitalization of interest (See f)
		266
		266
		345
		32Accumulated amortization for capitalized interest (See f)
		(104)
		(104)
		(144)
		(13)Goodwill (See g)
		120
		120
		120
		11Effect of applying Bulletin B-10 (See h)
		208
		208
		4
		-Effect of applying Bulletin B-15 (See i)
		(42)
		(42)
		-
		-Discontinued operations (See k)
		34
		34
		(25)
		(2)Effect of adoption of SFAS No. 158 (See m)
		-
		-
		(358)
		(33)Employee retirement obligations (See m)
		(115)
		(115)
		(85)
		(8)Purchase of Visteon's capital investment (See n)
		-
		-
		(68)
		(6)Sale of real estate (See o)
		-
		-
		(786)
		(73)Impairment of long-lived assets (See p)
		(70)
		(70)
		253
		23Total U.S. GAAP adjustments
		(402)
		(1,018)
		(1,633)
		(152)Total stockholders' equity under U.S. GAAP
		Ps.  5,351
		Ps.  4,735
		Ps. 5,504
		US$ 508
a) Minority interest
  Under Mexican FRS, minority
    interest in consolidated subsidiaries is presented as a separate component
    within the stockholders' equity section in the consolidated balance sheet.
    For U.S. GAAP purposes, minority interest is not included in stockholders' equity and is presented below total liabilities and above the stockholders' equity section in the consolidated balance sheet.
  b) Deferred income taxes
  Under Mexican FRS as required
    by Bulletin D-4, "Accounting for Income Tax, Tax on Assets and Employee Statutory
    Profit Sharing," income taxes are
    charged to results as they are incurred and the Company recognizes deferred
    income tax assets and liabilities for the future consequences of temporary
    differences between the financial statement carrying amounts of assets and
    liabilities and their respective income tax bases, measured using enacted
    rates. The effects of changes in the statutory rates are accounted for in
    the period that includes the enactment date. Deferred income tax assets are
    also recognized for the estimated future effects of tax loss carryforwards
    and asset tax credit carryforwards. Deferred tax assets are recognized only
    when it is highly probable that sufficient future taxable income will be generated
    to recover such deferred tax assets. Under Mexican FRS, the effects of inflation
    on the deferred tax balance generated by monetary items are recognized in
    the result of monetary position.
  Under U.S. GAAP,
    as required by SFAS No. 109, "Accounting for Income Taxes", the Financial
	Company recognizes deferred income tax assets and liabilities for the
    future consequences of temporary differences between the financial statement
    carrying amounts of assets and liabilities and their respective income tax
    bases, measured using enacted rates. The effects of changes in the statutory
    rates are accounted for in the period that includes the enactment date. Deferred
    income tax assets are also recognized for the estimated future effects of
    tax loss carryforwards and asset tax credit carryforwards.
  The ultimate
	realization of deferred tax assets is dependent upon the generation of
	future taxable income during the periods in which those temporary
	differences become deductible. Management considers the scheduled reversal
	of deferred tax liabilities, projected future taxable income, and tax
	planning strategies in making this assessment. Based upon the level of
	historical taxable income, projections of future taxable income over the
	periods in which the deferred tax assets are deductible and tax planning
	strategies that would be taken to prevent an operating loss
    or tax credit carryforward from expiring unused, management believes it is
    more likely than not that the Company will realize the benefits of these deductible
    differences, net of the existing valuation allowance at December 31, 2006.
    Under U.S. GAAP, the deferred tax balance is classified as a non-monetary
    item. As a result, the consolidated income statement differs with respect
    to the presentation of the gain or loss on monetary position and deferred
    income tax provision.
  For U.S. GAAP purposes
    the Company recognizes deferred taxes each period for the changes in the taxable
    portions of its distributable stockholders' equity. The Company's policy is
    to compare the deferred tax balance that would be required if all of the
	stockholders' equity were distributed. This amount is compared to the total
	deferred tax balance recorded prior to any adjustment. The difference
	between the amount recorded and the amount calculated from the stockholders'
	equity taxable accounts is recorded as an adjustment to deferred taxes as of
	the balance sheet date.  In 2005, the Company as a result of an arithmetic error
	of Ps. 236 incorrectly computed the taxable portions of its distributable stockholders'
	equity and as a result the deferred tax balances have been restated.
For U.S. GAAP
purposes the Company recognizes a deferred tax asset for the temporary
difference that exists between the book basis and the tax basis of its foreign
subsidiaries that legally own Vitro's intellectual property at the applicable tax rate in the
foreign jurisdiction based on the expected reversal date. For Mexican FRS purposes, the
Company recognizes a deferred tax asset for the temporary difference that exists
between the book basis and the tax basis at the applicable tax rate in Mexico,
which is where it expects to recognize such benefits. In 2005,
	the Company utilized the incorrect tax rates when calculating its deferred
	taxes for U.S. GAAP purposes with regards to the temporary taxable
	differences discussed above resulting in an incremental tax liability of Ps.
380 and as a result the deferred tax balances have
	been restated.
  U.S. GAAP differences to the extent taxable
    are reflected in the U.S. GAAP deferred tax balances. The significant components
    of deferred tax assets and liabilities, which differ for U.S. GAAP from deferred
    tax assets and liabilities calculated under Mexican FRS, are presented as follows:
	As of December 31,Deferred Tax Assets and Liabilities:
			As Presented 2005
			As Restated 2005
			2006Reversal of negative goodwill
			Ps.
			8
			Ps.
			8
			Ps.    -Employee retirement obligations
			34
			34
			257Discontinued operations
			-
			
			7Sale of real estate
			-
			
			219Purchase of Visteon capital investment
			-
			
			19Buildings, machinery and equipment
			9
			9
			(84)Stockholders' equity
			(554)
			(790)
			(860)Intellectual property
			-
			(380)
			(330)Other
			(45)
			(45)
			(56)Change in deferred tax liability
			Ps.   (548)
			Ps.  (1,164)
			Ps.   (828)c) Negative goodwill and
    reduction in depreciation expense
  Under Mexican FRS, 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).
    Until December 31, 2004 the period of amortization for negative goodwill was
    18 months. Beginning January 1, 2005 negative goodwill is recognized in the
    income statement). Under U.S. GAAP, such excess is recorded as a reduction
    of fixed assets, and depreciation expense is reduced accordingly over the
    estimated useful life of the related assets.
  d) Deferred workers' profit
    sharing
  In accordance with
	Mexican FRS the Company
    determines the provision for deferred workers' profit sharing by applying
    the partial accrual method of Bulletin D-4 applicable to temporary differences
    between the financial and adjusted tax income that are expected to reverse
    within a defined period. For U.S. GAAP purposes the Company accrues for workers' profit sharing based on a liability approach similar to accounting for income
    taxes under SFAS No. 109.
  e) Monetary position result on deferred income taxes and
	deferred workers' profit sharing
  The monetary position result is determined
	by (i) applying the annual inflation factor to the net monetary position of
	the U.S. GAAP adjustments at the beginning of the period, plus (ii) the
	monetary position effect of such adjustments during the period determined in
	accordance with the weighted average inflation factor.
  
  f) Capitalization of interest
  Under Mexican FRS, the capitalization of the integral cost of financing
    (interest, foreign exchange gain or loss, and monetary position gain or loss)
    generated by loan agreements obtained to finance investment projects is optional,
    and the Company has elected not to capitalize the integral cost of financing.
  
  In accordance with SFAS No. 34, "Capitalization of Interest Cost", if the integral cost of financing is incurred during the construction of qualifying
    assets, capitalization is required as part of the cost of such assets. Accordingly,
    a reconciling item for the capitalization of a portion of the integral cost
    of financing is included in the U.S. GAAP reconciliation of the majority net
    income and majority stockholder's equity. If the borrowings are denominated
    in U.S. dollars, the weighted-average interest rate on all such outstanding
    debt is applied to the balance of construction-in-progress to determine the
    amount to be capitalized. If the borrowings are denominated in Mexican pesos,
    the amount of interest to be capitalized as noted above is reduced by the
    gain on monetary position associated with the debt.
  
  g) Goodwill
  As mentioned in Note 3 j), under
	Mexican FRS,
    until December 31, 2004 goodwill represented the excess of cost over recorded
    value of subsidiaries as of the date of acquisition and was restated using
    NCPI and amortized using the straight-line method over 20 years. Beginning
    on January 1, 2005, goodwill represents the excess of cost over fair value
    of subsidiaries as of the date of acquisition. Goodwill is restated using
    the NCPI and at least once a year is subject to impairment test, as it ceased
    to be amortized under the provisions of Bulletin B-7 (see Note 3 a)). In accordance
    with SFAS No. 142, "Goodwill and Other Intangibles Assets", goodwill and indefinite-lived assets are also no longer subject
    to amortization, but rather are subject to periodic assessment for impairment.
  The disclosure requirements of SFAS
    No. 142 are included below:
  For the year ended December 31, 2005
    the Company recorded goodwill impairment of Ps.41. This impairment comes from
    two reporting units within our Flat Glass reportable segment, due to an increase
    in offshore competition and the decline of the commercial construction industry
    in the

  United States, operating profits and cash flows
    declined in those reporting units. The fair value of all reporting units was
    estimated by using multiples of the respective units' trends of earnings before
    interest, taxes, depreciation, and amortization (EBITDA). No impairment was
    recorded for the year ended December 31, 2006.
  The changes in the carrying amount
    of goodwill for the years ended December 31, 2005 and 2006 are as follows:
  Balance as of December 31, 2004
      Ps. 907Impairment
      (41)Changes for effects of inflation and exchange rates
      (131)Balance as of December 31, 2005
      735Changes for effects of inflation and exchange rates
      80Balance as of December 31, 2006
      Ps. 815
  h) Effect of applying Bulletin B-10
  As discussed in note 3 f), under
	Mexican FRS the Bulletin B-10 allows the restatement of the value of machinery
    and equipment purchased in a foreign country using the consumer price index
    of the country of origin and the period-end exchange rate.  For U.S. GAAP purposes, such restatement is
    based on the NCPI.
  i) Effect of applying Bulletin
    B-15
  In 1997, the IMCP issued Bulletin
    B-15, "Foreign Currency Transactions and Translation of Financial Statements
    of Foreign Operations", which specifies the procedures to be applied in the
    consolidation of foreign subsidiaries by Mexican companies for (i) current
    year amounts and (ii) prior year amounts, presented for comparative purposes.
    Vitro's accounting policies for the consolidation of its foreign subsidiaries
    are described in notes 2 b) and 3 b). Such policies conform to the requirements
    of Bulletin B-15.
  We believe that the application of
    the methodology of Bulletin B-15 to translate the current year amounts for
    foreign operations does not result in a difference between Mexican FRS and U.S. GAAP
    that must be reconciled in order to comply with the rules and regulations
    of the SEC.
  However, there are two methods allowed
    under Bulletin B-15 to restate prior year amounts for foreign subsidiaries.
    Vitro uses the method that reconsolidates prior year balances by restating
    foreign subsidiaries using the current inflation rate in the foreign country
    and translating into pesos using the year-end exchange rate. We believe that
    this methodology of Bulletin B-15 used to restate prior years balances for
    comparative purposes does not conform to the requirements of SEC Rule 3-20e
    of Regulation S-X, which requires all amounts in financial statements to be
    presented in the same reporting currency. Accordingly, in filings with the
    SEC, we are including an adjustment for the difference in methodologies of
    restating prior year balances. These amounts (Ps. 10 and Ps. (5) in 2004 and
    2005, respectively, in the reconciliation of net income, and Ps.
    (42) in 2005, in the reconciliation of stockholders' equity) represent the differences between (i) the balance if all amounts were
    adjusted by applying the NCPI, and (ii) the balance used in the primary financial
    statements to comply with Bulletin B-15.
  Under Mexican FRS, as disclosed in Note 3
    q), the Company presents the result from monetary position and exchange rate
    fluctuation gains and losses in the shortfall in restatement of capital within
    stockholder's equity in relation to subsidiaries designated as economic hedges.
    In accordance with U.S. GAAP, only exchange rate fluctuation gains and losses
    receive the treatment specified above. Monetary gains and losses are presented
    in the statements of operations as part of total financing cost.
  j) Derivative financial
    instruments
  As of January 1, 2005, in accordance
    with Mexican FRS, as mentioned in note 3 a), the Company values and records all
    derivative instruments and hedging activities according to Bulletin C-10,
    which establishes similar accounting treatment as described in SFAS No. 133,
    "Accounting for Derivative Instruments and Hedging Activities". Prior to the
    implementation of Bulletin C-10, financial instruments entered into for hedging
    purposes were valued using the same valuation criteria of the underlying assets
    or liabilities hedged, and the effect of such valuation was recognized in
    net income, net of costs, expenses or income from the assets or liabilities
    whose risks were being hedged.
  The Company determined that the accounting
    for derivative financial instruments is the same for Mexican FRS and U.S. GAAP as
    they relate to their consolidated financial statements as of and for the year
    ended December 31, 2006. The effects of the initial application of Bulletin
    C-10 were already reflected in the U.S. GAAP financial statements for 2004.
    Therefore, the cumulative effect of the change in accounting principle is
    reconciled out of the amounts presented in the U.S. GAAP income statement
    for 2005.
  k) Discontinued
    operations
  U.S. GAAP as defined by SFAS No.
    144, "Accounting for the Impairment or Disposal of Long-Lived Assets", requires
    that an entity report as discontinued operations those components of its business
    that have been classified as held for sale. A component of an entity is defined
    as comprising operations and cash flows that can be clearly distinguished,
    operationally and for financial reporting purposes, from the rest of the business. Individually insignificant disposals of a component of an entity should be
    aggregated for purposes of assessing materiality for all periods presented. Therefore, individually insignificant dispositions should be aggregated and
    reported as discontinued operations under SFAS No. 144 beginning in the period
    the impact of the dispositions is material to the financial statements of
    any period presented. This evaluation should also include the effect of the
    gain or loss on sale of the component.
    Mexican FRS as defined by Bulletin C-15,
    "Impairment of Long-lived Assets and their Disposal", requires the asset group
    being disposed of to be presented as a discontinued operation only if its
    operations are individually significant to the consolidated operations. Bulletin
    C-15 defines the discontinuance of an operation as the process of final interruption
    of a significant business activity of an entity and establishes that the discontinuation
    of an operation implies the final interruption of a significant activity of
    the entity that leads to the sale, abandonment, exchange or return to stockholders
    of long-lived assets originally intended for use, in addition to other assets
    and liabilities related to the operation. Therefore, the analysis of the significance
    of the disposed business is performed without considering the eventual gain
    or loss on sale or aggregating each business being disposed with other businesses
    sold, and instead considers only the significance of the business activity
    of the relevant business being sold.
  As a result of the differences
    identified above between U.S. GAAP and Mexican FRS, the following components of the
    Company's business that were classified as held for sale during 2006, 2005
    and 2004, are presented as discontinued operations in the Company's U.S. GAAP
    consolidated financial statements:
  
  On April 2, 2004, we sold our 60% interest in Vitro OCF, S.A. de C.V., which
    we refer to as "Vitro OCF," our joint venture with Owens Corning engaged in
    the manufacturing and distribution of fiberglass and fiberglass products,
    to Owens Corning for US$71.5 million in cash. The gain on sale of this component
    was approximately Ps. 438. This business was previously included in our Flat
    Glass reportable segment.
    In  March 2004, the Board of Directors of Vitro America, authorized management
    to close all of its distribution and production facilities and discontinue
    operations in the Northwestern United States, which we refer to as "VVP NW". The closing plan included operation of the facilities through June 30, 2004.
    As of December 31, 2004, all operations in these facilities have ceased. Vitro
    America conducts a substantial majority of our
    flat glass operations in the United
    States and is a subsidiary of Vimexico, the holding
    company of our Flat Glass business unit, which is included in our Flat Glass
    reportable segment.
    During 2004, the Company's management decided to close two small facilities
    (the PVA facilities) in Mexico dedicated
    to the manufacture of architectural value added products. These disposal activities
    were initiated and finalized during 2004 and as a result no liability was
    accrued for as of December 31, 2004. The amount incurred in these disposal
    activities were Ps. 21. The PVA facilities were managed by Vitro Flotado Cubiertas,
    a subsidiary of Vimexico, the holding company of our Flat Glass business
    unit. This business was previously included in our Flat Glass reportable segment.
    On April 1, 2005, we sold 100% of our interest in Plasticos Bosco, S.A. de
    C.V. and Inmobiliaria de la Suerte, S.A. de C.V., which we refer to collectively
  as "Bosco," our subsidiaries engaged in the manufacturing and distribution
    of plastic tubes and disposable thermo fold ware and industrial products,
    to Convermex, S.A. de C.V., which we refer to as "Convermex," for US$10 million
    in cash. In 2004, Bosco had consolidated net sales of approximately Ps. 454
    and a consolidated operating loss of approximately Ps.10. The consolidated
    net sales and operating loss of Bosco were approximately Ps.108 and Ps.7,
    respectively, during the period beginning on January 1, 2005 and ending
    on April 1, 2005. The Company recorded a loss for the sale of Bosco of Ps.
    132.
    
    As disclosed in Note 4, on June 16, 2006, the Company completed the sale of
    its 51% equity ownership interest in Vitrocrisa to Libbey, the owner of the
	other 49% equity interest, recognizing a gain on sale of Ps. 463 under
	Mexican FRS
	and Ps. 398 under U.S. GAAP. Vitrocrisa was previously presented as one of
    our reportable segments, and is now presented as a discontinued operation
	for both Mexican FRS and U.S GAAP purposes.On March 2, 2006, the Company sold its 51% interest in Quimica M, to Solutia
    Inc. for US$20 million in cash, recognizing a gain on sale of Ps. 97 under
    Mexican FRS and Ps. 96 under U.S. GAAP. Solutia is now the sole owner of this Mexican
    operation, which was formed in 1995. Quimica M was previously included in
    our Flat Glass reportable segment.The following table discloses the condensed balance sheets
    and condensed income statements of the entities that were disposed for all
    periods presented:
    For the year ended December 31, 2006Vitrocrisa
      Quimica M
      TotalCondensed
          Income Statement:Sales
      Ps.
          996
      Ps.
          79
      Ps. 1,075Cost of sales
      830
      72
      902General, administrative and
          selling expenses
      125
      5
      130Operating income (loss)
      41
      2
      43Total financing cost and other
          expenses
      (93)
      (2)
      (95)Loss before income tax
      (52)
      -
      (52)Income tax benefit (expense)
      22
      (1)
      21Net loss
      Ps.
          (30)
      Ps. (1)
      Ps. (31)
  
  As of December 31, 2005Condensed
          Balance Sheet
      Vitrocrisa
      Quimica M
      TotalCurrent assets
      Ps. 773
      Ps. 261
      Ps. 1,034Non-current assets
      1,174
      214
      1,388Total assets
      1,947
      475
      2,422Short-term liabilities
      360
      101
      461Long-term liabilities
      988
      64
      1,052
  
  For the year ended December 31, 2005Condensed
          Income Statement:
      BOSCO
      Vitrocrisa
      Quimica M
      TotalSales
      Ps.
          108
      Ps.
          2,260
      Ps.
          621
      Ps.
          2,989Cost of sales
      98
      1,932
      520
      2,550General, administrative and
          selling expenses
      17
      267
      39
      323Operating (loss) income
      (7)
      61
      62
      116Total financing cost
		and other expenses
      (2)
      (61)
      (6)
      (69)(Loss) income before income
          tax
      (9)
      0
      56
      47Income tax benefit (expense)
      (1)
      3
      17
      (15)Net
		income (loss)
      Ps. (10)
      Ps.
      3
      Ps. 39
      Ps.
          32
  
  For the year ended December 31, 2004Condensed
          Income Statement:
      Vitro OCF
      VVP NW
      PVA
      BOSCO
      Vitrocrisa
      Quimica M
      TotalSales
      Ps.
          217
      Ps.
          53
      Ps.
          160
      Ps.
          454
      Ps.
          2,416
      Ps.590
      Ps.
          3,890Cost of sales
      142
      56
      143
      384
      2,038
      510
      3,273General, administrative and
          selling expenses
      24
      46
      15
      79
      278
      38
      480Operating income (loss)
      51
      (49)
      2
      (9)
      100
      42
      137Total financing
		income (cost) and other expenses
      4
      -
      -
      (8)
      (51)
      5
      (50)Income (loss) before income
          tax
      55
      (49)
      2
      (17)
      49
      47
      87Income tax (expense) benefit
      (24)
      22
      -
      12
      44
      (17)
      37Net income (loss)
      Ps. 31
      Ps.(27)
      Ps.
      2
      Ps.
          (5)
      Ps. 93
      Ps.
          30
      Ps. 124Basis difference between


  U.S.
    GAAP and Mexican FRS.-The basis of the assets and liabilities under U.S. GAAP
    of the entities mentioned above at the time of their sale was different from
    the basis of such assets and liabilities under Mexican FRS; accordingly, the gain
    recorded on disposal of such entities under U.S. GAAP differs from that under
    Mexican FRS.
	
  l) Deconsolidation of Comegua
  For Mexican FRS purposes, based on: (a) the
    Company's control over the CEO whose function is to govern the operating decisions
    and financial policies of Comegua; (b) the Company's sole right to propose
    the CEO for designation by the Board of Directors of Comegua; and (c) the
    Company's sole right to remove the CEO, the Company concludes that it controls
    Comegua as defined by Bulletin B-8, "Consolidated and Combined Financial Statements
    and Valuation of Permanent Investments in Shares" and therefore, Comegua should
    be consolidated in accordance with Mexican FRS.
  For U.S. GAAP purposes, the Company
    has determined that the control it retains over the management of the annual
    budget of Comegua is not unilateral and is not sufficient to meet all of the
    technical requirements for consolidation. The Company's position is based
    on the guidance provided by EITF 96-16, "Investor's Accounting for an Investee
    When the Investor Has a Majority of the Voting Interest but the Minority Shareholder
    or Shareholders Have Certain Approval or Veto Rights". Under EITF 96-16, such
    approval and veto rights held by the minority shareholders of Comegua, including
    the approval of annual budget, qualify as substantive participating rights
    and therefore do not allow the Company to consolidate Comegua in its financial
    statements for U.S. GAAP purposes. Therefore, the Company's investment in
    Comegua is recorded by applying the equity method in the Company's U.S. GAAP
    consolidated financial statements. (See Note 25 q 4).
  m) Employee retirement obligations
  The Company maintains defined benefit
    pension plans for all of its subsidiaries and provides for seniority premiums
    and severance payments (severance indemnities) for all of its Mexican subsidiaries.
    For its Mexican FRS consolidated financial statements, the Company applies Bulletin
    D-3. Prior to 2006, the accounting treatment for pensions and seniority premiums
    set forth in this Bulletin is substantially the same as those set forth in
    SFAS No. 87, "Employers' Accounting for Pensions". The Company records the
    pension cost determined by actuarial computations, as described in notes 3
    k) and 12. Significant assumptions (weighted-average rates) used in determining
    net periodic pension cost and the Company's related pension obligations for
    2006 and 2005 are also described in note 12.
    The Company adopted SFAS No. 158,
    "Employers' Accounting for Defined Benefit Pension and Other Postretirement
    Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)", in its December 31, 2006 consolidated financial statements. This statement requires
    companies to (1) fully recognize, as an asset or liability, the over funded
    or under funded status of defined pension and other postretirement benefit
    plans; (2) recognize changes in the funded status through other comprehensive
    income in the year in which the changes occur; and (3) provide enhanced disclosures. There is no impact on results of operations or cash flows. Retrospective application
    of this standard is not permitted. The impact of adoption, including the
    inter-related impact on the additional labor liability, resulted in a decrease
    in total assets of Ps. 259, a decrease in total liabilities of Ps. 133 and
    a decrease in stockholders' equity reported under U.S. GAAP of Ps. 126.
  The incremental effect of this adoption
    on the individual line items in the December 31, 2006 consolidated U.S.
    GAAP balance sheet is shown in the following table:
  Balances before
          application SFAS No. 158
      SFAS
          No. 158 Adjustments
      Balances under U.S. GAAPIntangible pension asset
      Ps. 259
      Ps. (259)
      Ps. -Total Assets
      25,412
      (259)
      25,153Deferred taxes (long -term)
      505
      (56)
      449Employee retirement obligations
      1,430
      (77)
      1,353Total liabilities
      18,707
      (133)
      18,574Total stockholders' equity
      5,630
      (1)
          (126)
      5,504Total liabilities, minority
          interest in consolidated subsidiaries and stockholders' equity
      Ps. 25,412
      Ps.
		(259)
      Ps. 25,153
  (1) Represents an adjustment
	of Ps. 833 less the minimum pension liability previously recorded of Ps. 474
	in stockholders' equity, net of the deferred income tax effect of Ps. 233.
  The Company has prepared a study
    of pension costs under U.S. GAAP based on actuarial calculations using the
    same assumptions applied under Mexican FRS (see Note 3 k). Prior to the
    adoption of SFAS No. 158, there was no difference in the liabilities for pension
    plans and seniority premiums between Mexican FRS and U.S. GAAP.
  The components
    of the plans' funded status that are reflected in the consolidated statement
    of financial position as of December 31, 2006 are as follows:
  2006Benefit obligation
      Ps. 2,596Fair value of plan assets
      (1,243)Unfunded Status
      Ps. 1,353
    
  Pension
          and retirement plans
      Seniority
          premiums
      TotalUnrecognized items:Transition obligation
      Ps. 147
      Ps.
        7
      Ps.
          154Prior service cost
      168
      -
      168Net actuarial gain
      485
      26
      511Unrecognized items
      Ps.
          800
      Ps. 33
      Ps.
          833
  Severance indemnities.-Under Mexican FRS, effective 2005 revised Bulletin
    D-3 requires the recognition of a severance indemnity liability calculated
    based on actuarial computations. Similar recognition criteria under U.S. GAAP
    are established in SFAS No. 112, "Employers' Accounting for Post employment
    Benefits", which requires that a liability for certain termination benefits
    provided under an ongoing benefit arrangement such as these statutorily mandated
    severance indemnities, be recognized when the likelihood of future settlement
    is probable and the liability can be reasonably estimated. Mexican FRS allows for
    the Company to amortize the transition obligation related to the adoption
    of revised Bulletin D-3 over the expected service life of the employees. However,
    U.S. GAAP required the Company to recognize such effect upon initial adoption,
    which results in a difference in the amount recorded under the two accounting
    principles. The tables below reflect the requirements under U.S. GAAP, which
    applies SFAS No. 112 standard for all years presented.
  For purposes of determining the cost of our pension plans,
    seniority premiums and severance indemnities under U.S. GAAP, the Company
    applies SFAS No. 87, as amended by SFAS No. 158, and SFAS No. 112. The Company
    uses a December 31 measurement date for its pension plans, seniority premiums
    and severance indemnities. The additional pension disclosures required by
    SFAS No. 132(R), as amended by SFAS No. 158, which are applicable to the Company,
    are presented below:
    2005
      2006Change in benefit obligation:Benefit obligation at beginning
          of year
      Ps 2,802
      Ps.
          2,582Service
          cost
      59
      68Interest
          cost
      132
      138Actuarial
          losses
      (165)
      179Benefits
          paid
      (246)
      (371)Benefit
          obligation at end of year
      2,582
      2,596Changes in plan assets:Fair value of plan assets at
          beginning of year
      595
      694Contribution
          of cash and securities
      227
      433Return
          on plan assets
      87
      366Benefits
          paid
      (215)
      (250)Fair
          value of plan assets at end of year(1)
      694
      1,243Unfunded status:
      1,888
      1,353Unrecognized
          actuarial loss
      (1,121)
      -Unrecognized
          transition obligation
      (204)
      -Unrecognized
          prior service costs
      (179)
      -Net
          amount recognized
      Ps. 384
      Ps. 1,353Amounts recognized in the consolidated
          balance sheet consists of:Accrued
          benefit liability
      Ps. 1,082
      Ps. 1,353Intangible
          asset
      (307)
      -Accumulated
          other comprehensive income
      (391)
      -Net
          amount recognized
      Ps. 384
      Ps. 1,353
  
  (1) Includes
    approximately Ps. 881 and Ps. 534 as of December 31, 2006 and 2005, respectively
    of Vitro common stock (47,472,678 and 39,150,000 stock at market value, respectively).
  Net periodic pension cost for 2004, 2005 and 2006
    are summarized below:
  Year
          ended December 31,2004
      2005
      2006Service costs
      Ps.
          64
      Ps. 59
      Ps. 68Interest cost
      139
      132
      138Return on plan assets
      (42)
      (42)
      (47)Net amortization and deferral
      162
      166
      234Net periodic pension cost
      Ps. 323
      Ps. 315
      Ps. 393
  The trust assets consist of fixed income and variable
    funds, valued at market value. As of December 31, 2005 and 2006, the pension
    plan assets were invested in the following financial instruments:
  2005
      2006Fixed Rate:Federal Government instruments
      21%
      29%Variable Rate:Equity securities traded on the Mexican
          Stock Exchange
      79%
      71%100%
      100%
  We develop our expected long-term rate of return
    assumption based on the historical experience of our portfolio and the review
    of projected returns by asset class on broad, publicly traded equity and fixed-income
    indices. The composition of the objective portfolio is consistent with the
    share composition of the portfolios of five of the best-known international
    companies located in

  Mexico that manage long-term funds.
  Contributions to the pension plans amounted to Ps.
    227 and Ps. 433 as of December 31, 2005 and 2006, respectively. The Company
    estimates that the contributions to the pension plan funds during 2007 are
    expected to be approximately Ps. 240. Expected benefit payments for our pension
    plans, seniority premium and severance indemnities are as follows:
  Year ended December 31,
      Pension
      Seniority Premium
      Severance Indemnities2007
      Ps. 240
      Ps.
      9
      Ps. 292008
      220
      9
      252009
      220
      9
      222010
      258
      9
      202011
      200
      9
      172012
          - 2016
      1,005
      44
      60
  Expected benefit payments are based
	on the same assumptions used to measure the benefit obligations.
	
  n) Purchase of Visteon's
    capital investment
  In connection
	with the termination of the joint venture agreement between Vimexico and Visteon
    discussed in note 20 d, under Mexican FRS as established in Bulletin B-7, "Business Acquisitions" the Company recognized the difference between the
	price paid and the book value of Ps. 67 as a credit in the majority stockholders' equity. Under U.S. GAAP, in accordance with SFAS
	No. 141, "Business Combinations" the excess over cost of Ps. 87 was allocated as a pro rata reduction of the
    acquired assets.
  o) Sale of real estate
  As disclosed in
    Note 8 b) on December 14, 2006, Vitro sold real estate located in


  Mexico City used by COVISA for US$100 million, 80% payable on the
    date of sale and the remainder payable on the delivery date of the property.
    In connection with the sale of the property, the Company has agreed to deliver
    the real estate within 24 months following the sale, free and clear of all
    buildings and fixtures, as well as any environmental claims, recording reserves
    of Ps. 54 for the estimated asset retirement costs and prepaid rent of Ps.
    60 for the estimated fair value of the rental expense over the 24 months. Vitro is obligated to refund the US$80 million to the purchaser in the event
    that the property is not delivered to the purchaser within 36 months following
    the sale. A third party financial institution has guaranteed the repayment
    of the purchase price in the event Vitro does not deliver the property by
    such time and fails to refund the purchase price to the purchaser. Under U.S. GAAP, in accordance with SFAS No. 66, "Accounting for Sales of Real Estate", SFAS No. 13,
  "Leases" and SFAS No. 98, "Accounting for Leases" as a result
    of the Company's level of continuing involvement the gain on the sale of the
    land has been deferred and will be recognized in earnings during the two years
    over which the Company will continue to utilize the property. The depreciation
    estimates of the fixed assets that will be disposed of as a result of the
    real estate sale have been adjusted to reflect the use of the assets over
    their shortened useful lives. Such change in estimate will be accounted for
    prospectively. For purposes of Mexican FRS, the Company wrote off the net book value
    of the fixed assets against the gain on sale recorded in the current year.
  p) 
    Impairment of long lived assets
  For
    U.S. GAAP purposes, in accordance with SFAS No. 144, long-lived assets are
    reviewed for impairment whenever events or changes in circumstances indicate
    that the carrying amount of an asset may not be recoverable. The carrying
    amount of an asset is not recoverable when the estimated future undiscounted
    cash flows expected to result from the use of the asset are less than the
    carrying value of the asset. Impairment is recorded when the carrying amount
    of the asset exceeds its fair value. Impairment charges and asset write-downs
    are presented in selling, general and administrative expenses in operating
    income in our U.S. GAAP consolidated financial statements.
    For Mexican FRS purposes,
    in accordance with Bulletin C-15, the Company reviews the carrying amounts
    of long-lived assets in use when an impairment indicator suggests that such
    amounts might not be recoverable, considering the greater of the present value
    of future net cash flows or the net sales price upon disposal. Impairment
    is recorded when the carrying amount of the asset exceeds the greater of the
    amounts mentioned above. Impairment charges and asset write-downs are presented
    in other expenses in our Mexican FRS consolidated financial statements.
    In 2004, 2005
    and 2006, for Mexican FRS purposes, while performing its annual impairment test using
    its best estimates based on reasonable and supportable assumptions and projections,
    the Company recorded an impairment charge of Ps. 11, Ps. 107 and Ps. 322,
    respectively within its Flat Glass reportable segment as the carrying amount
    of the long-lived assets exceeded the present value of their future discounted
    cash flows. For U.S. GAAP purposes no impairment charge was recorded as the
    assets were considered to be recoverable given that the estimated undiscounted
    cash flows expected to result from the use of the assets were greater then
    the carrying value of the asset.
    In 2005 for
    U.S. GAAP purposes, based on fair value appraisals received the Company recorded
    an impairment charge of Ps.188 for land and buildings located at its corporate
    offices classified as available for sale in accordance with SFAS No. 144.
    This charge is recorded in operating income for U.S. GAAP purposes. Under
    Mexican FRS, the assets did not meet the definition of held for sale as required
    by Bulletin C-15 as such assets were still in use by the Company at that time.
    The discounted cash flow model utilized by the Company did not result in an
    impairment charge for Mexican FRS purposes. During 2006 as disclosed in note 8 c),
    Vitro sold one of its buildings located at its corporate headquarters recognizing
    a loss on sale of Ps. 133 under Mexican FRS and PS. 90 under U.S. GAAP.
    q) Other differences and supplemental
    U.S. GAAP disclosures
  	Accounts receivable
    securitizationsThe Company has
    included additional disclosures in accordance with SFAS No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", primarily related to the retained interests in the securitized financial assets. See below for the additional disclosures required by SFAS No. 140:
  In 2004, VVP entered into an agreement to sell of its accounts receivable,
    on a revolving basis, to VVP Funding, a wholly owned subsidiary of VVP.
    VVP Funding is a special-purpose entity that was formed prior to the execution
    of this agreement for the sole purpose of buying and  selling accounts receivable
    and is designed to be bankruptcy remote and self liquidating. Also, during
    2004, VVP and VVP Funding entered into agreement with an unrelated financial
    institution whereby VVP Funding, on a revolving basis and subject to the maintenance
    of   certain financial and receivables-based ratios, sells an undivided
    percentage ownership in all eligible accounts receivable, as defined, for
    consideration composed of cash, up to a maximum amount of US$40 million, and
    retain undivided interests in securitized receivables. The transfer of undivided
    ownership interests from VVP Funding to the unrelated major financial institution
    for cash consideration is accounted for as a sale of receivables in accordance
    with SFAS No. 140. The agreement, which expired in May 2007, was renewed on
    April 16, 2007 through 2010. As part of the renewal, the maximum amount of
    the facility was increased to US$50 million.
  	The gross receivables
    sold, totaling approximately US$78 million and US$73 million at  December
    31, 2006 and 2005, respectively, are reflected as a reduction of trade accounts
    receivable. Estimated fair value of the retained undivided interests securitized
    receivables at December 31, 2006 and 2005, totaled US$32 million and US$29 million and was determined based on expected credit losses and allowance
    of 3%, expected average receivable collection   time of 52 days, and expected
    short-term commercial paper rates of 2.3% per annum. The Company has completed
    a sensitivity analysis on the estimated fair value of the retained undivided
    interests with the objective of measuring the change in value associated with  
   changes in individual key variables. A 10% increase in expected credit
    losses and allowance, to 3.3%, would decrease the year-end valuation by approximately
    US$193 million, and 20% increase in expected credit losses and allowances,
    to 3.6%, would decrease the year-end valuation by approximately US$386 million.
    Similarly, 10 or 20% adverse fluctuations in either average   receivable
    collection times or expected short-term commercial paper rates would not 
   significantly
    affect the recorded fair value of the retained undivided interests. This sensitivity
    analysis is hypothetical and should be used with caution. Changes in fair
    value based on a 10 or 20% variation should not be extrapolated because the
    relationship of the change in assumption to the change in fair value may not
    always be linear.
	Proceeds received
    by the Company from the revolving securitizations aggregated to US$492 million
    and US$471 million for the years ended December 31, 2006 and 2005, respectively,
    and  are included in cash flows from operating activities. Securitization
    fees totaled US$3 million and US$2 million for the years ended December
    31, 2006 and 2005, respectively, and are  included in general and administrative
    expenses. Delinquencies on securitized receivables, representing amounts over
    60 days past due, totaled US$9 million and US$8 million at   December 31,
    2006 and 2005, respectively with credit losses totaling US$2 million and US$3 million for the years then ended, respectively. VVP continues to service
    the securitized receivables, receiving compensation that is approximately
    equal to its cost of such servicing plus a reasonable profit margin; accordingly,
    no servicing assets or liabilities are recorded. For the years ended December
    31, 2006 and 2005, the Company received servicing fees totaling US$0.6 million
    each year.
	
	Securitization of VENA trade receivables. - On March 31,
      2005, Compania Vidriera, S.A. de  C.V., Industria del Alcali, S.A. de C.V.
      and Comercializadora Alcali, S. de R.L. de C.V., all subsidiaries of VENA,
      closed a revolving accounts receivable facility, through which such
      companies obtained Ps. 550 (nominal amount) and US$19 million. The VENA
      subsidiaries entered into an agreement to sell all of their trade accounts
      receivable, on a revolving basis  during four years, to a fideicomiso (the
      "Mexican Trust", a qualifying special purpose entity)   that was formed
      prior to the execution of this agreement for the sole purpose of buying
      and selling accounts receivable and is designed to be bankruptcy remote.
      The Ps. 550 (nominal amount) was obtained through the issuance of
      certified preferred securities ("certificados bursatiles preferentes")
      that trade on the Mexican Stock Exchange issued by the Mexican Trust, and
      US$19 million in subordinated notes, which have a payment guarantee by
      Vitro. The interest payments and eventual principal reimbursement on the certificados bursatiles preferentes and the subordinated notes are payable
      from the collection of the receivables originated by the VENA subsidiaries
      and sold to the Mexican Trust. The transfer of undivided ownership
      interests from VENA to the unrelated major financial institution for cash
       consideration is accounted for as a sale of receivables in accordance
      with SFAS No. 140.
  	
	At December 31, 2006 and 2005, the gross receivables sold
    to the Trust totaled Ps. 1,265 and Ps. 772, respectively, and are reflected
    as a reduction of trade accounts receivable. The estimated fair value of the retained undivided interests in securitized receivables at December
	31, 2006 and 2005 was Ps. 510 and Ps. 159, respectively. The Company
    has completed a sensitivity analysis on the estimated fair value of the
    retained undivided interests with the objective of measuring the change in
    value associated with changes in individual key variables. As the
	Company's reserve is below the established floor, no additional charge would
	result due to changes in the sensitivity analysis.
	Proceeds received by the Company from the revolving
    securitizations aggregated to Ps. 8,129 and Ps. 6,141 for the years ended
    December 31, 2006 and 2005, and are included in cash flows from operating
    activities. Delinquencies on securitized receivables, representing amounts
    over 60 days past due, totaled Ps. 21 in 2006 and Ps. 11 in 2005. VENA continues
    to service the securitized receivables, receiving compensation that is approximately
    equal to its cost of such servicing plus a reasonable profit margin; accordingly,
    no servicing assets or liabilities are recorded. For the years ended December
    31, 2006 and 2005, the Company received servicing    fees totaling Ps.
	25 and Ps. 20, respectively.
	
	Securitization of Vimexico (formerly Vitro Plan) trade receivables. - On August
  22, 2005,  Dinavisa, Vitro Flotado Cubiertas, S.A. de C.V. ("VFC"), Vidrio
    y Cristal and VAU, all subsidiaries of Vimexico, closed a five year revolving
    accounts receivable facility through which such companies obtained US$
    21.5 million. The Vimexico subsidiaries entered into an agreement to sell
    all of its trade accounts receivable, on a revolving basis, to a Mexican Trust that was formed prior to the execution of this agreement for the sole purpose
    of buying and selling accounts receivable and is designed to be bankruptcy
    remote. The US$21.5 million was obtained through a private issuance of notes
    in the

  United States. The interest payments and eventual
    principal reimbursement will be provided from the collection of the receivables
    originated by four subsidiaries of Vimexico and sold to the Mexican Trust.
    The transfer of undivided ownership interests from Vimexico to the unrelated
    major financial institution for cash consideration is accounted for as a sale
    of receivables in accordance with SFAS No. 140.
	At December 31,
    2006 and 2005, the gross receivables sold to the Trust totaled Ps. 704 and
    Ps.  553, respectively and are reflected as a reduction of trade accounts
    receivable. The estimated fair value of the retained undivided interests
    in securitized receivables at December 31, 2006 and 2005 was Ps. 320
    and Ps. 328, respectively. The Company has completed a sensitivity   analysis
    on the estimated fair value of the retained undivided interests with the objective
    of measuring the change in value associated with changes in individual key
    variables. A 0.01% increase in the 12-month peak 3-month average loss ratio
    from the May 31, 2006 amount to 3% would result in a reduction in
    the availability equal to 1.66 % of eligible funds.
	Proceeds received by the Company from the revolving
    securitizations aggregated to Ps. 540 and US$286 million dollars, and
    Ps. 588 and US$67 million dollars for the years ended December 31,
    2006 and 2005, respectively, and are included in cash flows from operating activities. Delinquencies on securitized receivables, representing amounts
    over 60 days past due, totaled Ps. 54 and US$1 million dollars, and
    Ps. 47 and US$1 million dollars at December 31, 2006 and 2005, respectively.
    Vimexico continues to service the securitized receivables, receiving compensation
    that is approximately equal to its cost of such servicing plus a reasonable
    profit margin; accordingly, no servicing assets or liabilities are recorded.
    For the years ended December 31, 2006 and 2005, the Company received servicing
    fees totaling Ps. 11 and Ps. 0.45, respectively.
	Exit or disposal activities.-

	The disclosures required by SFAS No. 146 "Accounting for Costs Associated with
    Exit or Disposal Activities" related to the Company's exit or disposal activities
    are asfollows:Vitro America Restructuring - In 2004, Vitro

  America implemented
    a three-year operational restructuring designed to streamline the organization
    and instill a more customer and results oriented culture in its workforce.
    Teams of internal and external consultants and vendors are evaluating and
    re-organizing the Vitro America's installation, manufacturing and corporate
    processes. These teams have identified and initiated a number of projects
    with a view to position Vitro

  America
    as the leader among the distributors, manufacturers and installers of flat
    glass in the

  United States.
    The Company incurred expenses during 2004 of approximately Ps. 35, which are
    recorded as "Other Expenses" under Mexican FRS and within selling, general
    and administrative expenses for U.S. GAAP purposes. These expenses related
    to professional and consulting fees were expensed as incurred. Additionally,
    the Company incurred approximately Ps. 21, which for both Mexican and U.S.
    GAAP purposes was recorded in selling, general and administrative expenses
    for severance costs related to one-time termination benefits given to former
    officers and members of management. The Company does not expect to incur additional
    severance or termination costs in future years related to this restructuring.
    As such, as of December 31, 2006 no liability has been recorded as the professional
    and consulting fees will continue to be expensed as such services are provided.
    Vitro
  America conducts
    a substantial majority of our flat glass operations in the United States and
    is a subsidiary of Vimexico, the holding company of our Flat Glass reportable
    segment.
		Tin Oxide Project - During 2004, the Company's management decided to stop
    the manufacture of mirrors with tin oxide. This exit activity was initiated
    and finalized during 2004 and as a result no liability was accrued for as
    of December 31, 2004. This decision led to the sale of certain fixed assets
    and inventory on hand. These sales were recorded as other expenses under
			Mexican FRS
    and within operating income under U.S. GAAP. The costs incurred as a result
    of this exit activity were Ps. 28. Our terminated Tin Oxide Project had been
    conducted by Vitro Flotado Cubiertas, a subsidiary of Vimexico, the holding
    company of our Flat Glass reportable segment.Restructuring charges.- During 2005 and 2006 the Company restructured certain operating
    units and its corporate and administrative functions. For Mexican FRS purposes the
    corresponding costs met the definition of a restructuring charge and were
    included in Other expenses in the Company's consolidated financial statements,
    but for U.S. GAAP purposes the Company applied SFAS No. 112, as opposed to
    SFAS No. 146, to its downsizing activities as these costs are part of an ongoing
    benefit arrangement and do not meet the definition of a one-time termination
    benefit. The Company has a practice of providing similar benefits to those
    employees that were terminated under its downsizing activities and therefore
    it applied SFAS No. 112 when accounting for such transactions. These costs
    are included in general and administrative expenses in the accompanying U.S.
    GAAP consolidated statements of operations.
		
		Gain or loss on sale of assets.- The gain or loss on sale of assets that do not meet the definition of a component
    of a business as described in SFAS No. 144 are included in operating income
    in our   U.S. GAAP consolidated financial statements. Gains or losses on
    sales of assets not presented as discontinued operations under Mexican FRS are included
    in other expenses in our consolidated Mexican FRS financial statements (see note
    17).
		
		Equity method investments.-The
    Company's subsidiary Vitro AFG, S.A. de C.V. ("AFG"), which is part of the
    Flat Glass segment, is a joint venture in which the Company has a 50% interest
    and shares joint control with its partner, AFG Industries, Inc. Under
			Mexican FRS,
    AFG is consolidated using the proportionate consolidation method. Under U.S.
    GAAP, the Company's investment in and its interest in the net income of AFG
    are recorded based on the equity method. In addition, as mentioned in Note
    25 l) we account for Comegua under the equity method for U.S. GAAP  purposes.
		Summary
    information of the Company's equity method investments is as follows:
		
		As
            of the year ended December 31,2005
				2006
				2005
				2006AFG
				ComeguaCurrent assets
				Ps.
          28
				Ps. 20
				Ps. 360
				Ps.
		646Total assets
				465
				426
				1,113
				1,082Current liabilities
				242
				194
				210
				184Total liabilities
				255
				209
				366
				464Stockholders' equity
				210
				217
				747
				718Net sales
				95
				108
				610
				857Net income (loss)
				(11)
				7
				19
				7Cash flow information:Operating
          activities
				(2)
				1
				59
				51Financing
          activities
				-
				-
				(25)
				108Investing
          activities
				1
				-
				(50)
				(165)
	
	Under U.S. GAAP, as
	of December 31, 2005 and 2006 the Company's investment in AFG and Comegua
	was Ps. 210 and Ps. 217 respectively, and Ps. 747 and Ps. 718, respectively.
	Weighted-average interest rates.-The weighted-average
	interest rates on short-term borrowings outstanding as of December 31, 2004,
	2005 and 2006 were approximately 5.37%, 7.31% and 8.85%, respectively
	Fair value of financial instruments.-SFAS No. 107, "Disclosures about Fair Value of Financial Instruments",
	requires disclosure of the estimated fair values of certain financial
	instruments. The carrying amounts and estimated fair values of the Company's
	significant financial instruments were as follows:
	December 31, 2005
				December 31, 2006Carrying
            Amount
				Fair
            Value
				Carrying
            Amount
				Fair
            ValueLiabilities:Short-term borrowings
				Ps. 1,256
				Ps. 1,256
				Ps.
		289
				Ps.
		289Long-term debt(1)
				14,083
				13,915
				12,046
				12,556Derivative instruments:Embedded derivatives
				Ps. (16)
				Ps. (16)
				Ps. 7
				Ps. 7Interest rate swaps
				(32)
				(32)
				-
				-Libor interest rate options
				-
				-
				21
				21Cross currency swaps
				-
				-
				294
				294Foreign exchange options
				(29)
				(29)
				1
				1Natural gas contracts
				(102)
				(102)
				(99)
				(99)
	
	(1) Includes current portion of long-term
    debt.
	The fair value of
	short-term borrowings approximates their carrying value due to their short
	maturities. The fair value of the U.S. (dollar denominated) publicly traded
	long-term debt was Ps. 6,774 and Ps. 7,293 as of December 31, 2005 and 2006,
	respectively, and its related book value was Ps. 6,942 and Ps. 6,783,
	respectively. The fair value of the remaining long-term debt approximates
	its book value of Ps. 7,141 and Ps. 5,263 as of December 31, 2005 and 2006, respectively.
	The fair value of 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,
    2005 and 2006. 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.
	
	Classification of workers' profit
    sharing.- In the Company's U.S. GAAP statements of operations, workers' profit
    sharing expense is classified as an operating expense.
	Earnings per common share in accordance with U.S. GAAP.-Earnings per share
    in accordance with U.S. GAAP are based on the provisions of SFAS No. 128,
    "Earnings Per Share", 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 15 c) were not dilutive during 2004, 2005
    and 2006, as the average market price per share of the Company's common stock
    during the period was either less than the exercise price per share or as
    a result of net losses during the year. The Company has no other potentially
    dilutive securities. Basic earnings per share are based upon 271,840,010,
    273,116,069, and 289,636,496 weighted-average shares outstanding for 2004,
    2005 and 2006, respectively.Income (loss) per common
    share computed in accordance with U.S. GAAP is presented below:

Year ended December 31,2004
		As Presented 2005
		As Restated 2005
		2006Income (loss) per share - Basic and diluted earnings (loss) from
		continuing operationsPs.   (3.09)
		Ps.   1.61
		Ps. (0.64)
		Ps. (1.85)Discontinued operations
		2.21
		(0.37)
		(0.37)
		1.60Income (loss) per common share
		Ps.   (0.88)
		Ps. 1.24
		Ps.  (1.01)
		Ps.  (0.25)
	Comprehensive income.- Under U.S.
    GAAP, SFAS No. 130, "Reporting Comprehensive Income", establishes standards
    for reporting and display of comprehensive income and its components. Vitro's
    items of other comprehensive income are: loss from holding nonmonetary assets, unrealized gain (loss) on long-term investments and the currency translation
    adjustment.See note 25 r, for consolidated
    financial statements presented on a U.S. GAAP basis, which reflect the provisions
    of SFAS No. 130, "Reporting Comprehensive Income". There were no reclassification
    adjustments for any of the periods presented.
	Share-based Payment. -As disclosed below in 2006
	the Company adopted and currently applies SFAS No. 123 (R), "Share-based
	Payment", in accounting for its shared-based payment awards. The Company's
	employee stockoption plan was adopted in 1998. The disclosures required
	under U.S. GAAP as they relate to this plan are included in Note 15 c.Effective January 1, 2006, under U.S. GAAP, Vitro adopted SFAS No. 123(R).
SFAS No. 123(R) replaces SFAS 123, "Accounting for Stock-Based Compensation" and
supersedes Accounting Principles Board ("APB") No. 25, "Accounting for Stock
Issued to Employees". SFAS No. 123(R) requires that all stock-based compensation
be recognized as an expense in the financial statements and that such cost be
measured at the fair value of the award. SFAS No. 123(R) requires liabilities
incurred under stock awards to be measured at fair value at each balance sheet
date, with changes in fair value recorded in the income statement.  In addition, SFAS No. 123(R) requires compensation cost related to awards qualifying as
equity instruments to be determined considering the grant-date fair value of the
awards, and be recorded over the awards' requisite service period. There was no
significant impact to the Company's consolidated financial position or result of
operations as a result of adopting SFAS No. 123(R).
	Restrictions that limit the payment of dividends by the registrant. -The
    Company derives substantially all of its operating income from advances, fees,
    interest and dividends paid to the Company by its subsidiaries. Accordingly,
    in paying the principal of, premium, if any, interest on, and additional amounts,
    if any, with respect to the Company's indebtedness, the Company relies on
    income from advances, fees, interest and dividends from its' subsidiaries,
    as well as income from the disposition of one or more of its subsidiaries,
    interests therein or assets thereof. Therefore, the Company's subsidiaries' ability to pay such dividends or make such distributions are subject to (i)
    such subsidiaries having net income and the requisite amount of paid-in capital
    under Mexican law, (ii) such subsidiaries' shareholders (including the Company's
    joint venture partners) having approved the payment of such dividends at the
    annual general ordinary shareholders' meeting and (iii) applicable laws and,
    in certain circumstances, restrictions contained in joint venture and debt
    agreements. At December 31, 2006, the net assets
    of the Company were not restricted.
	Concentration of credit risk. -The Company sells products to customers primarily
    in Mexico, the U.S.
    and Europe, although no single customer accounted for
    more than 8% of consolidated net sales in 2006, 2005 and 2004, the Company
    has customers that are significant to its business units and to its consolidated
    financial statements taken as a whole. The Company's three largest customers
    accounted for approximately 15% of its consolidated net sales in 2006, 2005
    and 2004. The Company conducts periodic evaluations of its customers' financial
    condition and generally does not require collateral. The Company does not
    believe that significant risk of loss from a concentration of credit risk
    exists given the large number of customers that comprise its customer base
    and their geographical dispersion. The Company also believes that its potential
    credit risk is adequately covered by the allowance for doubtful accounts.
	Irrevocable Standby Letters of Credit.-As of December 31, 2004 and 2006 VVP
    Holdings Corp. (subsidiary of Vitro, S.A.B.), had outstanding irrevocable standby
    letters of credit issued, for insurance purposes, totaling US$18.
	
	Staff Accounting Bulletin (SAB) No. 108, "Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
    Statements" was issued in September 2006. SAB No. 108 establishes a
    dual approach that requires quantification of financial statement misstatements
    based on the effects of the misstatements on an entity's balance sheet and
    income statement (the iron curtain and roll-over methods) and the related
    financial statement disclosures. SAB No. 108 permits existing public companies
    to initially apply its provisions either by (i) restating prior financial
    statements as if the "dual approach" had always been applied or
    (ii) recording the cumulative effect of initially applying the "dual
    approach" as adjustments to the carrying values of assets and liabilities
    as of January 1, 2006 with an offsetting adjustment recorded to the opening
    balance of retained earnings. The Company determined that a cumulative adjustment
    of prior period misstatements was not required for its fiscal year ending
    December 31, 2006, since the identified misstatements of prior periods were
    neither quantitatively nor qualitatively material to prior periods or the
    current period and thus did not require a prior period or cumulative adjustment.
	Vicap Notes.-11 3/8% Vicap Notes registered under the U.S. Securities Act
    of 1933 were issued by Vicap (now known as SOFIVSA), the Company's 100% owned
    finance subsidiary, and fully and unconditionally guaranteed by Vitro. There
    are no restrictions on the ability of Vitro to obtain funds from SOFIVSA by
    dividend or loan. The Vicap Notes were repaid prior to their maturity date
  in March 2007.
	Recently issued accounting pronouncements. -SFAS No. 155, "Accounting for Certain
    Hybrid Financial Instruments - an Amendment of FASB Statements No. 133 and
    140", issued in February 2006. This statement amends SFAS No. 133, and No.
    140. This statement resolves issues addressed in SFAS No. 133 Implementation
    Issue No. D1, "Application of Statement No. 133 to Beneficial Interests in Securitized
    Financial Assets." This statement permits fair value remeasurement for any
    hybrid financial instrument that contains an embedded derivative that otherwise
    would require bifurcation, clarifies which interest-only strips and principal-only
    strips are not subject to the requirements of SFAS No. 133, establishes a
    requirement to evaluate interests in securitized financial assets to identify
    interests that are freestanding derivatives or that are hybrid financial instruments
    that contain an embedded derivative requiring bifurcation, clarifies that
    concentrations of credit risk in the form of subordination are not embedded
    derivatives and amends SFAS No. 140 to eliminate the prohibition on a qualifying
    special-purpose entity from holding a derivative financial instrument that
    pertains to a beneficial interest other than another derivative financial
    instrument. This Statement is effective for all financial instruments acquired
    or issued after the beginning of an entity's first fiscal year that begins
    after September 15, 2006. The Company is currently evaluating the impact
    of adopting this statement on its consolidated results of operations and financial
    position.
	SFAS No. 156, "Accounting for Servicing
    of Financial Assets - an Amendment of FASB Statement No. 140" issued on March
    2006. This statement amends SFAS No. 140 with respect to the accounting for
    separately recognized servicing assets and servicing liabilities. This statement
    requires that all separately recognized servicing assets and servicing liabilities
    be initially measured at fair value, if practicable. This statement permits,
    but does not require, the subsequent measurement of servicing assets and servicing
    liabilities at fair value. This statement permits an entity to reclassify
    certain available-for-sale securities to trading securities, regardless of
    the restriction in paragraph 15 of SFAS No. 115 "Accounting for Certain Investments
    in Debt and Equity Securities", provided that those available-for-sale securities
    are identified in some manner as offsetting the entity's exposure to changes
    in fair value of servicing assets or servicing liabilities that a servicer
    elects to subsequently measure at fair value. This option is available only
    once, as of the beginning of the fiscal year in which the entity adopts this
    statement. An entity should adopt this statement as of the beginning of its
    first fiscal year that begins after September 15, 2006. Earlier adoption is
    permitted as of the beginning of an entity's fiscal year, provided the entity
    has not yet issued financial statements, including interim financial statements,
    for any period of that fiscal year. The effective date of this statement is
    the date an entity adopts the requirements of this statement. An entity should
    apply the requirements for recognition and initial measurement of servicing
    assets and servicing liabilities prospectively to all transactions after the
    effective date of this statement. The Company is currently evaluating the
    impact of adopting this statement on its consolidated results of operations
    and financial position.
	In
    September 2006, the FASB issued SFAS No. 157, "Fair Value Measurement". SFAS
    No. 157 defines fair value, establishes a framework for the measurement of
    fair value, and enhances disclosures about fair value measurements. The statement
    does not require any new fair value measures. The statement is effective for
    fair value measures already required or permitted by other standards for fiscal
    years beginning after November 15, 2007. The Company is required to adopt SFAS No. 157 beginning on January 1, 2008. SFAS No. 157 is required to be
    applied prospectively, except for certain financial instruments. Any transition
    adjustment will be recognized as an adjustment to opening retained earnings
    in the year of adoption. The Company is currently evaluating the impact of
    adopting this standard on its consolidated results of operations and financial
    position.
	In
    September 2006, the FASB issued SFAS No. 158, which requires companies to
    measure the fair value of its plan assets and benefit obligations as of the
    date of its year-end balance sheet. Companies no longer are permitted to measure
    the funded status of their plan(s) by being able to choose a measurement date
    up to three months prior to year end. This aspect of SFAS No. 158 is effective
    for all companies in fiscal years ending after December 15, 2008, but does
    not impact the Company, its results of operations or its cash flows, as its
    measurement date is the same as its fiscal year end. Retrospective application
    of SFAS No. 158 is not permitted.
	
	In
    February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial
    Assets and Financial Liabilities - Including an Amendment of FASB Statement
    No. 115", which provides a fair value option to measure many financial instruments
    and certain other assets and liabilities at fair value on an instrument-by-instrument
    basis. SFAS No. 159 is effective as of the beginning of an entity's first
    fiscal year that begins after November 15, 2007. Early adoption is permitted
    as of the beginning of a fiscal year that begins on or before November 15,
    2007, provided the entity also elects to apply the provisions of SFAS No.
    157. This statement is not expected to impact the Company's consolidated financial
    position or results of operations in future periods.
	In
    September 2006, the FASB issued FASB Staff Position ("FSP") No. AUG AIR-1,
    "Accounting for Planned Major Maintenance Activities". This guidance prohibits
    the use of the accrue-in-advance method of accounting for planned major activities
    because an obligation has not occurred and therefore a liability should not
    be recognized. The provisions of this guidance will be effective for reporting
    periods beginning after December 15, 2006. The Company is currently evaluating
    the impact of adopting this standard on its consolidated results of operations
    and financial position.
	In
    July 2006, the FASB issued FASB Interpretation ("FIN") No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109".
    FIN 48 clarifies the accounting for uncertainty in income taxes recognized
    in an enterprise's financial statements and prescribes a threshold of more-likely-than-not
    for recognition of tax benefits of uncertain tax positions taken or expected
    to be taken in a tax return. FIN 48 also provides related guidance on measurement,
    derecognition, classification, interest and penalties, and disclosure. The
    provisions of FIN 48 will be effective for the Company on January 1, 2007,
    with any cumulative effect of the change in accounting principle recorded
    as an adjustment to opening retained earnings. The Company is in the process
    of assessing the impact of adopting FIN 48 on its results of operations and
    financial position. However, the Company's current policy is to recognize
    tax benefits of uncertain tax positions only if it is probable that the positions
    will be sustained. The Company is currently evaluating the impact of adopting
    this standard on its consolidated results of operations and financial position.
	
	Reclassifications. - Certain amounts in the consolidated financial statements
    as of and for the years ended December 31, 2004 and 2005 have been reclassified
    in order to conform to the presentation of the consolidated financial statements
    as of and for the year ended December 31, 2006.r) Comparative consolidated financial
    statements - U.S. GAAP
	CONSOLIDATED BALANCE SHEETSU.S.
    GAAP BASIS
	(Millions of constant Mexican pesos
    as of December 31, 2006)
	

	December 31,As
			Presented 2005
			As
			Restated 2005
			2006AssetsCash and cash equivalents
			Ps.           1,175
			Ps.           1,175
			Ps.        1,042Trade receivables, net
			1,004
			1,004
			1,004Retained undivided interests in securitized
			receivables
			826
			826
			1,204Other receivables
			1,790
			1,790
			1,125Inventories
			3,714
			3,714
			3,409Land and buildings held for sale
			427
			427
			-Deferred income taxes
			61
			61
			135Current assets of discontinued operations
			1,005
			1,005
			-Current assets
			10,002
			10,002
			7,919Long-term investments
			367
			367
			71Investment in unconsolidated and associated
			companies
			957
			957
			935Land and buildings, net
			7,343
			7,343
			7,703Machinery and equipment, net
			6,885
			6,885
			5,928Construction in progress
			587
			587
			792Goodwill
			735
			735
			815Intangible pension asset
			307
			307
			-Other assets
			698
			698
			990Deferred income taxes
			398
			263
			-Non-current assets of discontinued operations
			1,330
			1,330
			-Total assets
			Ps.       29,609
			Ps.       29,474
			Ps.   
			25,153LiabilitiesShort-term borrowings
			Ps.         1,106
			Ps.         1,106
			Ps.        178Current maturities of long-term debt
			2,420
			2,420
			55Trade payables
			1,780
			1,780
			1,961Sundry creditors
			1,391
			1,391
			818Accrued expenses
			982
			982
			934Current maturities of unrealized gain on sale
			of real estate
			-
			-
			505Current liabilities of discontinued operations
			433
			433
			-Current liabilities
			8,112
			8,112
			4,451Long-term debt
			11,538
			11,538
			11,627Employee retirement obligations
			1,082
			1,082
			1,353Long-term liabilities of discontinued
			operations
			996
			996
			-Unrealized gain on sale of real estate
			-
			-
			484Deferred income taxes
			-
			481
			449Other long-term liabilities
			131
			131
			210Long-term
			liabilities
			13,747
			14,228
			14,123Total liabilities
			21,859
			22,340
			18,574Minority interest in consolidated subsidiaries
			2,399
			2,399
			1,075Stockholders' EquityTotal stockholders'
			equity
			5,351
			4,735
			5,504Total liabilities,
			minority interest in consolidated subsidiaries and stockholders'
			equity
			Ps.       29,609
			Ps.       29,474
			Ps.   
			25,153
	CONSOLIDATED STATEMENTS OF OPERATIONSU.S.
    GAAP BASIS
	(Millions of constant Mexican pesos as of December 31,
    2006)
	

Year ended December 31,2004
		As Presented 2005
		As Restated 2005
		2006Net
		sales
		Ps.   23,027
		Ps.    23,414
		Ps.    23,414
		Ps.     24,728Cost of
		sales
		16,670
		16,935
		16,935
		18,193Gross
		profit
		6,357
		6,479
		6,479
		6,535Selling,
		general and administrative expenses
		5,660
		5,678
		5,678
		5,062Operating income
		697
		801
		801
		1,473Interest
		expense
		2,211
		2,304
		2,304
		2,397Interest
		income
		(124)
		(157)
		(157)
		(128)Exchange
		loss (gain), net
		88
		(402)
		(402)
		207Gain
		from monetary position
		(727)
		(431)
		(431)
		(517)Total
		financing cost
		1,448
		1,314
		1,314
		1,959Operating loss after financing cost
		(751)
		(513)
		(513)
		(486)Other
		income (expenses), net
		29
		400
		400
		(39)Loss from
		continuing operations before taxes and workers' profit sharing
		(722)
		(113)
		(113)
		(525)Income and asset tax (benefit)
		expense
		(120)
		(755)
		(139)
		169Net minority interest
		(287)
		(208)
		(208)
		145Share in earnings of unconsolidated
		associated companies
		48
		6
		6
		14Net income
		(loss) from continuing operations
		(841)
		440
		(176)
		(535)Discontinued operations including
		gain (loss) on disposal of discontinued operations of Ps. 479 in 2004,
		Ps. (132) in 2005, and Ps. 494 in 2006 net of taxes of Ps. (7),  Ps.
		(4), and Ps. (83) respectively
		602
		(101)
		(101)
		464Net income
		(loss)
		Ps.   (239)
		Ps.      339
		(277)
		Ps.     (71)
	
	CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYU.S.
    GAAP BASIS
	(Millions of constant Mexican pesos as of December
    31, 2006)
	

2,004
		As Presented 2005
		As Restated 2005
		2,006Stockholders' equity at the beginning of the year
		Ps.   5,964
		Ps.   5,181
		Ps.   5,181
		Ps.   4,735Comprehensive income (loss):Net income
		(239)
		339
		(277)
		(71)Other comprehensive income (loss):Minimum pension liability adjustment
		(117)
		21
		21
		-Gain from holding nonmonetary assets
		(427)
		36
		36
		(235)Cumulative translation adjustment
		(11)
		(17)
		(17)
		115Deferred income taxes
		114
		(423)
		(423)
		(65)Deferred workers' profit sharing
		1
		7
		7
		-Effect of applying the Bulletin B-10
		(76)
		(93)
		(93)
		(33)Other comprehensive loss
		(516)
		(469)
		(469)
		(218)Comprehensive loss
		(755)
		(130)
		(746)
		(289)Bulletin B-15 adjustments
		55
		231
		231
		(42)SFAS No. 158 Adjustment
		-
		-
		-
		(126)Canceled dividends
		-
		158
		158
		-Dividends paid
		(99)
		(96)
		(96)
		(92)Issuance of treasury stock
		16
		7
		7
		67Issuance of capital stock
		-
		-
		-
		556Dilution of minority interest
		-
		-
		-
		695Stockholders' equity at the end of
		the year
		Ps.   5,181
		Ps.      5,351
		Ps.      4,735
		Ps.     5,504
	
	CONSOLIDATED STATEMENTS OF CASH FLOWSU.S.
    GAAP BASIS*
	(Millions of nominal pesos)

Year
		ended December 31,2004
		As
		Presented 2005
		As
		Restated 2005
		2006Operating Activities:(Loss) income from continuing
		operations in constant pesos
		Ps. ( 841)
		Ps.    440
		Ps.   
		(176)
		Ps.  (535)Effect of constant pesos
		57
		7
		7
		13(Loss) income from continuing operations in nominal
		pesos
		(784)
		447
		(169)
		(522)Add (deduct) non-cash items:Minority interest
		267
		200
		200
		(145)Depreciation and
		amortization
		1,919
		1,636
		1,636
		1,718Provision for seniority premiums,
		pensions, severance indemnities and other long-term liabilities
		282
		293
		293
		377Amortization of debt issuance costs
		118
		200
		200
		188Share in
		earnings of unconsolidated associated companies
		(45)
		(6)
		(6)
		(13)Dividends received from
		unconsolidated associated companies
		17
		17
		17
		12Fair value of derivative
		financial instruments
		(9)
		(123)
		(123)
		(107)Gain on execution of Vitro
		Club's trust
		-
		(424)
		(424)
		-Gain from sale of
		subsidiaries
		(82)
		-
		-
		34Write-off and loss from
		sale of fixed assets
		316
		428
		428
		48Deferred income tax and
		workers' profit sharing
		(194)
		(939)
		(323)
		71Gain from monetary
		position
		(689)
		(430)
		(430)
		(514)Exchange loss (gain)
		73
		(373)
		(373)
		197Increase in trade payables
		5
		97
		97
		213(Increase) decrease in trade receivables
		(252)
		616
		616
		26(Increase) decrease in inventories
		(234)
		(170)
		(170)
		320Changes in other current assets and liabilities
		465
		(482)
		(482)
		(471)Employee retirement obligations
		(271)
		(282)
		(282)
		(557)Net
		income (loss) from discontinued operations
		112
		31
		31
		(30)Operating
		assets and liabilities from discontinued operations
		24
		151
		151
		29Net cash provided by
		operating activities
		1,038
		887
		887
		874Investing Activities:Sales of
		land and buildings and machinery and equipment
		17
		29
		29
		1,342Investment in land and
		buildings and machinery and equipment
		(1,209)
		(978)
		(978)
		(1,009)Sale of subsidiaries and
		associated companies
		904
		157
		157
		1,049Restricted cash
		181
		1
		1
		385Discontinued operations
		(114)
		(178)
		(178)
		20Capital
		distribution to minority interest
		-
		-
		-
		(21)Deferred Charges
		(94)
		(64)
		(64)
		(86)Net cash
		(used in) provided by investing activities
		(315)
		(1,033)
		(1,033)
		1,680Financing Activities:Proceeds from short-term
		borrowings
		3,072
		2,820
		2,820
		4,603Proceeds from long-term
		debt
		4,933
		5,606
		5,606
		840Payment of short-term
		borrowings
		(3,241)
		(3,927)
		(3,927)
		(3,191)Payment of long-term debt
		(3,514)
		(5,278)
		(5,278)
		(5,419)Debt issue costs
		(153)
		(183)
		(183)
		(23)Issuance of capital stock
		-
		-
		-
		556Sale of treasury stock
		14
		7
		7
		67Dividends paid to
		stockholders of Vitro
		(89)
		(90)
		(90)
		(92)Dividends paid to minority
		interests
		(113)
		(67)
		(67)
		(20)Discontinued operations
		(22)
		(4)
		(4)
		(19)Net cash provided by (used in) financing activities
		887
		(1,116)
		(1,116)
		(2,698)Net decrease in cash and
		cash equivalents
		1,610
		(1,262)
		(1,262)
		(140)Monetary and exchange rate effect on cash and cash
		equivalents
		(56)
		(1)
		(1)
		51Balance at beginning of year
		840
		2,394
		2,394
		1,131Balance at end of year
		Ps. 2,394
		Ps.   1,131
		Ps.   1,131
		Ps.  1,042Net cash provided by
		operating activities reflects net cash payments of interest and income
		taxes as follows:Interest
		Ps. 1,488
		Ps. 1,773
		Ps. 1,773
		Ps.  1,694Income taxes
		72
		246
		246
		20* This consolidated statement
    of cash flows on the basis of nominal pesos is presented to fulfill disclosure
    requirements of the International Practices Task Force
    of the American Institute of Certified Public Accountants.
	
	Schedule II - Valuation and Qualifying Accounts

Schedule of
            Valuation and Qualifying AccountsFor
            the years Ended December 31, 2006, 2005 and 2004Millions
            of constant Mexican pesos as of December 31, 2006Balance
            at beginning of year
        Additions
        Deductions
        Changes
            for effects of inflation
        Balance
            at the end of the yearYear
            ended December 31, 2006Allowance for doubtful accounts
        Ps.
            189
        Ps.
            68
        Ps.
            53
        Ps.
            (7)
        Ps.
            197Deferred tax valuation allowance
        606
        185
        507
        (24)
        260Ps.
            795
        Ps.
            253
        Ps. 560
        Ps. (31)
        Ps.
            457Year
            ended December 31, 2005Allowance for doubtful accounts
        Ps. 126
        Ps.
            100
        Ps.
            38
        Ps.
            1
        Ps.
            189Deferred tax valuation allowance
        711
        33
        114
        (24)
        606Ps.
		837
        Ps. 133
        Ps.
            152
        Ps. (23)
        Ps.
		795Year
            ended December 31, 2004Allowance for doubtful accounts
        Ps.
            111
        Ps. 65
        Ps. 44
        Ps. (6)
        Ps.
            126Deferred tax valuation allowance
        1,596
        148
        956
        (77)
        711Ps. 1,707
        Ps.
            213
        Ps. 1,000
        Ps. (83)
        Ps.
		837


Item 19. Exhibits

Exhibit No.
    Description
    Page
    
    1.01
    Amended and restated by-laws (estatutos sociales)
        of Vitro, S.A.B. de C.V., together with an English translation
    *
    
    2.01
    Form of Deposit Agreement among the Company,
        Nacional Financiera S.N.C., Citibank, N.A. and all registered holders
        from time to time of American Depositary Receipts issued thereunder, including
        the form of American Depositary Receipt
    ***
    
    2.02
    Trust Agreement dated November 28, 1990 between
        the Common Shares Trustee, as grantor, and the CPO Trustee (the "CPO Trust
        Agreement"), together with an English translation
    ***
    
    2.03
    Public Deed dated November 29, 1990 (the
      "Public Deed"), together with an English translation
    ***
    
    2.04
    Common Shares Trust Agreement
    ***
    
    2.05
    CPO Trust Agreement and Public Deed
    ***
    
    2.06
    Form of Certificado Bursatil
    *****
    
    2.07
    Indenture dated as of October 22, 2003 ("2013 Indenture") between Vitro, S.A. de C.V. and Wachovia Bank (including exhibits)
    ******
    
    2.08
    Form of 11.75% Senior Note due 2013 (included
        in Exhibit 2.12)
    ******
    
    2.09
    First Supplemental Indenture to the 2013
        Indenture dated as of February 1, 2007 among Vitro, S.A.B. de C.V. the
        New Guarantors party thereto, the Existing Guarantors party thereto and
        the Bank of New York
    *
    
    2.10
    Second Supplemental Indenture dated as of
        April 27, 2007 to the 2013 Indenture among Vitro, S.A.B. de C.V., the
        New Guarantors party thereto, the Existing Guarantors party thereto, and
        U.S. Bank National Association as successor trustee to Wachovia Bank,
        National Association
    *
    
    2.11
    Trust Agreement between Banco Invex, S.A.,
        Institucion de Banca Multiple, Invex Grupo Financiero, as issuer and trustee,
        Distribuidora Nacional de Vidrio, S.A. de C.V., Vitro Flotado Cubiertas,
        S.A. de C.V., Vitro Automotriz, S.A. de C.V., and Vitro Vidrio y Cristal,
        S.A. de C.V., dated August 3, 2005, in connection to the issuance of the
        6.46% Preferred Notes.
    *******
    
    2.12
    Purchase Agreement between Banco Invex, S.A.,
        Institucion de Banca Multiple, Invex Grupo Financiero, as issuer, Distribuidora
        Nacional de Vidrio, S.A. de C.V., Vitro Flotado Cubiertas, S.A. de C.V.,
        Vitro Automotriz, S.A. de C.V., Vitro Vidrio y Cristal, S.A. de C.V.,
        and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank
        International", as purchaser, dated August 22, 2005, in connection
        to the sale of 6.46% Preferred Notes. Summary of the document in English attached.
    *******
    
    2.13
    Indenture dated as of February 1, 2007 between
        Vitro, S.A.B. de C.V., the Guarantors party thereto and The Bank of New
        York as Trustee ("2012 Indenture")
    *
    
    2.14
    Form of 8.625% Senior Note due 2012
    *
    
    2.15
    First Supplemental Indenture to the 2012
        Indenture dated as of April 27, 2007 among Vitro, S.A.B. de C.V. the New
        Guarantors party thereto, the Existing Guarantors party thereto and the
        Bank of New York
    *
    
    2.16
    Indenture dated as of February 1, 2007 between
        Vitro, S.A.B. de C.V., the Guarantors party thereto and The Bank of New
        York as Trustee ("2017 Indenture")
    *
    
    2.17
    Form of 9.125% Senior Note due 2017
    *
    
    2.18
    First Supplemental Indenture to the 2017
        Indenture dated as of April 27, 2007 among Vitro, S.A.B. de C.V. the New
        Guarantors party thereto, the Existing Guarantors party thereto and the
        Bank of New York
    *
    
    4.01
    Receivables Purchase Agreement dated as of
        May 7, 2004 among VVP Funding Corporation, Vitro America, Inc., Windmill
        Funding Corporation, ABN Amro Bank N.V. and Finacity Corporation
    ******
    
    4.02
    Receivables Sales Agreement dated as of May
        7, 2004 between Vitro America, Inc. and VVP Funding Corporation
    ******
    
    4.03
    Second Amendment to Receivables Purchase
       Agreement dated as of May 5, 2006, among VVP Funding Corporation, Vitro America, Inc., Windmill Funding Corporation and ABN Amro Bank N.V.
    ******
    
    4.04
    Third Amendment to Receivables Purchase Agreement
        dated as of April 16, 2007, among VVP Funding Corporation, Vitro America, Inc., Windmill Funding Corporation and ABN Amro Bank N.V.
    *
    
    4.05
    Stock Purchase Agreement dated as of June
        3, 2002 among Vitro, S.A. de C.V. Whirlpool Corporation and Whirlpool
        Holdings, Inc.
    *****
    
    4.06
    Stock Purchase Agreement dated as of January
        23, 2004 among Vitro, S.A. de C.V., Vitro Envases Norteamerica, S.A. de
        C.V., Owens Corning and Owens Corning VF Holdings, Inc.
    ******
    
    4.07
    Stock Purchase Agreement dated as of September
        25, 2004 among Rexam plc, Rexam Overseas Holding Limited and Vitro, S.A.
        de C.V.
    **
    
    4.08
    Trust Agreement dated as of March 23, 2005
        among Compania Vidriera, S.A. de C.V., Industria del Alcali, S.A. de C.V.,
        Comercializadora Alcali, S. de R.L. de C.V., ABN AMRO Bank (Mexico), S.A.,
        Institucion de Banca Multiple, Division Fiduciaria and Banco Invex, S.A.,
        Institucion de Banca Multiple, Invex Grupo Financiero; Assignment of Rights
        dated as of March 23, 2005 among Compania Vidriera, S.A. de C.V., Industria
        del Alcali, S.A. de C.V., Comercializadora Alcali, S. de R.L. de C.V.
        and ABN AMRO Bank (Mexico), S.A. Institucion de Banca Multiple, Division
        Fiduciana; Certificados Subordinados issued by ABN AMRO
        Bank (Mexico), S.A., Institucion de Banca Multiple, Division Fiduciaria,
        together with English summary.
    **
    
    4.09
    Guaranty dated as of March 31, 2005 among
        Vitro, S.A.B. de C.V. and of the holders of the Certificados Subordinados
    **
    
    4.10
    Purchase Agreement dated as of March
        31, 2005 among ABN AMRO Bank (Mexico), S.A., Institucion de Banca Multiple, Division Fiduciaria, Compania Vidriera, S.A. de C.V., Industria del
        Alcali, S.A.de C.V., Comercializadora Alcali, S. de R.L. de C.V., and
        Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank International",
        New York Branch
    **
    
    4.11
    Placement Agent Agreement dated as of March
        29, 2005 among Compania Vidriera, S.A. de C.V., Industria del Alcali,
        S.A. de C.V., Comercializadora Alcali, S. de R.L. de C.V., ABN AMRO Bank
        (Mexico), S.A., Institucion de Banca Multiple, Division Fiduciaria, and
        Banco Invex, S.A. Institucion de Multiple, Invex Grupo Financiero
    **
    
    4.12
    Letter of extension between Pilkington plc
        and Vitro Vidrio y Cristal, S.A. de C.V., dated April 24, 2006
    **
    
    4.13
    Stock Purchase Agreement of Vidrios Panamenos
        S.A. between the Sellers listed therein and Empresas
        Comegua, S.A., dated
        April 4, 2006.
    *******
    
    8.1
    List of subsidiaries of Vitro, S.A.B. de
        C.V.
    *
    
    12.1
    Certification of the Chief Executive Officer
        of Vitro, S.A.B. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.
    *
    
    12.2
    Certification of the Chief Administrative
        Officer of Vitro, S.A.B. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.
    *12.3
    Certification of the Chief Financial Officer
        of Vitro, S.A.B. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.
    *
    
    13.1
    Certification of the Chief Executive Officer,
        Chief Financial Officer and Chief Administrative Officer of Vitro, S.A.B.
        de C.V. pursuant to 18 U.S.C.  1350, as adopted pursuant to Section 906
        of the Sarbanes Oxley Act of 2002.
    *


|___________________
|-------------------
|*                  
|**                 
|***                
|****               
|*****              
|******             
|*******            



SIGNATURES Vitro, S.A.B. de C.V. hereby
    certifies that it meets all of the requirements for filing on Form 20-F and
    that it has duly caused and authorized each of the undersigned to sign this
    annual report on Form 20-F on its behalf. Date: June 21, 2007. VITRO, S.A.B. DE
          C.V.,by
      /s/ Federico Sada GonzalezName: Federico Sada GonzalezTitle: President and Chief Executive
          Officer
 by
      /s/ Claudio Del Valle CabelloName: Claudio Del Valle CabelloTitle: Chief Administrative Officer
 by
      /s/ Enrique Osorio LopezName: Enrique Osorio LopezTitle: Chief Financial Officer