UNITED
    STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington,
    D.C. 20549  FORM
    20-F  / /
      REGISTRATION
        STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
        ACT OF 1934OR/x/
      ANNUAL
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF 1934For the fiscal year ended December 31st. 2001OR/ /
      TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF 1934
        For the transition period 
        to  Commission
    file number:1-10905 Vitro,
    S.A. de C.V.(Exact name
    of Registrant as specified in its charter) United
    Mexican States(Jurisdiction of incorporation or organization) Ave.
    Ricardo Margain Zozaya 400 Col. Valle del Campestre,
    Garza Garcia, Nuevo Leon, 66265 Mexico 
    Telephone (52-81) 8863-1200(Address of principal executive offices) Securities
    registered or to be registered pursuant to Section 12(g) of the Act. Title
          of each class:
      
      Name
          of each exchange on which registered:Ordinary
          Shares, no par value
      
      New
          York Stock Exchange*Ordinary
          Participation Certificates
      
      New
          York Stock Exchange*American
          Depositary Shares, evidenced by
      
      New
          York Stock ExchangeAmerican
          Depositary Receipts each representing three Ordinary Participation Certificates *Not for trading, but only in connection
    with the registration of American Depositary Shares, pursuant to the requirements
    of the Securities and Exchange Commission.
 Securities
    registered or to be registered pursuant to Section 12(b) of the Act. None Securities
    for which there is a reporting obligation pursuant to Section 15(d) of the
    Act. 11 3/8%
    Guaranteed Senior Notes Due 2007 ("11 3/8% New Vicap Notes")
    (Title of Class) Indicate
    the number of outstanding shares of each of the issuer's classes of capital
    or common stock as of the close of the period covered by the annual report: [Ordinary
    Shares, no par value, 273,705,980] Indicate
    by check mark whether the registrant (1) has filed all reports required to
    be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
    the preceding 12 months (or for such shorter period that the registrant was
    required to file such reports), and (2) has been subject to such filing requirements
    for the past 90 days. Yes /x/  No / / Indicate
    by check mark which financial statement item the registrant has elected to
    follow. / / Item 17  /x/ Item 18


PRESENTATION
    OF CERTAIN INFORMATION Vitro
    is a corporation with variable capital (sociedad anonima de capital
    variable) organized under the laws of Mexico. It is a holding company
    that conducts all of its operations through subsidiaries and has investments
    in associated companies. Except when indicated or the context otherwise requires,
    the words "Vitro," "we," "us," "our" and "ours" refer to Vitro, S.A. de C.V.
    together with its consolidated subsidiaries. However, it should always be
    understood that each subsidiary of Vitro is an independent legal entity with
    its own accounting, corporate structure and records, executives and employees.
    References in this annual report to business units are to combinations of
    various subsidiaries that have been grouped together for management and presentation
    purposes. We use the term "joint venture" to refer to companies which are
    not wholly owned subsidiaries of Vitro or in which Vitro, directly or indirectly,
    has either management control or shares management control with one or more
    third parties. We believe that our use of the term "joint venture" is consistent
    with international business practices. However, our "joint ventures" are not
    necessarily "Joint Ventures" as defined in International Accounting Standards.
    References in this annual report to "pesos" or "Ps." are to the lawful currency
    of Mexico. References to "U.S. dollars," "dollars" or "$" are to United States
    dollars. This
    annual report contains translations of certain constant peso amounts into
    U.S. dollars at specified rates solely for the convenience of the reader.
    These translations should not be construed as representations that the constant
    peso amounts actually represent such U.S. dollar amounts or could be converted
    into U.S. dollars at the rate indicated or at all. The exchange rate used
    in preparing our consolidated financial statements and in preparing convenience
    translations of such information into U.S. dollars is the exchange rate calculated
    and published by Banco de Mexico, Mexico's central bank, in the Official Gazette
    of the Federation (Diario Oficial de la Federacion) for the conversion
    of U.S. dollar-denominated amounts into pesos, which we refer to as the "Free
    Exchange Rate." As of December 31, 2001, the Free Exchange Rate was 9.1695 pesos
    per U.S. dollar. As of December 31, 2001, the noon buying rate for Mexican
    pesos reported by the Federal Reserve Bank of New York, which we refer to
    as the "Noon Buying Rate," was 9.156 pesos per U.S. dollar. All
    the peso amounts contained in this annual report are restated in constant
    pesos as of December 31, 2001, except where otherwise indicated. As of
    December 31, 2001, the value of the Unidad de Inversi-nor
    "UDI," which is a Mexican inflation unit adjusted by the change in the INPC,
    was 3.055569 pesos per UDI. For
    purposes of this annual report, we consider our export sales to be (i) products
    sold by our Mexican subsidiaries to third parties outside Mexico, (ii) products
    sold by our Mexican subsidiaries to our foreign subsidiaries that do not act
    as distributors (principally VVP America) and (iii) products sold by
    our foreign distribution subsidiaries (principally Vitro Packaging, Inc. and
    Crisa Corporation) to third parties outside Mexico. All
    amounts included in this annual report, except those stated in accordance
    with U.S. GAAP or unless otherwise indicated, include the operating results
    and assets of Vitromatic, S.A. de C.V., which we refer to as "Vitromatic,"
    the holding company of our former Acros-Whirlpool business unit. On June 3,
    2002, we signed the definite agreement to sell, subject to governmental approval,
    our controlling 51% interest in Vitromatic to Whirlpool Corporation, which
    we refer to as "Whirlpool," which held the remaining 49% of the joint venture
    prior to this sale. See "Information on the Company-Recent Developments". Certain
    amounts included in this annual report may not sum due to rounding. FORWARD-LOOKING
    STATEMENTS This
    annual report includes forward-looking statements within the meaning of the
    Private Securities Litigation Reform Act of 1995. These statements relate
    to our future prospects, developments and business strategies. These
    forward-looking statements are identified by our use of terms and phrases
    such as "anticipate," "believe," "could," "estimate," "expect," "intend,"
    "may," "plan," "predict," "project," "will" and similar terms and phrases,
    and may include references to assumptions. These
    forward-looking statements reflect our best assessment at the time, and thus,
    involve uncertainty and risk. It is possible that our future financial performance
    may differ from expectations due to a variety of factors, some of which include
    the following: *
    foreign currency fluctuations relative to the U.S. dollar or the Mexican peso;* changes in capital availability or cost, including interest rate fluctuations;* the general political, economic and competitive conditions in markets and
    countries where we have operations, including competitive pricing pressures,
    inflation or deflation and changes in tax rates;* consumer preferences for forms of packaging that are alternatives to glass
    packaging;* fluctuations in raw material and labor costs;* availability of raw materials;* cost and availability of energy;* transportation costs;*
    consolidation among competitors and customers;*
    lifting of trade barriers and enforcement of measures against unfair trade
    practices;*
    the ability to integrate operations of acquired businesses;*
    the ability to hire and maintain experienced management;*
    the performance by customers of their obligations under purchase agreements;
    and*
    the timing and occurrence of events which are beyond our control. It
    is not possible to foresee or identify all such factors. 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 in the circumstances. Forward-looking statements are not a
    guarantee of future performance and actual results or developments may differ
    materially from expectations. While we continually review trends and uncertainties
    affecting our results of operations and financial condition, we do not intend
    to update any particular forward-looking statements contained in this document.


ORGANIZATIONAL
      STRUCTURE The
    following table presents the organizational structure of Vitro's business
    units, it's principal subsidiaries and the direct or indirect Vitro's ownership
    as of June 28, 2002:   (1)On
    June 3, 2002, we signed an agreement to sell, subject to governmental approval,
    our controlling 51% interest in Vitromatic to Whirlpool, which held the remaining
    49% interest. See "Information on the Company-Recent Developments."(2)Companies that were part of the former Diverse Industries business unit.
    See "Information on our Company-Organizational Changes and Cost
    Reduction Program."     TABLE
    OF CONTENTS Item
          No.
      TitlePresentation
          of Certain InformationForward-Looking
          StatementsOrganizational
          StructurePart
          IItem
          1
      Identity
        of Directors, Senior Management and AdvisersItem
          1
      Offer
        Statistics and Expected TimetableItem
          3
      Key
        InformationItem 4
      Information
        on the CompanyItem 5
      Operating
        and Financial Review and ProspectsItem 6
      Directors,
        Senior Management and EmployeesItem 7
      Major
        Shareholders and Related Party TransactionsItem 8
      Financial
        InformationItem 9
      The
        Offer and ListingItem 10
      Additional
        InformationItem 11
      Quantitative
        and Qualitative Disclosures About Market RiskItem 12
      Description
        of Securities Other Than Equity SecuritiesPart
            IIItem 13
      Defaults,
        Dividend Arrearages and DelinquenciesItem 14
      Material
        Modifications to the Right of Security Holders And Use of ProceedsItem 15
      (Reserved)Item 16
      (Reserved)Part
            IIIItem 17
      Financial
        StatementsItem 18
      Financial
        StatementsItem 19
      Exhibits *
    Not applicable **
    The Registrant has responded to Item 18 in lieu of this Item  PART
    I  Item
    1. Identity of Directors, Senior Management and Advisers  Not
    applicable   Item 2. Offer Statistics and Expected Timetable  Not
    applicable   Item 3. Key Information SELECTED
    FINANCIAL DATA Our
    consolidated financial statements have been prepared in accordance with Mexican
    GAAP, which differs in certain respects from U.S. GAAP. See note 22 to
    our audited consolidated financial statements appearing elsewhere in this
    annual report. Our
    consolidated financial statements were prepared giving effect to Bulletin
    B-10 and its amendments, and Bulletin B-12. Generally, Bulletin
    B-10 is designed to provide for the recognition of certain of the effects
    of inflation by requiring:


- the
      restatement of inventories at current replacement cost;
- the
      restatement of all other non-monetary assets and non-monetary liabilities,
      as well as the components of stockholders' equity, by the INPC; and
- the recording to the income statement of gains or losses in purchasing power
      from holding monetary liabilities or assets.



The
  Fifth Amendment to Bulletin B-10, which became effective on January 1,
  1997, changed the method of restating fixed assets from the replacement cost
  method to the inflation rate method. In accordance with the Fifth Amendment
  to Bulletin B-10:

- fixed
      assets purchased in Mexico are required to be restated by using the INPC;
      and
- fixed
      assets purchased outside Mexico can be restated by using the general consumer
      price index from the country of origin; the underlying foreign currency
      amounts are then translated into pesos using the peso/foreign currency exchange
      rate at the end of the period.

The
    Third Amendment to Bulletin B-10 requires the restatement of all financial
    statements to constant pesos as of the date of the most recent balance sheet
    date. Pursuant to Bulletin B-15, prior period financial statements presented
    for comparative purposes are restated on a basis that incorporates the effects
    of inflation in Mexico for our Mexican operations using the INPC and inflation
    and currency exchange rate fluctuations in countries in which we have foreign
    subsidiaries. Bulletin B-12 requires that the statement of changes in
    financial position reconcile changes from the restated historical balance
    sheet to the current balance sheet. Accordingly, all data in our consolidated
    financial statements, and the related selected consolidated financial information,
    have been restated in constant pesos as of December 31, 2001. Effective
    January 1, 2000, the Mexican Institute of Public Accountants, which we
    refer to as the "IMCP," issued Bulletin D-4. Bulletin D-4 sets forth the accounting
    treatment for income taxes, tax on assets and workers' profit sharing. In
    accordance with Bulletin D-4, the financial statements recognize:


- Deferred
        income taxes for all temporary differences between accounting and tax
        bases for all assets and liabilities; and
- Deferred
        workers' profit sharing for temporary differences between tax and accounting
        results, which are expected to reverse in the future.

Additionally,
    net operating income (loss) and asset tax paid must be recognized as assets.
    Until 1999, deferred taxes were provided only for identifiable, non-recurring
    timing differences that were expected to reverse over a definite period of
    time, and the tax on assets paid was recognized in the income statement. See
    note 3(o) to the audited consolidated financial statements. Except
    for the restatement of fixed assets purchased outside Mexico and the restatement
    of prior period financial statements as they relate to the restatement of
    foreign subsidiaries, the differences between inflation accounting under Bulletin
    B-10 and its amendments and U.S. GAAP have not been included in the
    reconciliation to U.S. GAAP. The application of Bulletin B-10 represents
    a comprehensive measure of the effects of price level changes in the Mexican
    economy and, as such, is considered a more meaningful presentation than historical
    cost-based financial reporting for both Mexican and U.S. accounting purposes.
    If it were necessary in the future to include the difference between inflation
    accounting under Bulletin B-10 and its amendments and U.S. GAAP, a change
    would be reflected in the U.S. GAAP reconciliation in the financial statements. Our
    export sales consist of (i) products sold by our Mexican subsidiaries
    to third parties outside Mexico, (ii) products sold by our Mexican subsidiaries
    to our foreign subsidiaries that do not act as distributors (principally VVP
    America) and (iii) products sold by our foreign distribution subsidiaries
    (principally Vitro Packaging, Inc. and Crisa Corporation) to third parties
    outside Mexico. The
    following table sets forth selected financial information and other data for
    the periods indicated and are qualified by reference to, and should be read
    in conjunction with, our consolidated financial statements, the notes to those
    financial statements and the information under "Operating and Financial Review
    and Prospects." The
    following table presents on a consolidated basis our financial information
    and other data for our consolidated subsidiaries and us: As
          of or for the year ended December 31,1997
      1998
      1999
      2000
      2001
      2001(Millions
          of constant pesos as of December 31, 2001)(1)
      (Millions
          of U.S. dollars)(2)Income Statement
          Data:Mexican GAAP:
          (3)Net sales
      Ps.
          29,431
      Ps.
          29,837
      Ps.
          28,599
      Ps.
          28,631
      Ps.
          28,190
      $3,074Cost of sales
      19,925
      20,195
      19,765
      20,307
      20,638
      2,250Gross profit
      9,506
      9,642
      8,834
      8,324
      7,552
      824General, selling
          and administrative expenses
      4,379
      4,476
      4,479
      4,807
      4,949
      540Operating income
      5,127
      5,166
      4,355
      3,517
      2,603
      284Financing cost:Interest expense,
          net
      4,015
      3,052
      2,782
      2,328
      1,892
      207Exchange loss (gain),
          net
      440
      3,096
      (453)
      183
      (590)
      (64)Gain from monetary
          position
      2,983
      2,853
      2,005
      1,315
      651
      72Total financing
          cost
      1,472
      3,295
      324
      1,196
      651
      71Other expense (income),
          net
      (5)
      226
      1,249
      488
      866
      95Share in net income
          of unconsolidated associated companies (4)
      258
      6
      24
      5
      7
      1Gain (loss) in
          value of shares in trust (5)
      60
      (1,218)
      -
      -
      -
      -Income before income
          tax and workers' profit sharing
      3,978
      433
      2,806
      1,838
      1,093
      119Income and asset
          tax (6)
      1,272
      1,056
      1,600
      675
      407
      44Workers' profit
          sharing
      235
      213
      260
      326
      109
      12Net income (loss)
          from continuing operations (7)
      2,471
      (836)
      946
      837
      577
      63Net income from
          discontinued operations (7)
      60
      -
      -
      -
      -
      -Income on disposal
          of discontinued operations (8) (9)
      1,223
      331
      573
      -
      -
      -Extraordinary item
          (10)
      360
      123
      158
      -
      -
      -Net income (loss)
          for the year
      4,114
      (382)
      1,677
      837
      577
      63Net income (loss)
          of majority interest
      3,337
      (958)
      724
      347
      135
      15Dividends declared
      -
      363
      355
      323
      307
      33U.S. GAAP:(3)
          (11)Net sales
      Ps.
          23,916
      Ps.
          24,223
      Ps.
          22,422
      Ps.
          22,149
      Ps.
          20,964
      $2,286Operating income
      4,733
      4,434
      2,215
      1,927
      1,434
      156Income from continuing
          operations
      3,140
      507
      676
      716
      597
      65Net income (loss)
          of majority interest
      3,969
      (141)
      411
      623
      366
      40Balance Sheet
          Data:Mexican GAAP:
          (3)Cash and cash equivalents
      Ps.
          793
      Ps.
          681
      Ps.
          620
      Ps.
          787
      Ps.
          1,005
      $110Current assets
      8,490
      8,599
      8,031
      8,158
      7,853
      856Total assets
      40,514
      38,358
      35,121
      33,175
      31,347
      3,418Current liabilities
      6,533
      7,345
      6,391
      8,895
      11,156
      1,217Total debt (6)
      19,568
      19,592
      17,082
      16,333
      14,453
      1,576Minority interest
          in consolidated subsidiaries
      4,732
      4,476
      4,385
      3,209
      3,333
      363Stockholders' equity
          (6)
      11,599
      8,734
      8,093
      6,233
      5,534
      604U.S. GAAP:(3)Total assets
      Ps.
          39,204
      Ps.
          37,126
      Ps.
          34,407
      Ps.
          33,496
      Ps.
          31,653
      $3,452Total liabilities
      26,462
      26,626
      24,846
      24,303
      22,519
      2,456Majority Stockholders
          equity
      9,419
      7,176
      6,632
      6,498
      6,146
      670Other Data:Mexican GAAP:
          (3)Capital expenditures
      Ps.
          2,088
      Ps.
          2,865
      Ps.
          1,854
      Ps.
          1,110
      Ps.
          944
      $103Depreciation and
          amortization
      1,896
      2,062
      2,121
      2,084
      2,050
      224EBITDA (11)
      7,086
      7,321
      6,553
      5,679
      4,861
      530Ratio of EBITDA
          to interest expense (11)
      1.7
      2.3
      2.3
      2.4
      2.5Ratio of total
          debt to EBITDA(11)
      2.8
      2.7
      2.6
      2.9
      3.0U.S. GAAP:(3)EBITDA (11)
      Ps.
          6,495
      Ps.
          7,112
      Ps.
          5,932
      Ps.
          5,039
      Ps.
          4,148
      $452INFLATION AND
          EXCHANGEPercentage of chanfe
          in INPC
      15.7%
      18.6%
      12.3%
      9.0%
      4.4%Peso/dollar exchange
          rate (12)
      Ps. 8.068
      Ps. 9.8963
      Ps. 9.4886
      Ps. 9.6098
      Ps. 9.1695   (1) Except ratios,
    inflation and exchange rate data.
    (2) Peso amounts have been translated into U.S. dollars, solely for the convenience
    of the reader, at the rate of 9.1695 pesos per one U.S. dollar, the Free Exchange
    Rate on December 31, 2001 
    (3) On June 3, 2002, we signed an agreement to sell, subject to governmental
    approval, our controlling 51% interest in Vitromatic, the holding company
    of our former Acros-Whirlpool business unit, to Whirlpool, which held the
    remaining 49% of this joint venture, for $148.3 million in cash before expenses.
    As a result of our signing of the contract on June 3, 2002, under U.S. GAAP,
    we have recasted our financial information to report the Acros-Whirlpool business
    unit as a discontinued operation for all periods presented in this annual
    report. For Mexican GAAP purposes, when we report financial statements that
    include the sale of Acros-Whirlpool, we will recast all periods presented
    to report the sale as a discontinued operation
    (4) Includes principally the results of Grupo Financiero Serfin, S.A. de C.V.
    ("Grupo Serfin") and Cydsa, S.A. ("Cydsa"). In December
    1997, Vitro sold its interest in Cydsa and in 1999, Vitro wrote off its investment
    in Grupo Serfin.
    (5) In 1998, Vitro recorded a charge of Ps. 1,218 million related to the loss
    in the market value of a receivable resulting from the sale of its 49.9% ownership
    of Cydsa.
    (6) Effective January 1, 2000, we applied the provisions of the new Bulletin
    D-4 "Accounting Treatment of Income Tax, Tax on Assets and Workers' Profit
    Sharing," issued by the IMCP. As required by this bulletin, deferred
    income taxes are provided for differences between the book and tax values
    of assets and liabilities and deferred workers' profit sharing for temporary
    differences between the financial and adjusted tax income, that are expected
    to reverse in the future. Additionally, the tax on assets paid is recognized
    as an asset. Until 1999, deferred taxes were provided only for identifiable,
    non-recurring timing differences that were expected to reverse over a definite
    period of time, and the tax on assets paid was recognized in the statement
    of operations. The effects in net income on the years ended December 31, 2000
    and 2001 were increases of Ps. 112 million and Ps. 66 million, respectively.
    (7) In June 1997, we sold certain of our subsidiaries engaged in the mining
    of silica sand and feldspar (the Mining Subsidiaries") to Unimin Corporation
    ("Unimin"). Our audited consolidated financial statements and the
    data set forth above have been restated to present the net results of the
    Mining Subsidiaries in "Net income from discontinued operations."
    Under U.S. GAAP, the results of the Mining Subsidiaries would not be treated
    as the results of a discontinued operation. Includes the results of the Mining
    Subsidiaries through June 27, 1997. 
    (8) In September 1996, Anchor Glass filed for protection under Chapter 11
    of the U.S. Bankruptcy Code. As a result of the Anchor Glass bankruptcy filing,
    we wrote off our entire investment in Anchor Glass as of August 31, 1996.
    The 1997, 1998 and 1999 tax benefit in the amount of Ps. 467 million, Ps.
    331 million and Ps. 573 million, respectively, from the corresponding deduction
    of the loss from discontinued operations recorded with respect to Anchor Glass
    in 1996 is reflected in 1997, 1998 and 1999 as "Income on disposal of
    discontinued operations." See note 4 to our audited consolidated financial
    statements.
    (9) On June 27, 1997, we sold the Mining Subsidiaries to Unimin. A gain of
    Ps. 756 million was recognized from the sale of such subsidiaries.
    (10) The extraordinary item is the tax benefit that resulted from the utilization
    of tax loss carry forwards and the recovery of the asset tax paid in previous
    years.
    (11) EBITDA consists of operating income plus depreciation, amortization and
    provisions for seniority premiums and pensions. Seniority premiums and pension
    payments for the years 1997, 1998, 1999, 2000 and 2001 were Ps. 113 million,
    Ps. 131 million, Ps. 163 million, Ps. 172 million and Ps. 35 million, respectively.
    The concept of EBITDA is presented because it is a widely accepted indicator
    of funds available to service debt. EBITDA is not intended to represent cash
    flow from operations as defined by generally accepted accounting principles
    and should not be considered as an alternative to net income as an indicator
    of Vitro's operating performance or to cash flows as a measure of liquidity.
    Because not all companies calculate EBITDA identically, our presentation of
    EBITDA may not be comparable to other similarly entitled measures used by
    other companies.
    (12) Based on the Free Exchange Rate at the end of the period.  The
    following table sets forth for each of the last five years, the annual period-end,
    average, high and low Noon Buying Rates, all expressed in nominal pesos per
    U.S. dollar. No representation is made that the peso or the dollar amounts
    referred to herein actually represent, could have been or could be converted
    into 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
          End1997
      Ps.
          8.41
      Ps.
          7.72
      Ps.
          7.97
      Ps.
          8.071998
      10.63
      8.04
      9.24
      9.901999
      10.60
      9.24
      9.56
      9.482000
      9.84
      9.20
      9.47
      9.612001
      9.97
      9.00
      9.35
      9.16  (1)
    Source: Federal Reserve Bank of New York(2) Average of month-end-rates   The
    following table sets forth the high and low Noon Buying Rates during the previous
    sixmonths, all expressed in nominal pesos per U.S. dollar:  Non
          Buying Rate(1)High
      LowDecember 2001
      9.62
      9.37January 2002
      9.25
      9.10February 2002
      9.17
      9.05March 2002
      9.11
      9.00April 2002
      9.37
      9.00May 2002
      9.71
      9.41  (1)
    Source: Federal Reserve Bank of New York.    RISK
    FACTORS For
    purposes of this section, when we state that a risk, uncertainty or problem
    may, could or would have an "adverse effect" on Vitro, we mean that the risk,
    uncertainty or problem may, could or would have an adverse effect on the business,
    financial condition, liquidity, results of operations or prospects of Vitro,
    except as otherwise indicated or as the context may otherwise require. The
    risks described below are intended to highlight risks that are specific to
    us, but are not the only risks that we face. Additional risks and uncertainties,
    including those generally affecting the industry in which we operate, the
    countries where we have a presence or risks that we currently deem immaterial,
    may also impair our business. The
    information in this annual report includes forward-looking statements that
    involve risks and uncertainties. Our actual results could differ materially
    from those anticipated in these forward-looking statements as a result of
    numerous factors, including those described in this section and under the
    sections entitled "Operating and Financial Review and Prospects" and "Information
    on the Company" elsewhere in this annual report. See "Forward-Looking Statements." Factors
    Relating to Vitro We
    may be unable to repay our debt, access credit, or pursue business opportunities,
    because of our leverage and debt service requirements. We
    operate in capital-intensive industries and require ongoing investments in
    our capital assets and technology improvements. Funds for such investments,
    and for working capital needs, joint venture transactions and acquisitions,
    over the past years, have been provided by a combination of cash generated
    from operations, bank credit facilities and short- and long-term debt. As
    of December 31, 2001, our total consolidated indebtedness was Ps. 14,453 million
    ($1,576 million), Ps. 6,162 million ($672 million) of
    which is considered short-term, because it is due within less than 360 days.
    If an opportunity arises, such as a strategic acquisition, we may consider
    incurring further indebtedness. The degree to which we are leveraged may adversely
    affect our ability to finance future operations, acquisitions and capital
    expenditures or to service our indebtedness, compete effectively against better-capitalized
    competitors and withstand downturns in our business or the United States or
    Mexican economies. In
    addition, a significant portion of our indebtedness is owed by our holding
    company. As a result, covenants and debt service requirements affecting our
    subsidiaries, and legal and contractual restrictions on the ability of our
    subsidiaries to upstream cash, may have an impact on our ability to service
    debt at our holding company level. Our
    ability to make scheduled payments on our indebtedness depends on our financial
    and operating performance, which is subject to prevailing economic conditions
    and financial, business and other factors, some of which are outside our control.
    We cannot assure you that our operating results will be sufficient for the
    payment of our indebtedness. In addition, our level of indebtedness could
    increase our vulnerability to adverse general economic and industry conditions
    (including increases in interest rates, exchange rate fluctuations and market
    volatility) and could impair our ability to take advantage of significant
    business opportunities that may arise. Downturns
    in the United States or Mexican economies may negatively affect the demand
    for our products and our results of operations. Our
    flat glass products are used to a significant extent by the Mexican and United
    States commercial construction industry and original equipment manufacturers,
    which we refer to as "OEMs," in the Mexican and United States automotive industries.
    Demand in the automotive and construction industries, in particular, tends
    to be cyclical. As a result, demand for our flat glass products and, consequently,
    our operating results may be negatively affected by a downturn in the United
    States or Mexican economies. Our
    Flat Glass business unit's subsidiaries and, to a lesser extent, sales in
    the United States by our Glassware business unit, through our partner Libbey,
    have been and may continue to be impacted by the slowdown in the U.S. economy.
    For example, sales to OEMs, which represent approximately 10% of the sales
    of the Flat Glass business unit and 4% of the consolidated sales of Vitro,
    have declined by 12% from 2000 to 2001, as a result of the reduction in orders
    by OEMs in the United States market. We may also experience a rise in operating
    costs, such as transportation, courier services, insurance and security. It
    is also possible that we may experience a reduction in export sales to the
    United States, or an increase in the cost of supplies imported from the United
    States. A prolonged economic downturn may have an adverse impact on the export
    sales of our Flat Glass and Glassware business units. It may also subject
    us to increased exchange and interest rate risk and impair our operations,
    results from operations and ability to raise capital or service our debt.
    This downturn could also affect our ability to continue growing our business. In
    addition, a variety of factors affecting customers within Mexico or abroad,
    many of which are beyond our control, may influence the level of our net sales
    in a particular period. Some of these factors include the timing of significant
    orders and shipments, new product introductions, production and quality problems,
    changes in the cost of materials, disruption in sources of supply, the availability
    of consumer financing at attractive interest rates and seasonal patterns of
    spending. Pricing
    pressures by OEMs may affect our operating margins and results of operations. Certain
    of our flat glass products sold to OEMs are sold under global purchase agreements,
    which are entered into after completion of a bidding process. OEMs have significant
    buying power which, coupled with substantial competition, puts pressure on
    prices and margins. As a result, even if we were awarded the right to sell
    to an OEM under a global purchase agreement, we may sell at operating margins
    that are lower than margins generally achievable from sales to other flat
    glass customers. This may have an impact on our results from operations. Our
    results of operations and operating margins are significantly affected by
    changes in the relative value of the peso against the U.S. dollar. Changes
    in the relative value of the peso against the U.S. dollar have a significant
    effect on our results of operations. A substantial portion of the sales of
    our Mexican subsidiaries is in U.S. dollars. Our export sales represented
    approximately 27% of our consolidated net sales in 2001. Furthermore, approximately
    47% of our consolidated net sales in 2001 were denominated in U.S. dollars.
    Our financial statements are prepared by translating the amount of dollar
    export sales into pesos at the Free Exchange Rate at the date of the sale.
    The peso amounts of the translated dollar sales are then restated, using the
    INPC, to the date of the most recent balance sheet included in those financial
    statements. As a result, when the peso depreciates in real terms against the
    U.S. dollar, as was the case during 1998, the same level of U.S. dollar sales
    will result in higher constant peso revenues. Conversely, when the peso appreciates
    in real terms against the U.S. dollar, as was the case in 1999 and 2001, the
    same level of U.S. dollar sales will result in lower constant peso revenues.
    Moreover, because our cost of sales and selling, general and administrative
    expenses are largely peso-based and tend to vary largely based on changes
    in Mexican inflation and not based on changes in the relative value (in real
    terms) of the peso to the U.S. dollar, the effect of the real appreciation
    of the peso relative to the U.S. dollar has a significant negative effect
    on our operating margins. In
    addition, a significant portion of our sales in Mexico, in particular sales
    of flat glass for automotive uses, certain glassware products and most chemical,
    appliances and packaging products, are made at prices, which are generally
    linked to U.S. dollar-based prices. The real appreciation or depreciation
    of the peso will generally have a similar effect on net sales and operating
    margins with respect to such products. Total
    financing cost is also impacted by changes in the nominal value of the peso
    relative to the U.S. dollar. Exchange gains or losses included in total financing
    cost result primarily from the impact of nominal changes in exchange rates
    on our and our 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 and cash equivalents and accounts receivable from exports) of Vitro and
    its Mexican subsidiaries. Because our dollar-denominated liabilities
    have historically been significantly in excess of our dollar-denominated
    monetary assets, the depreciation of the peso results in exchange losses.
    In 1998, the larger nominal devaluation of the peso significantly increased
    our exchange losses. In 1999 and 2001, the appreciation of the peso against
    the U.S. dollar resulted in a foreign exchange gain for us. In 2000, the nominal
    devaluation of the peso resulted in less significant exchange losses as compared
    to 1998. A
    strong peso relative to the U.S. dollar makes the Mexican market more attractive
    for importers and competitors that would not otherwise sell in the Mexican
    market. During the last two years, imports into Mexico at prices that we believe
    are below the cost of producing and distributing such products have had a
    general impact in the Mexican market and have an adversely affected on our
    results. Substitution
    trends in the glass container industry may 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 products. In mature glass container markets, such as in the United States
    and certain Western European countries, demand for glass containers began
    a sustained long-term decline in the 1970s, resulting in a significant reduction
    in capacity and consolidation among glass container producers. Glass container
    producers in mature markets have also faced pricing pressures as a result
    of competition from other forms of packaging. In Mexico, which is becoming
    a mature market, increased competition from alternate forms of packaging,
    particularly plastic, aluminum cans and laminated paper containers, has adversely
    affected, and may continue to adversely affect, our prices and operating margins,
    principally with respect to containers for the beer, soft drink and food industries.
    The Glass Containers business unit represented 33% of our 2001 consolidated
    net sales, after elimination of inter-business unit sales. Certain
    of our subsidiaries conduct all or a portion of their business through joint
    ventures with non-Mexican partners and, as such, loss of joint venture agreements
    may adversely affect our business. Sales
    attributable to our joint ventures represented approximately 71% of our consolidated
    net sales for 2001. In the future, certain of these non-Mexican partners may
    prefer to conduct business in Mexico directly and to terminate their relationships
    with us. The easing of limitations on foreign investment and the reduction
    of import duties and tariffs in Mexico has reduced barriers to entry for non-Mexican
    companies. A number of our joint venture agreements contain non-competition
    provisions that restrict, subject to certain exceptions and limitations, the
    joint venture partners from engaging in the production of the joint venture's
    products in specific markets during the term of the agreement and for a limited
    period following the termination of such agreement, other than through the
    joint venture vehicle. Our joint venture agreements generally contain provisions
    for termination under certain circumstances. If a termination were to occur,
    we cannot assure you that we could find an equivalent partner. Certain
    of our joint venture agreements require approval by the majority of the outstanding
    shares for certain significant operating and management decisions, including
    the payment of dividends. For example, in our joint venture with Libbey, whether
    dividends will be paid, and the amount of dividends to be paid, are determined
    by a formula, if the stockholders want to distribute a different amount, the
    vote of the super majority of shareholder is required. In the case our association
    with Pilkington, whether dividends will be paid, and the amount of dividends
    to be paid, are determined by a vote of the majority of shareholder which
    we have. The inability to reach an agreement among the respective joint venture
    participants in connection with such matters could restrict our ability to
    operate those businesses as we consider appropriate or to expand those businesses
    or others and could have an adverse effect on our business, results of operations,
    financial condition, prospects and ability to obtain financing. Additionally,
    our business units conduct certain research and development activities, but
    we generally do not develop our own proprietary technology. Although our business
    units' products and manufacturing processes are not in constant need of technological
    improvements and innovations, they do, from time to time, require access to
    new technology necessary to improve their manufacturing processes and product
    lines, to more effectively compete in both the Mexican and the international
    markets. The main portion of such technological needs is satisfied through
    the acquisition of technology from third parties through joint ventures, licenses,
    technology transfers, technical assistance or similar arrangements. We
    could be unsuccessful in renewing our joint ventures, technology licenses
    or other agreements or arrangements upon their expiration on terms equivalent
    to the present ones, in forming similar alliances with other partners or in
    developing equivalent technologies independently. In the event that any of
    our joint venture partners decides to terminate its relationship with us,
    we may not be able to replace our partner or achieve such venture's objectives
    on our own. Furthermore, the failure to continue some of our joint ventures
    could have a materially adverse effect on our financial condition and results
    of operations. We
    may make significant acquisitions in the future, which, if unsuccessful, may
    adversely affect our operating results. We
    have made significant acquisitions in the past and may make significant acquisitions
    in the future to continue our growth. Most recently, we acquired Cristalglass
    in May 2001 and, in April 2000, Harding Glass, Inc., which we refer to as
    "Harding", both of them not considered significant acquisitions. Although
    these acquisitions have generally been successful, acquisitions involve a
    number of risks, including: *
    failure of the acquired businesses to achieve the results we expect;*
    our inability to retain or hire key personnel for the acquired businesses;*
    our inability to reduce financial inefficiencies affecting those businesses;*
    risks associated with unanticipated events or liabilities;*
    the potential disruption of our business; and*
    customer dissatisfaction or performance problems at the acquired businesses. If
    we are unable to integrate or successfully manage the companies we have acquired,
    or the businesses that we may acquire in the future, we may not realize anticipated
    cost savings, revenue growth and levels of integration, which may result in
    reduced profitability or operating losses. Factors
    Relating to Mexico and the Global Economy Economic
    developments in Mexico and elsewhere affect our business. Beginning
    in December 1994 and continuing through 1995, Mexico experienced an economic
    crisis characterized by sharp peso devaluation, high inflation, exchange rate
    instability, high domestic interest rates, a strong contraction in consumer
    demand for many products and services, reduced availability of credit, high
    unemployment and diminished international investor confidence in Mexico. Mexico's
    GDP, which grew at an annual rate of 3.5% during 1994, declined to 6.2% during
    1995. In
    response to these developments, beginning in February 1995, the Mexican government
    implemented a variety of economic programs and accords designed to promote
    economic recovery, stabilize exchange rates and reduce inflation. Economic
    conditions in Mexico improved moderately in 1996 and 1997. However, a combination
    of factors led to a slowdown in Mexico's economic growth in 1998. Notably,
    the decline in the international price of oil resulted in a reduction of federal
    revenues, approximately one-third of which are derived from petroleum taxes
    and duties. In addition, the economic crises in Asia and Russia, as well as
    the financial turmoil in Brazil, Venezuela and elsewhere, produced greater
    volatility in the international financial markets, which further slowed Mexico's
    economic growth. In 1998, the inflation rate in Mexico was 18.6%, interest
    rates on 28-day Mexican government treasury securities averaged 24.8%
    and the peso lost 22.7% of its value (in nominal terms) against the U.S. dollar.
    During 1999, inflation in Mexico was 12.3%, interest rates on 28-day
    Mexican government treasury securities averaged 21.4% and the peso appreciated
    4.0% in value (in nominal terms) against the U.S. dollar. Throughout 2000,
    the improvement shown in 1999 continued; the inflation rate was 9.0%, interest
    rates on 28-day Mexican government treasury securities averaged 15.3%
    and the peso depreciated 1.2% in value (in nominal terms) against the U.S.
    dollar. Further, the Mexican government announced that real GDP grew by 4.8%
    in 1998, 3.7% in 1999 and 6.9% in 2000. During 2001, the inflation rate was
    4.4%, interest rates on 28-day Mexican government treasury securities
    averaged 11.3% and the peso appreciated 4.6% in value (in nominal terms) against
    the U.S. dollar. Additionally,
    commencing in September of 2001, amid concerns of a global economic slowdown
    and a United States recession, Mexico started experiencing an economic slowdown
    marked by slower GDP growth. GDP growth in Mexico in 2001 was (0.3)% and financial
    analysts have estimated a 1.7% growth for the year 2002. We
    are a company with the majority of our manufacturing operations located in
    Mexico. For each of the years ended December 31, 1999, 2000 and 2001,
    approximately 55%, 54% and 53%, respectively, of our consolidated net sales
    resulted from sales to parties located within Mexico. In the past, inflation
    has led to high interest rates, devaluations of the peso and, during the 1980s,
    substantial government controls over exchange rates and prices, which at times
    adversely affected our operating revenues and margins. Inflation itself, as
    well as governmental efforts to reduce inflation, has had significant negative
    effects on the Mexican economy in general and on Mexican companies, including
    us. Inflation has decreased the real purchasing power of the Mexican population
    and the Mexican government's efforts to control inflation have resulted in
    significantly higher financing costs, as inflation is used to restate the
    principal amount in pesos of the UDI-denominated debt, based on a pesos-per-UDI
    value published by Banco de Mexico in the Official Gazette of the Federation
    that, in turn, is based on the INPC. Any increase in the principal amount
    of such debt resulting from such restatement is charged to total financing
    cost as a restatement of UDIs. Accordingly, the economic, political and social
    environment within Mexico has a significant impact on our financial condition
    and results of operations. The
    current global economic slowdown, including the United States slowdown and
    other future economic developments in Mexico and elsewhere, such as devaluation,
    increase in interest rates or production costs, could impair our business,
    results of operations, financial condition, liquidity (including the ability
    to obtain financing and refinance liabilities) or business prospects. Political
    events in Mexico could affect Mexican economic policy and our operations. The
    Mexican government has exercised, and continues to exercise, significant influence
    over the Mexican economy. Mexican governmental actions concerning the economy
    could have a significant impact on Mexican private sector entities in general
    and on us in particular, as well as on market conditions and prices and returns
    on Mexican securities, including our securities. Mexican
    political events may also significantly affect our operations and the performance
    of Mexican securities, including our securities. In the Mexican national elections
    held on July 2, 2000, Vicente Fox of the Partido Accion Nacional
    (National Action Party or "PAN") won the presidency. His victory ended more
    than 70 years of presidential rule by the Partido Revolucionario Institucional
    (the Institutional Revolutionary Party or "PRI"). Neither the PRI nor the
    PAN succeeded in securing a majority in the Mexican Congress or Senate. President
    Fox assumed office on December 1, 2000. While the transition from the
    previous administration was smooth, President Fox has encountered strong opposition
    to some of his proposed reforms in both Congress and the Senate, where opposition
    parties such as the PRI and the Partido de la Revolucion Democratica
    ("Democratic Revolution Party" or "PRD") have frequently joined forces to
    block PAN initiatives. Such legislative gridlock could slow down the progress
    of reforms in Mexico and could have a material adverse effect on our business,
    financial condition, prospects and results of operations. Social
    instability in Mexico or other adverse social or political developments affecting
    Mexico, could adversely affect our business, results of operations, financial
    condition, prospects and ability to obtain financing. If
    exchange controls and restrictions are imposed, we may not be able to service
    our debt in U.S. dollars, which could expose you to currency risk. In
    the past, the Mexican economy has experienced balance of payment deficits,
    shortages in foreign exchange 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 exchange control policy in the future. Any such
    restrictive exchange control policy could prevent or restrict access to U.S.
    dollars and limit our ability to service our U.S. dollar-denominated debt. We
    may be adversely affected by fluctuations in interest rates. Interest
    rate risk exists primarily with respect to our floating rate peso- and dollar-denominated
    debt, which debt generally bears interest based on the Mexican equilibrium
    interbank interest rate, which we refer to as "TIIE," and the London interbank
    offered rate or LIBOR, respectively. As of December 31, 2001, our floating
    rate peso- and dollar-denominated debt amounted to Ps. 446 million and
    $692 million, respectively. Assuming a hypothetical increase of 375 basis
    points in TIIE (a 47.2% increase on the average TIIE of 7.9% for December 31,
    2001) and 120 basis points in LIBOR (a 62.5% increase on the 1.9% LIBOR
    as of December 31, 2001), the interest expense for the year ended December
    31, 2001 on our floating rate peso- and dollar-denominated debt would have
    increased by Ps. 17 million and $8 million, respectively. Our
    financial statements may not give you the same information as financial statements
    prepared under United States accounting rules. Mexican
    companies listed on the Mexican Stock Exchange, including Vitro, must prepare
    their financial statements in accordance with Mexican GAAP. Mexican GAAP differs
    in certain respects from U.S. GAAP, including the treatment of minority interests,
    employee profit sharing, capitalization of pre-operating costs, capitalization
    of interest and consolidation of subsidiaries. In particular, all such Mexican
    companies must incorporate the effects of inflation directly in their accounting
    records and in published financial statements. The effects of inflation accounting
    under Mexican GAAP, except for the restatement of fixed assets purchased outside
    Mexico and the restatement of prior period financial statements as they relate
    to the restatement of foreign subsidiaries, are not eliminated in the reconciliation
    to U.S. GAAP. For this and other reasons, the presentation of Mexican financial
    statements and reported earnings may differ from that of companies in other
    countries. Developments
    in other emerging market countries may adversely affect our business or the
    market price of our securities. The
    market value 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 any of such
    other countries may have an adverse effect on the market value of the securities
    of Mexican issuers, including our own. In late October 1997, prices of both
    Mexican debt securities and Mexican equity securities dropped substantially,
    precipitated by a sharp drop in the value of securities traded in Asian markets.
    Similarly, in the second half of 1998, prices of Mexican securities were adversely
    affected by the economic crises in Russia and Brazil. There can be no assurance
    that the market value of our securities will not be adversely affected by
    future events elsewhere, especially in emerging market countries.


Item
    4. Information on the Company HISTORY
    OF THE COMPANY Vitro
    is a corporation with variable capital (sociedad anonima de capital variable)
    organized under the laws of Mexico. We are a holding company that conducts
    all of its operations through its subsidiaries. Our predecessor was incorporated
    in Mexico in 1909, as Vidriera Monterrey, S.A. de C.V., and today our subsidiaries
    as a group comprise the leading Mexican producer of flat glass, glassware,
    glass containers, household products and one of the world's largest manufacturers
    and distributors of glass products. Our headquarters are located at Ave. Ricardo
    Margain Zozaya 440, Col. Valle del Campestre, San Pedro Garza Garcia, Nuevo
    Leon, 66265, Mexico, telephone number (52-818863-1200). We
    are the leading producer of flat glass, glass containers and glassware in
    Mexico and one of the world's largest manufacturers and distributors of glass
    products. Through our subsidiaries, we serve multiple product glass markets
    including construction and automotive, food and beverage, cosmetics, pharmaceuticals,
    and glassware for commercial, industrial and retail uses. We have production
    facilities in seven countries, distribution centers throughout the Americas
    and Europe and export our products to over 70 countries. Our net sales for
    the year ended December 31, 2001 totalled Ps. 28,190 million ($3,074
    million). As of December 31, 2001, our total assets were Ps. 31,347
    million ($3,418 million). We
    have successfully established numerous joint ventures and technology-sharing
    relationships with leading United States and European companies including,
    among others, Pilkington plc, which we refer to as "Pilkington," and Libbey,
    Inc., which we refer to as "Libbey." Sales attributable to joint ventures
    represented approximately 71% of our consolidated net sales in 2001. Our
    operations are currently organized into four operating business units: the
    Flat Glass business unit (37% of 2001 net sales), the Glass Containers business
    unit (33% of 2001 net sales), the Glassware business unit (9% of 2001 net
    sales), and Acros-Whirlpool business unit (21% of 2001 net sales). In June
    3, 2002, we signed an agreement to sell, subject to governmental approval,
    our controlling 51% interest in Vitromatic, the holding company of the Acros-Whirlpool
    business unit, to Whirlpool for $148.3 million and the assumption of $75 million
    of indebtedness and $125 million of off-balance sheet financing. See "Information
    on the Company-Recent Developments." Until October 1, 2001, we had historically
    organized our operations into five business units, but as of such date we
    integrated the companies that had been within the Diverse Industries business
    unit into our other business units. See "Information on the Company-Organizational
    Changes and Cost Reduction Program". Business
    Units Our
    organizational structure, comprised of the Flat Glass, Glass Containers, Glassware
    and Acros-Whirlpool business units, allows us to focus on the needs of four
    distinct end-markets, diversifies our revenue base and enables us to take
    advantage of our expertise in the efficient production of glass products. Flat
    Glass Our
    Flat Glass business unit is the largest flat glass producer in Mexico and
    the second largest in Latin America. In 2001, this business unit accounted
    for 37% of our net sales. Our primary products include flat glass, such as
    windshields for the automotive industry and windows for the construction industry.
    This business unit manufactures, processes and distributes flat glass primarily
    for the construction and automotive industries. In May 2001, we expanded our
    flat glass operations into Europe through the acquisition of 60% of the outstanding
    shares of Cristalglass Vidrio Aislante, S.A., which we refer to as "Cristalglass,"
    the holding company of the Spanish group Cristalglass, a leading processor
    of value-added flat glass for the construction market in Spain. We have a
    significant presence in the United States through our subsidiary, VVP America
    Inc., which we refer to as "VVP America." VVP America processes, distributes
    and installs flat glass products for the construction and automotive markets
    in the United States. VVP America operates in 32 states through 10 processing
    centers, 44 distribution centers and 151 installation centers. Since 1965,
    Pilkington, a leading producer of flat glass in the world, has been our partner,
    holding a 35% interest in Vitro Plan, S.A. de C.V., which we refer to as "Vitro
    Plan," the holding company of our Flat Glass business unit. Pilkington has
    also been an important provider of technology to our Flat Glass business unit.
    Our customer base includes: General Motors, Ford, DaimlerChrysler, Nissan
    and several companies in the construction industry. For the year ended December 31,
    2001, net sales for the Flat Glass business unit were Ps. 10,610 million
    ($1,157 million). During the same period, approximately 23% of the total
    net sales of the Flat Glass business unit came from exports. We also have
    joint ventures with Visteon through Vitro Flex, with Solutia through Quimica
    M and with Owens Corning through Vitro Fibras. Glass
    Containers Our
    Glass Containers business unit is the largest glass containers producer in
    Mexico and Central America. In 2001, this business unit accounted for 33%
    of our net sales. The Glass Containers business unit produces soda lime glass
    containers for the Mexican soft drink, beer, food, liquor and wine, pharmaceutical
    and cosmetics industries. The Glass Containers business unit operates six
    production facilities in Mexico, two in Central America and one in Bolivia.
    With approximately 4,200 tons of glass production a day, we believe we account
    for more than half the daily glass containers production in Mexico. The Glass
    Containers business unit exports containers for the wine, pharmaceutical and
    cosmetic industries in the United States and is also the leading exporter
    of glass containers to the United States. Our customers include leading global
    companies such as Procter & Gamble, Coca-Cola, Grupo Modelo, Nestle,
    Gerber, Avon, Coty and Allied Domecq. For the year ended December 31,
    2001, net sales for the Glass Containers business unit were Ps. 9,149 million
    ($998). During the same period, approximately 26% of the total net sales of
    the Glass Containers business unit came from exports. The
    Glass Containers business unit also (i) operates Vidrio Lux, S.A., which we
    refer to as "Vilux", a wholly owned Bolivian glass container manufacturer,
    (ii) is responsible for the operation of our controlling 49.7% interest in
    Comegua and (iii) operates Industria del A  ,
    S.A. de C.V., which we refer to as "Alcali", Vitro American National
    Can, S.A. de C.V., which we refer to as "Vancan" and Fabricacion
    de Maquinas, S.A. de C.V., which we refer to as "Fama". Alcali,
    Fama and Vancan were part of our former Diverse Industries business unit,
    and were integrated into the Glass Containers business unit effective October
    1, 2001. Glassware Our
    Glassware business unit is the largest producer of glassware in Mexico. In
    2001, this business unit accounted for 9% of our net sales. This business
    unit produces glassware for the industrial and consumer markets. Our glassware
    products include tableware, flatware, coffee carafes, blender jars, lids,
    meter covers and lighting products for the industrial segment and glassware,
    tableware, flatware, stemware, bake ware and home decoring products for the
    consumer segment. Since 1997, Libbey, a leading producer of tableware in North
    America, has been our partner, holding a 49% interest in Vitrocrisa Holding,
    S. de R.L. de C.V. Our industrial customer base includes leading global manufacturers
    such as Hamilton Beach/Proctor-Silex, Inc. In addition, our glassware products
    are sold at retailers such as Wal-Mart Stores, Inc., among others, and leading
    Mexican supermarket chains such as Gigante and Soriana. We have four production
    facilities in Monterrey and 10 distribution centers strategically located
    throughout Mexico. The Glassware business unit is also responsible for the
    operation of our plastic manufacturing business, which accounted for 21% of
    the total net sales of our Glassware business unit in 2001. For the year ended
    December 31, 2001, net sales for the Glassware business unit were Ps. 2,585 million
    ($282 million). During the same period, approximately 29% of the total
    net sales of the Glassware business unit came from exports. Acros-Whirlpool Our
    Acros-Whirlpool business unit produces major brand name household appliances,
    including refrigerators, ranges and washing machines for the Mexican and export
    markets. All of the business unit's business and operations are conducted
    through the subsidiaries of Vitromatic, Vitro's 51%-owned joint venture
    with Whirlpool Corporation, which was formed in 1987. Vitromatic is one of
    the two largest household appliances manufacturers in Mexico. In 2001, this
    business unit accounted for 21% of our net sales. For the year ended December 31,
    2001, net sales for the Acros-Whirlpool business unit were Ps. 5,960 million
    ($650 million). On
    June 3, 2002, we sign an agreement to sell, subject to governmental approval,
    our controlling 51% interest in Vitromatic to Whirlpool. See "-Information
    on the Company - Recent Developments." Organizational
    Changes and Cost Reduction Program In
    April 2001, a new management team was appointed and Mr. Jose Domene and Mr.
    Luis Nicolau were appointed Chief Operations Officer and Chief Corporate Officer,
    respectively. As part of several changes and an ongoing cost reduction program,
    in July 13, 2001, we appointed executives from within Vitroas new directors
    for each of our business units. Further, as part of the organizational changes
    announced on July 13, 2001, as of October 1, 2001, we consolidated our
    businesses into four business units: Flat Glass, Glass Containers, Glassware
    and Acros-Whirlpool. To achieve this consolidation, we integrated companies
    that were formerly part of our Diverse Industries business unit into our remaining
    business units. We believe we will realize certain synergies and improved
    operating and administrative synergies by integrating such companies into
    our core business units. The
    companies within our former Diverse Industries business unit were integrated
    into our remaining business units as follows: Business
            Unit
        Company
        BusinessFlat
            Glass
        Vitro
            Fibras, S.A. de C.V.(Vifisa)
        Production
            of fiber glass goodsGlass
            Containers
        Industria
            del Alcali, S.A. de C.V.(Alcali)
        Raw
            materials production, including soda ashFabricacion
            de Maquinas, S.A. de C.V.(FAMA)
        Glass
            manufacturing molds & machineryVitro
            American National Can, S.A. de C.V. (Vancan)
        Aluminum
            cansGlassware
        Plasticos
            Bosco, S.A. de C.V.
        Plastic
            containers manufacturingEnvases
          Cuautitlan, S.A. de C.V.
        Plastic
          containers manufacturing
  As
    part of our strategy, we have divested and continue the process of divesting
    some of our non-strategic businesses. These businesses primarily include companies
    that were part of the Diverse Industries business unit. Finally,
    and as part of the announced ongoing cost reduction program, during the third
    and fourth quarters of 2001, we terminated approximately 1,000 employees as
    part of our goal of reducing annual operating costs by approximately $40 million
    and improving the performance and competitiveness of Vitro. The layoffs required
    severance payments in the amount of Ps. 319 million ($35 million). Capital
    expenditures Our
    capital expenditure program is focused on new investment projects, technological
    upgrades in our manufacturing facilities and maintenance and expansion of
    our production capacity. The capital expenditure program also contemplates
    the purchase and maintenance of environmental protection equipment required
    to meet applicable environmental laws and regulations. The
    following table sets forth our capital expenditures by business unit for the
    periods presented. Year
          ended December 31,
        (Millions
          of constant pesos as of December 31, 2001)
      January through May 2002
          (Millions of constant pesos as of May 31, 2002)Business
          Unit
      1999
      2000
      2001Flat Glass
      Ps.
          410
      Ps.
          343
      Ps.
          381
      Ps. 73Glass Containers
      894
      373
      292
      228Glassware
      136
      154
      86
      56Acros-Whirlpool
      394
      223
      152
      28 
  Divestitures The
    following paragraphs describe the principal divestitures that we have made
    in the last three years, as part of our program to sell non-core businesses.
    We received aggregate net proceeds of approximately $65 million from divestitures
    and asset sales (including, approximately $33 million from the sale of assets
    such as land, buildings, warehousesand an aircraft). In
    May 2001, we sold to our former partner, Owens-Illinois, Inc., our 50% interest
    in Regioplast, S.A. de C.V., which we refer to as "Regioplast," a joint venture
    established in 1993 for $8 million in cash. Since its inception, Regioplast
    has been managed by Owens-Illinois. It has one production facility within
    the Mexico City area for plastic bottles and caps, including non-refillable
    closures. On
    September 8, 2000, Viplasticos, S.A. de C.V., a wholly owned subsidiary
    of Vitromatic, sold its injection molded plastic parts production line and
    related assets for $7.1 million in cash to Jones Plastic and Engineering
    de Monterrey, S.A. de C.V., which we refer to as "Jones Plastic Monterrey,"
    a wholly owned subsidiary of Jones Plastic and Engineering Company, a U.S.
    company. During
    the fourth quarter of 1999, we sold our 23.7% interest in Compania Manufacturera
    de Vidrio del Peru Ltda. to Owens-Illinois. During the same period, we also
    sold other assets related to our holdings in Peru. The total cash consideration
    received in connection with these sales was approximately $6.6 million. In
    December 1999, we sold to our former partner, PQ Corporation, our 55% indirect
    interest in Vitro PQ Quimica, S.A. de C.V. ("Vitro PQ Quimica") for $9.9 million
    in cash. Vitro PQ Quimica produces sodium silicate for the soap, detergent
    and paper industries. It also manufactures aluminum sulfate, which is used
    by the water treatment and paper industries. New
    Ventures On
    June 19, 2002, we entered into an agreement with AFG Industries, Inc.,
    a subsidiary of Asahi Glass, the largest producer of flat glass in the world,
    to convert one of our glass container facilities in Mexicali, Baja California,
    Mexico, into a flat glass facility. We expect that the project will result
    in an increased flat glass capacity of approximately 200,000 metric tons per
    year, which would be marketed independently by AFG Industries and Vitro on
    a 50-50 basis. The total investment by both partners is projected to
    be approximately $100 million. The facility is expected to commence operations
    by the fourth quarter 2003 and to satisfy demand in the Western United States
    and increased demand in Mexico. BUSINESS
    OVERVIEW Business
    Strategy We
    are seeking to enhance our value by (i) concentrating in our core businesses
    (glass and glass-related products), (ii) using available cash flow and proceeds
    from divestitures of non-strategic businesses and non-core assets to improve
    our financial position, (iii) reducing costs and expenses by focusing on operating
    and administrative cost efficiencies, (iv) consolidating our presence in the
    markets in which we participate by integrating operations and improving distribution
    activities, and (v) looking for opportunities to increase our presence
    in other markets. We have begun and intend to continue to improve operating
    efficiencies, take advantage of existing synergies to improve operating margins,
    secure and maintain long-term contracts with our key customers and joint venture
    partners, strengthen our services to customers, focus on value-added products
    and on product innovation, and increase our sales in various markets, particularly
    throughout the Americas. Our
    objective is to increase our profitability by solidifying our market position
    as a global leader in the glass manufacturing and distribution industry. In
    order to achieve this objective, we operate our business based on the following
    strategies: Concentrate
    on Core Competencies of Glass Manufacturing and Distribution Our
    Flat Glass, Glass Containers and Glassware and glass-related business units
    provide us with our most sustainable long-term organic growth opportunities.
    Additionally, they build on our manufacturing experience, technological strength,
    production flexibility and our ability to efficiently produce high quality
    glass products. These business units provide us with a solid platform on which
    to grow. The Flat Glass business unit will continue to strengthen its position
    in the domestic and United States markets, by focusing on value-added products
    and, where appropriate, pursue selective investment and integration opportunities
    in other attractive markets (as we have done in Spain). The Glass Containers
    business unit seeks to improve its margins, strengthen its relationships with
    key customers and optimize its cash generation. The Glassware business unit
    intends to focus on marketing and product innovation and its distribution,
    customer and customer service capabilities. For instance, as part of our effort
    to concentrate on our core businesses, we have recently sold Vitromatic, the
    holding company of our former Acros-Whirlpool business unit. See "-Recent
    Developments." Our focus will remain on value-added products and product innovation,
    as part of our strategy to distinguish ourselves from commodity-like products. Strengthen
    Our Financial Position We
    intend to strengthen our financial position by reducing debt through the use
    of internally generated funds and proceeds from the disposition of companies
    outside our core business. For example in 2001, we reduced our total debt
    by approximately $60 million with internally generated funds and in 2002 we
    have reduced our total debt by over $200 million as a result of the sale of
    Vitromatic. Additionally, we intend to extend the average life of our debt
    by reducing our short-term debt. These initiatives should improve our liquidity
    and support the growth of our core businesses. Continue
    to Reduce Costs and Enhance Operating Efficiencies As
    part of our ongoing efforts to reduce costs and expenses, in 2001, we completed
    significant reductions in corporate staff throughout our business units and
    central management, of approximately 1,000 employees. We incurred severance
    expenses of Ps. 319 million ($35 million), but we expect that this reduction
    in staff will decrease our operating expenses by approximately $40 million
    annually. We will continue to make further efforts to reduce our selling,
    general and administrative expenses. Additionally,
    we are improving and streamlining our communications network and improving
    our operations through the enhancement of information systems. system that
    we currently use to purchase % of our supplies. These initiatives extend across
    the value chain from employees and suppliers to customers. Recently, we entered
    into an arrangement with Electronic Data Systems, which we refer to as "EDS,"
    to outsource our information technology needs. EDS will be providing us with
    computer hardware and software and telecommunications management and technical
    support. Leverage
    Vitro Brand Name Our
    Vitro brand name is widely recognized in Mexico, and in markets where we have
    a presence as a leader in the manufacture and production of high quality glass
    and value added products. We will continue to leverage our Vitro name as means
    to emphasize our commitment to high quality glass products. Selectively
    Pursue Integration and Niche Acquisition Opportunities in Core Markets We
    believe that significant opportunities exist in glass markets outside Mexico.
    We intend to pursue such opportunities on a selective basis. We believe these
    strategies will allow us to pursue on value-added niche-type products and
    actively pursue customers requiring niche-type products. Historically, our
    growth has been through organic means, expansion into foreign markets via
    exports, and strategic acquisitions. Increasing access to foreign markets
    will enable us to continue to achieve our strategic objectives of consolidating
    our leadership position in the domestic and regional markets in the Americas,
    growing in attractive markets outside of the Americas and mitigating the impact
    of slowdowns in regional demand. Competitive
    Strengths Leadership position in the glass
    Manufacturing and Distribution Markets With
    over 90 years of glass production experience, we are an expert and leader
    in the glass production business. Our Flat Glass business unit is the largest
    flat glass producer in Mexico and among the largest in Latin America. It is
    also among the leading processors, distributors and installers of flat glass
    in the United States. It also has an important growing presence in the Spanish
    market for value added construction glass. Our Glass Containers business unit
    is the leading producer and distributor in Mexico and the largest glass container
    producer in Mexico and Central America. Our Glassware business unit is among
    the leading producers of glassware in the United States. Substantial
    Revenue and Cash Generation Base Our
    consolidated net sales were Ps. 28,190 million in 2001, ranking us among the
    largest Mexican companies. Historically, we have been able to maintain a growing
    level of net sales and generate substantial cash flow despite changes in the
    markets we serve and fluctuations in demand for our products. Solid
    and Diverse Customer Base We
    have successfully established long-term relationships with customers who are
    leaders in their industriesas a result of the quality of our products and
    our ability to effectively meet their specifications and promptly satisfy
    their demands. These long-standing relationships, some of which are over 50
    years old,provide us with a stable and diverse revenue base. Our customers
    include several global marketleaders, such as Ford, General Motors, Grupo
    Modelo, Coca-Cola, Allied Domecq and Procter & Gamble. In 2001, no
    one customer accounted for more than 5% of our total net sales. Our customer
    diversity is enhanced by the breadth of industries we serve, which include
    the automotive, construction, beverage, food, pharmaceutical and cosmetic
    industries. Furthermore, the customers are involved in a variety of industries. Broad
    Market and Geographical Scope Our
    Mexican business base is complemented by our presence in markets in the United
    States, Central and South America and, more recently, Europe. We operate in
    seven countries throughout the Americas and Spain, have distribution centers
    throughout the Americas and Europeand benefit froma diversified customer base
    located throughout 70 countries. During the last three years, an average of
    47% of our net sales were denominated in or linked to the U.S. dollar. Our
    presence in mature economies, especially the United States, balances our exposure
    to other economies. In addition, our broad geographic presencemitigates the
    impact of an economic downturn in any particular country or region. We have
    also reduced our exposure to downturns in any single industry by serving diverse
    glass market sectors through our three business units. In the year ended December 31,
    2001, our total export sales, most of which were to the United States and
    Canada, were $801 million, and represented approximately 27% of our consolidated
    net sales. Strong
    Strategic Alliances We
    have successfully established numerous joint ventures and technology-sharing
    relationships, some of which are over 20 years old, with leading United States
    and European companies. These arrangements supplement our product design and
    manufacturing technologies and, in certain instances, provide us with access
    to significant distribution networks. Sales attributable to joint ventures
    represented approximately 71% of our consolidated net sales in 2001. Many
    of our joint venture partners, including Pilkington (Flat Glass), Libbey (Glassware)
    and Asahi Glass Corporation, which we refer to as "Asahi" (FlatGlass), are
    recognized as global leaders in their respective industries. Efficient
    Producer of High Quality Glass Products Our
    glass manufacturing experience and technology have allowed us to operate efficiently
    and manufacture products recognized for their high-quality. Our efficiency
    and focus on value-added products have allowed us to achieve competitive margins.
    For instance, our expertise has allowed us to change productions lines quickly
    and efficiently. Our experienced personnel seek and obtain the best and most
    innovative technology available in the industry and use it to develop products
    of superior quality. Through the years, our subsidiaries have received several
    domestic and international quality awards. Experienced
    Management Team In
    July 2001, as part of our strategy of improving our organizational structure,
    we installed a new management team with the substantial experience and credentials
    to successfully manage a company of our size, diversity and complexity. We
    have an experienced senior management team with an average of over 27 years
    of industry experience. In 2001, we added two key executives to our senior
    management team: Luis Nicolau, as Chief Corporate Officer, and Jose Domene,
    as Chief Operating Officer. We believe that this combination is well positioned
    to effectively execute our business strategy. We
    have a solid and experienced team of operating managers with average experience
    of over 20 years in glass manufacturing. We employ highly qualified and trained
    engineers and technicians, who design, develop and maintain our production
    facilities. We maintain a training facility in Mexico, where we conduct continuing
    training programs for our operating personnel in the latest manufacturing
    processes. Recent
    Developments Ampolletas On
    April 15, 2002, we sold to Gerresheimer Glas AG, a German stock corporation,
    our 51% interest in Ampolletas, S. A., which we refer to as "ASA," in exchange
    for consideration that includes cash, the assumption of debt, and the assignment
    of certain receivables that collectivelyamount to approximately $21 million.
    ASA was established in 1978 as a joint venture with Kimble, Inc. ASA's products,
    manufactured at one production facility, include borosilicate glass products
    for laboratory and pharmaceutical use, such as ampoules, vials and syringes. Vitromatic On
    June 3, 2002, we signed an agreement to sell, subject to governmental approval,
    our controlling 51% interest in Vitromatic, the holding company of our former
    Acros-Whirlpool business unit, to Whirlpool, which held the remaining 49%
    of this joint venture, for $148.3 million in cash. In addition, Whirlpool
    has assumed all of Vitromatic's on- and off-balance sheet debt. As a result
    of our signing of the contract on June 3, 2002 we have included Acros-Whirlpool
    as a discontinued operation. Under U.S. GAAP, we have recasted our financial
    information to report the Acros-Whirlpool business unit as a discontinued
    operation for all periods presented in this annual report. For Mexican GAAP
    purposes, when we report financial statements that include the disposal of
    Acros-Whirlpool, we will recast all periods presented to report the disposition
    as a discontinued operation. Asahi On
    June 19, 2002, we entered into an agreement with AFG Industries, Inc.,
    a subsidiary of Asahi the largest producer of flat glass in the world, to
    convert one of our glass containers facilities in Mexicali, Baja California,
    Mexico, into a flat glass facility. We expect that the project will result
    in an increased flat glass capacity for Vitro byapproximately 200,000 metric
    tons per year. The facility is expected to require an aggregate investment
    by both partners of approximately $100 million,which include the value
    of our glass containers facility being transformed. The facility is expected
    to commence operations by the fourth quarter of 2003 and to satisfy demand
    in the Western United States and increased demand in Mexico. Financing
    Transactions On April 30, 2002, we sold $88.35 million principal amount of our 2009 Senior Notes to Credit Suisse First Boston International ("CSFBI"), an affiliate of Credit Suisse First Boston Corporation, for net proceeds of $77.9 million.  The 2009 Senior Notes are senior, unsecured debt securities issued under an indenture dated as of April 30, 2002 between Vitro, as issuer, and JPMorgan Chase Bank, as trustee.  The indenture contains covenants limiting, among other things, our ability and our restricted subsidiaries' ability to incur additional indebtedness, pay dividends or make certain investments, engage in transactions with affiliates, engage in mergers and consolidations and create or permit liens A
    portion of the net proceeds of the sale of the 2009 Senior Notes, $38.8 million,
    were applied to repay the $175 million 101⁄4% Guaranteed Notes due 2002,
    issued by our wholly owned subsidiary Servicios y Operaciones Financieras
    Vitro, S.A. de C.V. ("SOFIVSA") and guaranteed by us, which matured
    on May 15, 2002, and accrued interest. The remaining proceeds, $39.1 million,
    were used to purchase $40 million of 13.889% Credit Linked Notes issued by
    Credit Suisse First Boston, acting through its Nassau branch (the "CLN
    Issuer"). Under the terms of the Credit Linked Notes, upon the occurrence
    of a Credit Event, which includes our bankruptcy or insolvency, noncompliance
    with the terms of our indebtedness which would permit the acceleration thereof,
    a default in respect of our indebtedness, a restructuring of our indebtedness,
    or a repudiation of or moratorium with respect to payments of our indebtedness,
    whether by us or a governmental entity, the principal amount of the Credit
    Linked Notes will be reduced pursuant to a formula based on the then current
    market price of SOFIVSA's 11?% Guaranteed Notes due 2007. As a result, if
    a Credit Event occurs, we may lose the entire amount that we invested in the
    Credit Linked Notes. As long as a Credit Event has not occurred, the CLN Issuer
    is generally required to redeem (i) the Credit Linked Notes in four annual
    installments, beginning on May 7, 2003 and (ii) a pro rata portion of the
    Credit Linked Notes at the time any portion of the 2009 Senior Notes is sold
    by CSFBI. Concurrently
    with the issuance of the 2009 Senior Notes and the purchase of the Credit
    Linked Notes, we entered into a swap agreement with CSFBI (the "Swap
    Counterparty") pursuant to which we agreed to make certain payments on
    April 30 of each year, beginning on April 30, 2003, and ending on April 30,
    2006, to the Swap Counterparty calculated with respect to an original notional
    amount of $80 million, if the market price of the 2009 Senior Notes declines
    from an initial benchmark price which is based on the price paid by CSFBI
    for the 2009 Senior Notes. In addition, the Swap Counterparty may require
    us to, at any time, make payments of all amounts that would be owed by us
    on all future payment dates if the market price of the SOFIVSA's 11?% Guaranteed
    Notes due 2007 declines to certain levels, with any such payments being netted
    against payments we would be required to make on future payment dates. If
    certain Termination Events occur, which are similar to the Credit Events described
    above, the Swap Counterparty may terminate the swap agreement. In that event,
    we may owe the Swap Counterparty an amount calculated as described above with
    respect to declines in the market price of the 2009 Senior Notes up to $40
    million. As long as a Termination Event has not occurred, a pro rata portion
    of the original notional amount will be reduced at the time any portion of
    the 2009 Senior Notes is sold by CSFBI. Pursuant
    to the terms of the related agreements and indenture, the occurrence of a
    Credit Event under the Credit Linked Notes and the reduction of the principal
    thereunder owed to us to zero and the occurrence of a Termination Event under
    the swap agreement resulting in our obligation to pay the Swap Counterparty
    up to $40 million under the swap agreement will not affect our obligation
    to repay the $88.35 million principal amount of 2009 Senior Notes plus accrued
    interest thereunder. In
    addition, during the second quarter of 2002, we incurred the following short-term
    debt: $130
      million credit agreement dated April 26, 2002 with Banco Inbursa, S.A.,
      Institucion de Banca Multiple, Grupo Financiero Inbursa, which we refer
      to as the "Inbursa Credit Agreement"; and
    $25
        million of debt under a credit agreement dated May 14, 2002 with HSBC
        Bank USA, which we refer to as the "HSBC Credit Agreement." The
    proceeds from those agreements were applied to the payment of the 2002 Senior
    Notes, which matured on May 15, 2002.


OPERATING
    BUSINESS UNITS Our
    operations are currently organized into four operating business units: the
    Flat Glass business unit (37% of 2001 consolidated net sales, after elimination
    of inter-business unit sales); the Glass Containers business unit (33%); the
    Glassware business unit (9%) and the Acros-Whirlpool business unit (21%).
    Until October 1, 2001, we had organized our operations into five business
    units, but as of such date we integrated the companies that had been within
    the Diverse Industries business unit into our remaining business units. See
    "Information on our Company-Organizational Changes and Cost Reduction Program."
    In addition, on June 3, 2002, we signed an agreement to sell, subject to governmental
    approval, our controlling 51% interest in Vitromatic, S.A. de C.V., which
    we refer to as "Vitromatic," to Whirlpool Corporation, which we refer to as
    "Whirlpool," which held the remaining 49% interest. See "-Information on the
    Company -Recent Developments." The
    table below lists our current principal products, customers and end-users
    and sales regions by division:  Sector
        
        Products
        
        Customers
            and End Users
        
        Sales Regions
        
        Joint VenturesFlat Glass:Construction
            Glass
        
        Float glass,
            rolled glass, architectural tempered safety glass and insulated glass
            units
        
        Construction
            industry, distributors and installers
        
        Mexico, U.S.,
            Canada, Europe and Central and South America
        
        Pilkington plc
            and Solutia, Inc.Automotive Glass
        
        Windshields and
            rear and side tempered glass
        
        OEMs, automotive
            replacement glass market, distributors and installers
        
        Mexico, U.S.,
            Canada and Central and South America
        
        Pilkington plc,
            Visteon and Solutia, Inc.Fiberglass Products
        
        Fiberglass, thermal
            insulators and composites fibers
        
        Construction,
            automotive and household products industries
        
        Mexico, U.S.
            and Central and South America
        
        Owens-Corning,
            Inc.Glass Containers:Glass Containers
        
        Soda lime glass
            containers
        
        Soft drink, food,
            beer, liquor and wine, pharmaceutical and cosmetics industries
        
        Mexico, U.S.,
            the Caribbean and Central and South AmericaPackaging
        
        Aluminum cans
        
        Beverage industry
        
        Mexico and Central
            America
        
        Rexam Beverage
            Can of the Americas, Inc.Raw Materials
        
        Sodium bicarbonate,
            calcium chloride, and salt
        
        Glass manufacturers
            and detergent producers
        
        Mexico, U.S.
            and Central and South AmericaCapital Goods
        
        Glass forming
            machines, castings for glass molds, machinery parts and electronic
            controls
        
        Glass Containers
            business unit, Flat Glass business unit, Glassware business unit,
            glass manufacturers and other third party manufacturers
        
        Mexico, U.S.
            and Central and South AmericaGlassware:Glassware
        
        Glassware, dinnerware,
            stemware, bakeware, home decor products, coffee carafes, blender jars,
            lids and lighting products
        
        Commercial distributors,
            supermarkets, discount stores, consumer and industrial markets, institutional
            food service customers, hotels, and restaurants
        
        Mexico, U.S.,
            Canada, Europe and Central and South America
        
        Libbey, Inc.Packaging
        
        Plastic containers,
            plastic tubes, and disposable thermofold ware
        
        Food and dairy
            industry, supermarket and convenience stores, pharmaceutical and personal
            care distributors
        
        Mexico and U.S.Acros-Whirlpool:Household Appliances
        
        Refrigerators,
            ranges, washing machines and gas ranges components
        
        Furniture stores,
            retailers, wholesalers, household appliance stores and replacement
            and consumer market
        
        Mexico, U.S.,
            Canada, the Caribbean and Central America
        
        Whirlpool Corporation  Flat
      Glass Business Unit The
      Flat Glass business unit commence operations in 1936 with the incorporation
      of Vidrio Plano, S.A. de C.V., in Monterrey, Mexico, and is the largest
      producer of flat glass in Mexico. It is also a major domestic manufacturer
      of safety glass products for automotive OEMs and the replacement market
      in Mexico, and through VVP America, a major processor and distributor of
      flat glass products in the western, midwest and southeastern United States.
      Effective October 1, 2001, Vifisa, a producer of fiberglass products,
      was integrated into the Flat Glass business unit for strategic purposes. All
      of the Flat Glass business unit's business and operations, except Vifisa,
      are conducted through Vitro Plan, Vitro's 65%-owned associationwith
      Pilkington,which we control. Vitro Plan's subsidiaries include Vitro Flex,
      S.A. de C.V., which we refer to as "Vitro Flex," a 62%-owned joint venture
      with Visteon Automotive Systems (originally with Ford) that produces glass
      for OEM manufacturers and Quimica M, S.A. de C.V., which we refer to as
      "Quimica M," a 51%-owned joint venture with Solutia that produces polyvinyl
      butyral. In 2000, Ford announced the spinoff of its Automotive Parts Division,
      creating Visteon Automotive Systems, which we refer to as "Visteon," which
      includes all of Ford's automotive glass plants and certain other automotive
      parts, plants.While Vitro Plan was incorporated in 1981, our associationwith
      Pilkington was establishedmore than 30 years ago and has provided the
      Flat Glass business unit with access to leading technology in the flat glass
      industry. Net sales of the Flat Glass business unit in 2001 totalled Ps. 10,610 million
      ($1,157 million). The
      Flat Glass business unit's strategy is to: *
      increase its leadership position as a producer and distributor of value-added
      products in the markets it currently services;*
      maintain its leading position in the Mexican flat glass market including
      the Mexican automotive aftermarket;*
      solidify its relationship with OEMs in Mexico and the United States;*
      consolidate its presence as a producer and distributor in the United States;*
      increase its presence in Spain and other markets in Europe; and*
      pursue opportunities for profitable growth in other parts of the world. The
      Flat Glass business unit uses float glass produced by its own float glass
      manufacturing facilities to produce safety glass products. These float glass
      products are then processed into windshields and tempered glass, including
      complex curvature glass for automobiles, and other safety glass products
      such as architectural tempered safety glass, insulated glass units and mirror
      glass. Some of the subsidiaries of the Flat Glass business unit generally
      enter into both short-and long-term supply arrangements with automotive
      producers. In other cases, the Flat Glass business unit enters into supply
      arrangements that are renewable on an annual basis or supplies automotive
      glass to OEMs on a purchase order basis. Exports Export
      sales from the Flat Glass business unit's operations in Mexico amounted
      to approximately $260 million in 2001. A majority of the business unit's
      export sales in 2001 were sales of automotive glass to OEMs in the United
      States. Of the construction and automotive glass exports, approximately
      16% of such volume is sold in the United States through our subsidiary VVP
      America. From the Flat Glass business unit's net sales of approximately
      $1,157 million during 2001, $491 million corresponded to sales
      of VVP America and $215 million to direct sales of Vitro Plan to end-users
      in the United States market. Thus, approximately 62% of the Flat Glass business
      unit's sales are made in the United States. Mexican
      Operations The
      Flat Glass business unit is the leading producer of safety glass and construction
      glass products in Mexico. The business unit's safety glass products are
      principally supplied to the Mexican automotive industry and to the Mexican
      automotive aftermarket, while its construction glass products are used in
      the Mexican construction industry. The architectural and safety glass product
      lines of the Flat Glass business unit are produced by various subsidiaries
      of Vitro Plan. The
      business unit's flat glass products are produced using the float method,
      which involves pouring molten glass over a molten tin bath. The Flat Glass
      business unit operates two float glass production facilities near Monterrey,
      Mexico, and one production facility in Mexico City. These facilities are
      currently operating near full capacity. Our total production capacity of
      float glass is 715,000 tons per year. The
      Flat Glass business unit operates five production facilities in Mexico for
      the automotive glass OEM market and the automotive glass aftermarket, including
      Vitro Flex's facility located near Monterrey, Mexico. Visteon is the largest
      customer of the business unit's automotive safety glass products, through
      its purchases from Vitro Flex for use in Ford's assembly plants in the United
      States and through its purchases from other Vitro Plan subsidiaries for
      use in Ford's Mexican assembly plants. In addition, the Flat Glass business
      unit sells automotive safety glass products to other multinational automotive
      producers in Mexico (including the Mexican portion of Pilkington's global
      supply agreements), the United States and other markets. All of the Flat
      Glass business unit's facilities have obtained International Organization
      for Standardization ("ISO") 9001 certification. Besides
      supplying OEMs, the Flat Glass business unit also supplies, through its
      wholly owned subsidiary, Cristakar, the automotive glass aftermarket in
      Mexico, both through safety glass produced by Vitro Plan and, to a lesser
      extent, through imports of product lines not currently produced in Mexico.
      The business unit also intends to extend the breadth of its automotive safety
      glass product line in order to increase exports to the automotive glass
      aftermarket in the United States and Central and South America. The
      Flat Glass business unit also produces in Mexico polyvinyl butyral, which
      is the inner layer of plastic film used in the manufacture of clear and
      shaded windshields. Polyvinyl butyral is manufactured by Quimica M, a subsidiary
      formed pursuant to a joint venture arrangement between Vitro Plan and Solutia,
      a worldwide leading manufacturer of polyvinyl butyral. Vitro Plan holds
      a 51% interest in Quimica M, while Solutia holds the remaining 49% interest.
      Solutia provides ongoing technical assistance to the joint venture. The
      business unit's automotive safety glass products are sold exclusively through
      its own sales and marketing force, distributing products directly to OEMs
      and to installers through its own distribution centers throughout Mexico
      for the aftermarket market. Among
      the principal products of the construction glass sector produced in Mexico
      are float glass, rolled glass and tempered architectural safety glass, principally
      for commercial, residential and construction uses. In
      Mexico, the Flat Glass business unit relies exclusively on its own sales
      and marketing force for the sale of architectural glass products, using
      no outside sales representatives, except for the business unit's skylight
      products that are marketed by a group of independent manufacturers' representatives.
      This sales force markets the business unit's architectural glass products
      to a large number of distributors, and is supported by a technical support
      department to offer technical advice to architectural glass installers.
      The Flat Glass business unit also produces mirrors, insulating glass, tempered
      glass, tabletops and coated glass in its three facilities located in Mexico.
      The business unit's strategy is to concentrate on higher value added products,
      such as the so-called Duo-Vent (isolated glass) windows, mirrors and tempered
      and laminated products. In
      order to better serve its customers, Vitro Plan's subsidiaries have established
      account plans for OEMs and designated marketing executives for major architectural
      glass products customers. OEM account plans consist of a group of dedicated
      staff to major OEMs, which provide specialized assistance in the areas of
      engineering, service and sales. Similarly, designated commercial executives
      serve as individualized customer service representatives for the business
      unit's principal customers of architectural products. Vitro Plan's subsidiaries
      have established nine distribution centers throughout Mexico, where customers
      of both safety glass and architectural products may be informed of inventories
      and availability of required products on a real time basis. United
      States Operations The
      United States operations of the Flat Glass business unit are conducted through
      VVP America, an independent legal entity of the Flat Glass business unit
      operating under its own management. VVP America is a major distributor of
      flat glass products and producer of value-added glass products in the United
      States. In
      April 2000, VVP America consummated the acquisition of substantially all
      of the assets and business of Harding, a subsidiary of SunSource Inc. Harding
      is one of the United States' leading distributors of glass products for
      automotive and construction markets. With the acquisition of Harding, VVP
      America added approximately $100 million to its annual revenue base
      and incorporated into its operations 5 distribution centers and 118 retail
      stores strategically located throughout the United States. Harding was merged
      into VVP America in January 2001, in order to maximize the synergies between
      the two companies. After the acquisition of the assets of Harding, VVP America
      operated ten manufacturing centers, 44 distribution branches and 151 Binswanger
      retail stores in the United States. In 2001, VVP America had total sales
      of approximately $491 million, of which approximately 78% were in the
      commercial and residential construction flat glass sectors and approximately
      22% were in the replacement automotive glass sector. VVP
      America also purchases flat glass from other United States producers and
      uses it as raw material to manufacture tempered, spandrel, insulated, laminated
      and mirror products, as well as thick glass doors, vision walls and handrails.
      These products are sold directly to distributors as well as to end buyers
      through VVP America's own distribution centers and retail shops. VVP America
      also distributes and sells to furniture manufacturers in the United States
      a significant amount of glass tabletops custom produced by the business
      unit's manufacturing plants in Mexico. Additionally, VVP America engages
      in the design, production and installation of custom skylights in the United
      States and several other countries. VVP America also distributes to the
      United States replacement market a full line of auto glass products, including
      windshields, side and back tempered windows for American and foreign cars
      and trucks, as well as a wide range of flat glass products produced by other
      manufacturers. Approximately 8% of the sales of VVP America correspond to
      products manufactured by our Mexican subsidiaries. Central
      and South American Operations In
      March 1996, Vitro Plan acquired 51% of the common stock of Vidrios
      Templados Colombianos, S.A., which we refer to as "Vitemco," a Colombian
      automotive and architectural glass processor. In connection with the transaction,
      Vitro Plan entered into a joint venture agreement with Vitchile, an investor
      group that owned the remaining 49% of the common stock of Vitemco. During
      1997, Vitro Plan increased its ownership in Vitemco to 71%, and then, in
      1998, acquired the remaining common stock of Vitemco. Vitemco processes
      tempered and laminated glass for the automotive replacement, architectural
      and specialty markets in Colombia. Vitemco markets its products through
      a national network of distributors. Vitemco is expanding into the OEM automotive
      glass market in Colombia and other Andean Pact nations and replacement market
      in South America. Vitro Plan is providing technical assistance to Vitemco
      for the production of automotive glass for the OEM and into the replacement
      automotive glass markets. In 2001, Vitemco had $17 million in flat
      glass sales. European
      Operations In
      May 2001, Vitro Plan acquired 60% of the outstanding shares of Cristalglass,
      the holding company of the Spanish group Cristalglass. Cristalglass manufactures,
      distributes and sells flat glass for the construction industry through three
      production facilities located in Camponaraya and Fuenlabrada and two distribution
      centers located La Coruna and Valencia. Most of the sales of Cristalglass
      are of the so-called Duo-Vent (isolating glass) windows. Cristalglass had
      sales of $45 million for the eight-month period from May 1, 2001
      to December 31, 2001. Competition In
      Mexico, the Flat Glass business unit faces competition in the construction
      glass industry mainly from Compagnie de Saint Gobain, which we refer to
      as "Saint Gobain," and from imports of glass products. With respect to automotive
      safety glass, the business unit's principal competition includes Saint Gobain
      and imports of low volume consumption automotive glass products that are
      being utilized in new automotive designs produced in Mexico. Saint Gobain
      operates an automotive glass production facility located in Cuautla, Morelos. The
      Flat Glass business unit competes for customers in the United States primarily
      on the basis of breadth of geographic distribution capabilities, service
      (on a full line of products) and quality. The Flat Glass business unit faces
      competition in the U.S. from a variety of U.S. flat glass manufacturers,
      as well as from a large number of medium- and small-sized producers
      and distributors of flat glass products. The
      Flat Glass business unit competes outside the United States primarily on
      price and quality. In
      November 2001, the Flat Glass business unit, through Vitro Flex, won the
      Iberoamerican Quality Award in the large industries category, prevailing
      over important manufacturers located throughout Latin America, Spain and
      Portugal. Fiberglass
      Products Fiberglass
      products manufactured by Vifisa, a wholly owned subsidiary of Vitro OCF,
      S.A. de C.V., a 60% owned joint venture (indirectly through Vitro Envases
      Norteamerica, S.A. de C.V.) with Owens-Corning, include insulating
      materials used for piping, tanks, boilers, ducts and air-conditioning
      equipment, as well as insulation slabs used in the construction industry
      for roofs, walls and ceilings. The business unit also produces thermal insulators
      for use in refrigerators, ranges, ovens and water and space heaters, and
      manufactures reinforcing fibers for plastic resins, which are used in automobiles,
      boats and other products. In November 2000, Vifisa received the first ever
      Iberoamerican Quality Award, prevailing over important manufacturers located
      throughout Latin America, Spain and Portugal. Vifisa has also won Mexico's
      National Quality Award in 1995 and was a finalist in 1999. This award is
      the most important award for quality in Mexico. Vifisa's
      products are marketed in Mexico through its own sales force and distributors.
      Vifisa faces competition from imports of fiberglass insulation and other
      insulating materials from the United States and from substitute materials
      such as foam polyurethane. Glass
      Containers Business Unit The
      Glass Containers business unit began its operations in 1909 as Vidriera
      Monterrey, S.A. de C.V., the founding company of the Vitro group of companies.
      The business unit produces soda lime glass containers for the Mexican soft
      drink, food, beer, liquor and wine, pharmaceutical and cosmetics industries,
      and is the largest glass container producer in Mexico. In addition, the
      Glass Containers business unit (i) operates Vilux and (ii) is
      responsible for our 49.7% interest in Comegua, the largest Central American
      glass container producer, the operations of which are controlled by us.
      Effective October 1, 2001, Alcali, Vancan, ASA and FAMA were integrated
      into the Glass Containers business unit. Net sales for the Glass Container
      business unit in 2001 totalled Ps. 9,149 million ($998 million). The
      Glass Containers business unit's business strategy is to maintain its leadership
      position in the glass containers sector of the rigid packaging industry
      in Mexico and Central America and to increase sales in the United States
      and in South America. Among the business unit's key competitive strengths
      are its internationally competitive productivity, quality levels, low production
      costs and versatile and flexible production processes. The business unit's
      high levels of productivity, quality and low production costs, as well as
      its ability to rapidly meet higher demand, enable it to compete aggressively
      with other container technologies in Mexico and to offer value added products
      at attractive pricing in the United States and other export markets. Similarly,
      the business unit's technological expertise permits the introduction of
      new products, lightweight bottles and innovative customized images in order
      to meet the design requirements of customers. The versatility and flexibility
      of the business unit's production processes are reflected in the business
      unit's ability to offer customers special glass colors, fast turnarounds
      on small production runs on a cost-efficient basis, as well as decorating
      and labelling processes, including "plastishield", adhered ceramic labels
      (ACL's) and heat transfer labels (HTL's). The business unit has reduced
      the product development cycle for glass containers from 12 to 5 weeks,
      which is rapid compared with other world-class producers. The Glass Containers
      business unit has a widely diversified customer base. In 2001, no customer
      accounted for more than 5% of its consolidated net sales. Traditionally,
      the Glass Containers business unit has had access to technology that we
      believe is state-of-the-art in the glass containers industry.
      For the production of glass bottles, the Glass Containers business unit
      utilizes its own technology, some of which has been patented, and technology
      provided by Owens-Illinois, pursuant to a series of technical assistance
      agreements that began in 1964 and expired in September 1999. Owens-Illinois
      has granted the business unit the right to continue using Owens-Illinois'
      unexpired patents in Mexico, and a more comprehensive arrangement is currently
      being negotiated.In
      keeping with the trend in the glass container industry, the Glass Containers
      business unit is producing lighter-weight containers, that are at least
      as strong as the heavier containers they replace, yet have lower production
      costs. Sales
      of the Glass Containers business unit in the beer and soft drinks segments
      in Mexico are seasonal, with hotter weather increasing sales of glass containers
      for soft drinks and beer. As a result, second and third quarter sales are
      typically greater than sales in the first and fourth quarters. Accordingly,
      the Glass Containers business unit generally builds its inventory of soda
      lime glass containers during the fourth and first quarters in anticipation
      of seasonal demand. In
      addition, to maintain and improve operating margins and production levels,
      the Glass Container business unit is actively working to secure long-term
      supply agreements with its principal customers and is actively pursuing
      customers requiring niche-type products. We
      expect export sales to remain at current levels over the next years, as
      a result of our concentration in niche markets, which are best suited for
      our capacity for low volume production runs, our ability to offer enhanced
      value products to our customers and our emphasis on new product development. Mexican
      Operations The
      Glass Containers business unit produces soda lime containers at six production
      facilities located throughout Mexico. The business unit's facilities are
      located in close proximity to major customers, ensuring heightened responsiveness
      to customer design and production requirements and lower transportation
      costs. All such facilities have obtained ISO 9001 certification. We also
      own two cullet-processing plants (one of which is leased to a third party,
      which in turn supplies us the cullet). In the cullet processing plants,
      scrap or broken glass is gathered for re-melting and mixed with virgin raw
      materials in order to obtain cost reductions in the production process.
      Although there are currently no mandatory recycling laws in Mexico similar
      to those prevailing in the United States and in other countries, we conduct
      campaigns throughout Mexico to collect glass containers. In
      Mexico, the Glass Containers business unit relies primarily on its own sales
      and marketing force, utilizing outside sales representatives to service
      customers with smaller volume demand. The business unit has implemented
      an online system for sharing information with customers. From their offices,
      the business unit's customers can access product information, place orders,
      check inventories, trace shipments, and consult account statements. The
      business unit competes for customers primarily on the basis of service (focusing
      on on-time deliveries), quality (including the ability to conform
      to a wide variety of specifications), and quantity (including the ability
      to assure customers of the capacity necessary to support their growth). Exports Total
      export sales of the Glass Containers business unit, which do not include
      the sales of our Central and South American operations, amounted to $249 million
      in 2001. The large majority of the export sales of the business unit are
      made to the United States, principally through our United States trading
      company, Vitro Packaging, Inc., an independent legal entity of the business
      unit operating under its own management structure, which also sources part
      of its glass containers from third parties. The Glass Containers business
      unit intends to increase export sales into the United States by offering
      value enhanced specialty products, through sales in the cosmetics segment
      and to wine and liquor bottlers in the western United States. The business
      unit also produces special promotional containers for United States soft
      drink bottlers. Central
      and South American Operations Our
      49.7% subsidiary Comegua, a Panamanian holding company, operates production
      facilities in Guatemala and Costa Rica and distributes glass containers
      throughout Central America and the Caribbean. Vitro first invested in Comegua,
      currently the sole manufacturer of glass containers in Central America,
      in 1964. Comegua had $104 million in glass container sales in 2001. We
      own 100% of the common stock of Vilux, a company that owns and operates
      the only glass container manufacturing facility in Bolivia. Vilux distributes
      glass containers for the soft drink, food, beer, wine and liquor and pharmaceutical
      industries throughout Bolivia, southern Peru and northern Argentina. In
      addition, Vilux engages in mining activities for silica sand and dolomite
      used in its glass container production process. Vilux had approximately
      $5 million in glass container sales in 2001. During
      the fourth quarter of 1999, we sold our 23.7% interest in Compania Manufacturera
      de Vidrio del Peru Ltda. to Owens-Illinois. During the same period, we also
      sold other assets related to our holdings in Peru. The total cash consideration
      received in connection with these sales was approximately $6.6 million.
      In connection with these transactions, we terminated a joint venture agreement
      entered into in January 1994 with Cerveceria Backus and Johnston, S.A.,
      a Peruvian group of companies engaged in the manufacture and sale of glass
      containers in Peru. Competition Although
      the business unit is the principal supplier of glass containers in Mexico,
      it competes with various smaller manufacturers in Mexico as well as with
      the glass containers operations of the two major Mexican beer producers.
      In the soft drink industry, the Glass Containers business unit has faced
      increasing competition from returnable and non-returnable PET containers
      and aluminium cans. In particular, since1993 the shift of soft drink and
      food containers from glass to PET has continued, although decelerated. Although
      the business unit has introduced several presentations of returnable and
      non-returnable glass containers for soft drinks and continues such efforts,
      we cannot be certain that such trend of increased demand of returnable PET
      containers will end. To respond to the trend in soft drinks and food containers
      from glass to plastic, we have implemented and continue to implement measures
      to offset the effect of PET substitution, including improving operating
      efficiencies, novel product presentations and customer service. The
      Glass Containers business unit also currently produces lightweight, returnable
      glass containers designed for fewer refills than traditional returnable
      glass containers. Glass containers in Mexico also compete with alternative
      forms of packaging, including metal, paper and cardboard laminated containers,
      such as tetra-pack. The
      Glass Containers business unit faces greater competition in the United States
      than in Mexico. However, the business unit has utilized its competitive
      strengths to supply a variety of niche markets in the United States, including
      specialty food containers, microbreweries and specialty beverage producers.
      Among these strengths are its ability to offer cost-effective short production
      runs, quick turn-around of new designs, special glass colors, specialty
      labels and container designs. We believe the recent expiration of our noncompete
      agreement with Anchor Glass will enable us to pursue further opportunities
      in the United States. In
      November 2001, the Glass Containers business unit, through Vidriera Los
      Reyes, S.A. de C.V., won the Iberoamerican Quality Award in the large industries
      category, prevailing over important manufacturers located throughout Latin
      America, Spain and Portugal. Raw
      Material Operations The
      raw materials operations of the business unit are carried out by Alcali,
      a wholly owned subsidiary of Vitro Envases Norteamerica. The principal product
      lines of Alcali are synthetic soda ash, of which Alcali is the sole producer
      in Mexico, sodium bicarbonate, calcium chloride, and salt for industrial
      and commercial consumption. A significant portion of Alcali's soda ash production,
      which is used in the manufacture of glass, detergents and tripolyphosphates,
      is sold to third parties. Alcali
      competes in the soda ash sector with the American Natural Soda Ash Corporation,
      which we refer to as "Ansac," a United States exporter of natural soda ash.
      Alcali maintains a separate sales and marketing force for its products,
      which are distributed directly to its customers. The
      business unit's former mining operations produced silica sand and feldspar.
      Silica sand and feldspar were sold principally to our glass-making
      business units in Mexico, as well as to third parties in Mexico in the glass
      and ceramics industries. On June 27, 1997, we executed a definitive
      stock purchase agreement, which resulted in the sale to Unimin of our subsidiaries
      engaged in the mining of silica sand and feldspar. We also executed a ten-year
      supply agreement with Unimin whereby the applicable subsidiaries committed
      to purchase, and Unimin's subsidiaries committed to sell their requirements
      of silica sand and feldspar from Unimin at prices which have been fixed
      at real levels and which were substantially similar to the prices previously
      paid by such subsidiaries. Packaging
      Operations The
      principal packaging operations of the business unit are the production of
      aluminum cans and borosilicate glass containers. Aluminum
      Cans. The business unit's aluminum can operations are conducted by Vancan,
      a 50% owned joint venture with Rexam, one of the worldwide leaders in the
      production of aluminum cans. Vancan operates a can manufacturing facility
      in Queretaro, Mexico. The aluminum cans produced by Vancan serve mainly
      the Mexican beverage industry. We provide marketing and distribution expertise
      and administrative support services to Vancan, while Rexam provides technical
      assistance. Vancan maintains its own marketing and sales force to distribute
      its products directly to its customers. Net sales of Vancan in 2001 totalled
      Ps. 616 million ($67 million). In
      Mexico, Vancan faces competition from a Mexican subsidiary of a United States
      manufacturer of aluminum cans, an affiliate of a major Mexican beer producer
      and a subsidiary of a major Mexican beer and soft drink producer. Capital
      Goods Our
      capital goods operations are conducted through FAMA. FAMA was founded in
      1943 to source our needs for molds and machinery for our glass manufacturing
      operations. FAMA
      produces state-of-the-art glass-forming machines
      for the Glass Containers business unit. In addition, FAMA produces castings
      of special alloys for glass molds and for different types of machinery and
      parts for machinery used in the oil industry. FAMA also produces mold equipment
      for the glass industry and ancillary equipment for the glass, packaging
      and other industries, as well as electronic controls for machinery operation
      and process controls for glass-forming machines. In addition, FAMA
      manufactures annealing lehrs for the float and hollow glass industries. FAMA
      generally competes with the major international manufacturers of machinery
      and equipment for the glass industry. Glassware
      Business Unit The
      Glassware business unit, which commenced operations in 1936 with the incorporation
      of Cristaleria, S.A. de C.V., which we refer to as "Crisa", is the largest
      producer of glassware in Mexico. The Glassware business unit is also one
      of the largest plastic manufacturers in Mexico. Presently, the Glassware
      business unit consists of six operating companies: *
      Comercializadora Vitrocrisa, S. de R.L. de C.V., which manufactures and
      sells glassware products;*
      Vitrocrisa, which lease real estate and provide services;*
      Crisa Corporation and Crisa Industrial LLC, which we refer to as "Crisa
      Industrial", which distributes glassware products in the United States and
      Canadian markets;*
      Fabricacion de Cubiertos, S.A. de C.V., which manufactures flatware products;
      and*
      Plasticos Bosco and Envases Cuautitlan, which were integrated into the business
      unit on October 1, 2001, and manufacture plastic containers. The
      Glassware business unit's principal products include glassware, dinnerware,
      stemware, bake ware, plastic containers and home decor products for the
      consumer segment, glassware, plastic containers and flatware for the food
      service segment and coffee carafes, blender jars, lids, meter covers and
      lighting products for the industrial segment. Net sales of the Glassware
      business unit in 2001 totalled Ps. 2,585 million ($282 million). The
      business strategy of the Glassware business unit is to strengthen its core
      glass products business, with an emphasis on developing its high value added
      and industrial product lines, in order to improve both profitability and
      sales in Mexico and abroad. On
      August 29, 1999, we entered into a joint venture with Libbey pursuant
      to which Libbey became a 49% partner in Vitrocrisa and Crisa Industrial.
      We are responsible for the day-to-day management of the joint venture. Exports Total
      exports sales of the Glassware business unit amounted to $80 million
      in 2001, or approximately 16% of total sales. All export sales of this business
      unit are conducted through our joint venture with Libbey. Mexican
      Operations Vitrocrisa
      manufactures soda lime glass and borosilicate glass products in its two
      facilities in Monterrey, Mexico. We believe that the business unit's borosilicate
      glass products, which are more resistant than soda lime glass products to
      rapid temperature changes, will be attractive to potential customers in
      industrial line applications. Vitrocrisa's plants also are capable of producing
      manufactured and hand made products in a number of different colors and
      thermal treatments, which provides a competitive advantage compared to colored
      glass and specialty glass product lines. The business unit also manufactures
      flatware products in another facility located in Monterrey. All of the Glassware
      business unit's facilities have obtained ISO 9001 certification. The
      Glassware business unit is the largest producer of glass tableware in Mexico.
      The business unit has ten distribution centers and several sales offices
      located throughout Mexico. The business unit relies exclusively on its own
      sales and marketing force in Mexico, which markets the products directly
      or through wholesale commercial distributors, supermarkets and department,
      discount and outlet stores and direct consumer marketing efforts. The
      business unit is continuously evaluating methods to simplify its distribution
      channels so that it can get closer to the end user of its products. The
      Glassware business unit also seeks to attract new customers in its specialty
      products segment. The business unit is developing new strategies in order
      to reduce the time of a new product development, improve service and increase
      the number of developed products, to better satisfy consumer demands. Additionally,
      the business unit utilizes a variety of marketing research tools, including
      consumer focus groups, point of sale analysis and customer usage and habit
      studies, to stay informed of changes in customers' product preferences. International
      Operations The
      Glassware business unit's operations in the United States and Canada are
      conducted through Crisa Corporation and Crisa Industrial, which operate
      under their own management structures and are both located in Laredo, Texas.
      Crisa Corporation sells glassware products to Libbey for the consumer and
      food service markets in the United States and Canada. Crisa Industrial distributes
      in the United States and Canada the industrial line of products it manufactures
      in Mexico. The Glassware business unit had total export sales of $80 million
      during 2001, including sales to Libbey. The
      principal products distributed by Crisa Corporation in the consumer segment
      include glassware, dinnerware and home decor products. In the industrial
      sector, Crisa Industrial distributes products such as coffee carafes, blender
      jars, lids and lighting products to industrial customers. Plastic
      Containers The
      business unit supplies a variety of industries and end users with plastic
      containers, plastic tubes and disposable thermoformed ware and industrial
      products. These products are manufactured at two manufacturing facilities,
      Plasticos Bosco and Envases Cuautitlan, both located within the Mexico City
      area. The
      business unit's plastic container products are marketed by the business
      unit's internal sales force and outside distributors. The business unit's
      plastic containers operations face competition from a large number of small-
      and medium-sized Mexican manufacturers of plastic container products. Competition The
      business unit's glass dinnerware products compete with ceramic products
      produced by several other Mexican and international manufacturers. The Glassware
      business unit's stainless steel flatware also faces competition from several
      other Mexican and foreign manufacturers of stainless steel flatware. The
      Glassware business unit differentiates itself primarily through its quality,
      service, breadth of product line and price. Acros-Whirlpool
      Business Unit On
      June 3, 2002, we signed an agreement to sell, subject to governmental approval,
      our controlling 51% interest in Vitromatic to Whirlpool, which held the
      remaining 49% interest. The Acros-Whirlpool business unit produces major
      brand name household appliances, including refrigerators, ranges and washing
      machines for the Mexican and export markets. All of the business unit's
      business and operations are conducted through the subsidiaries of Vitromatic,
      Vitro's 51%-owned joint venture with Whirlpool Corporation formed
      in 1987. Vitromatic is one of the two largest household appliances manufacturers
      in Mexico. During 2001, the Acros-Whirlpool business unit had net sales
      of Ps. 5,960 million ($650 million). The
      Acros-Whirlpool business unit was formed in 1985 as a result of Vitro's
      acquisition of a group of companies producing major Mexican brand name household
      appliances and enamelware. The business unit was expanded in mid-1986
      with the acquisition from the Mexican Government of the group of companies
      producing appliances under the Acros brand name. In August 1987, the business
      unit's operations were further expanded with the acquisition of the Crolls
      group of companies, which principally produces compact washing machines.
      In late 1987, Vitro entered into the Vitromatic joint venture with Whirlpool,
      which enables the business unit to utilize Whirlpool technology for the
      production of appliances with the Whirlpool brand name for sale in both
      the United States and Mexico. Vitromatic
      serves as distributor of Whirlpool appliances in Mexico and produces its
      own brands, Acros and Supermatic. The association with Whirlpool also enabled
      the Acros-Whirlpool business unit to manufacture in Mexico appliances under
      the Kenmore and Roper brand names for distribution in the United States
      by Whirlpool. Mexican
      Operations In
      Mexico, the Acros-Whirlpool business unit manufactures and distributes a
      variety of refrigerators, washers and ranges under the Acros, Supermatic,
      Crolls and Whirlpool brand names. The business unit also distributes major
      and small household appliances under the Whirlpool, KitchenAid, Estate and
      Roper brand names. The
      Acros-Whirlpool business unit manufactures household appliances for the
      Mexican and export markets. It operates four production facilities located
      throughout Mexico through its subsidiary, Industrias Acros-Whirlpool, S.A.
      de C.V., which we refer to as "IAWSA". IAWSA owns the IAWSA-Supermatic and
      IAWSA-Interlav facilities near Monterrey, the IAWSA-Erna facility in Celaya
      and the Crolls facility in Puebla, where Whirlpool refrigerators, ranges
      and washing machines are manufactured under the Whirlpool brand name. All
      such facilities have obtained ISO 9001 certification. During
      1999, 2000 and the first quarter of 2001, the business unit carried out
      a $55 million investment to update and renew its manufacturing platform
      for gas ranges. Management of the business unit believes that the Siglo
      XXI new line of ranges, which has been approved by the American Gas Association
      and incorporates new designs and features, will better serve the needs of
      the consumers located in Mexico, the United States and Central America.
      The Acros-Whirlpool business unit imports certain components used in the
      manufacturing of refrigerators targeted for exports. The
      Acros-Whirlpool business unit has its own sales and marketing division for
      the distribution of its products in Mexico, Central and South America and
      the Caribbean. The business unit's products are marketed in Mexico through
      a variety of regional and local furniture stores of all sizes, wholesalers
      and other retailers. The Acros-Whirlpool business unit operates nine regional
      distribution centers located in major cities throughout Mexico. Sales of
      household appliances in the Mexican market, due to the holidays in Mexico,
      Mothers' Day on May 10 and Christmas Day on December 25, are seasonal, with
      peak purchases historically occurring during the months of April and November.
      The Acros-Whirlpool business unit generally builds inventory levels in anticipation
      of increased purchases during these months. Retailers finance a substantial
      majority of consumer purchases of major household appliances. Therefore,
      sales are dependent in part on the availability of consumer credit upon
      economically satisfactory terms. Sales levels are highly sensitive to changes
      in credit terms, including interest rates. On
      September 8, 2000, Viplasticos, S.A. de C.V., a wholly-owned subsidiary
      of Vitromatic, sold its injection molded plastic parts production line and
      related assets for $7 million in cash to Jones Plastic and Engineering de
      Monterrey, S.A. de C.V., a wholly-owned subsidiary of Jones Plastic and
      Engineering Company. Along with the decision to divest these assets, IAWSA
      entered into a 5-year term supply agreement to purchase such injection molded
      plastic parts for its operations. On
      October 2001, the Acros-Whirlpool business unit entered into an agreement
      in principle with Sourdillon International, B.V., a company incorporated
      in the Netherlands, to sell its 34% interest in Sourdillon de Mexico, S.A.
      de C.V., which we refer to as "Sourdillion de Mexico", for $3 million in
      cash. Sourdillion de Mexico is a supplier of the Acros-Whirlpool business
      unit. Exports The
      export sales of the Acros-Whirlpool business unit to the North-American
      region, which are made through Whirlpool's distribution network in the United
      States and Canada, amounted to approximately $212 million in 2001. Besides
      the United States and Canada, the Acros-Whirlpool business unit also exports
      household appliances throughout Central America, the Caribbean region and,
      to a lesser extent, to the northern region of South America. Sales of household
      products under the Acros and Supermatic brand names in Central America and
      the Caribbean are not made through Whirlpool's distribution network. Except
      for exports to Colombia, Venezuela, Peru and Ecuador, which are made directly
      by the business unit, sales of the business unit's products in South America
      are made through Whirlpool's export subsidiary. The
      Acros-Whirlpool business unit has been certified and is in full compliance
      with the new energy-saving requirements for each of its products sold in
      the United States. Competition In
      Mexico, the Acros-Whirlpool business unit faces competition mainly from
      Grupo Mabe, a joint venture involving General Electric Company, and other
      producers, such as Daewoo, which built a plant in 1998, and LG Electronics,
      which has built a new facility that produces refrigerators and air conditioners
      in Monterrey and started operations during the third quarter of 2001. The
      Acros-Whirlpool business unit competes principally on quality, features,
      price, warranty and service, including delivery and inventory management.
      In lower-cost, entry-level appliances, the principal method of competition
      is price and quality. Export
      sales of major appliances to the United States and Canada face significant
      competition from established manufacturers in those countries, although
      the business unit benefits from being able to distribute its major appliances
      through the well-established marketing and distribution network of
      Whirlpool in the United States and Canada. The
      Acros-Whirlpool business unit competes primarily on quality and service. In
      2000, Acros-Whirlpool, through its service unit Servicios Acros-Whirlpool,
      won the National Quality Award in the large service industries category.
      This prize is the highest quality award in Mexico. Raw
      Materials Glass The
      most important raw materials utilized by the Flat Glass business unit, the
      Glass Containers business unit and the Glassware business unit are soda
      ash, silica sand and feldspar. With respect to the sourcing of our needs
      of silica sand and feldspar, in connection with the sale to Unimin of our
      mining subsidiaries, we entered into a ten-year supply agreement with
      Unimin ending June 2007, whereby our applicable subsidiaries committed to
      purchase, and certain Unimin's subsidiaries committed to sell, the requirements
      of silica sand and feldspar from Unimin, at prices which have been fixed
      at levels substantially similar to the prices previously paid by such subsidiaries.
      In terms of soda ash sourcing, the Glass Containers business unit, through
      its subsidiary Alcali, has, to a large extent, the production capacity to
      supply the needs of our glass making operations in Mexico. We, however,
      purchase most of our soda ash needs from Ansac pursuant to a long-term supply
      agreement that expires in December 2002. We believe we can renew this agreement
      on acceptable terms. To the extent that any of our subsidiaries in Mexico
      requires silica sand or soda ash of a different grade than that produced
      by Unimin (silica sand and feldspar) or by Ansac and Alcali (soda ash),
      such companies may acquire such silica sand or soda ash from various suppliers
      in the United States. Our glass making business units are not dependent
      on any single supplier for any of the raw materials utilized in their business
      activities. Energy In
      October 2000, various subsidiaries of Vitro, controlling 19 production
      facilities throughout Mexico, mainly in the Monterrey and Mexico City vicinities,
      entered into a 15-year take-or-pay power purchase agreement, for the
      purchase of an aggregate of approximately 110 megawatts of electricity
      with Enron Energia Industrial de Mexico, S. de R.L. de C.V., which we refer
      to as "Energia Industrial", a subsidiary of Enron Corp. Such purchases represent
      approximately 65% of our total annual electricity consumption. Also, in
      December 1999, Alcali entered into a 15-year steam purchase agreement
      with Energia Industrial for the purchase of a minimum of 150 tons per
      hour of steam. In addition, as part of the overall transaction, Energia
      Industrial entered into a loan agreement with the Inter-American Development
      Bank to build the power plant facility. Vitro agreed to guarantee each subsidiary's
      obligations to purchase electricity and steam, under both agreements. In
      October 2001, Enron Corp. sold 80% of its equity participation in Energia
      Industrial to Tractebel, S.A., a Belgian company, which we refer to as "Tractebel,"
      and the name of Energia Industrial changed to Tractebel Energia de Monterrey,
      S. de R.L. de C.V. ("Tractebel Energia") and during the first
      semester of 2002 Enron Corp, sold its remaining 20% to Tractebel, S.A. The
      construction of the plant is under way and, to our knowledge, it is scheduled
      to start operations at the end of October 2002, at which time the 15-year
      period under the power purchase agreement and the steam purchase agreement
      shall commence. Most
      of our glass furnaces are fueled by natural gas. The vast majority of the
      natural gas utilized at our Mexican facilities is purchased from Pemex.
      We have never suffered any material interruption in our natural gas supply
      from Pemex. In order to be protected against the volatility of gas prices,
      we have entered into arrangements to hedge our requirements from various
      alternative sources. See "Operating and Financial Review and Prospects-Qualitative
      and Quantitative Market Disclosure - Natural Gas Price Risk." Our
      management believes that all the above-described raw materials are and will
      continue to be available from various suppliers and, in the case of natural
      gas, from Pemex.
 Property,
      plant and equipment. Most
      of our assets and property are located in Mexico, the United States, Central
      and South America and Spain. At December 31, 2001, the net book value
      of all land and buildings, machinery and equipment and construction in progress
      was Ps. 21,045 million, of which approximately Ps. 19,329 million
      represented assets located in Mexico, approximately Ps. 234 million
      represented assets located in the United States, approximately Ps. 1,311 million
      represented assets located in Central and South America and approximately
      Ps. 171 million represented assets located in Europe. Our
      principal executive offices are located in the Monterrey, Mexico area, and
      are owned by us. We own and operate 46 manufacturing facilities in
      Mexico and elsewhere, of which the float glass plants are our largest facilities. We
      believe that all our facilities are adequate for our present needs and suitable
      for their intended purpose and that our production facilities are generally
      capable of being utilized at a higher capacity to support increased demand. The
      following table sets forth each business unit's principal manufacturing
      facilities: Business
              Unit
          Average
              Capacity Utilization
          Principal Facilities 
              (by region)as
              of December 31, 2001Flat Glass
          92%
          Monterrey,
              N.L. (4)
              Mexico City (5)
              Puebla, Pue.
              United States (9)
              Colombia
              Spain (3)Glass Containers
          89%
          Monterrey,
              N.L. (4)
              Guadalajara, Jal.
              Mexico City (2)
              Queretaro, Qro. (3)
              Toluca, Edo. Mex
              Costa Rica
              Guatemala
              BoliviaGlassware
          84%
          Mexico City
              (2)
              Monterrey, N.L. (3)Acros-Whirlpool
          83%
          Monterrey,
              N.L. (2)
              Puebla, Pue.
              Celaya, Gto.
 We
      also maintain over 100 sales offices and warehouses in Mexico and over
      100 warehouses, sales offices and retail shops in the United States,
      most of which are leased. Environmental
      Matters Our
      Mexican operations are subject to both Mexican federal and state laws and
      regulations relating to the protection of the environment. The fundamental
      environmental law in the Mexican federal system is the Ley General de
      Equilibrio Ecologico y Proteccion al Ambiente (the "Ecological Law"),
      pursuant to which rules have been promulgated concerning water pollution,
      air pollution, noise pollution and hazardous substances. The Mexican federal
      government has also enacted regulations concerning imports and exports of
      hazardous materials and hazardous wastes. In addition, in 1995, Mexico promulgated
      environmental regulations, that established a series of increasingly stringent
      air emission standards for glass manufacturing operations. Although our
      management expect to continue to incur capital expenditures in order to
      comply with such regulations, it does not expect such expenditures to have
      a material adverse effect on our financial condition or results of operation. The
      Mexican federal agencies in charge of overseeing compliance with the federal
      environmental laws are Secretaria del Medio Ambiente y Recursos Naturales
      ("SEMARNAT") and, as an agency of SEMARNAT, the Procuraduria Federal
      de Proteccion al Ambiente ("PROFEPA"), which has the authority to enforce
      the Mexican federal environmental laws. As part of their enforcement powers,
      PROFEPA inspectors can bring civil and criminal proceedings against companies
      and individuals that violate environmental laws and even have the power
      to close non-complying facilities. Furthermore, in special situations or
      certain areas, that are not federal in nature, the state or municipal authorities
      can regulate and enforce certain environmental regulations, as long they
      are consistent with the federal law. In
      1998, the subsidiaries of Vitro voluntarily started an environmental auditing
      program, which was approved by PROFEPA, to be ready to meet new environmental
      standards expected to be in place by the year 2006. An independent auditor
      certified by PROFEPA has completed environmental audits of each of our 29 plants
      in Mexico. Sixteen of these 29 plants already obtained PROFEPA's certification
      of Industria Limpia (Clean Industry) , which is a voluntary higher
      level of compliance. The remaining thirteen audited subsidiaries are working
      to comply with the actions required by the auditor in order to obtain the
      Industria Limpia certificate from PROFEPA. Vitro is working to finish
      the program and is seeking to comply with the requirements issued by the
      auditors by December 2003, at an estimated cost of $4.6 million. 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. We believe we are in substantial compliance with Mexican
      and other foreign environmental laws applicable to our operations. Our management
      does not believe that continued compliance with these environmental laws
      will have a material adverse effect on our financial condition or results
      of operations.  Item 5. Operating
      and Financial Review and Prospects You
      should read this discussion in conjunction with our consolidated financial
      statements and notes thereto and other financial information included elsewhere
      in this annual report. We prepare our financial statements in accordance
      with Mexican GAAP, which differs in certain respects from U.S. GAAP. Note 22
      to our audited consolidated financial statements provide a description of
      the principal differences between Mexican GAAP and U.S. GAAP as they relate
      to us. This section contains forward-looking statements that involve risks
      and uncertainties. Our actual results may differ materially from those discussed
      in the forward-looking statements as a result of various factors, including
      without limitation those set forth in "Risk Factors" and the matters set
      forth in this annual report. OPERATING
      RESULTS Factors
      Affecting Vitro's Results of Operations. Economic
      Conditions in Mexico: General After
      experiencing a severe economic crisis during 1994 and 1995, Mexico's GDP
      increased by 5.1% during 1996. In 1997, Mexico's GDP increased 6.7%. The
      inflation rate decreased from 27.7% in 1996 to 15.7% in 1997, while the
      peso depreciated 1.8% and 2.4% in 1996 and 1997, respectively, to a Free
      Exchange Rate of Ps. 7.8765 per dollar by December 31, 1996 and
      Ps. 8.0681 per U.S. dollar by December 31, 1997. However,
      from the fourth quarter of 1997 through the first quarter of 1999, these
      economic indicators deteriorated as a result of the Asian, Russian and Brazilian
      financial crises, coupled with the decline in international oil prices.
      In 1998, Mexico's GDP experienced a slower rate of growth of 4.8%, the inflation
      rate rebounded to 18.6% and the peso increased its devaluation rate to 22.7%
      to a Free Exchange Rate of Ps. 9.8963 per U.S. dollar as of December 31,
      1998. Throughout
      1999 and with the support of increasing international oil prices during
      the second, third and fourth quarters, conditions in the Mexican economy
      generally improved when compared to 1998. The inflation rate for the year
      decreased to 12.3%, the Free Exchange Rate appreciated 4.0% relative to
      the U.S. dollar to reach Ps. 9.4986 per U.S. dollar at December 31,
      1999, and GDP grew by approximately 3.7%. Throughout
      2000, the improvement shown in 1999 continued. The official inflation rate
      for the whole year was 9%, and Mexico experienced a marginal nominal peso
      depreciation of 1.2% and GDP growth of 6.9%. During
      2001, the improvement shown throughout 2000 continued, but commencing in
      September 2001, amid concerns of a global economic slowdown and a United
      States recession, Mexico started experiencing an economic slowdown. GDP
      growth in Mexico in 2001 was (0.3)%, and financial analysts have estimated
      a 1.7% growth for the year 2002. Given the current state of the global economy,
      the Mexican economy may not continue to grow at a similar rate as it has
      in the past and the slowdown may continue to impact our businesses and our
      results of operations. Trade
      Liberalization Steps
      taken by Mexico since the 1980s to reduce import barriers and open its economy
      to foreign competition, such as becoming a signatory to the General Agreement
      on Tariffs and Trade ("GATT") and a member of the North American Free Trade
      Agreement ("NAFTA"), led to a substantial increase in imports into Mexico.
      Notwithstanding that the peso experienced a decrease in its relative value
      to the U.S. dollar in 1998, the trade balance of Mexico had a deficit of
      $7.9 billion in 1998. In 1999, when the peso revalued and increased
      its relative value against the U.S. dollar, the deficit increased to $5.4 billion.
      During 2000 and 2001, as the peso continued its revaluation and increasing
      its relative value against the U.S. dollar, the trade balance of Mexico
      reached deficits of $8.0 billion and $9.7 billion, respectively.
      We cannot predict the behavior of the Mexican trade balance in the future
      or the country's ability to finance a trade deficit, if any. With the opening
      of the Mexican economy and the implementation of NAFTA, other free trade
      agreements entered into by Mexico with the European Union, Chile, Costa
      Rica, Nicaragua, Colombia, Venezuela, Bolivia, Israel and a multilateral
      free trade agreement effective on January 1, 2001 with Guatemala, El
      Salvador and Honduras, manufacturers, such as us and certain of our domestic
      customers, have come under increased competitive pressure from imported
      goods. In addition, the reduction in import duty rates has generally limited
      our flexibility to adjust pricing levels to take account of the effects
      of devaluation and inflation in Mexico. However, we believe that implementation
      of the free trade agreements will enhance the ability of Vitro and certain
      of its domestic customers to increase the exports of their products to the
      countries that are signatories to such free trade agreements. Effect
      on the Company of Economic Conditions in Mexico Our
      results of operations are affected by, among other factors, (i) our
      costs of production, which principally consist of the costs of materials,
      labor and depreciation, a majority of which is incurred in pesos, (ii) the
      relationship between the peso, the currency in which a significant portion
      of our operating costs and expenses are incurred, and the U.S. dollar, the
      currency in which most of our export sales are made, and to which a significant
      amount of our domestic sales prices relate, (iii) the level of demand
      for our products in Mexico and (iv) financing costs which are incurred
      in both pesos and U.S. dollars. These factors are sensitive to changes in
      economic conditions in Mexico. Effects
      of Inflation and Exchange Rate Fluctuations The
      following table sets forth, for the periods indicated, the devaluation (revaluation)
      of the peso against the U.S. dollar (based on the Free Exchange Rate), Mexican
      inflation as measured by the INPC, United States inflation as measured by
      the CPI, the cumulative differential between the United States and Mexican
      consumer price indexes, the change in the relative value of the peso against
      the U.S. dollar and GDP growth in Mexico. For
            the year ended December 31,1999
        2000
        2001Peso devaluation
            (appreciation)
            against the U.S. dollar
        (4.0)%
        1.2%
        (4.6)%Mexican inflation
            (based on changes in INPC)
        12.3
        9.0
        4.4United States
            inflation (based on changes in CPI)
        2.7
        3.4
        1.6Inflation differential
            (Mexican vs. U.S.) (1)
        9.4
        5.4
        2.8Appreciation
            in real terms of the value of the peso to the U.S. dollar (1) (3)
        12.3
        4.0
        7.2INPC (4)
        308.92
        336.60
        351.42CPI (2)
        168.3
        174.0
        176.7Free Exchange
            Rate (4)
        9.4986
        9.6098
        9.1695Mexican GDP growth
            (4)
        3.7%
        6.9%
        (0.3)% (1)
      Compounded.
      (2) Source: U.S. Bureau of Labor Statistics.
      (3) 1-((Peso devaluation +1)/(Inflation differential +1)).
      (4) Source: Banco de Mexico. Effects
      of Inflation and Exchange Rate Fluctuations on Operating Margins Changes
      in the relative value of the peso against the U.S. dollar have a significant
      effect on our results of operations. In general, a real depreciation of
      the peso will result in higher operating margins and the real appreciation
      of the peso will result in lower operating margins as explained in the following
      paragraph. A
      substantial portion of the sales of our Mexican subsidiaries are denominated
      in U.S. dollars. Approximately 47% of our consolidated net sales were denominated
      in U.S. dollars in 2001. In addition, the prices of a significant portion
      of the products we sell in Mexico, in particular those of flat glass for
      automotive uses, capital goods, household products, certain glassware products
      and most chemical and packaging products are linked to the U.S. dollar.
      Our financial statements are prepared by translating the amount of U.S.
      dollar export sales into pesos at the Free Exchange Rate in effect at the
      time of sale. The translated U.S.-dollar sales of our Mexican subsidiaries
      are then restated into constant pesos using the INPC as of the date of the
      most recent balance sheet included in those financial statements. As a result,
      when the peso depreciates in real terms against the U.S. dollar, as was
      the case in the second half of 1998, the same level of U.S. dollar sales
      in the two periods 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 1997, 1999, 2000 and 2001, the same
      level of U.S. dollar sales in the two periods will result in lower constant
      peso revenues in the more recent period. Moreover, because part of our cost
      of sales and general, selling and administrative expenses are largely peso-based
      and tend to vary substantially based on changes in Mexican inflation and
      not based on changes in the relative value in real terms of the peso to
      the U.S. dollar, the real appreciation or depreciation of the peso relative
      to the U.S. dollar has a significant effect on our operating margins. During
      2000 and 2001, the increase in the relative value of the peso against the
      dollar negatively impacted net sales in peso terms and operating margins.
      During 2000, the marginal decrease in the relative value of the peso against
      the dollar at the end of the year slightly improved our sales, and positively
      affected our operating margin. Sales
      of products manufactured or processed by Vitro outside Mexico (principally,
      by VVP America, Empresas Comegua, which we refer to as "Comegua," and Cristalglass),
      as well as such subsidiaries' expenses, are restated during a financial
      reporting period by inflation in the country in which the subsidiary principally
      operates and are then translated into pesos at the exchange rate in effect
      at the end of the period. Thus, the depreciation or appreciation of the
      peso tends not to affect operating margins of such subsidiaries. Effect
      of Inflation and Exchange Rate Fluctuations on Total Financing Cost Total
      financing cost includes both net interest expense and the net effect of
      inflation on our monetary assets and liabilities, as well as the net effect
      of changes in nominal exchange rates on monetary assets and liabilities
      denominated in foreign currencies. Net
      interest expense includes the nominal amount of interest expense incurred
      by Vitro with respect to short- and long- term debt (net of the nominal
      amount of interest income generated by Vitro with respect to monetary assets).
      The amount of our net interest expense with respect to peso-denominated
      debt is significantly affected by nominal interest rates prevailing in Mexico.
      Approximately 12%, 10%, and 3% of our total debt as of December 31,
      1999, 2000, and 2001 respectively, was peso-denominated. Our peso-denominated
      debt generally bears interest at a spread over the TIIE. For the years ended
      December 31, 1999, 2000 and 2001 the average TIIE was 24.1%, 17.0%
      and 12.9%, respectively. For a discussion of Vitro's indebtedness, see "Description
      of Our Indebtedness." The level of nominal interest rates in Mexico may
      also affect demand for certain of our products in Mexico. Inflation
      affects our total financing cost. During periods of inflation, the amount
      of 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
      (which will be offset by the reduction in real terms in the value of monetary
      assets held during such period). Lower levels of inflation in 2000 and 2001,
      compared with 1999 resulted in our recording lower monetary gains in 2000
      compared with 1999 and in 2001 compared with 2000. Furthermore,
      inflation is also used to restate the principal amount in pesos of the UDI-denominated
      debt. Such restatement is made based on a pesos-per-UDI value published
      by Banco de Mexico in the Official Gazette of the Federation that in turn
      is based on the INPC. In any given period, the increase in the principal
      amount resulting from such restatement is charged to total financing cost
      as restatement of UDIs. See note 14 to our audited consolidated financial
      statements. As of December 31, 1999 and 2000, approximately 12% and
      10%, respectively, of our total debt was denominated in UDIs. During the
      first quarter of 2001, we entered into several swap transactions whereby
      the total amount of our UDI-denominated debt was swapped to U.S. dollar-denominated
      debt. Also, on April 2001, we entered into a five-year interest rate swap
      agreement between Compania Vidriera and Citibank N.A. in the amount of $250 million,
      to fix Compania Vidriera's floating rate in its syndicated loan at 5.20%
      per annum. See "Description of our Indebtedness." Total
      financing cost is also impacted by changes in the nominal value of the peso
      relative to the U.S. dollar. Exchange gains or losses included in total
      financing cost result primarily from the impact of nominal changes in exchange
      rates on U.S. dollar-denominated monetary liabilities (such as dollar-denominated
      debt and accounts payable arising from imports of raw materials and equipment)
      and assets (such as dollar-denominated cash and cash equivalents and accounts
      receivable from exports) of Vitro and its Mexican subsidiaries. U.S. dollar-denominated
      monetary liabilities and assets are translated into pesos at the Free Exchange
      Rate. Any net change in the peso-translated amounts during a financial reporting
      period in such U.S. dollar-denominated assets and liabilities is reported
      in our income statement in "Exchange loss (gain), net." Because our U.S.
      dollar-denominated liabilities have historically been significantly in excess
      of our dollar-denominated monetary assets, the depreciation of the peso
      has resulted in exchange losses. In 1998, the larger nominal devaluation
      of the peso significantly increased our exchange losses. In 1999 and 2001,
      however, the appreciation of the peso against the U.S. dollar translated
      into an exchange gain for us. In 2000, the nominal devaluation of the peso
      resulted in less significant exchange losses in our financial statements.
 Overview of Consolidated
      Results of Operations: Consolidated
      Results. The
      following table sets forth selected information contained in or derived
      from our consolidated financial statements: For
              the year ended December 31,1999
          2000
          2001
          2001(Millions
              of constant pesos as of 
              December 31, 2001)
          (Millions
              of U.S. dollars)(1)Net sales
          Ps.
              28,599
          Ps.
              28,631
          Ps.
              28,190
          $
              3,074Cost of goods
            sold
          19,765
          20,307
          20,638
          2,250Gross profit
          8,834
          8,324
          7,552
          824Selling, general
            and administrative expenses
          4,479
          4,807
          4,949
          540Operating income
          4,355
          3,517
          2,603
          284Financing Costs:Interest expense
          2,328
          1,791
          1,458
          159Interest income
          (36)
          (25)
          (27)
          (3)Exchange loss
              (gain), net
          (453)
          183
          (590)
          (64)Restatement
              of UDIs
          190
          156
          25
          3Gain from monetary
              position
          (2,005)
          (1,315)
          (651)
          (72)Other financial
              expenses
          300
          406
          436
          48Total financing
              cost
          324
          1,196
          651
          71Net income
          1,677
          837
          577
          63EBITDA (2)
          6,553
          5,679
          4,861
          530
  (1) Peso amounts have
      been translated into U.S. dollars, solely for the convenience of the reader,
      at the rate of 9.1695 pesos per one U.S. dollar, the Free Exchange Rate
      on December 31, 2001.(2) EBITDA consists of operating income plus depreciation, amortization
      and provisions for seniority premiums and pensions. Seniority premiums and
      pension payments for the years 1999, 2000 and 2001 were Ps. 163 million,
      Ps. 172 million and Ps. 35 million, respectively. The
      concept of EBITDA is presented because it is a widely accepted indicator
      of funds available to service debt, and because it serves as an approximation
      of free cash flow. EBITDA is not intended to represent cash flow from operations
      as defined by generally accepted accounting principles and should not be
      considered as an alternative to net income as an indicator of Vitro's operating
      performance or to cash flows as a measure of liquidity. Because not all
      companies calculate EBITDA identically, our presentation of EBITDA may not
      be comparable to other similarly entitled measure of other companies. Summary
      of Vitro's Consolidated Results Year
      Ended December 31, 2001 Compared to Year Ended December 31, 2000 Net
      Sales Our
      net sales decreased 1.5% from Ps. 28,631 million in 2000 to Ps. 28,190 million
      in 2001. The slowdown in the United States and the resulting slowdown in
      Mexico resulted in decreased demand, primarily in our Glassware and Flat
      Glass business units. Our net sales, as reported in constant pesos, were
      also affected by the appreciation in real terms of the peso versus the U.S.
      dollar of 4.6%, which resulted in a decline in the constant peso equivalents
      of U.S. dollar-denominated export sales and a decline in the peso equivalents
      of prices used for our products in the Mexican market that are linked to
      U.S. dollar-based prices. The net sales of our Glassware business unit in
      particular were affected by pricing pressure from imports sold in Mexico
      at prices that we believe do not represent the cost of production and distribution
      for such products. Volumes for 2001 as compared to 2000 were essentially
      flat. In
      2001, our export sales amounted to $801 million, an increase of 3.2%
      compared to $776 million in 2000. Our export sales represented 27% of our
      consolidated net sales in 2001. Approximately 47% of our consolidated net
      sales in 2001 were denominated in U.S. dollars. In addition, a significant
      portion of the sale prices of our products in Mexico was generally determined
      with reference to U.S. dollar-based prices. Operating
      Income Our
      operating income decreased 26% from Ps. 3,517 million in 2000 to Ps. 2,603
      million in 2001. This decrease resulted principally from the decrease in
      our net sales, as described above, and increase in our costs of goods sold
      from Ps. 20,307 million in 2000 to Ps. 20,638 million in
      2001 resulting from the reduction in inventory levels of certain products,
      principally in our Glassware and Acros-Whirlpool business units and an increase
      in our energy costs. In addition, our selling, general and administrative
      expenses increased from Ps. 4,807 million to Ps. 4,949 million
      primarily due to a productivity bonus, which previous year was paid as workers
      profit sharing, of $10 million, this productivity bonus was paid due
      to the administrative reestructuration of our Flat Glass, Glass Containers
      and Glassware business units. As
      a result of the reduction in our inventories, our proportion of fixed costs
      as a percentage of sales increased thereby decreasing our margins. Total
      Financing Cost Our
      total financing cost decreased 45% from Ps. 1,196 million in 2000
      to Ps. 651 million in 2001. This decrease resulted principally
      from a reduction in our interest expense of Ps. 333 million from
      Ps. 1,791 million in 2000, to Ps. 1,458 million in 2001.
      This decline in our interest expense was a result of a lower weighted average
      cost of our debt, due to lower interest rates in both the United States
      and Mexican markets, and a decrease in our aggregate amount of debt from
      Ps. 16,333 million in 2000 to Ps. 14,453 in 2001. Also, during 2001 we recorded
      a foreign exchange gain of Ps. 590 million compared with a loss
      of Ps. 183 million for the year 2000, due to the appreciation
      of the Mexican peso against the U.S. dollar. This decrease in financing
      cost was partially offset by a reduced gain from monetary position of Ps. 664 million
      from Ps. 1,315 million in 2000 to Ps. 651 million in
      2001, due to lower inflation during 2001 compared with 2000. Taxes
      and Workers' Profit Sharing The
      effect from the application of Bulletin D-4, which sets forth the accounting
      treatment for income taxes, tax on assets and workers' profit sharing, in
      the years ended December 31, 2000 and 2001 was an increase of our net income
      of Ps. 112 million and Ps. 66 million, respectively.
      See note 3(o) to our audited consolidated financial statements. Income
      and asset taxes and workers' profit sharing decreased to Ps. 516 million
      in 2001 from Ps. 1,001 million in 2000, resulting in an effective
      tax rate of 47.2% in 2001 including workers' profit sharing as compared
      to 54.5% in 2000. At the end of 2001, our companies had aggregate accumulated
      tax losses of Ps. 7,049 million and recoverable tax on assets of Ps. 487 million
      that may be recovered in future years under certain circumstances. See note 16
      to our audited consolidated financial statements. Net
      Income Our
      net income decreased 31.1% from Ps. 837 million in 2000 to Ps. 577 million
      in 2001. This decrease in our net income resulted principally from (i) a
      decrease in our operating income as described above, partially offset by
      the decrease in our total financing cost. Year
      Ended December 31, 2000 Compared to Year Ended December 31, 1999 Net
      Sales In
      2000, our net sales increased 0.1% to Ps. 28,631 million from
      Ps. 28,599 million in 1999. This increase is attributable primarily
      to the acquisition of Harding in April of 2000 and to increases in the net
      sales of our Flat Glass, Glassware and Acros-Whirlpool business units. Increased
      unit sales at these business units were largely offset by the appreciation
      in real terms of the peso to the U.S. dollar in 2000. In 2000, our export
      sales amounted to $776 million, an increase of 3.7% when compared with
      $749 million in 1999. Our export sales represented 27% of our consolidated
      net sales in 2000. Approximately 46% of our consolidated net sales in 2000
      were denominated in U.S. dollars. In addition, a significant portion of
      the sale prices of our products in Mexico is generally determined with reference
      to U.S. dollar-based prices. Operating
      Income In
      2000, our operating income decreased 19.2% to Ps. 3,517 million
      compared to Ps. 4,355 million in 1999 due to (i) the increase
      in the natural gas prices, (ii) the negative effect of the appreciation
      in real terms of the peso to the U.S. dollar on the operating margins of
      export sales and on the sales in Mexico of our products determined with
      reference to U.S. dollar-based prices and (iii) pricing pressure on
      OEM automotive glass sales. Additionally, during 2000, our Flat Glass business
      unit continued facing competition from imported commodity construction glass
      and our Glass Container business unit continued facing product substitution
      from returnable and non-returnable polyethylene terephthalate ("PET") containers
      and aluminum cans, especially in the soft drink segment. See "Business Overview-Glass
      Containers Business Unit-Competition." Total
      Financing Cost Total
      financing cost increased 269% from Ps. 324 million in 1999 to
      Ps. 1,196 million in 2000 as a result of a lower gain from monetary
      position and an exchange loss in 2000, which were partially offset by a
      decrease in net interest expense. Interest expense (net of interest income)
      decreased 23% from Ps. 2,292 million in 1999 to Ps. 1,766 million
      in 2000. This net interest expense decrease resulted principally from lower
      nominal interest rates on our debt. Net exchange loss (gain) changed from
      a gain of Ps. 453 million in 1999 to a loss of Ps. 183 million
      in 2000 as a result of the nominal depreciation of the peso against the
      dollar during 2000. Gain from monetary position declined 34% from Ps. 2,005 million
      in 1999 to Ps. 1,315 million in 2000, due primarily to the reduction
      in Mexican inflation from 1999 to 2000. Net
      Income Our
      net income decreased 50% from Ps. 1,677 million in 1999 to Ps. 837 million
      in 2000. This decrease in our net income resulted principally from (i) the
      increase in total financing cost, (ii) the reduction in operating income
      and (iii) the absence of income on disposal of discontinued operations
      during 2000, compared to a gain of Ps. 573 million in 1999. These
      sources of reduced income were partially offset by (i) a decrease in
      net income tax and profit sharing to workers of Ps. 859 million
      from Ps. 1,860 million in 1999 to Ps. 1,001 million
      in 2000 and (ii) a decrease of other expenses of Ps. 761 million
      from Ps. 1,249 million in 1999 to Ps. 488 million in
      2000, due mainly to the closing of Vidriera Oriental, a manufacturing facility
      in the Mexico City area. Taxes
      and Extraordinary Gain The
      statutory federal tax rate on taxable income for each of our subsidiaries
      during 1998 was 34%. This rate increased in 1999 to 35%. For 1999, the tax
      was paid at a 32% rate, with the remaining 3% payable when dividends are
      distributed, and for 2000, the tax was paid at a 30% rate, with the remaining
      5% payable when dividends are distributed. In addition, in certain circumstances,
      Mexican tax law requires that our subsidiaries pay alternative minimum taxes
      on assets. The alternative minimum tax for each of our subsidiaries is 1.8%
      payable with respect to certain assets of each company as defined under
      Mexican tax law. Taxable income, as defined under Mexican tax law, differs
      in certain respects from income before taxes under Mexican GAAP. In addition,
      we consolidate for tax purposes in Mexico but only with respect to 60% of
      our ownership, as permitted by applicable law. Consequently, Vitro and all
      of its subsidiaries pay taxes on taxable income, provided such taxable income
      exceeds each company's alternative minimum taxes, that would otherwise be
      payable. However, Mexican tax law allows our companies to offset their future
      taxable income with their accumulated tax losses and offset future income
      tax payments with excess alternative minimum taxes paid, if any. Such losses
      and excess alternative minimum tax payments can be carried forward for up
      to 10 years from the date they arise. In addition to federal income
      taxes, our companies are required under Mexican tax law to pay statutory
      employee's profit sharing of 10% of their pre-profit sharing income, as
      defined under Mexican tax law. Effective
      January 1, 2000, Mexican GAAP rules changed to an asset and liability
      approach for recognizing income tax. The new rules require recognizing the
      effects of deferred tax for all transactions recorded in periods different
      for financial statements than for tax returns. Deferred income tax assets
      and liabilities are determined by comparing the financial statement and
      tax basis of assets and liabilities multiplied by the enacted tax rate.
      The deferred effects of employee statutory profit-sharing are determined
      based on the reconciliation between the net accounting income for the year
      versus income for statutory profit-sharing purposes multiplied by the enacted
      rate applicable to employee statutory profit sharing. Deferred tax assets
      are only recognized to the extent there is a high probability of recovery.
      The initial cumulative effect at January 1, 2000, from the application
      of the new Bulletin D-4 in our financial statements was an increase in liabilities
      of Ps. 1,595 million, a decrease in total assets of Ps. 881 million
      and a decrease directly to stockholders' equity in the amount of Ps. 2,476 million,
      which had no effect on cash flow. The effect on the year ended December 31,
      2000 was an increase in net income of Ps. 112 million. See note 3(o)
      to our audited consolidated financial statements. Provisions
      for income and asset taxes and workers' profit sharing decreased to Ps. 1,001 million
      in 2000 from Ps. 1,860 million in 1999, resulting in an effective
      tax rate of 54.4% in 2000 and 66.3% in 1999. Summary
      of Divisional Results On
      June 3, 2002, we signed the definite agreement to sell, subject to governmental
      approval, our controlling 51% interest in Vitromatic to Whirlpool Corporation,
      which we refer to as "Whirlpool," which held the remaining 49% of the joint
      venture prior to this sale. See "-Recent Developments". The
      following table sets forth, for the periods indicated, net sales (before
      elimination of interdivisional sales and other), export sales and operating
      income (before corporate and other eliminations) of each of our business
      units, as well as the contribution to our audited consolidated results,
      in percentage terms, of net sales (after elimination of interdivisional
      sales), export sales and operating income (before corporate and other eliminations)
      of each of our business units. See note 20 to our audited consolidated financial
      statements for a description on the integration of the companies that had
      been part of the Diverse Industries business unit into our remaining business
      units. The following table does not include the results of discontinued
      operations. Year
            ended December 31,1999
        
        2000
        
        2001
        
        2001Amount
        %
            of Total
        Amount
        %
            of Total
        Amount
        %
            of Total
        Amount(Millions
            of constant pesos as of December 31, 2001, except for percentages)
        (Millions
            of U.S. dollars)(1)Net salesFlat Glass
        Ps.
            10,056
        34.8%
        Ps.
            10,536
        36.5%
        Ps.
            10,610
        37.3%
        $1,157Glass Containers
        10,327
        36.0
        9,406
        32.7
        9,149
        32.2
        998Glassware
        2,764
        9.5
        2
            ,967
        10.2
        2,585
        9.0
        282Acros-Whirlpool(2)
        5,587
        19.5
        5,784
        20.2
        5,960
        21.1
        650Interdivisional
            sales and other
        (135)
        0.2
        (62)
        0.4
        (114)
        0.4
        (13)Consolidated
            net sales
        Ps.
            28,599
        100%
        Ps.
            28,631
        100%
        Ps.
            28,190
        100%
        $3,074(Millions
            of U.S. dollars, except for percentages)Export salesFlat Glass
        $279
        37.3%
        $274
        35.3%
        $260
        32.4%Glass Containers
        228
        30.4
        245
        31.6
        249
        31.1Glassware
        76
        10.1
        89
        11.5
        80
        10.0Acros-Whirlpool(2)
        166
        22.2
        168
        21.6
        212
        26.5Consolidated
        $749
        100%
        $776
        100%
        $801
        100%(Millions
            of constant pesos as of December 31, 2001, except for percentages)
        (Millions
            of U.S. dollars)(1)Operating
            income (loss)Flat Glass
        Ps.
            1,980
        45.5%
        Ps.
            1,663
        47.3%
        Ps.
            1,243
        47.8%
        $136Glass Containers
        1,458
        33.4
        1,092
        31.0
        831
        31.9
        91Glassware
        563
        12.9
        509
        14.5
        320
        12.3
        35Acros-Whirlpool(2)
        635
        14.6
        615
        17.5
        467
        17.9
        51Corporate and
            other eliminations
        (281)
        (6.4)
        (362)
        (10.3)
        (258)
        (9.9)
        (29)Consolidated
            operating income
        Ps.
            4,355
        100%
        Ps.
            3,517
        100%
        Ps.
            2,603
        100%
        $284 (1)
      Pesos have been translated into U.S. dollars, solely for the convenience
      of the reader, at the rate of 9.1695 pesos per one U.S. dollar, the Free
      Exchange Rate on December 31, 2001.(2) On June 3, 2002, we signed the definite agreement to sell, subject to
      governmental approval, our controlling 51% interest in Vitromatic to Whirlpool
      Corporation, which we refer to as "Whirlpool," which held the remaining
      49% of the joint venture prior to this sale. See "-Recent Developments". Year
      Ended December 31, 2001 Compared to Year Ended December 31, 2000 Flat
      Glass Business Unit Net
      sales of our Flat Glass business unit amounted to Ps. 10,610 million
      in 2001, an increase of 0.7% from Ps. 10,536 million in 2000.
      Net sales increased principally as a result of the addition of the eight-month
      and twelve-month net sales of Cristalglass (Cristalglass was acquired in
      May 2001) and Harding, respectively. For the year 2000, net sales of Harding
      were recorded for the nine-month period, since its acquisition in April.
      The increase in net sales was principally offset by (i) the slowdown of
      the OEM component of the auto segment due to the slowdown in the United
      States and Mexican economies and (ii) lower volume and sales prices, especially
      in the construction industry, reflecting increased competition from imports
      sold in Mexico at prices that we believe do not represent the cost of production
      and distribution for such products. Export sales amounted to $260 million
      in 2001, a decrease of 5.1% when compared to $274 million in 2000.
      This decrease was attributable to the slowdown of the U.S. economy. Operating
      income of the Flat Glass business unit was Ps. 1,243 million in
      2001, a decrease of 25.3% compared to Ps. 1,663 million in 2000.
      This decrease was attributable to lower volume sales prices, reflecting
      increased competition from imports sold in Mexico at prices that we believe
      do not represent the cost of production and distribution for such products. Glass
      Containers Business Unit Net
      sales of our Glass Containers business unit decreased 2.7% to Ps. 9,149 million
      in 2001 from Ps. 9,406 million in 2000. In 2001, export sales
      of the Glass Containers business unit amounted to $249 million, an
      increase of 1.6% from $245 million in 2000. This increase in U.S. dollar
      terms reflects the Glass Containers business unit's strategy of reducing
      prices to gain market share and its ability to serve certain niche markets.
      The constant peso equivalent of export sales was adversely affected by the
      appreciation in real terms of the peso to the U.S. dollar during 2001. The
      closing of MEF, our former joint venture with General Electric Corporation,
      further offset the increase in export sales during the period. Operating
      income of our Glass Containers business unit decreased 23.9% from Ps. 1,092 million
      in 2000 to Ps. 831 million in 2001. This decrease was attributable
      to the decrease in net sales, as described above, and an increase in our
      cost of goods sold. The increase in our cost of goods sold resulted from
      a reduction in demand and a corresponding reduction in our production levels,
      which resulted in a lower fixed cost absorption. Glassware
      Business Unit Net
      sales of our Glassware business unit decreased 12.9% to Ps. 2,585 million
      in 2001 from Ps. 2,967 million in 2000, due to (i) increased
      competition from imports sold in Mexico at prices that we believe do not
      represent the cost of production and distribution for such products and
      (ii) reduced demand as a result of the economic slowdown in the United
      States and Mexico. Export
      sales amounted to $80 million in 2001, a decrease of 10.1% when compared
      to $89 million in 2000. This decrease is attributable to reduced demand
      as a result of the economic slowdown in the United States. In
      2001, operating income amounted to Ps. 320 million, a decrease of 37.1%
      from Ps. 509 million in 2000. This decrease was attributable to
      the decrease in net sales and an increase in our cost of goods sold. The
      increase in our cost of goods sold resulted from a reduction in demand and
      a corresponding reduction in our production levels, which resulted in a
      lower fixed cost absorption. Acros-Whirlpool
      Business Unit Net
      sales of our Acros-Whirlpool business unit were Ps. 5,960 million
      in 2001, an increase of 3.0% from Ps. 5,784 million in 2000. This
      increase was primarily due to an increase in the export sales of the Acros-Whirlpool
      business unit by 26.2% from $168 million in 2000 to $212 million
      in 2001. This increase is attributable to higher export volumes in our refrigerator
      line. Peso prices in the domestic market were affected by strong competition
      from imports from Asian countries and the start-up costs of our new range
      platform ("Siglo XXI") line of production. Operating
      income of the Acros-Whirlpool business unit amounted to Ps. 467 million
      in 2001, a decrease of 24.1% from Ps. 615 million in 2000. Additionally,
      a higher proportion of export sales when compared to 2000 also affected
      operating income, as the proportion of U.S. dollar-denominated sales grew
      for this business unit. Year
      Ended December 31, 2000 Compared to Year Ended December 31, 1999 Flat
      Glass Business Unit Net
      sales of our Flat Glass business unit amounted to Ps. 10,536 million
      in 2000, an increase of 4.8% compared with Ps. 10,056 million in 1999. This
      increase was attributable to VVP America and its acquisition of Harding
      in 2000. The increase in net sales of the Flat Glass business unit, combined
      with an increase in OEM sales, more than offset decreases in the construction
      glass industry. Export sales of the Flat Glass business unit amounted to
      $274 million, a decrease of 1.8% compared with $279 million in
      1999. In addition, net sales were affected by the decline in the constant
      peso equivalent of export sales, given the appreciation in real terms of
      the peso to the U.S. dollar. Operating
      income of the Flat Glass business unit amounted to Ps. 1,663 million
      in 2000, a decrease of 16.0% compared with Ps. 1,980 million in
      1999. The decrease is attributable to costs from the Harding acquisition,
      increases in natural gas prices and a strong peso compared to the U.S. dollar. Glass
      Containers Business Unit Net
      sales of our Glass Containers business unit decreased 8.9% in 2000 from
      Ps. 10,327 million in 1999 to Ps. 9,406 million in 2000.
      The decrease was attributable to the divestiture of the silicates operation
      in December 1999. Increased volume sales of soda lime glass containers in
      Mexico, particularly food and cosmetics, partially offset the reduction
      in sales volume of soft drink, liquor and wine and beer glass containers.
      In addition, net sales were affected by the decline in the constant peso
      equivalent of export sales, given the appreciation in real terms of the
      peso to the U.S. dollar. In 2000, export sales of the Glass Containers business
      unit were $245 million, an increase of 7.5% with respect to 1999. As
      a result of the decrease in sales described above and the increase in costs
      of natural gas and energy, the operating income of our Glass Containers
      business unit decreased 25.1%, from Ps. 1,458 million in 1999
      to Ps. 1,092 million in 2000. Cost-reduction efforts made on cost
      of sales and selling, general and administrative expenses helped to partially
      offset the decrease in unit sales and the increase in energy and natural
      gas costs in 2000 compared to 1999. Glassware
      Business Unit Net
      sales of our Glassware business unit amounted to Ps. 2,967 million
      in 2000, an increase of 7.3% compared to Ps. 2,764 million in
      1999. Net sales saw a significant increase, principally due to sales of
      products marketed in connection with the Olympic Games and the increase
      in export sales, mainly to the United States, due to the execution of a
      distribution agreement as part of the joint venture entered into with Libbey
      on August 29, 1999. Under the terms of this distribution agreement,
      the Glassware business unit agreed to distribute Libbey products in Mexico
      and Central and South America, and Libbey agreed to distribute products
      of the Glassware business unit in the United States and Canada. Export sales
      of the Glassware business unit increased 17.1% from $76 million in
      1999 to $89 million in 2000. In
      2000, operating income of our Glassware business unit amounted to Ps. 509 million,
      a decrease of 9.6% from Ps. 563 million in 1999. This decrease
      was due to an increase in cost of sales, which increased at a higher rate
      than unit sales and was partially offset by a reduction in selling, general
      and administrative expenses. Acros-Whirlpool
      Business Unit Net
      sales of our Acros-Whirlpool business unit amounted to Ps. 5,784 million
      in 2000, an increase of 3.5% from Ps. 5,587 million in 1999. The
      Acros-Whirlpool business unit had increased unit sales in the domestic market
      and decreased unit sales in the export market. Export sales of this business
      unit increased 1.2% from $166 million in 1999 to $168 million
      in 2000, due to increased sales of refrigerators to the United States. However,
      as with the Glass Containers and Flat Glass business units, the constant
      peso revenues of the export sales of the Acros-Whirlpool business unit continued
      to be adversely affected by the appreciation of the peso during 2000. Operating
      income of the Acros-Whirlpool business unit amounted to Ps. 615 million
      in 2000, a decrease of 3.1% compared with Ps. 635 million in 1999.
      Constant peso prices in the domestic market were negatively affected because
      our prices are related to the U.S. dollar and due to the strong competition,
      mainly from imports from Asia. Additionally, the Acros-Whirlpool business
      unit increased its selling, general and administrative expenses as a result
      of increased advertising to support the Acros-Whirlpool brands and due to
      the launching of new products. LIQUIDITY AND CAPITAL RESOURCES Liquidity We
      operate in capital-intensive industries that require ongoing investments
      to update our assets and technology. Funds for those investments, as well
      as for working capital needs, joint venture transactions and acquisitions
      over the past years, have been provided by a combination of cash generated
      from operations, bank credit facilities and short- and long-term debt. On
      June 3, 2002, we signed an agreement to sell, subject to governmental approval,
      our Acros-Whirlpool business unit to Whirlpool. For U.S. GAAP purposes,
      our consolidated financial statements have been recasted to present the
      net results of Acros-Whirlpool in net income from discontinued operations. Under
      Mexican GAAP, we present our consolidated statement of changes in financial
      position in accordance with Bulletin B-12, which identifies the generation
      and application of resources representing differences between beginning
      and ending financial statement balances in constant pesos. Thus, the changes
      shown in the statements of changes in financial position included in our
      consolidated financial statements do not necessarily represent cash flow
      activities. Accordingly, the discussion of cash flows presented in the two
      following paragraphs is based on the reconciliation to U.S. GAAP of our
      financial statements included in note 22 to our audited consolidated
      financial statements. During
      2001, net cash generated from continued operations was Ps. 2,080 million,
      an increase of 20.2% compared to Ps. 1,730 million generated in
      2000. This increase in net cash generated from continued operations was
      primarily due to the reduction in the payments needed to fund the pension
      plan of some of our subsidiaries during 2001. During 2001, the Ps. 2,080 million
      of net cash generated by continuing operations was used primarily to finance
      Ps. 781 million of capital expenditures and Ps. 445 million
      of investments in the acquisition of new subsidiaries, while Ps. 776 million
      of net cash was used in financing activities. During
      2000, net cash generated from continued operations was Ps. 1,730 million,
      an increase of 56.3% compared to Ps. 1,107 million in net cash
      generated from operations in 1999. The increase in net cash generated by
      continued operations is primarily due to better administration of our working
      capital and was partially offset when, in the last quarter of 2000, we used
      Ps. 498 million to fund the pension plan of some of our subsidiaries.
      During 2000, the Ps. 1,730 million of net cash generated by continuing
      operations was primarily used to finance Ps. 724 million of capital
      expenditures and Ps. 510 million of investments in subsidiaries,
      while Ps. 53 million of net cash was used in financing activities. At
      December 31, 2001, we had cash and cash equivalents totaling Ps. 1,005 million
      ($110 million). Our policy is to invest available cash in short-term
      instruments issued by Mexican and U.S. banks and securities issued by the
      governments of Mexico and the United States. We obtain short-term financing
      from various Mexican and international banks. Short-term financing consists
      of lines of credit denominated in pesos and U.S. dollars. See "Description
      of Our Indebtedness." At December 31, 2001, outstanding short-term
      debt (including the current portion of long-term debt) totaled Ps. 6,162 million
      ($672 million), approximately 97% of which was U.S. dollar-denominated.
      At December 31, 2001, our outstanding consolidated long-term debt (excluding
      the current portion thereof) totaled Ps. 8,291 million ($904 million),
      94% of which was U.S. dollar-denominated. We
      believe that funds anticipated to be generated from continued operations,
      divestitures, joint ventures and borrowings would be sufficient to meet
      our current working capital requirements and investments activities. As
      of December 31, 2001, our debt (including short-term debt) matures as follows: Maturity
        Million
            pesos
        Millions
            U.S. dollars
        Denominated
            in pesos
        Average
            interest rate
        Denominated
            in U.S. dollars
        Average
            interest rate2002
        Ps. 6,162
        $ 672
        Ps. 168
        9.18%
        Ps. 5,994
        5.68%2003
        2,308
        252
        52
        7.41
        2,256
        6.232004
        1,494
        163
        362
        7.58
        1,132
        5.092005 and thereafter
        4,489
        489
        60
        7.41
        4,429
        9.48Total
        Ps. 14,453
        $ 1,576
        Ps. 642
        7.82%
        Ps. 13,811
        6.62% Receivables
      Financing
 In
    order to diversify our sources of financing, we have implemented certain asset
    sale financing programs, including receivables and other asset sales. We have
    implemented factoring programs for our Glass Containers business unit, VVP
    America and VVP Espana and Acros-Whirlpool. As of December 31, 2001,
    we had accessed $49 million out of the $75 million available in
    the Glass Containers business unit's program, $37 million out of the
    $55 million available in VVP America's program, $7 million out of
    the $10 million available in VVP Espana's program and $138 million out
    of the $140 million available in Acros-Whirlpool program. In
    general terms, the receivables financing programs, in addition to providing
    an alternate source of financing, offer other advantages to us, both in terms
    of cost and in non-financial value added commitments, to promote the sale
    of certain of our consumer products. When the sale of receivables resulted
    in a true sale pursuant to Mexican and U.S. GAAP, we treated such sales as
    off-balance-sheet transactions. As of December 31, 1999 and 2000, respectively,
    we had an aggregate of $131 million and $194 million in off-balance-sheet
    financing related to these sales of trade-receivable programs. As of December 31,
    2001, including Acros-Whirlpool the aggregate amount was $231 million. Leaseback
    Transactions During
    1999, we implemented a sale and leaseback transaction with respect to a Dassault
    Falcon Jet 900-B previously owned by us. In connection with the transaction,
    we sold the aircraft and then subsequently leased it back in a ten-year operating
    lease transaction. We received a net cash consideration of $20.2 million,
    which was used to pay down debt. Share
    Repurchases During
    the second half of 1998 and the first quarter of 1999, we acquired 28 million
    common shares of Vitro from a special trust created byMrs. Lydia Sada
    Trevino, Mr. Tomas Gonzalez Sada and Mr. Pablo Gonzalez Sada (the
    "Gonzalez Sada Family") in a cash neutral transaction that resulted from our
    agreement to sell our 49.9% interest in Cydsa, S.A. to the Gonzalez Sada Family.
    In addition, during the same period, we purchased in the open market three
    million common shares of Vitro in a series of transactions for a nominal aggregate
    amount of Ps. 44 million. Additionally, five million common shares
    of Vitro were transferred from Vitro's stock option trust (the "Stock Option
    Trust") to us on October 1998. As a result of these transactions, we held
    36 million common shares of Vitro in treasury that were canceled on March 26,
    1999 at an extraordinary shareholders' meeting. During
    the last three quarters of 1999, the Stock Option Trust purchased in the open
    market approximately 12.9 million common shares of Vitro in a series
    of transactions for an aggregate amount of approximately nominal Ps. 172 million.
    These purchases, together with the 10.2 million common shares of Vitro
    previously held by the Stock Option Trust, resulted in total holdings of 23.1 million
    common shares of Vitro by the Stock Option Trust at December 31, 1999. During
    2000, the Stock Option Trust purchased in open market transactions 32.1 million
    common shares of Vitro for a nominal aggregate amount of Ps. 368.2 million.
    After the sale by the Stock Option Trust of 11.5 million and 11.4 million
    common shares of Vitro in connection with the swap transactions described
    below, and the sale of 30.5 million common shares of Vitro to Vitro's
    pension plan, the Stock Option Trust held, as of December 31, 2000, 1.8 million
    common shares of Vitro. Additionally,
    and pursuant to the stock repurchase plan approved by our Board of Directors
    for a maximum aggregate amount of $40 million, from January 1, 2000
    to October 9, 2000, in a series of open market transactions, we purchased
    a total of 34.3 million common shares of Vitro for an aggregate nominal
    amount of Ps. 380 million. On August 25, 2000, our Board of
    Directors approved the funding of our subsidiaries' pension plans and on November 28,
    2000, we sold to Vitro's pension plan 8.7 million common shares of Vitro
    for an aggregate nominal amount of Ps. 76.3 million. On December 23,
    2000, we sold to Vitro's pension plan an additional 30.5 million common shares
    of Vitro for an aggregate nominal amount of Ps. 271.5 million. As
    a consequence of the expiration of the stock swap transaction described below,
    on December 31, 2001, the Stock Option Trust held 20.5 million common
    shares of Vitro. As
    of March 20, 2002, we held 50.3 million common shares of Vitro as
    treasury stock, of which (i) 24.7 million common shares were held
    by the Stock Option Trust, which we consider for accounting purposes as treasury
    stock and (ii) 25.6 common shares were held as treasury stock. 2009
    Senior Notes, Credit Linked Notes and Swap On
    April 30, 2002, we sold $88.35 million principal amount of our 2009 Senior
    Notes to Credit Suisse First Boston International ("CSFBI"), an
    affiliate of Credit Suisse First Boston Corporation, for net proceeds of $77.9
    million. The 2009 Senior Notes are senior, unsecured debt securities issued
    under an indenture dated as of April 30, 2002 between Vitro, as issuer, and
    JPMorgan Chase Bank, as trustee. The indenture contains covenants limiting,
    among other things, our ability and our restricted subsidiaries' ability to
    incur additional indebtedness, pay dividends or make certain investments,
    engage in transactions with affiliates, engage in mergers and consolidations
    and create or permit liens. A
    portion of the net proceeds of the sale of the 2009 Senior Notes, $38.8 million,
    were applied to repay the $175 million 101⁄4% Guaranteed Notes due 2002,
    issued by our wholly owned subsidiary Servicios y Operaciones Financieras
    Vitro, S.A. de C.V. ("SOFIVSA") and guaranteed by us, which matured
    on May 15, 2002, and accrued interest. The remaining proceeds, $39.1 million,
    were used to purchase $40 million of 13.889% Credit Linked Notes issued by
    Credit Suisse First Boston, acting through its Nassau branch (the "CLN
    Issuer"). Under the terms of the Credit Linked Notes, upon the occurrence
    of a Credit Event, which includes our bankruptcy or insolvency, noncompliance
    with the terms of our indebtedness which would permit the acceleration thereof,
    a default in respect of our indebtedness, a restructuring of our indebtedness,
    or a repudiation of or moratorium with respect to payments of our indebtedness,
    whether by us or a governmental entity, the principal amount of the Credit
    Linked Notes will be reduced pursuant to a formula based on the then current
    market price of SOFIVSA's 11?% Guaranteed Notes due 2007. As a result, if
    a Credit Event occurs, we may lose the entire amount that we invested in the
    Credit Linked Notes. As long as a Credit Event has not occurred, the CLN Issuer
    is generally required to redeem (i) the Credit Linked Notes in four annual
    installments, beginning on May 7, 2003 and (ii) a pro rata portion of the
    Credit Linked Notes at the time any portion of the 2009 Senior Notes is sold
    by CSFBI. Concurrently
    with the issuance of the 2009 Senior Notes and the purchase of the Credit
    Linked Notes, we entered into a swap agreement with CSFBI (the "Swap
    Counterparty") pursuant to which we agreed to make certain payments on
    April 30 of each year, beginning on April 30, 2003, and ending on April 30,
    2006, to the Swap Counterparty calculated with respect to an original notional
    amount of $80 million, if the market price of the 2009 Senior Notes declines
    from an initial benchmark price which is based on the price paid by CSFBI
    for the 2009 Senior Notes. In addition, the Swap Counterparty may require
    us to, at any time, make payments of all amounts that would be owed by us
    on all future payment dates if the market price of the SOFIVSA's 11?% Guaranteed
    Notes due 2007 declines to certain levels, with any such payments being netted
    against payments we would be required to make on future payment dates. If
    certain Termination Events occur, which are similar to the Credit Events described
    above, the Swap Counterparty may terminate the swap agreement. In that event,
    we may owe the Swap Counterparty an amount calculated as described above with
    respect to declines in the market price of the 2009 Senior Notes up to $40
    million. As long as a Termination Event has not occurred, a pro rata portion
    of the original notional amount will be reduced at the time any portion of
    the 2009 Senior Notes is sold by CSFBI. Pursuant
    to the terms of the related agreements and indenture, the occurrence of a
    Credit Event under the Credit Linked Notes and the reduction of the principal
    thereunder owed to us to zero and the occurrence of a Termination Event under
    the swap agreement resulting in our obligation to pay the Swap Counterparty
    up to $40 million under the swap agreement will not affect our obligation
    to repay the $88.35 million principal amount of 2009 Senior Notes plus accrued
    interest thereunder. Stock
    Swap Transactions On
    March 14, 2000 (the "First Stock SWAP Initial Date"), we entered into
    a one-year agreement (the "First Stock SWAP Agreement"), with a financial
    institution, involving 11.5 million common shares of Vitro (the "First
    Stock SWAP Shares"). Under the terms of the First Stock SWAP Agreement, we
    would receive from the counterparty (the "First Counterpart") to the First
    Stock SWAP Agreement any appreciation (based on the stock price quoted on
    the Mexican Stock Exchange) experienced by the First Stock SWAP Shares plus
    any dividends and other payments made with respect to such shares, in exchange
    for paying to the First Counterpart any depreciation on the First Stock SWAP
    Shares plus a payment calculated using a fixed interest rate on the market
    value of the First Stock SWAP Shares. All payments under the First Stock SWAP
    Agreement were denominated in U.S. dollars and we made or received those payments
    on a monthly basis. Concurrently with this transaction, our Stock Option Trust
    sold to the First Counterpart 11.5 million common shares of Vitro for
    Ps. 139 million (non-inflation adjusted), resulting in an increase
    in our stockholders' equity by such amount. During the life of the transaction,
    any payments made or received by us were charged or credited directly to our
    stockholders' equity. This Stock Swap Agreement expired in March 2001, at
    which time Vitro split and renewed the stock swap into two tranches with due
    dates of 45 and 90 days from March 21, 2001. As of December 31,
    2001, these stock swap transactions terminated without any economic effect
    and the Stock Option Trust repurchased the 11.5 million common shares
    that it had sold to the First Counterpart for Ps. 102 million (non-inflation
    adjusted). On
    September 29, 2000, (the "Second Stock SWAP Initial Date"), we entered
    into a one-year agreement (the "Second Stock SWAP Agreement"), with a financial
    institution, involving 11.4 million common shares of Vitro (the "Second
    Stock SWAP Shares") pursuant to which we would receive from the counterparty
    (the "Second Counterpart") to the Second Stock SWAP Agreement any appreciation
    (based on the stock price quoted on the Mexican Stock Exchange) experienced
    by the Second Stock SWAP Shares, plus any dividends and other payments made
    with respect to such shares, in exchange for paying to the Second Counterpart
    any depreciation on the Second Stock SWAP Shares, plus a payment calculated
    using a fixed interest rate on the market value of the Second Stock SWAP Shares.
    All payments under the Second Stock SWAP Agreement were denominated in U.S.
    dollars and we made or received those payments on a monthly basis. Concurrently
    with this transaction, our Stock Option Trust sold to the Second Counterpart
    11.4 million common shares of Vitro for Ps. 95 million (non-inflation
    adjusted), resulting in an increase in our stockholders' equity by such amount.
    During the life of the transaction, any payments made/received by Vitro were
    charged/credited directly to stockholders' equity. The Second Stock SWAP Agreement
    expired on September 29, 2001 without any economic effect. On October 3,
    2001, the Stock Option Trust repurchased the 11.4 million common shares
    that it had sold to the Second Counterpart for Ps. 90.9 million
    (non-inflation adjusted). On December 31, 2001 the Stock Option Trust
    held 20.5 million common shares of Vitro. Debt
    Agreements Affected by the Implementation of Bulletin D-4 The
    implementation of Bulletin D-4 on January 1, 2000 had an effect on the
    level of our assets, liabilities and stockholders equity. With the implementation
    of Bulletin D-4, on January 1, 2000, we were in violation of some of
    our debt covenants relating to minimum tangible net worth, maximum debt to
    equity ratio and maximum liabilities to equity ratio. We have negotiated and
    executed amendment agreements for all of our credit agreements affected by
    the implementation of Bulletin D-4. Capital
    Expenditures Our
    capital expenditure program is focused on new investment projects, technological
    upgrades in our manufacturing facilities and maintenance and expansion of
    our production capacity. The capital expenditure program also contemplates
    the purchase and maintenance of environmental protection equipment required
    to meet applicable environmental laws and regulations. The
    following table sets forth our capital expenditures by business unit for the
    periods presented. Year
          ended December 31,
        (Millions
          of constant pesos as of December 31, 2001)
      January through May 2002
          (Millions of constant pesos as of May 31, 2002)Business
          Unit
      1999
      2000
      2001Flat Glass
      Ps.
          410
      Ps.
          343
      Ps.
          381
      Ps. 73Glass Containers
      894
      373
      292
      228Glassware
      136
      154
      86
      56Acros-Whirlpool
      394
      223
      152
      28 In
    2001, our capital expenditures amounted to approximately Ps. 944 million
    ($103 million). The principal investment project was in Vitro Fibras,
    S.A., which we refer to as "Vifisa," a producer of fiber glass products, in
    which we invested Ps. 184 million ($20 million) for the construction
    of a new furnace in order to expand capacity. Other investments were focused
    on maintenance and capacity expansions. In
    2000, our capital expenditures amounted to approximately Ps. 1,110 million.
    The principal investment projects were focused on technological upgrades,
    maintenance, capacity expansions and environmental protection programs. In
    1999, our capital expenditures amounted to approximately Ps. 1,854 million.
    The principal investment projects were in our former Acros-Whirlpool business
    unit (See "Annual report Summary-Recent Developments"), where we
    invested Ps. 284 million in the launch of our new line of gas ranges
    and Ps. 147 million in our Glass Containers business unit relating
    to the completion of the construction of a new furnace in Comegua's plant
    in Costa Rica. Other projects included technological upgrades, maintenance,
    capacity expansions and environmental protection programs. Description
    of our Indebtedness Long-Term
    Debt As
    of December 31, 2001, and March 31, 2002, we had approximately Ps. 11,084
    million ($1,209 million), and Ps. 10,690 million ($1,185 million), respectively,
    of long-term debt, including the current portion of long-term debt. The
    following description of certain of our debt agreements and instruments is
    limited to those agreements pursuant to which more than $20 million (or
    its equivalent in pesos) of long-term debt was outstanding as of March 31,
    2002 or where the relevant debt is publicly placed. Facility
      Outstanding
          PrincipalAmount
      Interest
      MaturityComerica-Vitro
          Plan Facility
          Borrower: Vitro Plan subsidiaries
          Guarantor: Vitro Plan
      $75 million
      Rate: LIBOR
          plus 1.5% per annum.Period:
          Between 1 and 180 days to be negotiated at the time of disbursement.
      March 31, 2003Bank of America
          -VVP Facility
          Borrower: VVP America
      $25 million
      Rate: LIBOR
          plus a spread between 1.5% and 2.25% per annum, determined based upon
          the level of the ratio of Total Funded Debt to Adjusted Net Earnings
          ratio.Period:
          Monthly, bimonthly, quarterly or semiannually, at the election of the
          borrower.
      November 30, 2003CCB-Vidrio Plano
          de Mexico
          Borrower: Vidrio Flotado
          Guarantor: Vitro Plan
      $30 million
      Rate: LIBOR
          plus 2.32% per annumPeriod:
          Semiannually, commencing on June 5, 2001.
      December 5, 20032000-1 Peso-denominated
          Medium Term Notes ("MTNs")
          Issuer: Vitro
      Ps. 310 million
        ($34 million)
      Rate: Determined
          every 196 days (every interest rate period includes 7 interest payment
          dates). For the first 196-day period, 180-day CETES rate plus 2.4%;
          for the following 196-day periods, 180-day CETES rate plus 2.4%, plus
          or minus the difference between (x) 28-day CETES rate issued during
          the previous 196-day period plus 3.5% and (y) the rate established for
          the previous 196-day period.Period:
          Interest is paid every 28 days starting December 7, 2000.
      February 26, 2004Bank of Montreal
          -Vitrocrisa Facility
          Borrower: Vitrocrisa
      $25 million
      Rate: LIBOR
          plus 1.625%, 1.875% and 2.25% per annum for the first, second and third
          year, respectively.Period:
          Monthly, bimonthly, quarterly or semiannually, at the election of the
          borrower, and subject to availability at the discretion of the administrative
          agent; commencing on April 30, 2001.
      January 5,
          2004Banamex-Vitrocrisa
          Facility
          Borrower: Vitrocrisa
          Conditional Guarantor: Vitro
      $30 million
      Rate: To
          be negotiated every 180 days.Period:
          Semiannually commencing on February 19, 1999.
      August 31, 20041999-3 UDI-MTNs
          Issuer: Vitro
      UDI 50 million
        (Ps. 154 million
          or $17 million)
      Rate: 175
          basis points above the 5-year UDI-denominated government bond rate per
          annum.Period:
          Quarterly starting January 12, 2000.
      October 12, 2004Citibank- Vitrocrisa
          Facility
          Borrower: Vitrocrisa
          Contitional Guarantor: Vitro
      $23 million
      Rate: LIBOR
          plus 2.50% per annum.Period:
          Semiannually commencing on June 29, 2000.
      June 29, 20051999-1 UDI-MTNs
          Issuer: Vitro
      UDI 200 million
        (Ps. 618 million
          or $69 million)
      Rate: 9.0%
          per annum.Period:
          Quarterly starting September 7, 1999.
      June 7, 2006HSBC-SSB Facility
          Borrower: COVISA
          Guarantor: Vitro Packaging, Vena and Vitro
      $223 million
      Rate: LIBOR
          Plus 2.25, decreasing upon meeting debt ratiosPeriod:
          Quarterly starting November 14, 2001.
      August 21, 2006Banamex-Viplamex
          Facilities
          Borrower: Viplamex
          Guarantor: Vitro Plan
      $39 million
      Rate: LIBOR
          plus 2.26% per annum.Period:
          Semiannually commencing on March 25, 1997.
      September 4, 2006Bancomext - Vitro
          Plan Facility
          Borrower: Vitro Plan
      $30 million
      Rate: To
          be negotiated a the time of disbursement.Period:
          Between 1 and 180 days, to be negotiated at the time of disbursement.
      September 25, 20061999-2 UDI-MTNs
          Issuer: Vitro
      UDI 155 million
        (Ps. 479 million
          or $53 million)
      Rate: 9.90%
          per annum.Period:
          Quarterly starting January 12, 2000.
      October 12, 200611 3/8% Vicap Notes
          Issuer: Vicap
          Guarantor: Vitro
      $250,000,000
      Rate: 11
          3/8% per annum.Period:
          Semiannually on May 15 and November 15 of each year.
      May 15, 200711 1/2% Senior Notes
        due 2009
        Issuer: Vitro
      $88,350,000
      Rate:11 1/2%
        per annum.Period: Semiannually on April 30 and October of each year
      April 30, 2009 The
    following discussion provides additional information with respect to the foregoing
    facilities: Comerica-Vitro
    Plan Facility On
    December 31, 1997, certain subsidiaries of the Flat Glass business unit
    entered into a revolving Credit Agreement (the "Comerica-Vitro Plan Facility")
    among Comerica Bank, as lender, such Vitro Plan subsidiaries, as borrowers
    (the "Comerica Borrowers"), and Vitro Plan, as guarantor. The
    Comerica-Vitro Plan Facility, which provides for borrowings of up to $75 million,
    requires Vitro Plan to maintain compliance with certain financial covenants,
    including, among others, a current ratio, a leverage ratio, an interest coverage
    ratio and a minimum level of export receivables. The Comerica-Vitro Plan Facility
    contains covenants which restrict or limit, among other things, the ability
    of the Comerica Borrowers and of Vitro Plan (i) to create certain liens, (ii)
    to enter into certain mergers and dispose of certain assets, (iii) to pay
    certain dividends, (iv) to make changes to their current corporate structure
    that may result in Vitro having less than a majority interest in Vitro Plan,
    or Vitro Plan having less than the majority interest in the Comerica Borrowers
    and (v) to carry out certain investments or advances. The Comerica-Vitro Plan
    Facility contains customary events of default, including the failure by VVP
    America or VVP Holdings Inc., the parent company of VVP America, to make a
    payment on any debt whose principal amount exceeds $250,000. Bank
    of America-VVP Facility On
    January 31, 1997, VVP America entered into a Loan and Security Agreement (the
    "Bank of America-VVP Facility") among Bank of America, FSB, as lender, and
    VVP America, as borrower. The agreement provides for a maximum revolving line
    of credit for loans and letters of credit in the amount of $50 million. Any
    borrowings under the Bank of America-VVP Facility are collateralized with
    a continuing security interest in certain assets of VVP America, including
    among others, receivables, inventory, equipment and intangible assets. The
    Bank of America-VVP Facility is also guaranteed by VVP Holdings Inc. pursuant
    to a guarantee agreement dated January 31, 1997. The
    Bank of America-VVP Facility requires VVP America to maintain compliance with
    certain financial covenants at a consolidated level including, among others,
    a fixed charge coverage ratio, an adjusted tangible net worth and a total
    funded debt to adjusted net earnings ratio. The Bank of America-VVP Facility
    contains covenants which restrict, among other things, the ability of VVP
    America to (i) enter into certain mergers, consolidations and asset sales,
    (ii) grant certain liens on its assets, (iii) pay certain dividends, (iv)
    enter into certain sale and leaseback transactions, (v) make certain capital
    expenditures and (vi) incur additional indebtedness. The Bank of America-VVP
    Facility contains customary events of default. CCB-Vidrio
    Plano de Mexico Facility On
    November 24, 2000, Vitro Flotado entered into a medium-term Loan Agreement
    (the "CCB-Vitro Flotado Facility") among California Commerce Bank, as lender,
    Vitro Flotado, as borrower, and Vitro Plan, as guarantor. The CCB-Vitro Flotado
    Facility contains covenants which restrict, among other things, the ability
    of Vitro Flotado to (i) enter into certain mergers, consolidations and asset
    sales, (ii) grant certain liens on its assets and (iii) make investments in,
    or purchases of, other enterprises. The CCB-Vitro Flotado Facility contains
    customary events of default. Bank
    of Montreal-Vitrocrisa Facility On
    January 5, 2001, Vitrocrisa entered into a medium-term Credit Agreement (the
    "Bank of Montreal-Vitrocrisa Facility") among Bank of Montreal, as administrative
    agent, various financial institutions, as lenders, and Vitrocrisa, as borrower.
    The Bank of Montreal-Vitrocrisa Facility provides for U.S. dollar-denominated
    borrowings of up to $30 million. The Bank of Montreal-Vitrocrisa Facility
    requires Vitrocrisa to maintain compliance with certain financial covenants,
    including, among others, an interest coverage ratio, a leverage ratio and
    a minimum net worth. The Bank of Montreal-Vitrocrisa Facility contains covenants
    which restrict, among other things, the ability of Vitrocrisa to (i) enter
    into certain asset sales, mergers or consolidations, (ii) grant certain liens
    on its assets and (iii) pay certain dividends. The Bank of Montreal-Vitrocrisa
    Facility contains customary events of default. Banamex-Vitrocrisa
    Facility On
    August 19, 1998, Vitrocrisa entered into a Credit Agreement (the "Banamex-Vitrocrisa
    Facility") among Banamex, as lender, Vitrocrisa, as borrower, and Vitro, as
    conditional guarantor. The Banamex-Vitrocrisa Facility requires Vitrocrisa
    to maintain compliance with certain financial covenants, including, among
    others, an interest coverage ratio and a leverage ratio. The Banamex-Vitrocrisa
    Facility contains covenants, which restrict, among other things, the ability
    of Vitrocrisa to (i) enter into certain mergers, consolidations and asset
    sales, (ii) grant certain liens on its assets and (iii) pay certain dividends.
    The Banamex-Vitrocrisa Facility contains customary events of default. Citibank-Vitrocrisa
    Facility On
    June 23, 2000, Vitrocrisa entered into a long-term Export Financing Agreement
    (the "Citibank Facility") among Citibank, N.A., as lender, Vitrocrisa, as
    borrower, and Vitro, as conditional guarantor. The Citibank Facility provided
    for U.S. dollar-denominated borrowings of up to $33 million. The Citibank
    Facility requires Vitrocrisa to maintain compliance with certain financial
    covenants, including, among others, an interest coverage ratio, a leverage
    ratio, minimum net worth and minimum annual export sales. The Citibank Facility
    contains covenants, which restrict, among other things, the ability of Vitrocrisa
    to (i) enter into certain asset sales, (ii) grant certain liens on its assets
    and (iii) pay certain dividends. The Citibank Facility contains customary
    events of default. HSBC-SSB
    Facility On
    August 14, 2001, Compania Vidriera, S.A. de C.V. ("COVISA") entered into an
    Export Security Long Term Credit Agreement (the "HSBC-SSB Facility") among
    COVISA as Borrower, Vitro Packaging Inc., Vitro Envases Norteamerica, S.A.
    de C.V. ("Vena") and Vitro, S.A. de C.V. as guarantors, various banks as lenders,
    HSBC and SSB as Joint Lead Arrangers and HSBC Investment Bank PLC as administrative
    agent. The HSBC-SSB Facility provides for up to $235 million U.S. dollar-denominated
    borrowings. Loans under the HSBC-SSB Facility were used to repay foreign trade
    short- and medium-term borrowings of Vena's subsidiaries. The
    loan made pursuant to the HSBC-SSB Facility is guaranteed by Vitro, S.A. de
    C.V., Compania Vidriera, S.A. de C.V. and Vitro Packaging Inc. Additionally,
    the loan made under the HSBC-SSB Facility is secured with export receivables. The
    HSBC-SSB Facility contains certain covenants which restrict or limit, among
    other things, the ability of Vena (i) to incur any additional indebtedness,
    pursuant to a debt to EBITDA ratio, (ii) make certain dividend payments, (iii)
    maintain certain interest coverage ratios and (iv) to enter into certain transactions
    with affiliates. The HSBC-SSB Facility contains certain customary events of
    default for the borrower and guarantors. Banamex-Viplamex
    Facilities On
    September 4, 1996, Vidrio Plano de Mexico, S.A. de C.V. ("Viplamex") entered
    into two Credit Agreements (the "Banamex-Viplamex Facilities") among Banamex,
    as lender, Viplamex, as borrower, and Vitro Plan, as guarantor. The Banamex-Viplamex
    Facilities are composed of two Credit Agreements. The Banamex-Viplamex Facilities
    require Vitro Plan, on a consolidated basis, to maintain compliance with certain
    financial ratios, including, among others, a leverage ratio and a liquidity
    ratio. The Banamex-Viplamex Facilities contain covenants, which restrict,
    among other things, the ability of Viplamex and Vitro Plan (i) to enter into
    certain mergers, consolidations and asset sales, and (ii) to pay certain dividends.
    The Banamex-Viplamex Facilities contain customary events of default. The amounts
    outstanding under the Banamex-Viplamex Facilities are secured by mortgages
    on certain assets of Viplamex. Bancomext-Vitro
    Plan Facility On
    September 25, 2001, Vitro Plan entered into a long-term Export Financing Agreement
    (the "Bancomext-Vitro Plan Facility") between Bancomext and S.N.C. as lender
    and Vitro Plan, as borrower. This facility provides for U.S. dollar-denominated
    borrowings of up to $30 million, requires Vitro Plan to maintain compliance
    with certain covenants, including, among others, an interest coverage ratio
    and minimum net worth test and contains certain customary events of default. Vicap
    Notes On
    May 13, 1997, Vicap, S.A. de C. V. ("Vicap"), a wholly owned subsidiary
    of Vitro and our financing vehicle in Mexico, completed an offering (pursuant
    to Rule 144A, coupled with a registration rights agreement) in the international
    capital markets of $250,000,000 aggregate principal amount of its 11.375%
    Guaranteed Notes due 2007, unconditionally guaranteed by Vitro (the "Old Vicap
    Notes"). On
    November 18, 1998 (the "Exchange Offer Termination Date"), Vicap and Vitro
    consummated their offer to exchange (the "Exchange Offer") $250,000,000 aggregate
    principal amount of the Old Vicap Notes for a like principal amount of notes
    that were registered under the Securities Act (the "New Vicap Notes"). The
    aggregate principal amount of Old Vicap Notes that were exchanged in the Exchange
    Offer by holders thereof for New Vicap Notes was $231,825,000. Pursuant to
    the undertaking by the Vicap and Vitro in the registration statement for the
    Exchange Offer, Vicap and Vitro removed from registration all the New Vicap
    Notes that remained unsold at the Exchange Offer Termination Date. Accordingly,
    as of the Exchange Offer Termination Date there were outstanding $231,825,000
    and $18,175,000, respectively, of New Vicap Notes and Old Vicap Notes (the
    Old Vicap Notes and the New Vicap Notes are collectively referred herein as
    the "Vicap Notes"). The
    terms of the New Vicap Notes are identical in all material respects to the
    terms of the Old Vicap Notes, except that the New Vicap Notes have been registered
    under the Securities Act and are issued free of any transfer restrictions.
    As a consequence, the Old Vicap Notes bear legends restricting their transfer
    and, in general, may not be offered or sold, unless registered under the Securities
    Act, except pursuant to an exemption from, or in a transaction not subject
    to, the Securities Act and applicable state securities laws. The
    Vicap Notes are debt securities issued under an Indenture dated May 1,
    1997 (the "Indenture") among Vicap, as issuer, Vitro, as guarantor, and The
    Chase Manhattan Bank, as trustee. The Vicap Notes and the guarantee by Vitro
    are general, senior unsecured obligations, respectively, of Vicap and Vitro
    and rank pari passu with senior unsecured obligations, respectively
    of Vicap and Vitro (other than obligations given preference by statute). However,
    obligations of Vitro to its creditors, including holders of the Vicap Notes,
    are effectively subordinated in right of payment to all direct liabilities
    of its subsidiaries. The Vicap Notes are redeemable at the option of Vicap
    after May 15, 2002, at defined redemption prices plus accrued interest
    on the redemption date. The Indenture contains covenants limiting, among other
    things, the ability of Vitro and/or its Restricted Subsidiaries (as defined
    therein) to incur additional indebtedness, pay dividends or make certain investments,
    engage in transactions with affiliates, engage in mergers and consolidations
    and create or permit liens. On
    January 31, 2001, Servicios y Operaciones Financieras Vitro, S.A. de
    C.V., which we refer to as "SOFIVSA," a wholly owned subsidiary of Vitro,
    entered into a merger agreement with Vicap, SOFIVSA being the surviving entity.
    On the same date, SOFIVSA, as issuer, Vitro as guarantor, and The Chase Manhattan
    Bank as trustee (successor by merger to Chase Bank of Texas, National Association,
    which was successor by change of name to Texas Commerce Bank National Association)
    entered into a supplemental indenture pursuant to which SOFIVSA expressly
    assumed all of the obligations of Vicap under the notes and the Indenture. Short-Term
    Debt Our
    short-term debt consists primarily of unsecured borrowing arrangements with
    Mexican and foreign banks and commercial paper programs denominated in both
    U.S. dollars and Mexican pesos. We engage, from time to time, in the ordinary
    course of business, in a number and variety of short-term loan arrangements
    with a number of Mexican and foreign banks. Such loans generally have a maturity
    ranging from 30 to 180 days and have interest rates ranging from 1.5% to 2.5%
    above LIBOR, for the U.S. dollar-denominated loans, and floating market rates,
    for the peso-denominated loans. As of December 31, 2001, we had approximately
    Ps. 3,369 million ($368 million) of short-term debt,
    excluding the current portion of long-term debt. Research
    and development, patents and licenses, etc. Our
    research and development efforts are generally decentralized, with each operating
    business unit making its own decisions as to research and development expenditures
    and areas of emphasis. In 1999, we formed a technology committee, which coordinates
    research and development projects that have the potential to create synergies
    or that could be implemented in more than one of our business units. In addition,
    in 2001 we migrated several of our Mexican subsidiaries that own part of the
    technology in our Flat Glass and Glass Containers business units to Switzerland.
    These Swiss subsidiaries will perform research and development activities,
    license the technology to our Mexican operating subsidiaries and undertake
    development efforts jointly with the Mexican subsidiaries and, eventually,
    third parties. Also, through technology licensing arrangements, we benefit
    significantly from research and development conducted by certain of our joint
    venture partners. Of particular significance to us is the technology license
    arrangement with Pilkington, which provides us with state of the art float
    glass technology. See "Flat Glass Business Unit." We own a
    number of trademarks and patents, which in the aggregate are important to
    conduct our business, none of which, however, is individually considered material
    to our business as a whole. No material amount of money was spent on research
    activities during 1999, 2000 or 2001. A
    number of our subsidiaries conduct all or a portion of their businesses through
    joint ventures or technology alliances with non-Mexican partners and we expect
    to enter into other similar arrangements in the future. Certain of these partners
    also license technology and trade names to our subsidiaries for use in the
    manufacture of various products, including flat glass, glassware, household
    appliances and glass containers. We believe that these joint ventures, alliances
    and license arrangements provide us with important competitive advantages.
    We cannot be certain that in the future, some of these partners will not prefer
    to conduct business directly in Mexico and terminate their relationships with
    us in view of the easing of the limitations on foreign investments, the reduction
    of import duties and tariffs that has occurred under NAFTA or for other reasons.
    In addition, there can be no assurance that we will be successful in renewing
    any joint venture, technical assistance, license or other agreements or arrangements
    upon their expiration, in renewing these agreements on terms as favorable
    as the present ones, in forming similar alliances with other partners or in
    developing equivalent technologies independently. Application
    of Critical Accounting Policies We
    prepare our consolidated financial statements in conformity with accounting
    principles generally accepted in Mexico. 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 in the related disclosures. The significant accounting policies
    which we believe are the most sensitive to such estimates and relevant to
    aid you in fully understanding and evaluating our reported financial statements
    include 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 credit worthiness, as
    determined by our review of their current credit information. We continually
    monitor collections and payments from customers and maintain an allowance
    for doubtful accounts based upon our historical experience and any specific
    customer collection issues that we have identified. While such credit losses
    have historically been within our expectations and the provisions established,
    we cannot guarantee that we will continue to experience the same credit loss
    rates that we have in the past. A significant change in our experience of
    credit losses could have a material adverse impact on our future operating
    results. Contingencies Contingencies,
    by their nature, relate to uncertainties that require management to exercise
    judgment both in assessing the likelihood that a liability has been incurred
    as well as in estimating the amount of potential loss. We believe the amounts
    recorded and/or disclosed in our financial statements are based on the best
    estimates and judgments of management, although actual outcomes could differ
    from our estimates. Financial
    instruments Assets
    and liabilities resulting from financial instruments, except for such instruments
    held to maturity, are recorded in the balance sheet at fair value. The financial
    instruments held to maturity are valued at their acquisition cost. The effects
    of valuation of the financial instruments, including their cost and yield,
    are recorded in the corresponding year in the statement of operations. Financial
    instruments for hedging purposes are valued using the same criteria of valuation
    of the 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 market value amounts. Revenue
    recognition, inventories and cost of sales Revenues
    and related costs are recognized in the period in which risks and benefits
    are transferred to purchasers, which generally coincides with the shipment
    of products to costumers in satisfaction of orders. Inventories
    are valued at the price of the last purchase made during the year or at the
    latest production cost without exceeding the net realizable value. Cost of
    sales is determined by using the price of the last purchase prior to the date
    of consumption or the latest production cost at the time of sale. Seniority
    premiums, retirement plans and severance payments Seniority
    premiums and pension plans for all personnel are considered as costs in the
    periods in which services are rendered. Periodic costs are calculated in accordance
    with Bulletin D-3 issued by the Instituto Mexicano de Contadores Publicos
    (Mexican Institute of Public Accountants) and the actuarial computations are
    made by an independent actuary, utilizing extensive estimates of salaries,
    inflation, investment returns, mortality, turnover and discount rates well
    into the future. While we have made such estimates based on published tables
    and current market conditions, significant variance in actual experience compared
    to our estimates, could have a material adverse effect on our future operating
    results. Income
    tax, tax on assets and profit sharing to workers Effective
    January 1, 2000, we are applying the provisions of the new Bulletin D-4 "Accounting
    Treatment of Income Tax, Tax on Assets and Workers' Profit Sharing."
    As required by this bulletin, deferred income taxes are provided for differences
    between the book and tax values of assets and liabilities and deferred workers'
    profit sharing for temporary differences between the financial and adjusted
    tax income, which are expected to reverse in the future. Additionally, tax
    on assets paid is recognized as an asset. Realization
    of the net deferred tax assets is dependent on our ability to generate future
    taxable income. Management regularly reviews its deferred tax assets for recoverability
    and establishes a valuation allowance based on historical taxable income,
    projected future taxable income, and the expected timing of the reversals
    of existing temporary differences. If we are unable to generate sufficient
    future taxable income, or if there is a material change in the actual tax
    rates or time period within which existing temporary differences become taxable
    or deductible, we could be required to establish a valuation allowance against
    some or all of our deferred tax assets resulting in a significant increase
    in our effective tax rate and a material adverse effect on our operating results. Accounts
    receivable financings We
    entered into several factoring agreements to sell accounts receivables. The
    outstanding balance of receivables sold at December 31, 2001 amounted to $ 231 million.
    We continuously monitor collections and customer credit-worthiness and provide
    an allowance for any estimated uncollectible amounts. A significant change
    in our experience could have a material adverse impact on our future operating
    results.  Item
    6. Directors, Senior Management and Employees Directors and senior
    management. Directors The
    following information refers to directors of Vitro. There are no arrangements
    or understandings with major shareholders, customers, suppliers or others,
    pursuant to which any of them was selected as a member of senior management. The
    board of directors is responsible for the management of the business. Our
    by-laws (estatutos sociales) provide that the board of directors will
    consist of the number of directors specified by the annual general ordinary
    shareholders' meeting, and that each member of such board of directors shall
    be elected at such shareholders' meeting for a renewable term of one year.
    Each director shall serve until a successor is duly elected and takes office.
    Our board of directors currently consists of 17 directors. The
    current directors, their principal occupations and directorships, the year
    they first became a director and year of birth are as follows: Name
      Principal Occupation
      First
          Became a Director
      Year
          of BirthAdrian Sada Gonzalez
      Chairman of the
          Board of Vitro
      1984
      1944Adrian Sada Trevino
      Director and Honorary
          Chairman of the Board of Directors of Vitro
      1969
      1920Federico Sada Gonzalez
      President and Chief
          Executive Officer of Vitro
      1982
      1949Tomas Gonzalez
          Sada
      Chairman, President
          and Chief Executive Officer of Cydsa
      1980
      1943Andres A. Yarte
          Cantu
      Chief Executive
          Officer of Nacional de Ceramica, S.A.
      1991
      1941Dionisio Garza
          Medina
      Chairman and Chief
          Executive Officer of Alfa, S.A. de C.V.
      1995
      1954Gustavo Madero
          Munoz
      Chief Financial
          Officer of Promotora Empresarial del Norte, S. A. de C. V.
      1996
      1955Roberto G. Mendoza
      Financial Advisor
      1998
      1945Carlos E. Represas
      Executive Vice
          President of Nestle S.A.
      1998
      1945Jaime Serra Puche
      Partner of SAI-Consultores,
          S.C.
      1998
      1951Lorenzo H. Zambrano
          T.
      President and Chief
          Executive Officer of Cemex, S.A. de C.V.
      1998
      1944Carlos F. Munoz
          O.
      Private investor
      2000
      1955Joaquin Vargas
          G.
      Chairman of the
          Board of Directors of Grupo MVS, S.A. de C.V.
      2000
      1954Raul Rangel Hinojosa
      Legal and Financial
          Advisor, also serves as Secretary of the Board of Vitro
      2001
      1949Luis A. Nicolau
          G.
      Chief Corporate
          Officer of Vitro
      2001
      1961Alejandro Garza
          Laguera
      Member of the executive
          committee of Pulsar Internacional, S.A. de C.V.
      2001
      1926Eduardo Brittingham
          S.
      Private Investor
      2001
      1926 The
    directors were elected for a one-year term by our shareholders at the annual
    general ordinary shareholders' meeting held on March 14, 2002. The directors
    receive directors' fees of three Centenarios (37.5 gram gold coins) per
    meeting of the board of directors. Following
    brief descriptions of the current occupations and biographical information
    of each of Vitro's directors: Adrian
    Sada Gonzalez: Chairman
    of the Board of Directors of Vitro. He is also a member of the Boards of Alfa
    S.A., Gruma, S.A. de C.V., Grupo Cydsa S.A., Regio Empresas, Wharton (Latin
    American Executive Board for the Wharton School of Finance), Mexican Businessmen
    Council, Consejo de Industriales de Nuevo Leon, Fondo Chiapas and Pronatura
    and a Member of the Young Presidents Organization. Adrian
    Sada Trevino: Honorary
    Chairman of Vitro's Board and Chairman of the Board of Fundacion Martinez
    Sada. President
    and Chief Executive Officer of Vitro. He is a former Chairman of the Mexican
    Council for Foreign Trade; Member of the Boards of Alpek, S.A. de C.V., Banco
    Nacional de Comercio Exterior, S.N.C., Institute for Educational Investigation
    and Improvement, Instituto Tecnologico y de Estudios Superiores de Monterrey,
    Regio Empresas, University of Texas, MD Anderson Cancer Center; Chairman of
    the Council of the National History Museum; Chairman of Trustees, Parque Ecologico
    Chipinque; Member of the Consejo Coordinador Empresarial; Member of the World
    Business Council for Sustainable Development. Tomas
    Gonzalez Sada: Chairman
    of the Board and Chief Executive Officer of Grupo Cydsa S.A.; Chairman of
    the Mexico-Japan Business Committee of the Mexican Council for Foreign Trade;
    Chairman of the Board of Trustees of Universidad Regiomontana; Treasurer of
    Fundacion Martinez Sada; Member of the Board of Regio Empresas; Member of
    the Mexican Businessmen Council and The George Washington University School
    of Business and Public Management. Andres
    A. Yarte Cantu: Chairman
    of the Board and Chief Executive Officer of Distribuidora de Productos Ceramicos
    and K-Inver, S.A. Dionisio
    Garza Medina: Chairman
    of the Board and Chief Executive Officer of Alfa S.A.; Chairman of the Board
    of Universidad de Monterrey; Member of the Board of Cemex, S.A. de C.V., Grupo
    Cydsa S.A. and Seguros Comercial America, S.A. de C.V. Member of the Board
    of Directors of the Harvard Business School; Member of the Mexican Businessman
    Council and the Advisory Committee to the David Rockefeller Center for Latin
    American Studies. Gustavo
    Madero Munoz: Chief
    Financial Officer of Promotora Empresarial del Norte, S.A. de C.V.; Chairman
    of the Board of Hermanos Madero, Electronic Publishing, and Servicios de Prevision
    Integral; Regional Vice President of Grupo Financiero Banamex Accival, S.A.
    de C.V.; Technology Vice-President of Desarrollo Economico del Estado de Chihuahua,
    Member of the Boards of Instituto Tecnologico y de Estudios Superiores de
    Monterrey, Campus Chihuahua and Seguros Comercial America, S.A. de C.V. Roberto
    G. Mendoza: Financial
    Advisor; Chairman of Egg Plc; Vice Chairman of J.P. Morgan Chase & Co.
    (1990-2000). Carlos
    E. Represas: Executive
    Vice-President of Nestle S.A.; Chairman of the Board of Nestle Mexico, S.A.
    de C.V.; Chairman of the Board of Nestle Holdings, Inc.; Co-Chairman of the
    Board of Coca-Cola Nestle Refreshments; Member of the Board of Cereal Partners
    Worldwide. Jaime
    Serra Puche: Senior
    Partner of Serra Associates International (SAI-Consultadores); Trustee of
    the Yale Corporation; Member of the Boards of Alcatel Indetel, S.A. de C.V.,
    Tubos de Acero de Mexico, S.A. and The Mexico Fund Inc.; Mexico's Secretary
    of Finance and Public Credit (1994), Mexico's Secretary of Trade and Industry
    (1988-1994); Mexico's Under-Secretary of Revenue, Ministry of Finance and
    Public Credit (1986-1988). Lorenzo
    H. Zambrano T.: Chairman
    of the Board and Chief Executive Officer of Cemex, S.A. de C.V.; Chairman
    of the Board of Instituto Tecnologico y de Estudios Superiores de Monterrey;
    Member of Executive Committee of Grupo Financiero Banamex Accival, S.A. de
    C.V.; Member of the Salomon Smith Barney International Advisory Board; Member
    of the Boards of Coca-Cola Femsa, S.A. de C.V., Empresas ICA Sociedad Controladora,
    S.A. de C.V., Alfa, S.A. de C.V., Grupo Cydsa S.A. and Televisa, S.A.; Member
    of the Board of The Americas Society, Advisory Council to the Stanford Graduate
    School of Business, the Museo de Arte Contemporaneo, and the U.S.-Mexico Commission
    for Educational and Cultural Exchange. Carlos
    F. Munoz O.: Private
    Investor; Vice-President of Fomento Bursatil; Vice-President of Super Mart;
    Vice-President of Manufacturas de Concreto; Member of the Board of Instituto
    Tecnologico y de Estudios Superiores de Monterrey, Campus Chihuahua. Joaquin
    Vargas G.: Chairman
    of the Board of Grupo MVS, S.A. de C.V. ; Chairman of the Board of Corporacion
    Mexicana de Restaurantes, S.A. de C.V.; President of Asociacion Mexicana de
    Restaurante A.C.; Chairman of the Board of Trustees of Camara Nacional de
    Industria de Radio y Television; Member of the Boards of Possehl, Grupo Costamex,
    S.A. de C.V., Grupo Posadas, Bolsa Mexicana de Valores, VistaLink Medical
    Communications Inc., First Vice-President of Nucleo Radio Mil. Raul
    Rangel Hinojosa: President
    of Institutional Relations of the Council for Foreign Trade; Member of the
    Boards of Consejo Coordinador Empresarial, Advisory Council of Universidad
    Autonoma de Nuevo Leon, Consejero Centro Patronal de Nuevo Leon, Camara de
    la Industria de la Transformacion en Nuevo Leon and Centro de Estudios en
    Economia y Educacion. Luis
    Nicolau Gutierrez: Chief
    Corporate Officer of Vitro; Vice President for Corporate Affairs of Vitro;
    Member of the Boards of Grupo Cinemex S.A. de C.V. and J.P. Morgan Grupo Financiero;
    former partner at Ritch, Heather y Mueller, S.C. (1991-2001), a Mexico City-based
    law firm. Alejandro
    Garza Laguera: Member
    of the Executive Committee of Pulsar Internacional, S.A. de C.V.; Member of
    the Boards of Grupo Cydsa S.A., Grupo Industrial Ramirez S.A., Instituto
    Tecnologico y de Estudios Superiores de Monterrey and Centro de Estudios de
    Economia y Educacion; Member of the Board of Governors of the Wharton School
    of Business and the Joseph H. Lauder Institute. Eduardo
    Brittingham S.: Private
    Investor; Chief Executive Officer of Auto Express Rapido Nuevo Laredo, S.A.
    de C.V., Laredo Autos, S.A. de C.V. and Corporacion Internacional de
    Manufacturas. Examiner
    and Secretary We
    have a Comisario, an examiner, who is elected by our shareholders at
    the annual general ordinary shareholders' meeting. Under Mexican law, the
    examiner's duties include, among other things, examination of our operations,
    books, records and any other documents and the presentation of a report of
    such examination at the general ordinary shareholders' meeting. At the annual
    general ordinary shareholders' meeting held on March 14, 2002, Manuel
    Guemez de la Vega was elected to serve as examiner for one year and Julio
    Escamez Ferreiro was elected as alternate examiner also for one year. The
    board of directors has the power to appoint the secretary of the board, who
    does not need to be a director. The
    secretary of the board, elected at the March 14, 2002 ordinary shareholders'
    meeting, is Raul Rangel Hinojosa. Each of the secretary and the examiner receives
    a fee of three Centenarios (37.5 gram gold coins) per meeting. Senior
    Management The
    following table sets forth information with respect to the executive officers
    of Vitro. There are no arrangements or understandings with major shareholders,
    customers, suppliers or others, pursuant to which any of them were selected
    as a member of the senior management. Name
      Year
          Born
      Title
      Current
          Position Held SinceFederico
        Sada Gonzalez
      1949
      President
        and Chief Executive Officer
      1995Luis
        A. Nicolau Gutierrez
      1961
      Chief
        Corporate Officer
      2001Jose
        Domene Zambrano
      1954
      Chief
        Operating Officer
      2001Juan
        M. De Nigris
      1952
      Executive
        Commission Office Director
      2001Roberto
        Rubio Barnes
      1955
      General
        Director of Flat Glass business unit
      2001Fernando
        Flores Faz
      1946
      General
        Director of Glass Containers business unit
      2001Gonzalo
        Escamez Sada
      1963
      General
        Director of Glassware business unit
      2001Alfonso
        Gomez Palacio Gastelum
      1942
      Projects
        Director and former General Director of Acros-Whirlpool business unit
      2002Javier
        Bofarull Viladaf
      1953
      General
        Director of International Commerce
      2001 Following
    are brief biographies of each of Vitro's executive officers not otherwise
    provided above: Federico
    Sada Gonzalez, born in 1949, President and Chief Executive Officer of
    Grupo Vitro. Mr. Sada
    obtained his B.S. degree in Business Administration at the Instituto Tecnologico
    y de Estudios Superiores de Monterrey, and his M.B.A. degree from IMEDE in
    Lausanne, Switzerland; Mr. Sada also attended Harvard University's Advanced
    Management Program. Mr. Sada joined Vitro, S.A. de C.V. in 1974. He became
    Planning and Finance Director of Glass Containers business unit in 1978. In
    1985, he was named President of North America Glass Containers, the largest
    single business of Vitro. This business included the operations of Glass Containers
    business unit in Mexico, and the investments of Vitro in North, Central and
    South America. As
    of January 1, 1995, Mr. Sada was named President and Chief Executive
    Officer of Vitro, S.A. de C.V. Mr. Sada is member of the boards
    of Vitro, S.A. de C.V. Instituto Tecnologico y de Estudios Superiores de Monterrey,
    The University of Texas MD Anderson Cancer Center, Regio Empresas, The Institute
    for Educational Investigation and Improvement and ALPEK (a subsidiary of Alfa,.
    S.A. de C.V.). In
    addition to his responsibilities at Vitro, Mr. Sada is the Chairman of
    Trustees of Chipinque Ecological Park Foundation, Trustee at the Museum of
    Wildlife and Natural Sciences in Monterrey and Chairman of Trustee of the
    National Museum of History (Chapultepec Castle Trust). He is member of the
    World Business Council for Sustainable Development (WBCSD); and on May 14,
    1999, he became the first President of the Mexican Council for International
    Commerce (COMCE). Luis
    A. Nicolau Gutierrez, born in 1961, Chief Corporate Officer. Mr. Nicolau
    holds a law degree from Escuela Libre de Derecho, Mexico City, and a Master
    of Laws degree from Columbia University, where he attended as a Fulbright
    Grantee. After spending several years at Shearman & Sterling in New
    York, he became a partner at Ritch, Heather y Mueller, S.C., a Mexico City
    law firm specializing in corporate and financial affairs, where he remained
    for over 10 years. Mr. Nicolau
    was appointed Chief Corporate Officer in April 2001. In addition, Mr. Nicolau
    is a member of the boards of Group Cinemex S.A. de C.V. and JPMorgan Grupo
    Financiero, S.A. de C.V. Jose
    Domene Zambrano, born in 1954, Chief Operating Officer. Bachelor
    of Science Chemical Engineering at University of Wisconsin-Madison (1976)
    and Master's Degree in Business Administration at Stanford University (1979). Mr. Domene
    joined Alfa, S.A. de C.V., in 1976 and worked in several executive positions
    in strategic planning at Alfa Industries. In 1982, Mr. Domene was appointed
    Vice-President of Finance, Planning and Tourism, Electronics and Food Division
    at Grupo Protexa, S.A. de C.V., until he was promoted to President of Real
    State and Tourism. In 1987 Mr. Domene joined Cemex, S.A. de C.V. as Chief
    Executive Officer of Cementos Anahuac. Later, he was appointed Chief Financial
    Officer of Cemex, S.A. de C.V. and then Chief Executive Officer of Empresas
    Tolteca de Mexico. In 1991, Mr. Domene was appointed President of Cemex
    International. In April 1999, Mr. Domene held the position of Chief Executive
    Officer in Altos Hornos de Mexico, S.A. de C.V. Mr. Domene
    joined Vitro, S.A. de C.V. in April 2000. Mr. Domene was appointed Chief
    Operating Officer in April 2001. Roberto
    Rubio Barnes, born in 1955, General Director of Flat Glass business unit. Mr. Rubio
    earned his bachelors degree in Mechanical and Electric Engineering from the
    Universidad de Anahuac in Mexico City in 1977. In 1980, Mr. Rubio earned
    a degree of Master of Science in Industrial Engineering at North Carolina
    State University and, in 1990, a Masters Degree in Management at the Massachusetts
    Institute of Technology. Mr. Rubio
    began working in 1980's for Vitro in Vitro Flex, S.A. de C.V. and, in 1981,
    become Manager of Manufacturing Engineering. Mr. Rubio held several executive
    positions from 1981 until 1989, when he was appointed General Manager of Vitro
    Flex, S.A. de C.V. In 1995, Mr. Rubio was promoted to Administrative
    Vice President of Glass businesses of the Glassware business unit and in 1996
    he was appointed President of the Glassware Division. Mr. Rubio was also
    given the responsibility of managing the technology area of Vitro, S.A. de
    C.V. In 1999, Mr. Rubio was appointed President of the Glass Containers business
    unit and remains responsible for the Technology area for the Vitro, S.A. de
    C.V. In July 2001 he was appointed General Director of Flat Glass business
    unit. Fernando
    Flores Faz, born in 1946, General Director of Glass Containers business
    unit. Mr. Flores
    graduated in Industrial Engineering from the Instituto Tecnologico y de Estudios
    Superiores de Monterrey in 1970. Mr. Flores also attended the University
    of Texas Advanced Management Program in 1979. Mr. Flores began working
    in Vitro, S.A. de C.V. at Vidriera Monterrey in 1974, serving several positions
    in the areas of industrial engineering, human resources and planning. In 1982,
    Mr. Flores was named General Manager of Enbosa (glass borosilicate operations
    for pharmaceutical containers). In 1986, Mr. Flores was appointed Vice
    President of Gas Range Operations, and in 1988, he was appointed Vice President
    of Refrigerator Operations. In 1990, Mr. Flores worked for Glass Containers
    as Exports Vice President, in 1992 as Operations Vice President and in 1998
    as International Vice President. In 1999, Mr. Flores was appointed General
    Director of Glassware business unit and in July 2001 he was appointed General
    Director of Glass Containers business unit. Gonzalo
    Escamez Sada, born in 1963, General Director of Glassware business unit. Mr. Escamez
    graduated in Business and Administration at St. Edward's University at Austin,
    Texas. Mr. Escamez obtained a Master Degree in Administration with a specialization
    in Marketing and Finance from Southern Methodist University of Dallas, Texas,
    in 1990. Since 1984, Mr. Escamez has worked in Vitro in the areas of Planning
    and Finance, Administration, Marketing, and Sales in Glass Containers business
    unit and Vitro Packaging, Inc. From 1992 to 1996 Mr. Escamez held the position
    of International Director in Glass Containers business unit. Later, Mr. Escamez
    was appointed Commercial Vice President of the same company. From 1998 to
    2001, Mr. Escamez was the President of Diverse Industries business unit.
    In July 2001, he was appointed General Director of Glassware business unit. Alfonso
    Gomez Palacio Gastelum, born in 1942, General Director of special projects. Mr.
    Gomez Palacio received his Bachelor's and Master's Degree in Administration
    at the University of California at Berkeley. Later Mr. Gomez Palacio received
    a degree in Advanced Studies in Administration and Commerce at the University
    of Bordeaux in France. Mr.
    Gomez Palacio was appointed Commercial Vice President of Containers in 1985,
    and Executive Vice-President in 1992. Mr. Gomez Palacio was appointed General
    Director of Special Projects in 2002. Javier
    Bofarull Viladaf, born in 1953, General Director of International Commerce. Mr. Bofarull
    holds a law degree from Universidad de Barcelona, Spain, and attended several
    advance management programs at Harvard University. He has worked in several
    executive positions in Cemex, S.A. de C.V. from 1992 to 1999. Since 1999 until
    late 2001, he held the position of director at Newbridge Consultants. Mr. Bofarull
    was appointed General Director of International Commerce in December 2001. Family
    Relationship of Directors and Senior Management Seven
    of the 23 directors and executive officers are related by blood (including
    first-cousins) or marriage to another member of this same group. Adrian Sada
    Trevino, Director, is the father of both Adrian Sada Gonzalez, Chairman of
    the Board, and Federico Sada Gonzalez, Director and Chief Executive Officer
    of Vitro. Adrian Sada Gonzalez and Federico Sada Gonzalez are cousins of Tomas
    Gonzalez Sada, Director and Chairman, President and Chief Executive Officer
    of Grupo Cydsa S.A. Tomas Gonzalez Sada is the nephew of Adrian Sada Trevino.
    Andres A. Yarte Cantu, Director, is the son-in-law of Adrian Sada Trevino,
    the brother-in-law of Adrian Sada Gonzalez and Federico Sada Gonzalez, and
    the cousin by marriage of Tomas Gonzalez Sada. Gustavo Madero Munoz, Director,
    is the cousin of Carlos Munoz, Director. Compensation For
    the year ended December 31, 2001, the aggregate compensation, including
    variable compensaton, described in next paragraph, of all of our directors
    and executive officers paid or accrued in that year for services in all their
    capacities was approximately Ps. 245 million. This amount includes Ps. 69
    millions of salary and retirement payments of three officers that no longer
    stay with us. Variable
    Compensation During
    the year 2001 we implemented a variable compensation strategy in order to
    aling the objectives of our administrative staff and workers with our business
    strategy. The
    purpose of this strategy is based on the following aspects: (i) recognize
    the extraordinary performance, (ii) boost growth and cash flow of the business,
    (iii) increase stock price (iv) focus on key priorities, and (v) attraction
    and retention of talented people. In
    order to mesure this compensation, we have an especial focus on the improvement
    of the following elements (i) EBITDA generation, (ii) cash flow from operations,
    (iii) our quality model, which we refer to as "AST Model" and, (iv) the individual
    performance appraisal. Depending of the result of those measures, our personal
    would be elegible to received between 2.7 to 10.5 months of base salary. During
    the year 2001 we paid to our employes and workers, approximately Ps. 57 million. Employee
    Stock Option Plan In
    March 1998, we adopted an employee stock option plan with respect to Vitro's
    common shares (the "Plan"). Pursuant to the Plan, effective on the dates listed
    in the table below (each, a "Grant Date"), we granted to certain of our employees,
    executive officers and directors (the "Eligible Executives") stock options
    pursuant to which the Eligible Executives have the right to buy a certain
    number of common shares of Vitro at an exercise price to be determined at
    the time such options are exercised, except for the last grant, in which the
    exercise price will be fixed during the life of the options. We established
    a trust to manage the Plan (the "Stock Options Trust"). As of June 25, 2002,
    the Stock Options Trust held in trust approximately 24.7 million common shares
    of Vitro. Subject
    to certain exceptions in case of changes in the employment status, 50%, 25%
    and 25% of the options become exercisable, respectively, on the third, fourth
    and fifth anniversary of the Grant Date (except for the options granted in
    2000 and 2001, where one third of the options granted become exercisable on
    each of the second, third and fourth anniversary of the Grant Date), and all
    of the options expire on the tenth anniversary date of the Grant Date. Except
    for the options granted in 2000 and 2001, whose exercise price is Ps. 11.00
    and Ps. 8.27 per share, respectively and has no indexation mechanism, all
    options have been granted at an initial exercise price equal to the average
    closing price on the Mexican Stock Exchange of the common shares on the 20
    trading days prior to the Grant Date (the "Initial Exercise Price"). The exercise
    price of such options will be determined at the time such options are exercised,
    by indexing the initial exercise price using an indexing factor based on the
    cumulative performance of Vitro's common shares relative to the cumulative
    performance of the Indice de Precios y Cotizaciones of the Mexican
    Stock Exchange (the "MSE Price Index"), which indexing factor is subject to
    certain ceilings and floors. The effect of the indexation is that the initial
    exercise price will be increased less if the common shares outperform the
    MSE Price Index and will be increased more if the common shares of Vitro under
    perform the MSE Price Index, provided, however, that no negative indexation
    is allowed. In addition, the indexed exercise price will be adjusted for dividends,
    stock splits and other similar transactions (the "Adjusted Exercise Price"). Although
    the Plan contemplates yearly grants for a total of 5 years, we may at any
    time, at our sole discretion, amend any of the terms of the ungranted options,
    or otherwise terminate the Plan, subject to previously acquired rights. During
    2001, we repriced 940,950 options granted in 1998 to Ps. 13.00 The
    table below shows for each of the Grant Dates, the number of common shares
    underlying the options granted, the portion of such common shares that were
    granted to our executive officers as a group, the Initial Exercise Price,
    and the Adjusted Exercise Price, where applicable, as of the date mentioned
    therein, assuming that the options could be exercised on the date indicated. Grant
          Date
      Total
          Number of Underlying Shares
      Initial
          Exercise Price
      Adjusted
          Exercise Price as of December 31, 2001March
        1, 1998
      499,800
      Ps.
          31.31
      Ps.
          33.45March
        1, 1998
      952,800
      Ps.
          13.00
      Ps.
          13.00June
        1, 2000
      4,851,900
      Ps.
          11.00
      Ps.
          11.00September
        1, 2001
      3,204,800
      Ps.
          8.27
      Ps.
          8.27Total
      12,402,300 Board practices Pursuant
    to Vitro's by-laws, the Board of Directors must meet at least four times per
    calendar year and dedicate one of such meetings to the analysis of the company's
    mid and long term strategy. Meetings usually take place at the Company's domicile;
    however, if required such meetings may be held anywhere else in Mexico, abroad
    or by telephone. For a meeting to be considered formally installed, the assistance
    of 50% plus one of the Directors is required, and the favorable vote of the
    majority of the Directors present is required for the adoption of any resolution.
    Minutes shall be prepared after every meeting of the Board of Directors to
    reflect the resolutions adopted and any relevant discussions that take place;
    such minutes must be signed by the Chairman, the Secretary and the Examiner
    (statutory auditor), if in attendance. Resolutions adopted outside a traditional
    face-to-face meeting have the same force and effect as those adopted at a
    meeting, as long as they are duly documented in writing and signed by every
    Director (unanimous resolutions). The
    Board of Directors can appoint as many committees as it deems appropriate
    for the discharge of its duties; however pursuant to Vitro's by-laws the following
    committees are required: evaluation and compensation, audit, and finance and
    planning. In addition to the foregoing, the Board of Directors has also formed
    a corporate responsibilities committee. Each
    committee is formed by between 3 and 5 Directors and has the ability to summons
    any officer and/or executive, and to assist itself with the advice of the
    experts, advisors or consultants it deems appropriate. These committees meet
    as often as required and are required to report their findings to the Board. Employees As of December 31,
    2001, we employed approximately 33,378 persons, 82% of them located in Mexico. The
    following table sets forth, for the periods indicated, the period end, and
    the average for each period, number of our employee's breakdown into our four
    operating business sectors and corporate offices: Business
          Unit
      2001
      2000
      1999Period
          End
      Average
      Period
          End
      Average
      Period
          End
      AverageFlat
        Glass
      10,929
      10,954
      11,120
      10,916
      9,558
      9,439Glass
        Containers
      11,195
      11,243
      10,764
      11,414
      11,510
      12,123Glassware
      4,669
      4,748
      5,157
      5,278
      5,147
      5,290Acros
        Whirlpool
      5,815
      5,894
      5,989
      5,730
      5,386
      5,384Corporate
        Offices
      770
      786
      785
      839
      934
      1,046Total
      33,378
      33,625
      33,815
      34,177
      32,535
      33,282 The
    following table sets forth, for the periods indicated, our employees by geographic
    location: Business
          Unit
      2001
      2000
      1999Period
          End
      Average
      Period
          End
      Average
      Period
          End
      AverageMexico
      27,381
      27,974
      28,400
      28,891
      28,063
      28,761U.S.A.
      3,190
      3,240
      3,280
      3,067
      2,364
      2,321Rest
        of the world
      2,807
      2,411
      2,135
      2,219
      2,108
      2,200Total
      33,378
      33,625
      33,815
      34,177
      32,535
      33,282 The
    principal variation in our employee's base was in April 2000, due to the acquisition
    of Harding Glass by the Flat Glass business unit, in May 2001, we acquired
    Cristalglass, which at December 31, 2001, had 466 employees Relation with labor
    unions In
    Mexico, all of our workers (others than workers performing excluded function)
    are currently affiliated with labor unions. Labor relations in each production
    facility in Mexico are governed by separate collective bargaining agreements,
    executed between the relevant subsidiary and a union selected by the employees
    of the relevant facility. The terms of the collective bargaining agreements
    are renegotiated every two years, except for wages, which are negotiated on
    a yearly basis. For over 60 years, we have not had any strikes that materially
    affected our overall operations in Mexico, and management believes that it
    has a good relationship with its employees. Share ownership. The
    following table presents information regarding the beneficial ownership of
    our share capital as of March 14, 2002, date of our stockholders meeting,
    by our directors and our senior management: Name
      Share
          Ownership (1)
      Granted
          Options
      Initial
          Exercise Price
      Adjusted
          Excercise Price
      Expiration DateAdrian
        Sada Gonzalez
      5.01%
      90,400
      13.00
      13.00
      March
        2008168,750
      14.88
      15.92
      March
        2009215,000
      11.00
      11.00
      June
        2010137,500
      8.27
      8.27
      March
        2011Adrian
        Sada Trevino
      13.45%
      75,000
      13.00
      13.00
      March
        2008Federico
        Sada Gonzalez
      4.97%
      90,400
      13.00
      13.00
      March
        2008168,750
      14.88
      15.92
      March
        2009215,000
      11.00
      11.00
      June
        2010137,500
      8.27
      8.27
      March
        2011Tomas
        Gonzalez Sada
      *
      ----
      ----
      ----
      ----Andres
        A. Yarte Cantu
      *
      ----
      ----
      ----
      ----Dionisio
        Garza Medina
      *Gustavo
        Madero Munoz
      *
      ----
      ----
      ----
      ----Roberto
        Mendoza
      *
      ----
      ----
      ----
      ----Carlos
        Represas
      *
      ----
      ----
      ----
      ----Jaime
        Serra Puche
      *
      ----
      ----
      ----
      ----Lorenzo
        Zambrano
      *
      ----
      ----
      ----
      ----Carlos
        Munoz
      *
      ----
      ----
      ----
      ----Joaquin
        Vargas
      *
      ----
      ----
      ----
      ----Alejandro
        Garza Laguera
      *
      ----
      ----
      ----
      ----Raul
        Rangel Hinojosa
      *
      ----
      ----
      ----
      ----Luis
        Nicolau
      *
      ----
      ----
      ----
      ----Jose
        Domene
      *
      90,000
      8.27
      8.27
      March
        2011Alfonso
        Gomez Palacio
      *
      54,300
      13.00
      13.00
      March
        200875,000
      14.88
      15.92
      March
        200960,000
      11.00
      11.00
      June
        201032,500
      8.27
      8.27
      March
        2011Fernando
        Flores
      *
      13,300
      13.00
      13.00
      March
        200860,000
      14.88
      15.92
      March
        200975,000
      11.00
      11.00
      June
        201040,000
      8.27
      8.27
      March
        2011Roberto
        Rubio
      *
      48,200
      13.00
      13.00
      March
        200875,000
      14.88
      15.92
      March
        200990,000
      11.00
      11.00
      June
        201047,500
      8.27
      8.27
      March
        2011Gonzalo
        Escamez
      *
      36,200
      13.00
      13.00
      March
        200860,000
      14.88
      15.92
      March
        200980,000
      11.00
      11.00
      June
        201040,000
      8.27
      8.27
      March
        2011 * Beneficially owns
    less than one percent (1)
    Beneficial ownership is determined in accordance with the rules of the SEC
    and generally includes voting or investment power with respect to securities.
    All such shares have the same voting rights as the shares owned by any other
    shareholder.  Item
    7. Major Shareholders and Related Party Transactions Major
    shareholders. As
    of June 16, 2002, Vitro had 324 million outstanding common voting
    shares, of which (i) 24.7 million common shares, which we consider
    for accounting purposes as treasury stock, were held by the Stock Option Trust
    and (ii) 25.6 million common shares were held as treasury stock.
    Vitro has one class of American Depositary Shares ("ADSs") registered pursuant
    to the Securities Act. ADSs are evidenced by American Depositary Receipts
    ("ADRs"), each representing three Ordinary Participation Certificates. Each
    Ordinary Participation Certificate represents one common share of Vitro. As
    of May 1, 2002 there were 25.2 million ADSs outstanding (representing
    75.7 million common voting shares of Vitro). Vitro's ADRs are issuable
    by Citibank, N.A. pursuant to a deposit agreement. The
    following table discloses our major shareholders. These shareholders do not
    have any different or special voting rights when compared with the rest of
    our shareholders. Name
      Shares
          outstanding
      %
          of ownership(1)Mr.
        Adrian Sada Trevino(2)
      18,470,423(3)
      6.69%Mrs.
        Maria Nelly Gonzalez de Sada(2)
      18,650,011(3)
      6.76%Mr.
        Adrian Sada Gonzalez
      13,825,654
      5.01%Pension
        Plan Trust
      39,150,000
      14.18% (1)
    In order to calculate the ownership percentage, we have used as denominator
    the total number of outstanding shares minus the number of shares held as
    treasury stock, which as of June 16, 2002 were 47,981,734 shares,
    including the shares held by the Stock Option Trust.(2)In aggregate, they hold 13.45%.(3)The number of shares owned by Mr. and Mrs. Sada's children,Mr. Federico
    Sada Gonzalez, Ms. Alejandra Sada Gonzalez and Mrs. Maria Nelly
    Sada de Yarte, their children's spouses and their grandchildren, is not included.
    Mr. Federico Sada Gonzalez, Ms. Alejandra Sada Gonzalez and Mrs. Maria
    Nelly Sada de Yarte, their spouses and their children own an aggregate of
    32,151,366 shares, representing 11.65% of the total outstanding shares.  Item
    8. Financial Information Consolidated
    Statements and Other Financial Information. Consolidated
    Financial Statements. See "Item 18. Financial Statements" Export
    sales The
    following table sets forth, for the periods indicated, a breakdown of our
    domestic sales, export sales and sales attributable to our foreign subsidiaries: Flat
        Glass
      Acros
        Whirlpool
      
      Glass
        ContainersGlassware
      Consolidated2001Total
        sales
      Ps.10,610
      Ps.5,960
      Ps.2,585
      Ps.9,149
      Ps.28,190Domestic
        sales
      3,460
      3,947
      1,835
      5,845
      14,968Export
        sales
      2,474
      2,013
      750
      2,296
      7,533Foreign
        Subsidiaries
      4,676
      0
      0
      1,008
      5,6892000Total
        sales
      Ps.10,536
      Ps.5,784
      Ps.2,967
      Ps.9,406
      Ps.28,631Domestic
        sales
      3,546
      4,054
      2,097
      6,114
      15,734Export
        sales
      2,817
      1,730
      870
      2,342
      7,759Foreign
        Subsidiaries
      4,173
      0
      0
      950
      5,1381999Total
        sales
      Ps.10,056
      Ps.5,587
      Ps.2,764
      Ps.10,327
      Ps.28,599Domestic
        sales
      3,507
      3,703
      1,964
      6,993
      16,052Export
        sales
      3,164
      1,884
      800
      2,276
      8,124Foreign
        Subsidiaries
      3,385
      0
      0
      1,059
      4,423 Dividend
    Policy Stockholders
    holding the majority of the voting stock, at an ordinary shareholders' meeting,
    determines whether dividends are to be paid and the amount and date of their
    payment. This decision is generally, but not necessarily, based on the recommendation
    of the Board of Directors. Vitro's Board of Directors, taking into account
    the Vitro's financial condition and the terms of the stockholders' approval,
    generally determines the timing for the payment of the dividends formally
    declared by the corresponding ordinary shareholders meeting. Significant
    Changes There
    are no significant changes in our financial information since the date of
    our annual financial statements.   Item
    9. The Offer and Listing. Offer
    and listing details. Vitro
    is registered as a public company in Mexico. Vitro shares are registered in
    the Mexican Stock Exchange and in the New York Stock Exchange through ADSs. The
    following tables show information regarding the quoted peso price of our common
    shares on the Mexican Stock Exchange and of our ADS in U.S. dollars traded
    in the New York Stock Exchange. There is no public market outside of Mexico
    for our common shares. Annual
    high and low quoted prices per common share in the Mexican Stock Exchange
    and per ADS in the New York Stock Exchange: Year
      Nominal Pesos
          Per Common Share (1) Mexican Stock Exchange
      U.S.
          dollars Per ADS (2) Mexican Stock ExchangeHigh
      Low
      High
      Low1996
      Ps.
          20.45
      Ps.
          12.70
      $
          8.38
      $
          4.631997
      42.60
      14.10
      16.38
      5.381998
      35.90
      11.50
      13.38
      3.251999
      23.10
      11.90
      7.50
      3.502000
      17.00
      6.60
      5.81
      2.002001
      11.30
      6.96
      3.50
      2.14 (1)
    Source: Infosel
    (2) Source: Infosel Quarterly
    high and low quoted prices per Common Share in the Mexican Stock Exchange
    and per ADS in the New York Stock Exchange: Year
      Nominal Pesos
          Per Common Share (1) Mexican Stock Exchange
      U.S.
          dollars Per ADS (2) Mexican Stock ExchangeHigh
      Low
      High
      Low2000First
        Quarter
      Ps.17.00
      Ps.12.18
      $5.81
      $3.94Second
        Quarter
      14.50
      10.40
      4.83
      3.00Third
        Quarter
      12.50
      8.32
      3.88
      2.56Fourth
        Quarter
      9.10
      6.60
      3.00
      2.002001First
        Quarter
      Ps.11.30
      Ps.7.40
      $3.50
      $2.38Second
        Quarter
      9.90
      8.09
      3.02
      2.17Third
        Quarter
      9.60
      7.52
      3.10
      2.34Fourth
        Quarter
      8.20
      6.96
      2.45
      2.142002First
        Quarter
      Ps.9.58
      Ps.6.60
      $3.22
      $2.08 (1)
    Source: Infosel
    (2) Source: Infosel Monthly
    high and low quoted prices per Common Share in the Mexican Stock Exchange
    and per ADS in the New York Stock Exchange: Year
      Nominal Pesos
          Per Common Share (1) Mexican Stock Exchange
      U.S.
          dollars Per ADS (2) Mexican Stock ExchangeHigh
      Low
      High
      Low2001December
      Ps.7.50
      Ps.6.96
      $2.25
      $2.142002January
      8.06
      6.60
      2.65
      2.08February
      9.58
      7.29
      3.22
      2.25March
      9.40
      8.78
      3.10
      2.93April
      11.60
      8.85
      3.75
      2.93May
      14.50
      11.30
      4.61
      3.45As
          of June 27
      12.90
      10.00
      4.03
      3.15 (1)
    Source: Infosel
    (2) Source: Infosel 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 exclusively authorized
    to trade on the floor of the Exchange. Trading on the Mexican Stock Exchange
    takes place electronically through the centralized automated system of the
    Exchange, which is open each business day between the hours of 8:30 a.m. and
    3:00 p.m., Mexico City time. Most transactions in listed Mexican securities
    take place through the Mexican Stock Exchange. Trades on or off the Mexican
    Stock Exchange involving ten percent or more of an issuer's outstanding capital
    stock must be reported to the Comision Nacional Bancaria y de Valores ("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
    under taken 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 and /or sell such stock, within a period of three months considered from
    the date of the last purchase and/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 suspension of trading in shares of a particular issuer
    as a mean of controlling excessive price volatility. Each day a price band
    is established, with upper and lower limits, which is initially the day's
    opening price. If during the day a bid or offer is accepted at a price outside
    this 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 common shares as well as other Mexican securities
    publicly traded in the United States, however, are not subject to the above-described
    temporary suspension of trading rules dictated by the Mexican Stock Exchange.
    In addition, the Mexican Stock Exchange may also suspend trading of a security,
    including securities not subject to the automatic suspension systems, for
    up to five days if it determines that disorderly trading is occurring with
    respect to such security, which may be extended beyond five days if so approved
    by the CNBV. Trading
    in New York Stock Exchange Since
    November 19, 1991 our American Depositary Shares (the "ADSs") have
    been listed on the New York Stock Exchange ("NYSE"). Since May 6, 1992, each
    ADS represents three Ordinary Participation Certificates (each a "CPO")
    issued by Nacional Financiera ("Nafin"), as trustee (the "CPO Trustee")
    for a Mexican trust (the "CPO Trust"). Each CPO represents financial
    interests, but does not grant voting rights, in one ordinary share, without
    par value (a "Common Share"), of Vitro held in the CPO Trust. The
    ADSs are evidenced by American Depositary Receipts (the "ADRs").
    ADRs evidencing ADSs may be issued by Citibank, N.A., as depositary (the "Depositary")
    pursuant to the Deposit Agreement, dated as of November 26, 1991 (the "Deposit
    Agreement"), among Vitro, the CPO Trustee, the Depositary and all registered
    holders from time to time of the ADRs issued thereunder. An ADR may evidence
    any number of ADSs. As
    of June 15, 2002, approximately 5% of the outstanding shares of Vitro were
    publicly held through CPOs in the Mexican Stock Exchange and approximately
    23% of the outstanding shares were publicly held through ADRs (in turn representing
    CPOs) in the New York Stock Exchange. Holders of ADRs and CPOs have no voting
    rights with respect to the underlying shares, but have all economic rights
    relating to those shares. Pursuant to the Trust Agreements dated November 24,
    1989, and November 28, 1990, Nafin, as trustee for both trusts,
    is required to vote the shares held pursuant to such trusts in the same manner
    as the majority of the shares that are not so held and that are voted at the
    relevant meeting. Consequently, under Mexican law, holders of CPOs and ADRs
    are not able to exercise voting or other rights granted to minorities. However,
    if a Mexican holder would acquire CPOs, it may request from the trustee the
    cancellation of such CPOs and receive the equivalent number of shares.   Item
    10. Additional Information. Memorandum
    and articles of association. Certain
    information is set forth below concerning Vitro's capital structure, as well
    as a brief summary of certain significant provisions of Vitro's by-laws and
    applicable Mexican law. This description does not purport to be complete and
    is qualified by reference to the by-laws of Vitro and provisions of applicable
    Mexican law. General
    Information and Corporate Purpose Vitro
    was incorporated on August 27, 1936 as a company (sociedad anonima) formed
    under the laws of Mexico, under the name of Fomento de Industria y Comercio,
    S.A. The incorporation deed was registered in the Public Registry of Commerce
    on October 3, 1936. On May 9, 1980, the company changed its corporate name
    to Vitro, S. A. and the deed pursuant to which its name was changed, was registered
    in the Public Registry of Commerce on June 9, 1980. The company adopted the
    variable capital form on March 30, 1998, and the corresponding deed was registered
    with the Public Registry of Commerce on April 1, 1998. Vitro's
    corporate domicile is San Pedro Garza Garcia, State of Nuevo Leon, Mexico
    and its principal administrative office is located at Ave. Ricardo Margain
    Zozaya # 400, San Pedro Garza Garcia, Nuevo Leon, Mexico. Vitro's
    principal corporate purposes are (i) to issue, and sell stock, bonds, debentures
    or other securities, (ii) hold and manage shares issued by its subsidiaries
    (iii) to render services and perform promotion, enhancement and restructuring
    studies and analyses for its own subsidiaries, and (iv) in general, to enter
    into and execute agreements, negotiable instruments, guarantees, loans, credit
    transactions and any other related transactions needed to fulfill its own
    corporate purpose. Vitro
    is required to have a portion of its capital that is fixed (which must represent
    at least 1/11th of all of its outstanding shares of capital stock)
    and may have variable capital (which may not exceed ten times the amount representing
    the fixed portion of its capital stock). Both the fixed and the variable portion
    of the capital stock of Vitro, is required to be represented by Series "A"
    shares. There is no other Series of shares. Pursuant
    to Vitro's by-laws, shares may only be held by Mexican investors under applicable
    Mexican Law. However, non-Mexican investors may acquire financial interest
    (i.e. economic, but no voting rights) in Series "A" shares through CPOs. See
    "Description of CPOs". Vitro
    has not issued shares representing the variable portion of its capital stock
    and the outstanding fixed portion of its capital stock consists of Ps. 298,380,000.00,
    represented by 298,380,000 Series "A" shares, without par value. Neither Vitro
    nor any of its subsidiaries may own shares representing the capital stock
    of Vitro, although Vitro may repurchase its own shares. See "Other Provisions". Any
    acquisition of Series "A" shares by non-Mexican investors in violation of
    Vitro's corporate charter would be null and void. Registration
    and Transfer Share
    certificates in registered form evidence shares. Stockholders of Vitro may
    hold their shares in the form of physical certificates or indirectly through
    institutions that have an account with S.D. Indeval, S.A. de C.V., Institucion
    para el Deposito de Valores, wich we refer to as "Indeval". Brokers, banks
    or other entities approved by the CNBV (collectively, "Indeval Participants")
    may maintain accounts at Indeval. Vitro maintains a registry of stockholders
    who have either received physical certificates evidencing shares or are holding
    such shares through Indeval or an Indeval Participant. Only persons listed
    in such registry and persons holding statements issued by Indeval directly
    or coupled with corporations issued by Indeval Participants evidencing ownership,
    would be recognized as stockholders of Vitro. Voting
    Rights; Stockholders' Meeting; Certain Minority Rights Each
    Series "A" share entitles the holder thereof to one vote at any general meeting
    of the stockholders of Vitro. Holders of CPOs are not entitled to vote the
    Series "A" shares underlying such CPOs. See "Description of CPOs". General
    stockholders' meetings may be ordinary meetings or extraordinary meetings.
    Extraordinary general meetings are those called to consider certain matters
    specified in Article 182 of the Ley General de Sociedades Mercantiles (the
    "Mexican Companies Law"), including amendments to the by-laws, anticipated
    dissolution, merger and transformation from one type corporate entity to another
    and increases or decreases affecting the fixed portion of Vitro's capital
    stock. General meetings called to consider all other matters, including increases
    and decreases affecting the variable portions of Vitro's capital stock, are
    ordinary meetings. An
    annual general ordinary stockholders' meeting must be held at least once a
    year, within the four months following the end of the prior fiscal year. The
    annual general ordinary stockholders' meeting is held (i) to consider, and,
    if applicable, approve the board of directors' annual report to the stockholders,
    regarding Vitro's prior year's results and performance, which reflects the
    performance and results of the companies in which Vitro holds more than 50%
    of the outstanding stock and/or those in which Vitro has an investment that
    exceeds 20% of Vitro's net worth, including the approval of the financial
    statements for the preceding fiscal year, (ii) to elect directors (and, if
    applicable, alternate directors) and the statutory auditor and (iii) to determine
    the distribution of the profits, if any, for the preceding year. At any such
    general ordinary stockholders' meeting, any stockholder or group of stockholders
    representing 10% or more of the outstanding Series "A" shares has the right
    to appoint one director and one alternate director, if applicable. The stockholders
    establish the number of directors at each annual ordinary meeting. The
    quorum for an ordinary general meeting convened at the first call is at least
    50% of all outstanding shares entitled to vote at such meeting and action
    may be taken by holders of a majority of all 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 shares present, and action
    may be taken by a majority of the shares present at such meeting. The quorum
    for an extraordinary general meeting convened at the first call is 75% of
    all outstanding shares entitled to vote at such meeting. If a quorum is not
    present, a subsequent meeting may be called at which 50% of all outstanding
    shares constitute a quorum. Whether on first or subsequent calls, actions
    at an extraordinary general meeting may be taken only by holders of at least
    50% of the outstanding shares, except for the cancellation of the registration
    of Series "A" shares with the Securities Section of the Registro Nacional
    de Valores e Intermediarios, which we refer to as "RNVI" maintained by the
    CNBV, which action may only be taken by holders of at least 95% of the outstanding
    shares of the company. Stockholders'
    meetings may be called by (i) the board of directors or the statutory auditor,
    (ii) stockholders representing at least 10% of the outstanding shares entitled
    to vote at such meeting by requesting the board of directors or the statutory
    auditor to issue such a call, (iii) a Mexican court in the event the board
    of directors or the statutory auditor do not comply with a request of the
    stockholders as described in (ii) above, and (iv) any stockholder if no stockholders'
    meeting has been held for two consecutive years or if any of the following
    matters has not been dealt with at such a meeting within such two year period:
    the annual report of the Board of Directors regarding Vitro's financial statements
    (and distribution of profits), the appointment of directors and statutory
    auditors, or the compensation of Vitro's directors and statutory auditors.
    Notice of meetings must be published in the Official Gazette of the State
    of Nuevo Leon or in one of the newspapers of wide distribution in Monterrey,
    Nuevo Leon, at least 15 calendar days prior to a meeting. Only stockholders
    who have either deposited their shares at the offices of Vitro or are holding
    statements issued by Indeval, or Indeval Participant and a Mexican bank and
    present a statement from any such entity indicating ownership by such person,
    will be admitted as such to a stockholders' meeting. A stockholder may be
    represented by an attorney-in-fact who holds a duly granted proxy or a power-of-attorney. Under
    Mexican law, holders of at least 10% of Vitro's outstanding capital stock
    entitled to vote on a particular matter may seek to have any shareholder action
    with respect to such matter set aside, by filing a complaint with a court
    of law within 15 days after the close of the meeting at which such action
    was taken and showing that the challenged action violates Mexican law or Vitro's
    by-laws. Relief under these provisions is only available to holders (i) who
    were entitled to vote on, or whose rights as stockholders were adversely affected
    by, the challenged shareholder action and (ii) whose shares were not represented
    when the action was taken or, if represented, voted against it. Under
    Mexican law, an action for civil liabilities against directors may be initiated
    by a stockholders' resolution. In the event stockholders decide to bring such
    an action, the persons against whom such action is brought will immediately
    cease to be directors. Additionally, stockholders representing not less than
    15% of the outstanding shares may directly exercise such action against the
    directors; provided that (i) such stockholders shall not have voted against
    exercising such action at the relevant stockholders' meeting and (ii) the
    claim covers all of the damage alleged to have been caused to Vitro and not
    merely the damage suffered by the plaintiffs. Any recovery of damage with
    respect to such actions will be for the benefit of Vitro and not the stockholders
    bringing the action. Dividends At
    the annual general ordinary stockholders' meting, the board of directors submits
    the financial statements of Vitro for the previous fiscal year, together with
    a report thereon by the board, to the stockholders for consideration and approval.
    The stockholders, once they have approved the financial statements, determine
    the allocation of Vitro's distributable earnings for the preceding fiscal
    year. Five percent of Vitro's net income must be allocated to a legal reserve
    fund, until such fund reaches an amount equal to at least 20% of Vitro's then
    current capital stock (allocation to the legal reserve is determined without
    reference to inflation adjustment under Mexican GAAP). Thereafter, the remainder
    of net income is allocated as determined by the stockholders (including the
    creation of reserves for the repurchase of Shares) and may be distributed
    as dividends. All Series "A" 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. Series "A" shares which are
    only partially paid participate in a dividend or distribution in the same
    proportion that such shares have been paid at the time of the dividend or
    distribution. For a description of dividend rights applicable to holders of
    CPOs, see "Description of CPOs" below. Liquidation Upon
    dissolution of Vitro, one or more liquidators must be appointed by a general
    extraordinary stockholders' meeting to wind up its affairs. All fully paid
    and outstanding Series "A" shares of capital stock will be entitled to participate
    equally in any distribution upon liquidation. Partially paid Series "A" shares
    participate in a liquidation distribution in the same manner as they would
    in a dividend distribution. Variable
    Capital and Certain Rights to Sell The
    fixed portion of Vitro's capital stock may be increased or decreased at a
    general extraordinary stockholders' meeting. The variable portion of Vitro's
    capital stock may be increased or decreased in the manner and on the terms
    authorized by an ordinary stockholders' meeting. Capital increases and decreases
    must be recorded in Vitro's book of capital variations. The minimum fixed
    portion of Vitro's capital stock specified in Vitro's by-laws cannot be withdrawn. Although
    Vitro only has shares representing the fixed portion of its capital stock
    outstanding, if Vitro issued variable capital shares, any holder of such shares
    would have the right to have such shares redeemed. A stockholder who wishes
    to obtain a total or partial redemption of its shares must notify Vitro in
    an authenticated written notice to that effect. If notice of withdrawal is
    received prior to the last quarter of the fiscal year, the withdrawal becomes
    effective al the end of the fiscal year in which the notice is given. Otherwise,
    the withdrawal becomes effective at the end of the following fiscal year. Reimbursement
    of withdrawn shares is made at the lower of: (i) 95% of the average closing
    share price quoted on the Mexican Stock Exchange during the 30 business days
    prior to the date on which the withdrawal becomes effective; and (ii) the
    book value per share as calculated from Vitro's financial statements (as approved
    at the annual ordinary general meeting) for the fiscal year at the end of
    which the withdrawal becomes effective. Any such amount to be paid by Vitro
    becomes due on the day following the annual ordinary general meeting referred
    to in clause (ii) above. Preemptive
    Rights In
    the event of a capital stock increase, a holder of issued and outstanding
    shares has a preferential right to subscribe for a sufficient number of shares
    to maintain the holder's existing proportional holdings of shares. Preemptive
    rights must be exercised within 15 days following the publication of the notice
    of the capital increase in the Official Gazette of the State of Nuevo Leon
    (Periodico Oficial del Estado) or they will lapse. Under Mexican law, preemptive
    rights cannot be waived in advance and cannot be represented by an instrument
    that is negotiable separately from the corresponding share. Stockholders
    will not have preemptive rights to subscribe for shares issued (i) in connection
    with mergers, (ii) on the conversion of convertible debentures or (iii) for
    placement in a public offering, if an extraordinary stockholders' meeting
    called for such purpose so approves and other requirements specified in Article
    81 of the Securities Market Law are satisfied, including obtaining the approval
    of the CNBV. Repurchase
    Obligation In
    accordance with Vitro's by-laws, and as prescribed by the CNBV, the controlling
    stockholders of Vitro are obligated to make a public offer for the purchase
    of stock to the minority stockholders, in the event that the listing of stock
    of Vitro with the Mexican Stock Exchange is cancelled, either by resolution
    of Vitro or by an order of the CNBV. The price at which the stock must be
    purchased by the majority stockholders is the higher of (i) the average closing
    quotation price for the 30 trading days prior to the date of the offer or
    (ii) the book value per share, as reflected in the last quarterly report with
    the CNBV and the Mexican Stock Exchange. The controlling stockholders are
    not bound to make such public offer if all the stockholders of Vitro adopt
    the cancellation of the listing. Such cancellation may only take place upon
    resolution by holders of at least 95% of the outstanding shares of the company. Redemption Shares
    representing Vitro's capital stock are subject to redemption in connection
    with either (i) a reduction of capital stock or (ii) a redemption with retained
    earnings which, in either case must be approved by the stockholders of Vitro.
    The stock subject to the redemption procedure set forth in (ii) above would
    be selected by Vitro by lot, or in the case of redemption with retained earnings,
    by means of a tender offer conducted in the Mexican Stock Exchange, in accordance
    with the Mexican Companies Law. Other
    Provisions Duration. Vitro's
    existence under its by-laws is indefinite. Purchase
    by Vitro of its Shares Vitro
    may repurchase its shares on the Mexican Stock Exchange at any time at the
    prevailing market prices. Repurchases may be undertaken by debiting either
    (i) stockholders' equity or (ii) paid-in capital, in the event the shares
    are to be maintained as treasury shares, if the repurchase is taken under
    (i) above, the ordinary stockholders' meeting must approve, for the current
    fiscal year, the maximum aggregate amount of stockholders' equity that may
    be used for stock repurchases, provided that such amount shall not exceed
    the aggregate amount of Vitro's net retained earnings. Directors'
    and Stockholders' Conflict of Interest Under
    Mexican law, any stockholder that has a conflict of interest with respect
    to any transaction must abstain from voting thereon at the relevant stockholders'
    meeting. A stockholder that votes on a transaction in which its interest conflicts
    with that of Vitro may be liable for damages in the event the relevant transaction
    would not have been approved without such shareholder's vote. Under
    Mexican law, any director who has a conflict of interest with Vitro in any
    transaction must disclose such fact to the other directors and abstain from
    voting. Any director who infringes such provisions will be liable for damages.
    Additionally, the directors and statutory auditors of Vitro may not represent
    stockholders in the stockholders meetings where any proposal of the board
    of directors is being considered. Appraisal
    Rights The
    Mexican Companies Law provides that upon the adoption, at an general extraordinary
    stockholders' meeting, of any of the resolutions listed below, dissenting
    stockholders have the right to withdraw from a Mexican company and to compel
    Vitro to reimburse their shares, subject to the satisfaction of certain terms
    and conditions. The amount of the reimbursement is determined by the proportion
    of the tendered shares to the net worth of Vitro as set forth in the financial
    statements approved at the then most recent stockholder's meeting. Such
    withdrawal rights are triggered by resolutions approving changes in Vitro's
    business purpose, nationality or transformation from one form of corporate
    organization to another. Dissenting stockholders must perfect their withdrawal
    rights by making a request to this effect within 15 days following the date
    on which the meeting adopting the relevant resolution adjourns. Description
    of CP0s The
    following is a description of certain provisions of (i) the Trust Agreement,
    dated November 28, 1990, between Nacional Financiera, S.N.C., as grantor and
    as CPO Trustee, and Vitro, Sociedad Anonima (the "CPO Trust Agreement" or
    "CPO Trust"), (ii) the public deed, dated November 29, 1990, which evidences
    the issuance of CPOs by the CPO Trustee pursuant to the CPO Trust Agreement
    and which deed is registered with, and may be examined at, the Public Registry
    of Commerce of Mexico City, Federal District (Registro Publico del Comercio
    de la Ciudad de Mexico, D.F.) (the "First CPO Deed"), (iii) the public deed,
    dated June 24, 1998, which evidences the issuance of CPOs by the CPO Trustee
    pursuant to the CPO Trust Agreement and which deed is registered with, and
    may be examined at, the Public Registry of commerce of Mexico City, Federal
    District (Registro Publico del Comercio de la Ciudad de Mexico, D.F.) (the
    "Second CPO Deed" and, together with the First CPO Deed, the "CPO Deeds"),
    and (iv) applicable provisions of the Mexican Law of Negotiable Instruments
    and Credit Transactions ("Ley General de Titulos y Operaciones de Credito,"
    the "Negotiable Instruments Law"). Such description does not purport to be
    complete and is qualified in its entirety by reference to the CPO Trust Agreement,
    the CPO Deeds, and the provisions of Mexican law referred to in this description. The
    CPO Trust Agreement established a master trust that enables non-Mexican investors
    to acquire ordinary participation certificates representing financial interests
    in shares of Vitro, whose shares may only be purchased and held directly by
    investors deemed Mexican investors under applicable law pursuant to its by-laws. The
    terms of the CPO Trust Agreement were authorized by Official Communication
    dated November 27, 1990, of the National Commission on Foreign Investment.
    The CPO Trust Agreement is registered with the National Registry of Foreign
    Investment in Mexico City ("Registro Nacional de Inversiones Extranjeras").
    An Official Communication of the CNBV authorized the issuance of CPOs by the
    CPO Trustee pursuant to the CPO Trust Agreement. CPOs,
    which are negotiable instruments under Mexican law, have been issued by the
    CPO Trustee pursuant to the terms of the CPO Trust Agreement and the CPO Deeds,
    and may be released as herein set forth. Each CPO represents financial interests
    in one Series "A" share of Vitro 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 the Series A Shares held in the CPO Trust. Such rights are exercisable
    by the CPO Trustee pursuant to the terms of the CPO Trust Agreement. The CPO
    Trust Agreement qualifies as a "neutral investment" trust because, among other
    things, voting rights in respect of the underlying Series "A" shares are exercisable
    only by the CPO Trustee and not by the holders of the CPOs. Deposit
    and Withdrawal of Series "A" Shares Holders
    of Series "A" shares of Vitro may transfer Series "A" shares to the account
    at Indeval of the CPO Trustee, in exchange for CPOs to be delivered by the
    CPO Trustee, pursuant to the CPO Trust Agreement, to investors deemed non-Mexican
    investors. All such Series "A" shares will be held in trust by the CPO Trustee
    in accordance with the terms and conditions of the CPO Trust Agreement. The
    CPO Trustee (through Indeval) will be, for Vitro's purposes, the holder of
    such Series "A" shares. Transfer of ownership of Series "A" shares underlying
    CPOs will be effected through the records maintained by Indeval and institutions
    that maintain accounts with Indeval. The
    CPO Trustee will deliver CPOs in respect of the Series "A" shares transferred
    as described above. The CPOs are evidenced by a single certificate (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 institutions that maintain accounts with Indeval. 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 Series "A" shares represented by CPOs that are held
    in the CPO Trust. Holders
    of CPOs may sell their CPOs (i) to an investor deemed a non-Mexican investor,
    in which event the non-Mexican investor will become the transferee of such
    CPOs, or (ii) to a Mexican investor, in which event the Mexican investor purchaser
    would be the transferee of the Series "A" shares underlying such CPOs, directly
    or by keeping such Shares deposited at an account at Indeval maintained thereby
    or by an Indeval participant and such CPOs will be held (through Indeval by
    the CPO Trustee pending a new delivery). Dividends,
    Other Distributions and Preemptive and Other Rights Holders
    of CPOs are entitled to receive the economic benefits corresponding to the
    Series "A" shares underlying the CPOs, at any time that Vitro's general ordinary
    stockholders' meeting declares and management pays dividends or makes distributions
    to stockholders, and to receive the proceeds of the sale of such Series "A"
    shares at the termination of the CPO Trust agreement. See "Termination of
    the CPO Trust" below. The CPO Trustee, through Indeval, will distribute cash
    dividends and other cash distributions received by it in respect of the Series
    "A" shares held in the CPO Trust to the holders of the CPOs in proportion
    to their respective holdings, in each case in the same currency in which they
    were received. Dividends paid with respect to Series "A" shares underlying
    CPOs will be distributed to holders by Indeval (including the custodian) on
    the business day following the date on which Indeval receives the funds on
    behalf of the CPO Trustee. If
    a distribution by Vitro consists of a dividend in Series "A" shares, such
    Series "A" shares will be transferred to Indeval, on behalf of the CPO Trustee,
    and held in the CPO Trust and 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 Series "A" shares received
    by the CPO Trustee as such dividend. If the maximum amount of CPOs that may
    be delivered under the CPO Deeds would be exceeded as a result of a dividend
    in Series "A" shares, a new CPO deed would need to the entered into setting
    forth that new CPOs (including those CPOs exceeding the number of CPOs authorized
    under the CPO Deed) may be issued. In the event that the CPO Trustee receives
    any distribution with respect to Series "A" shares held in the CPO Trust (other
    than in the form of cash or additional Series "A" shares), the CPO Trustee
    will adopt such method, as it may deem legal, equitable and practicable to
    effect the distribution of such property. If Vitro offers, or causes to be
    offered, to the holders of Series "A" shares, the right to subscribe for additional
    Series "A" shares, subject to applicable law, the CPO trustee (through Indeval)
    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 Series
    "A" shares (subject to such holders' providing the CPO Trustee (through Indeval)
    with the funds necessary to subscribe for such additional Series "A" shares).
    Neither Vitro nor the CPO Trustee is obligated to register such rights, or
    the related series "A" shares or CPOs, under the Securities Act. If the offering
    of rights were possible, under applicable law and without registration under
    the Securities Act, and CPO holders provide the CPO Trustee with the necessary
    funds, the CPO Trustee (through Indeval) will subscribe for the corresponding
    number of Series "A" shares, which will be placed in the CPO Trust (to the
    extent possible), and deliver additional CPOs (through Indeval) in respect
    of such Series "A" shares to the applicable CPO holders pursuant to the CPO
    Deeds or, if applicable, through a new CPO deed (which Vitro will deed to
    enter into). According
    to Mexican law, dividends or other distributions and the proceeds from the
    sale of the Series "A" 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 estate of the Mexican Ministry of Health (Secretaria
    de Salud). Changes
    Affecting Series "A" Shares. Upon
    any change in par value, split-up, consolidation or any other reclassification
    of the Series "A" shares, or upon any merger or consolidation affecting Vitro,
    the CPO Trustee shall determine whether to execute and deliver additional
    CPOs to represent any securities that shall be received by the CPO Trustee
    (through Indeval) in exchange for or in conversion of or in respect of the
    Series "A" shares held in the CPO Trust, or call for the surrender of outstanding
    CPOs to be exchanged for new CPOs and to determine, in each case, any required
    amendments to be made to the CPO Deeds and the CPOs. If as a result of a redemption
    of Series "A" shares (see "Memorandum and Articles of Association-Redemption"),
    any Series "A" shares held in the CPO Trust are called for redemption, the
    CPO Trustee will, in accordance with the instructions of the technical committee
    (as defined below under "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 Series "A" shares held
    in the CPO Trust so called for redemption), and pay the holders of such CPOs
    their proportionate share of the consideration paid by Vitro in respect thereof. Voting
    of the Series "A" Shares Holders
    of CPOs are not entitled to exercise any voting rights with respect to the
    Series "A" 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 Series "A" shares in the same manner as the holders of a majority
    of the outstanding shares not held in the CPO Trust are voted at the relevant
    meeting. Because CPOs grant no voting rights to holders thereof, such holders
    would nothave the benefit of any rights (including minority protection rights)
    granted under applicable law and the by-laws of Vitro to holders of Series
    "A" shares. Administration
    of the CPO Trust. Pursuant
    to the terms of the CPO Trust Agreement, the CPO Trustee administrates the
    CPO Trust under the direction of a technical committee. The technical committee
    of the CPO Trust ("the CPO Technical Committee") consists of five members
    and their respective alternates. Each of the following appoints one member:
    the Mexican National Foreign Investment Commission, the Mexican Stock Exchange,
    the Mexican Association of Securities Brokerage Firms, the Common Representative
    (as hereinafter defined), and the CPO Trustee. Actions taken by the CPO Technical
    Committee are required to be approved by a majority of the members present
    at any meeting of such committee, at which at least the majority of the members
    are present. Banca Serfin, Sociedad Anonima, Institucion de Banca Multiple,
    Grupo Financiero Serfin, has been appointed as the common representative of
    the holders of CPOs (the "Common Representative"). Pursuant
    to the Negotiable Instruments Law, the duties of the Common Representative
    include, among others, verifying the due execution and terms of the CPO Trust
    Agreement, verifying the existence of the Series "A" shares being held in
    the CPO Trust, authentication, by its signature, of the Global CPO, exercising
    the rights of the CPO holders in connection with the payment of any dividend
    or distribution to which such CPO holders are entitled; undertaking any other
    action to protect the rights, actions or remedies to which CPO holders are
    entitled, calling and presiding over CPO holders general meetings (a "CPO
    General Meeting"), and carrying out the decisions adopted therein. The Common
    Representative may request from the CPO Trusteeall information and data necessary
    for the performance of its duties. CPO holders, by a resolution adopted at
    a duly held CPO General Meeting, may (i) revoke the appointment of the Common
    Representative and appoint a substitute Common Representative, and (ii) instruct
    the Common Representative to undertake certain actions. Holders
    of CPOs representing at least 10% of the aggregate number of outstanding CPOs
    representing Series "A" shares, 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 Official Gazette of the Federation and in one of the newspapers with
    the largest distribution in the domicile of the CPO Trustee (currently Mexico
    City), ten days in advance of the date scheduled for the CPO General Meeting.
    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, through Indeval participants,
    not less than two days prior to the date scheduled for such Meeting, and must
    submit such statement to the institution designated for such purposes in the
    notice for such Meeting on or before the date prior to the date scheduled
    for the Meeting. 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 it. At CPO General Meetings, resolutions must be approved by
    a vote of the majority of the holders 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 at least 50% plus one of the total number of CPOs
    delivered and, if no quorum initially is present, any holders present at a
    subsequently called CPO General Meeting shall constitute a quorum. Resolutions
    adopted by the required number of CPO holders at a duly convened CPO General
    Meeting will bind al CPO holders, including absent and dissident holders. Certain
    matters must be approved at special CPO General Meeting at which for the first
    call 75% of the CPOs delivered must be present and resolutions with respect
    to such matters must be approved by the holders of 50% plus one of the CPOs
    represented 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 in respect of 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
    represented at such meeting. Enforcement
    of Rights of CPO Holders In
    accordance whit the Negotiable Instruments Law, CPO holders may, with certain
    limitations, individually and directly exercise certain rights with respect
    to CPOs. Such rights include the right to cause the CPO Trustee to distribute
    dividends or other distributions received by it (directly or through Indeval),
    to cause the Common Representative to protect the rights to which the CPO
    holders are entitled and to enforce such rights and to bring action against
    the Common Representative for civil liabilities in the event of willful misconduct. Status
    of CPO Holders The
    CPO Trust Agreement and the CPO Deeds provide that any investors deemed a
    non-Mexican investor acquiring CPOs shall be considered under the CPO trust
    Agreement, by virtue of its acquisition of CPOs, to be a Mexican national
    with respect to its holdings of CPOs and shall be deemed to have agreed not
    to invoke the protection of its own government. If such protection is invoked,
    such CPO holder will forfeit its CPOs to the Mexican government. A holder
    of CPOs is deemed to have invoked the protection of the home government of
    such holder by, for example, asking such government to interpose a diplomatic
    claim against the Mexican government with respect to the CPO holders' rights
    or by bringing suit in its home jurisdiction against the Mexican government
    with respect to such right. In the opinion of such counsel, CPO holders are
    not deemed to have waived any of their other rights, including any rights
    such holder may have under the United States securities laws or pursuant to
    the terms and provisions of the CPOs. Termination
    of the CPO Trust The
    CPO Trust Agreement and the CPOs issued under the CPO Deeds will expire 30
    years after the date of execution of the CPO Trust Agreement. The CPO Trustee
    will commence the procedure for the termination of the CPO Trust Agreement
    12 months prior to its expiration. At the time of such termination, the CPO
    Trustee will proceed to sell the Series "A" shares held in the CPO Trust and
    distribute the proceeds of such sale to the holders of the CPOs on a pro rata
    basis in accordance with the number of CPOs owned by each holder. The CPO
    Trust, with respect of Vitro's shares, may also be terminated upon a resolution
    approved by the holders of a majority of the relevant CPOs, 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, the Series "A" 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
    Common Share is entitled to one vote at general shareholders' meetings. Holders
    of ADRs and CPOs are not entitled to vote the underlying Common Shares. Voting
    rights with respect to the underlying Common Shares are exercisable only by
    the CPO Trustee, which is required to vote all such Common Shares in the same
    manner as the holders of a majority of the Common Shares that are not held
    in the CPO Trust and that are voted at the relevant meeting. Vitro's
    corporate charter prohibits ownership of Common Shares by non-Mexican nationals.
    Any such acquisition in violation of such provision would be null and void
    under Mexican law and such Common Shares would be canceled and Vitro's share
    capital accordingly reduced. Non-Mexican nationals may, however, hold financial
    interests in Common Shares through a neutral investment trust such as the
    CPO Trust. Material
    contracts. There
    are no material contracts other than contracts entered into the ordinary course
    of business and/or those discussed throughout this report. Exchange
    controls. Effective
    November 11, 1991, certain rules dealing with currency conversions were repealed
    and, as a result, all conversions to pesos from U.S. dollars, formerly required
    to occur within the controlled exchange market, now occur in the free exchange
    market. Since
    then, the value of the peso has been subject to significant fluctuations with
    respect to the dollar and may be subject to significant fluctuations in the
    future. In 1994, a major devaluation of the peso relative to the dollar increased
    the exchange rate from Ps. 3.47 per U.S. dollar at December 19, 1994
    to Ps. 5.00 per U.S. dollar at December 31, 1994. Between December 31,
    1994 and December 31, 1995, the peso further depreciated to Ps. 7.74
    per U.S. dollar. In 1996 and 1997, the peso stabilized relative to the U.S.
    dollar, depreciating only 1.8% and 2.4%, respectively. During 1998, the peso
    devalued from Ps. 8.07 per U.S. dollar at the end of 1997 to Ps. 9.90 per
    U.S. dollar at the end of 1998. In 1999, the Mexican peso appreciated from
    Ps. 9.90 per U.S. dollar at the beginning of 1999 to Ps. 9.50 per U.S. dollar
    at the end of 1999. In 2000, the Mexican peso depreciated from Ps. 9.50 per
    U.S. dollar at the beginning of 2000 to Ps. 9.61 per U.S. dollar at the end
    of 2000, a total depreciation of 1.16% against the U.S. dollar. During 2001,
    the Mexican pesos appreciated from Ps.9.6098 at the end of 2000 to Ps. 9.1695
    at the end of 2001, a total appreciation of 4.58% against the U.S. dollar. Additionally,
    from time to time, the Mexican economy has suffered balance of payment deficits
    and shortages in foreign exchange reserves, that have affected the value of
    the Mexican peso relative to other currencies. While the Mexican government
    does not currently restrict the ability of Mexican or foreign persons or entities
    to convert pesos to dollars, it has done so in the past and may do so in the
    future. Any
    such exchange rate fluctuations or restrictive exchange control policy could
    adversely affect our ability to make payments in dollars, and could also have
    a material adverse effect on our financial condition and results of operations. Taxation. Mexican
    Taxes The
    following general summary of Mexican taxes is based on Mexican federal tax
    laws in force on the date of this Form 20-F, which are subject to change.
    It is not intended to constitute a complete analysis of the tax consequences
    under Mexican law of the purchase, ownership and sale of ADSs, CPOs, Common
    Shares or Vicap Notes (See "Item 5. B. - Liquidity and Capital Resources
    - Description Of Our Indebtedness - Vicap Notes) by individuals or corporations
    non-residents of Mexico. Each
    prospective investor should consult its tax adviser as to the Mexican, United
    States, or other tax consequences of an investment in, the ownership of, and
    the disposition of, ADSs, CPOs, common shares, or Vicap Notes, including the
    effects of any foreign, state or local tax laws. ADSs,
    CPOs and Common Shares Effective
    June, 2001 a new rule was issued by the Ministry of Finance and Public Credit
    under which payments of dividends, either in cash or any other form, paid
    with respect to ADSs, CPOs or Common Shares to a non-resident of Mexico will
    be subject to a withholding tax equal to 5% of the amount of dividends paid. Gains
    realized by non-residents of Mexico resulting from the sale of Common Shares,
    CPOs or ADSs sold through an authorized stock exchange (such as the Mexican
    Stock Exchange or the New York Stock Exchange) or broad-based market in any
    country, as determined by the general rules issued therefore by the Ministry
    of Finance and Public Credit (an "Authorized Stock Exchange Market") are exempt
    from Mexican Federal withholding tax. However, if the sale of the Common Shares,
    CPOs or ADSs by a non-resident of Mexico is not made through an Authorized
    Stock Exchange Market, the transaction will be subject to Mexican federal
    withholding tax at a rate of 20% of the gross sales price. However if the
    seller is a resident of a country not-deemed a tax-heaven under Mexican Law,
    and the seller appoints a representative in Mexico for income tax purposes
    related to such sale, the seller has the option to pay Mexican federal income
    tax at a rate of 40% of the gain on the sale. Notwithstanding
    the foregoing, according to the Tax Treaty (as defined below), gains obtained
    by a resident of the United States for tax from the sale of stock of the Company
    (such as our Common Shares, CPOs and ADSs), may only be taxed in Mexico if
    the recipient of the gain, during the 12-month period preceding such sale,
    had a participation, directly or indirectly, of at least 25% in our capital;
    otherwise such gain will not be taxed in Mexico. Deposits
    and withdrawals of CPOs in exchange for ADSs will not be subject to Mexican
    federal withholding tax. There are no Mexican indebtedness taxes imputable
    to the ownership, transfer or dispositions of Common Shares, CPOs or ADSs. Vicap
    Notes. This
    summary of certain Mexican federal tax considerations deals only with holders
    of Vicap Notes that are not residents of Mexico for Mexican tax purposes and
    that do not conduct a trade or business through a permanent establishment
    or a fixed base in Mexico (a "Foreign Holder"). For purposes of Mexican taxation,
    and individual is a resident of Mexico if he has established his domicile
    in Mexico, unless he has resided in another country for more than 183 calendar
    days, whether consecutive or not, in any one calendar year and can demonstrate
    that he has become a resident of that country for tax purposes. A legal entity
    is a resident of Mexico if it has been established under Mexican Law or if
    it maintains the principal administration of its subsidiaries or the effective
    location of its management in Mexico. A Mexican citizen is presumed to be
    a resident of Mexico for tax purposes unless such individual can demonstrate
    otherwise. If an individual or entity has a permanent establishment or fixed
    base in Mexico, such permanent establishment or fixed base will be required
    to pay taxes in Mexico on income attributable to such permanent establishment
    or fixed base in accordance with applicable tax law. Taxation
    of Interest and Principal. Under Mexican law, payments of interest (including
    original issue discount, which is deemed to be interest) made by the Issuer
    or the Guarantor in respect of the Vicap Notes to a Foreign Holder are generally
    subject to a Mexican withholding tax assessed at a rate of 10% given that
    the Vicap Notes are registered with the Special Section of the Registry maintained
    by the CNBV. Pursuant
    to Mexican law, payments of interest made by the Issuer or the Guarantor in
    respect of the Vicap Notes to a Foreign Holder are subject to a reduced 4.9%
    Mexican withholding tax rate (the "Reduced Rate") because the Vicap Notes
    are registered with the Special Section of the National Registry maintained
    by the CNBV if (i) we comply with the information requirements specified from
    time to time by the Ministry of Finance and Public Credit and (ii) the effective
    beneficiaries of the interest payments are parties not deemed related to us,
    as defined under applicable law. Apart
    form the Reduced Rate, other special rates of Mexican withholding tax may
    apply. In particular, under the Tax Treaty (as defined below), Mexican withholding
    tax rate is reduced to 4.9% (the "Treaty Rate") for certain holders that are
    resident of the United States (within the meaning of the Tax Treaty) under
    certain circumstances contemplated therein. Payments
    of interest made by the Issuer or the Guarantor with respect to the Vicap
    Notes to non-Mexican pension or retirement funds are exempt from Mexican withholding
    taxes, provided that (i) any such fund is duly organized pursuant to
    the laws of its country of origin, (ii) is exempt from income tax in such
    country and (iii) is registered with the Ministry of Finance for tax purposes. Each
    of the Issuer and the Guarantor has agreed, subject to specified exceptions
    and limitations, to pay additional amounts to the holder of the Vicap Notes
    in respect of the Mexican withholding taxes mentioned above. Holders
    or beneficial owners of Vicap Notes may be requested by the Issuer or the
    Guarantor to provide certain information or documentation necessary to enable
    the Issuer or the Guarantor, to establish the appropriate Mexican withholding
    tax rate applicable to such holders or beneficial owners. In the event that
    the specified information or documentation concerning the holder or beneficial
    owner, if requested, is not provided on a timely basis, the obligation of
    the Issuer or the Guarantor, as appropriate, to pay additional amounts will
    be limited. Under
    Mexican law, a Foreign Holder is not subject to any Mexican taxes in respect
    of payments of principal not in excess of the issue price made by the Issuer
    or the Guarantor, with respect to the Vicap Notes. Taxation
    of Dispositions. Capital gains resulting form the sale or disposition
    of the Vicap Notes by a Foreign Holder are not subject to Mexican income or
    other taxes. Transfer
    and Other Taxes. There are no Mexican stamp, registration, or similar
    taxes payable by a Foreign Holder in connection with the purchase, ownership
    or disposition of the Vicap Notes. A Foreign Holder of a Vicap Note is not
    liable for Mexican estate, gift, inheritance or similar tax with respect to
    the Vicap Notes. United
    States Taxes. ADSs,
    CPOs and Common Shares The
    following summary of United States federal income taxes is based on United
    States federal income tax laws in force on the date of this Form 20-F. It
    describes the principal United States federal income tax consequences of the
    purchase, ownership and sale of ADSs (which are evidenced by ADRs) or CPOs
    by a citizen, resident or corporation of the United States as the case may
    be ("U.S. Holder"). It is not a complete analysis or listing of
    all of the possible tax consequences of such purchase, ownership and sale
    and does not address tax consequences to special persons such as tax-exempt
    entities and corporations owning at least 10% of our stock. Investors should
    consult their tax advisors with respect to the tax consequences of the purchase,
    ownership and sale of ADSs or CPOs, including consequences under state and
    local tax laws. Taxation
    of Cash Dividends and Distribution of Stock.For United States federal
    income tax purposes, U.S. Holders of ADSs or CPOs generally will be treated
    as the owners of the underlying Common Shares. Dividends paid with respect
    to the Common Shares represented by ADSs or CPOs will be includable in the
    gross income of a U.S. Holder as ordinary income when the dividends are received
    by the CPO Trustee and will not be eligible for the dividends received deduction
    generally allowed to corporations under the Internal Revenue Code of 1986,
    as amended (the "Code"), and will be treated as foreign source dividend
    income. Dividends paid in pesos will be included in income in a U.S. dollar
    amount based on the exchange rate on the date such dividends are paid by Vitro. Distributions
    of Common Shares to the CPO Trustee with respect to its holdings of Common
    Shares and distributions of CPOs and ADSs to U.S. Holders with respect to
    their holdings of CPOs and ADSs, as the case may be ("Old Stock"),
    that are pro rata with respect to their holdings of Old Stock will generally
    not be subject to United States federal income tax (except with respect to
    cash received in lieu of fractional Common Shares, CPOs and ADSs). The basis
    of the CPOs and ADSs so received will be determined by allocating the U.S.
    Holder's adjusted basis in the Old Stock between the Old Stock and the CPOs
    and ADSs so received. Taxation
    of Capital GainsA U.S. Holder that holds ADSs or CPOs as capital assets
    will recognize capital gain or loss for United States federal income tax purposes
    upon a sale or other disposition of such ADSs or CPOs in an amount equal to
    the difference between such U.S. Holder's basis in the ADSs or CPOs and the
    amount realized on their disposition. Under current law, capital gains realized
    by corporate and individual taxpayers are generally subject to 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 28% (rather than 39.6%). 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 U.S. Holder
    of ADSs or CPOs generally should constitute gains or losses from sources within
    the United States. Deposits
    and withdrawals by U.S. Holders of CPOs in exchange for ADSs and of ADSs in
    exchange for CPOs will not be subject to any United States federal income
    tax. Vicap
    Notes. This
    summary of certain United States federal income tax considerations deals principally
    with United States Holders (as defined below) that hold Vicap Notes as capital
    assets and whose functional currency is the United States dollar. This summary
    generally does not address the tax treatment of United States Holders that
    may be subject to special rules, such as banks, insurance companies, dealers
    in securities, or persons that hold the Vicap Notes as a position in a "straddle"
    for tax purposes or as part of a "synthetic security" or "conversion transaction"
    or other integrated investment comprised of the Vicap Notes and one or more
    other investments, nor does it address the tax treatment of United States
    Holders that do not acquire Vicap Notes at their issue price as part of the
    initial distribution. As used under this section "Taxation", the term "United
    States Holder" means a beneficial owner of a Note that is, for United States
    income tax purposes, a citizen or resident of the United States or a United
    States domestic corporation or that otherwise are subject to United States
    federal income taxation on a net income basis on its worldwide income. Taxation
    of Interest and Additional Amounts. A United States Holder should treat
    the gross amount of interest and Additional Amounts (i.e., without
    reduction for Mexican withholding taxes, determined utilizing the appropriate
    Mexican withholding tax rate applicable to the United States Holder) as ordinary
    interest income in respect of the Vicap Notes. Mexican withholding taxes paid
    at the appropriate rate applicable to the United States Holder are treated
    as foreign income taxes eligible for credit against such United States Holder's
    U.S. federal income tax liability, subject to generally applicable limitations
    and conditions, or, at the election of such United States Holder, for deduction
    in computing such United States Holder's taxable income. Interest and additional
    amounts constitute income from sources without the United States for foreign
    tax credit purposes. Such income generally constitutes "high withholding tax
    interest" for U.S. foreign tax credit purposes unless and until the Mexican
    withholding tax rate applicable to the United States Holder is imposed at
    a rate below 5% (such as during any period in which the Reduced Rate is in
    effect, as well as when the Treaty Rate is further reduced to 4.9%), in which
    case such income generally constitutes "passive income" or in the case of
    certain United States Holders, "financial services income". The
    Issuer and Guarantor do not intend to treat the possibility of an optional
    redemption or repurchase of the Vicap Notes as giving rise to any accrual
    of "original issue discount" or recognition of ordinary income upon redemption,
    sale or exchange of a Note. Holders may wish to consider that United States
    Treasury Regulations regarding the treatment of certain contingencies were
    recently issued and may wish to consult their tax advisers in this regard. The
    calculation of foreign tax credits and, in the case of a United States Holder
    that elects to deduct foreign taxes, the availability of deductions, involves
    the application of rules that depend on a United States Holder's particular
    circumstances. United States Holders should consult their own tax advisers
    regarding the availability of foreign tax credits and the treatment of Additional
    Amounts. A
    holder or beneficial owner of Vicap Notes that is, for U.S. federal income
    tax purposes, a foreign corporation or a nonresident alien individual (a "Non-U.S.
    Holder") generally are not subject to United States federal income or withholding
    tax interest income or Additional Amounts earned in respect of Vicap Notes,
    unless such income is effectively connected with the conduct by the Non-U.S.
    Holder of a trade or business in the United States. Taxation
    of Dispositions. Gain or loss realized by a United States Holder on the
    sale, redemption or other disposition of Vicap Notes generally are long-term
    capital gain or loss if, at the time of the disposition, the Vicap Notes have
    been held for more than one year. Gain realized by a United States Holder
    generally is treated as from sources within the United States for U.S. foreign
    tax credit purposes. A Non-U.S. Holder of Vicap Notes are not subject to United
    States federal income or withholding tax on gain realized on the sale or other
    disposition of Vicap Notes unless (i) such gain is effectively connected with
    the conduct by the Non-U.S. Holder of a trade or business in the United States
    or (ii) in the case of gain realized by an individual Non-U.S. Holder, the
    Non-U.S. Holder is present in the United States generally for 183 days or
    more in the taxable year of the sale and certain other conditions are met.
    However, the number of days present in the United States can be as little
    as 31 days under some circumstances. Each Non-U.S. Holder should consult their
    own tax adviser regarding their status as a nonresident alien individual. United
    States Backup and Information Reporting. If certain holders of a Note
    (including, in particular, Non-U.S. Holders and non-corporate United States
    Holders) receive payment through the offices or agencies of the Issuer or
    the Guarantor in the United States, such holders are subject to backup withholding
    and information reporting unless appropriate certifications are provided as
    required by applicable law. Such holders should consult their tax advisers
    regarding the application of information reporting and backup withholding
    to their particular situations. On October 6, 1997, the IRS issued final regulations
    relating to backup withholding and information reporting that unifies current
    certification procedures and forms and clarifies reliance standards (the "Final
    Regulations"). The Final Regulations generally will be effective for payments
    made after December 31, 1999. Potential investors should consult their own
    tax advisors concerning possible changes in their documentation requirements
    under the Final Regulations in respect of an investment in the Vicap Notes. Tax
    Treaties A
    Convention for the Avoidance of Double Taxation and a Protocol thereto (the
    "Tax Treaty") between the United States and Mexico became effective on January
    1, 1994. Provisions of the Tax Treaty that may affect the taxation of certain
    United States holders of Notes are included above. The United States and Mexico
    have also entered into an agreement that covers the exchange of information
    with respect to tax matters. In addition, Mexico has in effect similar tax
    treaties with Belgium, Brazil, Canada, Denmark, Finland, France, Germany,
    Italy, Japan, Korea, Netherlands, Norway, Spain, Singapore, Sweden, Switzerland,
    the United Kingdom, Chile, Ecuador, Ireland, Israel and Venezuela. Dividends
    and paying agents. Owners
    of ADSs and CPOs are entitled to receive any dividends payable in respect
    of the Common Shares underlying such ADSs and CPOs. However, those owners
    are not entitled to vote the underlying Common Shares with respect to the
    approval of such dividends. Cash dividends will be paid to the CPO Trustee
    in pesos and, with respect to CPOs on deposit with the Depositary, such dividends
    will be paid by the CPO Trustee to the Depositary in pesos. Documents
    on display. Vitro
    is subject to the informational reporting requirements of the United States
    Securities and Exchange Act of 1934, as amended, and files with the Securities
    and Exchange Commission ("SEC"): Annual
      reports;
    Certain
      other reports that it makes public under Mexican law, files with the Mexican
      Stock Exchange or distributes to shareholders; and
    Other
        information. You
    may read and copy any reports or other information that Vitro files at the
    SEC's public reference room al 450 Fifth Street, N.W., Washington D.C. 20549,
    and at the SEC's regional offices located at Citicorp Center, 500 West Madison
    Street, Suite 1400, Chicago, Illinois 60661 and 233 Broadway, New York, New
    York 10279. Please call SEC at 1-800-SEC-0330 for further information on the
    public reference room. In addition, material filed by Vitro may also be inspected
    at the offices of the New York Stock Exchange at 20 Broad Street, New York,
    New York 10005. As
    a foreign private issuer, Vitro is exempt from the rules under the Exchange
    Act prescribing the furnishing and content of proxy statements and will not
    be required to file proxy statements with the SEC and its officers, directors
    and principal shareholders will be exempt from the reporting and "short swing"
    profit recovery provisions contained in Section 16 of the Exchange Act. You
    may obtain documents from Vitro by requesting them in writing or by telephone
    at the following addresses: Vitro,
    S.A. de C.V. Av.
    Ricardo Margain Zozaya 440 Col. Valle del Campestre, San Pedro Garza Garcia,
    Nuevo Leon, 66265, Mexico Attention:
    Investor Relations Department Telephone
    number: (52-81) 8863-12-00 You
    may obtain additional information about Vitro through its web site al www.vitro.com The
    information contained therein is not part of this annual report.   Item
    11. Quantitative and Qualitative Disclosures About Market Risk. Our
    business activities require that we hold or issue financial instruments, principally
    debt obligations in pesos or in U.S. dollars, that expose us to market risk
    caused by movements in interest rates or currency exchange rates. To hedge
    these risks, we utilize derivative instruments. All financial instruments
    held by us are for purposes other than trading. Interest
    Rate Risk Our
    exposure to market risk associated with changes in interest rates relates
    primarily to our debt obligations, most of which bear interest at floating
    rates. We periodically enter into interest rate swap agreements to hedge future
    interest payments under floating rate debt. The
    table below provides information as of December 31, 2001 regarding our
    debt obligations that are sensitive to changes in interest rates. For these
    debt obligations, the table presents principal cash flows and related weighted
    average interest rates by expected maturity dates. The fair value of long-term
    debt is based on the quoted market prices for the same or similar issues,
    as well as on the present value of future cash flows. The rates used to discount
    the future cash flows of debt instruments are LIBOR and the Mexican Certificados
    de la Tesoreria de la Federacion ("CETES") rates that match the remaining
    life of the instrument. In the case of interest rate swaps, the table presents
    notional amounts and weighted average interest rates by contractual maturity
    dates. Notional amounts are used to calculate the contractual payments to
    be exchanged under each contract. Expected
          Maturity Date(Millions
          of constant pesos as of December 31, 2001, except for percentages)2002
      2003
      2004
      2005
      2006
      There
          after
      Total
      Fair
          ValueFixed
        rate debt (1):Dollar-denominated
      Ps.
          1,605
      Ps.
          41
      Ps.
          179
      Ps.
          29
      Ps.
          989
      Ps.
          2,200
      Ps.
          5,043
      Ps.
          4,589Weighted
        average interest rate
      10%
      5%
      6%
      5%
      7%
      11%
      9%Floating
        rate debt (2):Dollar-denominated
      Ps.
          789
      Ps.
          2,214
      Ps.
          952
      Ps.
          535
      Ps.
          672
      Ps.
          3
      Ps.
          5,165
      Ps.
          5,165Weighted
        average interest rate (3)
      4%
      4%
      5%
      5%
      6%
      6%
      5%Peso-denominated
      
      
      Ps.
          310
      
      
      
      Ps.
          310
      Ps.
          310Weighted
        average interest rate (4)
      
      
      10%
      
      
      
      10%
      10%UDI-denominated
      Ps.
          52
      Ps.
          52
      Ps.
          52
      Ps.
          52
      Ps.
          8
      
      Ps.
          217
      Ps.
          217Weighted
        average interest rate (5)
      9%
      9%
      9%
      9%
      9%
      
      9% (1)  
    Fixed interest rates are weighted averages as contracted by Vitro and its
    subsidiaries.(2)   Floating interest rates are based on market rates as of December 31,
    2001 plus the weighted average spread for Vitro and its subsidiaries.(3)   Market rates for U.S. dollar-denominated debt are based on
    the LIBOR curve.(4)   Market rates for Peso-denominated debt are based on the CETES
    and TIIE and assume a flat yield curve (there is no long-term yield curve
    in Mexican pesos).(5)   Based on the pesos-per-UDI value published by Banco de Mexico
    in the Official Gazette of the Federation, which in turn, is based on the
    INPC. Expected
          Maturity Date(Millions
          of constant pesos as of December 31, 2001, except for percentages)2002
      2003
      2004
      2005
      2006
      There-after
      Total
      Fair
          ValueInterest
        Rate SwapsInterest
        rate swaps variable to fixed
      Ps.
          336
      
      
      
      Ps.
          6,586
      
      Ps.
          6,922Average
        pay rate
      8.57%
      
      
      
      6.19%
      
      6.30%Average
        receive rate
      5.66%
      
      
      
      5.65%
      
      5.65%Fair
        value of interest rate swaps
      
      
      
      
      
      
      
      $4.70 Exchange
    Rate Risk We
    periodically enter into currency swap agreements to mitigate our exposure
    to inflation in Mexico. The table below provides information as of December 31,
    2001 regarding our debt obligations that are sensitive to inflation in Mexico.
    We utilize currency exchange swaps to exchange UDI-denominated debt for U.S.
    dollar-denominated debt. Expected
          Maturity Date(Millions
          of constant pesos as of December 31, 2001, except for U.S. dollars)2002
      2003
      2004
      2005
      2006
      There-after
      Total
      Fair
          ValueCurrency
        Exchange SwapsUDI-denominated
        (1)
      110
      
      50
      
      355
      
      515Currency
        liabilities
      Ps.
          336
      
      Ps.
          153
      
      Ps.
          1,085
      
      Ps.
          1,574Nominal
        amount (2)
      $33.40
      
      $15.20
      
      $107.90
      
      $156.50Fair
        value of currency swaps
      
      
      
      
      
      
      
      $137.00 (1)In
    millions of UDIs represented by notes issued by Vitro in the Mexican Stock
    Exchange.
    (2)In millions of U.S. dollars. Natural
    Gas Price Risk Natural
    gas is the principal fuel consumed by our glass furnaces. We intend to enter
    into natural gas purchase contracts for hedging purposes only, and we will
    designate them as cash flow hedges to cover our anticipated natural gas requirements.
    Accordingly, these natural gas hedges will be purchases in the ordinary course
    of business, and thus, not subject to derivative accounting. As
    of December 31, 2001, we maintained hedges on the price of natural gas
    for approximately 50% of our consumption needs with Petroleos Mexicanos, which
    we refer to as "Pemex," at a price of $4.00 per Million British Thermal
    Unit, which we refer to as "MMBTU." These hedges are take-or-pay agreements
    by which we must purchase approximately 50% of our natural gas consumption
    needs from Pemex at a price that may be higher than the current market price
    of natural gas at the time of purchase. As of December 31, 2001, the
    market price per MMBTU was $2.10. Anchor
    Glass Certain
    Tax Benefits In
    1989, we acquired Anchor Glass, which at the time was the second-largest manufacturer
    of glass containers in the United States. Anchor Glass filed for protection
    under Chapter 11 of the United States Bankruptcy Code in September 1996.
    In February 1997, Anchor Glass sold substantially all of its assets to an
    affiliate of Consumers Packaging Inc., which we refer to as "New Anchor",
    and Owens-Brockway Glass Container, Inc. The proceeds of the sale of Anchor
    Glass were used in their entirety to pay expenses of the bankruptcy estate
    and to repay creditors of Anchor Glass. As a result of the disposal in 1997
    of Anchor Glass, the tax benefits resulting from utilization of net operating
    losses of Anchor generated in 1996 are included in the 1997, 1998 and 1999
    statement of operations as "Income on disposal of discontinued operations." PBGC
    Limited Guaranty In
    connection with the sale of assets of Anchor Glass to New Anchor, we executed
    a term sheet which contemplated that we would enter into an agreement pursuant
    to which we would guarantee on a limited basis the payment to the Pension
    Benefit Guaranty Corporation ("the PBGC"), an independent federal agency that
    guarantees certain pension obligations, of all or a portion of any unfunded
    benefit liabilities of three defined benefit plans which subsequently were
    merged into the Anchor Glass Container Pension Plan (the "AGCPP"). We would
    be liable under such limited guaranty only if the AGCPP terminates (in other
    than a successful standard termination) prior to August 1, 2006 and the
    PBGC is unable to recover the full amount of such liabilities from New Anchor
    or any members of its controlled group. The maximum amount of our limited
    guaranty and the dates on which payments under the limited guaranty could
    be required (based on the termination date of the AGCPP) are set forth below.
    In addition, as part of our arrangement with the PBGC, tax liens in favor
    of the AGCPP were filed in an original amount of approximately $23 million
    on all of the domestic assets of Vitro Packaging Corporation, and such liens
    currently remain valid. Termination
          Date
      Number
          of Semi-Annual $3.5 Million Payments
      First
          Payment Due
      Last
          Payment Due
      Maximum
          Amount of GuarantyFebruary
        1, 2002-July 31, 2002
      18
      February
        1, 2003
      August
        1, 2011
      $63
        MillionAugust
        1, 2002-January 31, 2002
      16
      August
        1, 2003
      February
        1, 2011
      $56
        MillionFebruary
        1, 2003-July 31, 2003
      14
      February
        1, 2004
      August
        1, 2010
      $49
        MillionAugust
        1, 2003-January 31, 2003
      12
      August
        1, 2004
      February
        1, 2010
      $42
        MillionFebruary
        1, 2004-July 31, 2004
      10
      February
        1, 2005
      August
        1, 2009
      $35
        MillionAugust
        1, 2004-January 31, 2005
      8
      August
        1, 2005
      February
        1, 2009
      $28
        MillionFebruary
        1, 2005-July 31, 2005
      6
      February
        1, 2006
      August
        1, 2008
      $21
        MillionAugust
        1, 2005-January 31, 2006
      4
      August
        1, 2006
      February
        1, 2008
      $14
        MillionFebruary
        1, 2006-July 31, 2006
      2
      February
        1, 2007
      August
        1, 2007
      $7
        Million However,
    according to New Anchor's Annual Report on Form 10-K for the year ended
    December 31, 2001 (the "NA 10-K"), New Anchor, effective December 31,
    2001, along with Glenshaw Glass Company, Inc. ("GGC"), created the Glass Companies
    Multiemployer Pension Plan (the "MEPP") from the merger of the AGCPP and GGC's
    defined benefit plan for hourly employees. In the NA 10-K, New Anchor expressed
    its belief, based on an opinion of its counsel, that the MEPP satisfies the
    definition of a multiemployer plan for purposes of the Employee Retirement
    Income Security Act of 1974, as amended ("ERISA") and the Internal Revenue
    Code of 1986, as amended (the "Code"). For accounting purposes, the MEPP does
    not constitute a multiemployer plan, because New Anchor and GGC are related
    entities. For purposes of ERISA and the Code, more than one employer must
    be required to contribute to a plan for it to constitute a multiemployer plan.
    If New Anchor and GGC are deemed to be a single employer, then such requirement
    may not be satisfied. New Anchor also disclosed in the NA 10-K that if the
    AGCPP remained a single employer plan, it would have been required to contribute
    approximately $140 million to the AGCPP through 2004. On
    April 15, 2002, New Anchor filed a pre-negotiated plan of reorganization
    under Chapter 11 of the U.S. Bankruptcy Code. On June 6, 2002, the
    PBGC filed with the bankruptcy court a notice of objection (the "Notice
    of Objection") to the disclosure statement filed by New Anchor in connection
    with such plan of reorganization (the "Disclosure Statement"). The
    PBGC objected to the Disclosure Statement on the grounds that New Anchor failed
    to inform its creditors of the potential consequences of a determination by
    the DOL that the MEPP does not meet the requirements of a multiemployer pension
    plan under ERISA. In the Notice of Objection, the PBGC stated that at its
    request, the DOL is currently reviewing the purported merger of the AGCPP
    with the GGC defined benefit plan to determine whether the applicable statutory
    and regulatory requirements have been satisfied. In addition, the PBGC has
    filed contingent claims with the bankruptcy court in the amount of approximately
    $218 million, which represents the amount by which the AGCPP would have been
    underfunded on a plan termination basis as of February 28, 2002 if it remained
    a single employer plan. If the MEPP is determined to be a multiemployer plan
    then our risk of incurring material liability in connection with PBGC limited
    guaranty will be reduced. However, our risk of incurring material liability
    in connection with the PBGC limited guaranty depends on positions to be taken
    by the IRS, DOL, PBGC and potentially, the courts. Accordingly, no assurances
    can be given.   Item
    12. Description of Securities Other than Equity Securities. Not applicable.  PART
    II Item
    13. Defaults, Dividend Arrearages and Delinquencies. In
    September 1996, Anchor Glass filed for protection under Chapter 11 of the
    United States Bankruptcy Code. In connection with the bankruptcy proceedings,
    Anchor Glass stopped payments of principal and interests due on approximately
    $470 million in aggregate principal amount of its various series of outstanding
    debt securities (of which, $170 million, $100 million and $200 million ranked
    senior secured, senior unsecured and senior subordinated debt securities,
    respectively). In February 1997, Anchor Glass sold substantially all of its
    assets to an affiliate of Consumers Packaging Inc., and to Owens-Brockway
    Glass Container, Inc., and in connection with such sale, the creditors committee
    of Anchor Glass issued to Vitro a liabilities release. Item
    14. Material Modifications to the Rights of Security Holders and Use of Proceeds. Not applicable. Item
    15. [Reserved] Item
    16. [Reserved]  PART
    III Item
    17. Financial Statements. Vitro is furnishing financial statements pursuant to the instructions of Item
    18 of Form 20-F. Item
    18. Financial Statements. The
    consolidated financial statements of Vitro, S.A. de C.V. attached to this
    annual report on Form 20-F have been audited by Deloitte & Touche, independent
    public accountants, as in their reports with respect to the consolidated financial
    statements. Item
    19. Exhibits. Link
    to Financial Statements:  SIGNATURESThe registrant
          hereby certifies that it meets all of the requirements for filing on
          Form 20-F and that it has duly caused and authorized the undersigned
          to sign this annual report on its behalf.Vitro,
          S.A. de C.V.
        /s/
          Clauido Luis del Valle
          Claudio Luis del Valle
        Finance
          and Tax DirectorDate:
          July 1st., 2002