1909

2009

2009 Annual Report

Our First Century

Our First Century

2009 A

nnual Report V

itro

On December 6, 1909, a group of visionary businessmen created Vidriera Monterrey, laying

the groundwork for the glass industry to become a reality in Mexico. This seed has grown

today to become one of the leading glass manufacturing companies in the world.

Vitro’s importance in the industry is no coincidence. Over the last century, the Company

has faced innumerable challenges but has also had the foresight to capitalize on many impor-

tant opportunities.

It all began 100 years ago…

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In 2009 Vitro celebrated its First Century. Today we can proudly say that the Company’s

corporate philosophy, ideology and the strong foundation of beliefs and values inherited from

its founders and predecessors, combined with its employees commitment and dedication

throughout their years, Vitro will not only succeed but will maintain and strengthen the

confidence of customers, suppliers and community in the future ahead.

Vitro is preparing to celebrate many more centuries as one of the world’s largest suppliers.

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At Vitro, our Mission, Vision and Values are the foundations that give meaning to everything we do within the Company;

they represent the key elements that encompasses the image projected to the world.

CompaniesGlass Containers Vitro Envases Norteamérica Compañía Vidriera Fabricación de Máquinas Industria del Álcali Servicios Integrales de Acabados Vidriera Guadalajara Vidriera Los Reyes Vidriera Monterrey Vidriera Querétaro Vidriera Toluca Vidrio Lux (Bolivia) Vitro Packaging de México Vitro Packaging (USA)

Flat Glass Viméxico Cristales Inastillables de México Distribuidor Vidriero Lan Vidrio Plano de México Vidrio y Cristal del Noroeste Vitro Automotriz Cristales Automotrices + Posselt Family - 49% Vitrocar Vitro Colombia Vitro Flex Vitro Flotado Cubiertas Vitro Vidrio y Cristal Grupo Sordo Noriega: Ruiz Álvarez Family - 45%

Productos de Valor Agregado en CristalVitro Cristalglass (Spain)Vitro Chaves - Industria de Vidro: Chaves Family (Portugal) - 40%Vitro America (USA)Super Sky (USA)

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United States of AmericaOne of the leading processors and distributors of architectural glass; automotive replacement glass, distribution and installation, and an important supplier of custom-made value-add glass containers.

MexicoLargest producer, distributor and seller of glass containers and flat glass.

Costa Rica, Guatemala and PanamaLeading glass container producer and commercial seller in Central America and the Caribbean through Comegua, our joint venture in the region.

ColombiaProducer of laminated and tempered glass products for the construction and automotive industries.

BoliviaProducer and distributor of glass containers for the soft drink, beer, food, wine and liquor, and pharmaceutical industries.

PortugalAn important player in the processing and distribution of flat glass products for the Portuguese construction industry.

SpainOne of the leading processors of flat glass products for the construction industry and other industrial markets.

FranceProcessing and distribution of glass products for the French and Central European construction markets.

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MissionVitro is a customer-committed company dedicated to providing value-added products and services in profitable

and growing markets.

VisionTo become a leading Company in the glass industry in

terms of profitability, efficiency, quality, and service.

ValuesAt Vitro we maintain a strict adherence to the following Values, to move on the path to profitability.

Customer Orientation: Our customer as origin and final destination of our efforts.

Quality: Constantly meet and exceed customer’s expectations.

Creativity and Innovation: Continuously search for new ideas to develop and improve our value-added products and services.

Integrity: Meet and exceed expected ethic behavior.

Teamwork: Foster a friendly environment among colleagues.

Founded in 1909, Vitro, S.A.B. de C.V. (BMV: VITROA),

is the leading glass manufacturer in Mexico, and one

of the largest in the world, backed by more than 100

years of experience in the industry.

Headquartered in Monterrey, Mexico, the Company

has subsidiaries in 10 countries throughout Europe

and the Americas, through which it offers high quality

products and reliable services that address the needs

of two distinct businesses: containers and flat glass.

Vitro’s manufacturing facilities produce, process,

distribute and sell a wide range of glass products that

form an important part of millions of people’s everyday

lives. The Company also provides excellent solutions

to a variety of industries, including: food, beverage,

wines & spirits, cosmetics, and pharmaceutical, as

well as the automotive and construction industries.

In addition Vitro is a supplier of raw materials,

machinery and industrial equipment.

As part of its culture of corporate responsibility,

the Company continues to create new initiatives to

improve the well-being of its employees, support

the communities in which it conducts business,

preserve the environment, and manage its business

with the highest ethical standards and in complete

transparency.

Our Company

4 Financial Highlights

6 Chairman´s Letter

8 CEO´s Letter

10 Glass Containers

12 Flat Glass

14 Sustainable Development

18 Board of Directors

Contents 19 Corporate Governance

20 Operating and Financial Analysis

28 Management´s Financial Responsibility

29 Independent Auditors´ Report

30 Consolidated Financial Statements

65 Shareholder Information

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(1) Dollar figures reported herein are in nominal dollars resulting from dividing each month’s nominal pesos by that month’s ending exchange rate. (2) Financial data is presented in nominal pesos. (3) Change from 2008 to 2009. (4) Based on the weighted average shares outstanding. (5) EBITDA = earning before interest, taxes, depreciation and amortization, and provision for employee retirement obligations.(6) Represents the capital expeditures carried out during the year, for which differs of the investments presented in the cash flow.

Starting December 2008 Comegua is consolidated under the method of equity. Due to changes in Mexican FRS, regarding to consolidation of entities, specifically to consolidation of entities or single-purpose transaccions, our accounts receivables securization trusts were included in the Consoli-dated Financial Statements of Vitro and Subsidiaries. The effects of these changes in accounting principles increased debt of fiscal years 2008 and 2009.

Vitro, S.A.B de C.V. and Subsidiaries(In millions of pesos, except where indicated otherwise; dollar figures are in millions of US nominal dollars).

Financial highlights

December 31,

US $ (1) % Ps. (2) %

2009 2008 change (3) 2009 2008 change (3)

Income Statement Consolidated net sales $ 1,770 $ 2,627 (32.6) Ps. 23,991 Ps. 29,013 (17.3)

Domestic 825 1,157 (28.7) 11,152 12,831 (13.0) Export 484 600 (19.3) 6,568 6,547 0.3 Foreign Subsidiaries 461 870 (47.0) 6,271 9,635 (34.9)

Operating income (EBIT) 98 160 (38.7) 1,329 1,710 (22.3)

Net loss (47) (458) (754) (5,682) Net loss of majority interest (49) (460) (787) (5,706) Net loss of majority interest earnings per common share (4) (0.17) (1.34) (2.17) (16.57) EBITDA (5) 237 329 (27.8) 3,217 3,605 (10.8)

Balance Sheet Total assets 2,500 2,586 (3.3) 32,652 35,774 (8.7) Total liabilities 2,348 2,361 (0.5) 30,668 32,666 (6.1) Stockholders’ equity 152 225 (32.4) 1,984 3,108 (36.2) Stockholders’ equity of majority interest 40 123 (67.5) 520 1,704 (69.5)

Financial Indicators Debt / EBITDA (times) 6.5 4.9 6.2 6.1 Interest Coverage (times) 1.3 2.1 1.3 2.1 (EBITDA / total net financial expense)

EBIT Margin (%) 5.5 6.1 5.5 5.9

EBITDA Margin (%) 13.4 12.5 13.4 12.4

Personnel 16,807 19,385 (13.3) 16,807 19,385 (13.3) Capital expenditures (6) 48 176 (72.7) 638 1,909 (66.6)

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(1) Financial data for year 2009 and 2008 is presented in nominal pesos, while for previous periods it is expressed in constant pesos as of December 31, 2007.

In millions of pesos (1) In millions of US nominal dollars

EBITDA

In millions of pesos (1) In millions of US nominal dollars

EBIT

In millions of pesos (1) In millions of US nominal dollars

Consolidated Net Sales23,99129,10328,59127,87626,567

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

1,7702,6272,5602,4012,212

1,3291,7102,7042,1171,839

2005 2006 2007 2008 2009

98160242180153

2005 2006 2007 2008 2009

3,2173,6054,3794,3314,041

2006 2007 2008 20092005

237329391371336

2005 2006 2007 2008 2009

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Dear Shareholders:2009 was a challenging and very important year for our Company.

Vitro commemorated its First Century of operations on December 6, 2009. This tremendous milestone occurred in the backdrop of a financial crisis that impacted almost everyone across the globe. Our financial posi-tion and liquidity was particularly affected since the third quarter 2008. While this was not the ideal scenario for celebrating an anniversary, it was an incentive for us to renew our commitment and work diligently to main-tain our position as one of the leading glass manufacturers in the world.

The financial crisis which began in late 2008, worsened in 2009, and fully impacted the global economy affecting, in different degrees our key geographic markets: US, Spain, France, Portugal, Colombia, Panama and Mexico.

In light of this broad and acute industry contraction, a disproportion-ate increase in unemployment rates, reduced consumer purchasing power, lack of liquidity at all levels, sharp devaluation of the Mexican Peso versus the US Dollar, combined with an unsafe environment in Mexico, our num-ber one priority became the ”business as usual” operation of our facilities.

In these circumstances we were forced to make difficult decisions during the first quarter of 2009 to safeguard the Company’s operations and liquidity.

As announced, we decided not to comply with certain financial obli-gations, which led certain creditors to demand payment.

We began negotiations with our creditors at the end of 2008, with the objective of achieving an organized debt restructuring that would allow us to maintain operations as usual and continue to address our customers’ needs.

Since then, we have maintained ongoing negotiations with the major-ity of our creditors attempting to reach a mutually satisfactory agree-ment. Throughout this process, we have reached agreements with several of them, exchanged restructuring proposals and expect to conclude this process in the near future.

The effects of the global recession significantly impacted the auto-motive and construction industries - the two important markets served by our Flat Glass business unit, as well as contractions in other markets served by the Glass Containers business unit. This in turn negatively af-fected our top line and, ultimately, our financial results.

During 2009 our net consolidated sales reached US$1,770 million, a 32.6 percent decrease compared with the prior year, while EBITDA fell 27.8 percent to US$92 million. These figures include the results of Empresas Comegua, S.A. our Central American investment which was consolidated until November 2008.

Management’s efforts to maintain production facilities operations and enhance liquidity have proven successful. We exceeded our cost reduction goals for the year. By the end of the third quarter of 2009, we achieved annualized savings of close to US$122 million, above our US$80 to US$120 million annualized savings target range. The majority of these benefits will be maintained going forward, and the rest will be incurred as required by growth in our businesses.

In order to streamline operations and re-calibrate our business to customers’ reduced demand, we divested certain assets, downsized our workforce, adjusted our installed capacity and implemented processes focused on increasing operating efficiencies.

Chairman’s Letter

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We successfully refinanced the majority of our short term lines of credit to finance working capital and, during the last quarter of the year, closed transactions to increase our cash position to US$217 mil-lion. This enables us to meet our 2010 cash requirements, and to be prepared for any future scenario as we continue our debt restructuring process.

The current complex financial position has not been a barrier to re-sponsibly and transparently manage your Company, complying with the highest standards and guidelines of corporate governance. I am pleased to report that Vitro received an award for Best Business Ethics Practices from the Mexican Philanthropic Center, A.C. (Cemefi) as well as from the Alliance for Social Responsibility in Mexico (AliaRSE) for our practice of “Corporate Institutionalization and Transparency.”

Since the onset of the restructuring process, we have kept our customers, suppliers, personnel and financial audiences well informed about its progress, while making it very clear that our top priority is to safeguard our operations, in order to continue servicing our customers in the timeliest manner possible.

Regarding conversations with our creditors, our position as a com-pany has always been to maintain an open dialogue in order to reach a mutually satisfactory agreement. We expect to reach a consensual agreement with the majority of our creditors in the coming months and to finalize the restructuring process.

We don’t foresee a short term recovery in our key markets. Al-though they have begun to show slight signs of improvement, we ex-pect the recovery process will require time.

Nevertheless, we are very confident that the decisions taken by the Board of Directors are appropriate and will lead us back to our original growth path.

We have reached our first one hundred year milestone, the result of the hard work, commitment, and enthusiasm of the men and women who have been a part of this great company. In honor of their dedica-tion, those of us who form part of Vitro today are grateful for the trust you bestow upon us and reiterate our commitment to being “The Glass Company” for many more centuries to come.

Sincerely,

Adrián Sada GonzálezChairman of the Board of Directors

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

September, 2010

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Dear Fellow Shareholders:At Vitro we are aware that the global economic environment remains uncertain, and complete recovery of our markets to levels before 2008’s financial crisis is still a long way ahead.

Although we see signs of recovery in certain market segments, we are nonetheless aware that the financial crisis drove the world into a deep recession and believe it will take at least a few years to see a sig-nificant recovery.

At the beginning of 2009 we expected a challenging year; not only for our Company, but also for the markets we serve. And indeed this year was a difficult period for all as a result of the economic crisis and restrictions in capital flows.

Despite the difficult environment, 2009 was a year of pride and en-couragement for those of us who are part of this great Company, as Vitro celebrated its First Century of existence. This historic event strengthened our spirits and reinforced our Company’s importance to shareholders, customers, suppliers, employees, the countries where we operate and other constituencies. We have proved that we are a company that is truly committed to the hard work, determination and loyalty passed on by our predecessors. We have the passion and skills to face all kinds of challenges, as we have demonstrated it over the past 100 years.

ResultsWe continued making important strategic decisions in 2009, redefining our Company’s structure and better aligning us with market demands; including the implementation of a challenging cost and expense reduction program. Today, we can proudly say that these initiatives have truly been successful, as they generated annualized savings of around US$122 mil-lion versus our forecasted range of US$80 to US$120 million.

At the same time, we made other important adjustments which par-tially compensated the negative impact the financial crisis had on our key markets; we downsized our organization and adjusted installed capacity to adapt to the current market needs.

In order to improve liquidity, we concluded a US$75 million transaction with Fintech Advisory Limited in 2009, creating a trust to which Vitro and selected subsidiaries transferred several real estate assets. Vitro also suc-cessfully refinanced its accounts receivable program for three Viméxico, S.A. de C.V. subsidiaries and refinanced the trade receivable securi- tization of our Glass Containers business unit.

These and other initiatives will allow us to continue servicing our cus-tomers´ needs in a timely manner while maintaining operations as usual.

The current state of our businesses is a direct reflection of today’s global economic conditions. The majority of the market segments ser-viced by our Glass Containers business unit were negatively impacted; the only exceptions were fragrances, cosmetics and pharmaceuticals. Glass Containers’ consolidated net sales for 2009 reached US$919 mil-lion, a 34.8 percent decline compared with 2008. These figures include the results of Empresas Comegua, S.A., our investment in Central Amer-ica, which was consolidated until November 2008.

Flat Glass was also negatively impacted. Sales continued to reflect the contraction in two of the most drastically affected sectors of the NAFTA economy: automotive and construction, and the poor conditions in Spain’s construction market, to which Vitro has significant exposure. Flat Glass consolidated net sales reached US$845 million in 2009, a 29.3 percent decline versus the prior year.

During 2009, our Company reported a 32.6 percent decline in total net consolidated sales, reduced to US$1,770 million. Operating income (EBIT) amounted to US$98 million, representing a 38.7 percent decrease versus 2008. These figures include the results of Empresas Comegua, S.A. which was consolidated until November 2008, since then Comegua’s re-sults have been reported under the equity method.

Financial RestructuringIn order to protect our liquidity and maintain operational continuity, given the severe decline in industrial activity at the end of 2008- with the

CEO’s Letter

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added threat of an even greater impact from financial derivative instru-ments we used mainly to hedge our natural gas prices- Vitro decided not to meet certain financial obligations.

Due to this decision, some of our counterparties begun legal pro-ceedings to which Vitro have responded in a timely manner. Proceed-ings are following their normal legal process, and Vitro will continue to defend its rights vigorously whenever necessary.

Vitro has maintained an open dialogue with its counterparties from the outset. Throughout the year, the Company maintained conversa-tions and exchanged proposals with bondholders seeking to reach a sat-isfactory agreement for all parties; specifically an agreement in line with Vitro’s cash flow generation capacity given current market conditions.

In February and March of 2009 some of the Company’s subsidiaries, and in certain cases the Company itself, were sued by counterparties involved in financial derivative operations who collectively demanded a payment of US$240 million plus interest. In June 2010, Vitro reached an agreement to settle the amount related to derivative financial instru-ments (“DFIs”) with Calyon, London Branch and on September 2010, the Company reached a settlement agreement with Fintech Investments Ltd. (“Fintech”), who had previously acquired all of the remaining DFIs claims from the other counterparties. As a result of these Settlements, all of the lawsuits related with the DFIs have been dismissed.

To date, the negotiations with bondholders continue and Vitro’s efforts are focused on arriving at a consensual restructuring with the majority of its creditors.

The Company remains committed to offer a package that will rep-resent an enhanced recovery for creditors versus the historical pricing levels during the last six months of the Senior Notes. The proposed struc-ture has the purpose of ensuring the long-term financial sustainability and competitiveness of Vitro, which should have a positive impact on the future value of the restructured debt.

Even with our intent of reaching an acceptable agreement with the

majority of our creditors, Vitro is prepared to defend the interests of the Company, and of our shareholders and business partners, custom-ers, suppliers and employees, as well as the communities where we are located.For this process, Vitro has therefore assembled a very capable negotiat-ing team. This allows us to remain focused on our operations and to continue to meet the expectations of our customers, suppliers and other members of the value chain of the Company. To all, we appreciate the confidence bestowed upon us and reiterate our commitment to continue offering the highest quality products and service possible.

To our valued shareholders, on behalf of everyone at Vitro I would like to reaffirm that our collective efforts and dedication are focused on strengthening our Company to regain satisfactory levels of value generation.

Sincerely,

Hugo A. Lara GarcíaChief Executive Officer

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

September, 2010

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Glass ContainersThis Vitro business unit supplies glass containers to the following

industries: beverage, beer, food, wine and liquor, cosmetics and

pharmaceuticals, as well as a broad range of design and marketing

services. It is the main manufacturer in Mexico and Central America,

the most important exporter into the US, and one of the leading glass

manufacturers in the world. Also supply raw materials, machinery and

industrial equipment to different industries.

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Business OutlookResults for 2009 were affected by the prolonged and deep market contraction.

Glass Containers production declined from early in the year, not only in the beer sector, but in all sectors Glass Containers serves, with the exception of fragrances and pharmaceutical. This scenario required dramatic capacity adjustments in order to meet the lower demand lev-els, aggressive cost and expense reduction programs were simultaneously put in place.

We also adjusted our workforce and capacity utilization to accom-modate these demand changes. Vitro’s customers remained supportive during these difficult times, and throughout 2009 we implemented a series of measures directed towards strengthening these valuable long term business relationships.

We were able to manage the market’s recessionary impact through creativity and innovation, encouraging new product development, pro-ducing high-value-added glass containers and exploring the market for new niche opportunities.

The Mexican Containers and Packaging Association (“AMEE”) once again awarded recognition to 45 Vitro glass containers, specially de-signed for several of our high-profile customers. At the same ceremony, a first-ever Sustainable Container Award was given to Vitro, for comply-ing with specific criteria, including: performance, cost, use of renewable resources, use of new technology and, among others, for being a clean industry.

Likewise, Vitro excelled among companies from 32 countries, when for the third consecutive year, three of its glass containers received the annual “World Star Award” from the World Packaging Organisation.

Consolidated net sales for Glass Containers were US$919 million, a 34.8 percent year over year decline. Glass Containers reported EBITDA of US$223 million, equivalent to a decrease of 11.5 percent compared to 2008.

Sales for Vitro Packaging, our US subsidiary, decreased by 9.8 per-cent compared to 2008, largely due to the decline in demand for glass containers from the beverage and wine markets.

Fabricación de MáquinasFabricación de Máquinas (“Fama”) a Vitro subsidiary specializing in the development of machinery, molds and equipment for the glass industry, reported a 48.9 percent decrease in sales caused by the downsizing of the installed capacity in our manufacturing facilities as well as a signifi-cant decline in demand for the equipment and machinery that we supply to external customers and other industries.

Fama continues to integrate new technologies into its processes in order to improve its products, an example is Fama’s recent strategic alli-ance with Boscato Dalla Fontana, one of the world’s largest glass indus-try equipment manufacturers.

Industria del ÁlcaliIndustria del Álcali, a Vitro company that manufactures, markets and distributes soda ash, sodium bicarbonate, sodium chloride and calcium chloride, basic ingredients for the glass, soaps and detergents, chemicals, pharmaceutical, food, oil, and water treatment industries, registered positive results by operating its four plants at 99.5 percent capacity.

The greatest challenge the company faced in 2009 was the broad based market contraction, which impacted Álcali’s top line as well as those of the industries it serves. The major drop in oil prices brought down prices in ocean shipping and represented another challenge; in-creased shipping at cheaper prices brought competitive products into Mexico from China.

We addressed this challenge through increased productivity and strict adherence to the cost and expense reduction plan. We also rein-forced alliances with customers by demonstrating that our high-quality products and services have been and will always be available to them at competitive prices, regardless of economic environment.

In order to increase productivity and operating efficiencies, we in-vested in a replacement drier at Álcali’s soda ash plant in 2009, which allowed us to improve operations and gain important cost savings in energy consumption, also benefiting the environment.

2009 was good year for Industria del Álcali; it reported a 14.6 in-crease in sales compared with the prior year.

We are optimistic; the recovery of our end markets, combined with our important alliances with customers and suppliers, should ensure we meet or exceed our goals in the near future.

Strategic Perspectives for the BusinessWhile the markets we serve recover, we will continue focusing on de-veloping and improving our products and services in order to offer optimum solutions for our customers’ needs. We will strengthen our efforts to maintain a competitive cost structure and to be prepared to address any demand increases, once the economic environment begins to normalize.

We will continue to seek out new business opportunities by taking advantage of our team’s experience and talent, while nurturing solid, well-established relationships with our current portfolio of customers.

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Flat GlassFlat Glass is Vitro’s business unit dedicated to glass manufacturing,

processing, commercialization, distribution and installation for the

construction and automotive industries, in the later for both original

equipment and replacement glass. The quality of Vitro’s products and

services has transcended borders, and the Company operates facilities

in Mexico, Portugal, Spain, France, Colombia and the US through

which it serves the North American, Central and South American and

European markets.

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Business OutlookThe global economic meltdown had a significant impact on diverse mar-kets, including the construction and automotive industries, which had a materially negative effect on our business results.

Flat Glass net consolidated sales for 2009 contracted by 29.3 percent compared to 2008, principally due to the fact that the markets we serve entered into a recession at the end of 2008. Flat Glass reported EBITDA of US$6.2 million for 2009, a decline of 91.6 percent over 2008.

The Float Glass business unit, which serves both the construction and automotive industries, registered a decrease in sales caused by a severe drop in US automotive demand, a reduction of exports to the US and the contraction in the US real estate market. Following the financial collapse and its related impact- particularly on the construc-tion industry during 2007 and 2008- Vitro America, our US subsidiary, faced one of its sharpest contractions in recent history.

Vitro’s subsidiaries in Spain, Portugal and France were also impac-ted by the challenging global economic environment. Spain, where the greater part of Vitro’s regional facilities are located, showed a sharp contraction in its markets caused by the bursting of the real estate bubble, which will continue to negatively impact the Company going forward.

In the case of the automotive glass market, the general industry col-lapse was compounded by the weak financial situation of some of the large automotive original equipment manufacturing companies, who resorted to federal aid to mitigate their severe financial problems. Flat Glass took the necessary measures to minimize the effect, adjusting production capacity to reduced demand and, in doing so, continued serving the needs of its customers at competitive costs. Management made significant adjustments to Vitro’s cost structure at all facilities- in Mexico as well as abroad- in order to adapt to the changed market environment.

Vitro’s business segment serving the construction industry intro-duced pyrolytic glass to the market in 2009. This product was designed to satisfy the demand for glass products with thermal control; “low-emission” glass that allows a large percentage of natural light penetra-tion while generating significant energy savings; as well as “reflective” glass, which controls excessive heat transfer by reflecting solar energy and capturing heat mass.

Strategic Perspectives for the BusinessGlass is a product that has a very clear future. Its virtues of trans-parency, safety and malleability, now combined with high performance in energy conservation, have substantially broadened its automotive applications and use in construction.

The construction market in Europe, particularly the residential and large building sectors, remain in a challenging situation. Neverthe-less, we’re confident the market will recover in the medium term. In the meantime, we have taken the necessary measures to address the effects of the industry’s contraction; one example being the consolida-tion of Vitro’s production centers in Spain.

In Mexico, the construction industry should experience a slight recovery during the next months. In the last quarter of 2009 Vitro brought on line the first production line of low emission glass in Mexi-co, thus becoming the nation’s first supplier of this type of glass.

With regards to the North American automotive industry, we also anticipate a slight improvement during this year and the following years, but expect to achieve 2007 production levels until 2014.

It is becoming increasingly challenging to supply the Venezuelan market from Colombia, given the difficult business environment be-tween these two countries. As an important part of Vitro’s strategic business plan, we will continue to make a concerted effort to find work-able solutions that allow us to continue serving the large automotive OEMs in the region.

In the US, we expect that the non-residential construction sector will persist contracting slightly. In this scenario, we will continue to focus on the competitiveness of our cost and service structure. One project concluded in 2009 that will have a positive impact in early 2010 is the consolidation of three manufacturing facilities in Califor-nia into one single facility in the City of Industry located east of Los Angeles,California.

The above strategies prove that, in addition to creating solutions that counteract the world economic recession’s negative impact on our markets, we are also focused on operating at production levels that are determined by Flat Glass customers’ levels of demand, only making investments that are absolutely necessary while developing new, inno-vative products.

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SustainableDevelopment2009 was a year characterized by great challenges which

ultimately led to significant advances in our sustainable

development initiatives, a key element of our business strategy

which assures our Company’s long term viability and the

harmonious development within the many areas of our

organization.

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Socially Responsible CompanyOn 2010, Vitro was awarded the distinction of “Socially Responsible Company”, by the Mexican Philanthropic Center, A.C. (Cemefi for its initials in Spanish). Recognizing, for the third consecutive year its com-mitment to the care and preservation of the environment, the develop-ment of its employees, the support of its community and the ethical and transparent management of the Company.

These distinctions were awarded to: the Flat Glass and Glass Con-tainers business units, as well as to Vitro Corporate Offices and Clínica Vitro (Vitro’s Clinic).

We also took an important step towards our strategy of encourag-ing social responsibility through our value chain. For the first time ever, Calzado Industrial Duramax, a Vitro supplier, was awarded the distinc-tion of being a “Socially Responsible”, Small and Medium Sized (PYME for its initials in Spanish) Mexican Company.

TRANSPARENCY AND BUSINESS ETHICSBest Practices in Business EthicsVitro’s focus on best-practice corporate governance to achieve the highest standards of transparency and business ethics has not been overlooked.

In 2009, our “Corporate Institutionalization and Transparency” practice, an initiative related to the ongoing implementation of trans-parency–related policies and guidelines was awarded “Best Practice for Business Ethics in Mexico” by the Cemefi.

Code of ConductOur Business Conduct and Professional Ethics Code, allows us to ensure that the organizations beliefs, values and the highest ethical standards are an integral part of day to day operations. With 98 percent of our employees taking Vitro’s Professional Ethics course in 2009.

Transparency MailboxTo guarantee the compliance to our Professional Code of Ethics, as well as to the different national and international legislation that regulate our conduct, we have a communication tool that is available 24/7, 52 weeks of the year so any employee, customer, supplier or third party can document and inform any deviation from the Code in a strictly confidential manner.

OUR PEOPLE Training and DevelopmentWe believe our Company is only as competitive as our employees’ skill-levels. We are therefore constantly striving to encourage their profes-sional development and to strengthen their skills and competencies. We

are able to take advantage of the latest technologies and offer over 300 online courses, all of which are available through our internal network training system “@utodesarróllate”.

Plant SafetyYear after year we place strong emphasis on workplace safety. Our pro-gram, applicable to all of our employees, contractors and suppliers, has allowed us to maintain an accident ratio that is well below the estab-lished norms and regulations, year after year.

Promoting Good HealthGood health is fundamental to our employee’s well being and quality of life. We have therefore designed a permanent preventive healthcare and medical services program for our workers, in line with the labor and health laws in each country where we do business.

This program enables us to detect different ailments, such as dia-betes and high blood pressure, among others, and to rely on healthier employees and less work days lost due to illness.

EducationIn 2009 we continued to support our employees looking to improve their education; those who wished to finalize their basic education, and those pursuing specialized courses.

One example of our commitment is Vitro’s High School (Prepa-Empresa) program, established in 2005 in conjunction with the Univer-sidad Regiomontana. This past year, the third generation of students, a total of 29, –graduated from this program, bringing today’s total to 94 students who have received their diploma through this extracurricular program.

Housing Ownership Program: Own your own homeEstablished in 1952, our Housing Department has worked diligently to provide support to our Mexican employees in the mortgage loan ap-plication process so they can buy their own home, thus improving the quality of life for employees and their families, 1,097 new mortgages were successfully obtained in 2009 alone, bringing the total to 26,167, since the program started.

OUR ENVIRONMENTAL COMMITMENTOur recycling program continues to expandOne of the pillars of our commitment to sustainable development is our glass recycling program, the most important in the industry in Mexico, called “For a More Transparent World.”

Thanks to this initiative, during this past year we collected 152,133 tons of glass for recycling, representing a 16 percent increase from

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2008. This translates into natural gas savings of 164,304 MMBTUs’, the elimination of 9,620 tons of CO2 equivalent being released into the atmosphere, and freeing up 304,266 cubic meters of physical space in solid waste landfills.

Energy EfficienciesIn 2009 we worked aggressively to improve the design and operation of various furnaces in order to improve efficiencies, reduce operating costs, use less energy to melt glass, reduce emissions and make a sig-nificant contribution to environmental protection.

Electricity SavingsOur electricity savings programs have also made progress, by substituting high energy consumption equipment with energy efficient equipment.

We have also renovated the high and low air pressure compres-sors responsible for approximately two thirds of our plants’ electricity consumption.

Clean IndustryIn 2009 our plants were once again certified as “Clean Industry” by the Mexican government’s Federal Environmental Protection Agency for complying with current environmental regulations.

Authorities recognize our environmental leadershipThe Glass Containers business unit was recognized by the Mexican Secretary for the Environment and Natural Resources as a“Leading Company” within the Environmental Leadership for Competitiveness Initiative, a program that seeks the better use of raw materials, the reduced emissions and a decreased discharge of contaminants into our streams and rivers.

Our products contribute to sustainable architecture We strongly support sustainable development by supplying a broad range of architectural glass with thermal insulation properties, allow-ing up to 70 percent savings in heating and cooling systems’ electric energy consumption.

Vitro America: a manufacturer of energy efficient productsOur US subsidiary, Vitro America, was awarded the Crystal Achievement Award for the most innovative energy efficient glass application on the Azure Tower in Dallas, Texas, in a contest organized by the National Glass Association.

Madrid Window Renewal Plan Vitro Cristalglass, Vitro’s European affiliate, is actively collaborating with the community of Madrid to promote the Windows Renewal Plan in residential buildings. This Plan substitutes single pane glass win-dows with double pane fortified thermal glass that yields important energy savings.

Lighter bottlesWe continue to work towards reducing the weight of our bottles, which represents important savings in energy and raw materials consumption while allowing for greater efficiency in our production processes.

Containers 100% free of heavy metalsIn 2009 we reached an important milestone when 100 percent of the production of non-returnable decorated containers was free of heavy metals through a total migration to organic paints. This accomplishment contributes to the elimination of chemical reactions that could be harm-ful to people or the environment.

Another step forward for Naturally VitroFor the third consecutive year, Vitro personnel enthusiastically participat-ed in the “Naturally Vitro” campaign by planting 3,500 trees. This past year the Company broadened the scope of its participation by including 2,000 seedlings called “Flor Española” which are vitally important to the biological cycle of the Monarch butterfly.

United for the preservation of wilderness areasThrough the Wildlife Organization (OVIS for its initials in Spanish) we confirmed our strong commitment to biodiversity, wildlife and wild plant conservation programs by taking an active part in the 9th World Wil-derness Congress which took place in Mérida, Yucatán. This important international forum was founded by The Wild Foundation in 1977.

OUR SOCIAL COMMITMENTEach day that passes we’re recycling moreWith the objective of promoting a glass recycling culture, Vitro joined forces with different government authorities, schools, associations, res-taurants, bars and hotels to undertake waste separation campaigns and collect discarded glass.

Thanks to the general response, this initiative was once again very successful; we were able to increase the number of glass recycling pro-grams by 12 percent compared to 2008 through 256 different projects. In addition, the tonnage collected with the community’s help increased by 14 percent year over year.

17

Agreement with UANLVitro believes education is the cornerstone for Society’s growth, and has signed an agreement of cooperation with the Universidad Autónoma de Nuevo León (Autonomous University of Nuevo León) to incorporate an ‘application of glass in architecture’ academic program in their curricu-lum, using criteria based on sustainability.

This agreement also strengthens the bond between the two institu-tions in the areas of expert interchange, professional practices and job opportunities.

Recreation and family integrationWe are proud to contribute to the improvement in the quality of life of our employees and the community through the Vitro Parque El Man-zano, an impressive 585 hectare green area dedicated to recreation and family use.

This park a true “green lung” for the state of Nuevo León, spreads environmental awareness and is focused on the development and pro-tection of wild life and plants; 46,492 people visited the park in 2009.

An anniversary tour of MUViTo commemorate the 100th anniversary of Vitro, the Glass Museum enriched its heritage with materials that document the Company’s trajectory including one of the first bottles manufactured by Vidriera Monterrey, as well as the commemorative bottle for its first 100 years; 13,000 visitors toured the museum in 2009.

Sustainable development is part of the reason we exist: Glass, an environmentally friendly material, is 100 percent recyclable.

18

Board of DirectorsADRIÁN SADA G. 1944 Member since 1984 Chairman of the BoardPresident of the Finance and Planning Committee Member of the Boards of Alfa, Gruma, Cydsa, Regio Empresas, Latin American Executive Board for the Wharton School, Consejo Mexicano de Hombres de Negocios (CMHN), and Grupo de Industriales de Nuevo León.

JULIO ESCÁMEZ F. 1934 Member since 2006 Member of the Boards of Consorcio Industrial de Manufacturas, S.A., and of Vitro, S.A.B. de C.V. (1974–1998); and Alternate Examiner of the Board of Vitro, S.A.B. de C.V. (1999-2005).

ALEJANDRO GARZA L. 1926 Member since 1972 Member of the Executive Committee of Desarrollo Inmobiliario Omega; Member of the Boards of Cydsa, Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM), and Centro de Estudios en Economía y Educación; Member of the Latin American Executive Board for the Wharton School and the Joseph H. Lauder Institute of the University of Pennsylvania.

TOMÁS GONZÁLEZ SADA 1943 Member since 1980 Chairman of the Board and Chief Executive Officer of Cydsa; Vice President of the Mexican Institute for Competitiveness; Honorary Consul of Japan at Monterrey, Mexico; Treasurer of the Fundación Martínez Sada; Member of the Board of Trustees of the Universidad Regiomontana; Member of the Consejo Mexicano de Hombres de Negocios (CMHN); and Member of the Board of Directors of Regio Empresas.

MANUEL GÜEMEZ 1942 Member since 2006President of the Corporate Practices CommitteeChairman of the Boards of Regio Empresas and Grupo PREZ; Member of the Advisory Committee of Grupo de Seguridad Integral; and Alternate Member of the Board of Gruma.

HUGO A. LARA GARCÍA 1965 Member since 2009Chief Executive OfficerPresident of the Automotive Cluster in the state of Nuevo Léon, Mexico; Member of the Board of Empresas Comegua, S.A.; General Manager of Parmalat de México (2001-2004); at Vitro he held several key positions such as Glass Containers business unit’s Commercial Director (2004-2005), Float Glass´ Vice President (2005-2006), and President of the Flat Glass business unit (2006-2008).

RICARDO MARTÍN BRINGAS 1960 Member since 2007President and Member of the Board at Organización Soriana; Member of the Boards of Teléfonos de México, Aeroméxico, Grupo Financiero Banamex, Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM), Consejo Mexicano de Hombres de Negocios (CMHN), Grupo de Empresarios de Nuevo León and Asociación Nacional de Tiendas de Autoservicio y Departamentales (ANTAD for its initials in Spanish).

CARLOS F. MUÑOZ O. 1955 Member since 2000 President of Fomento Bursátil; President of Holding Fibsa; Member of the Board (North Zone) of Banco Nacional de México (Banamex); Member of the Board of Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM), Chihuahua Campus.

JAIME RICO 1957 Member since 2008President and CEO of the Boards of Vitro Europa, IP Vidrio y Cristal and Vitro Global; and Member of the Board of Vitro Cristalglass.

FEDERICO SADA MELO 1979 Member since 2009International Commercial Manager at Flat Glass business unit; Member of the Boards of Grupo Vical, Parque Ecológico Chipinque, A.C., Pronatura Noreste, A.C. and Instituto de Empresa Alumni.

JAIME SERRA P. 1951 Member since 1998 President of SAI Consultores, S.C.; Founder of Aklara (Electronic auctions), Centro de Arbitraje de México (CAM), and the Mexico NAFTA Fund (Private Capital Fund); Member of the Boards of Chiquita Brands International, Fondo México, Tenaris, and Grupo Modelo; former Undersecretary of Finance, Secretary of Trade and Industry and Secretary of Finance of the Mexican Government (1986-1994); Member of Trustees of the Yale University (1994-2001); Co-chair of the President’s Council on International Activities of Yale University; Member of the Trilateral Commission and the US-Mexico Bilateral Council.

JOAQUÍN VARGAS G. 1954 Member since 2000 President of the Audit CommitteeMember of the Boards of Bolsa Mexicana de Valores, Grupo Financiero Santander, Posadas, Grupo Costamex, El Universal and Médica Sur; and Member of the Patronato del Instituto Nacional de Nutrición.

COMMITTEESAudit CommitteeJoaquín Vargas Guajardo (President) *Manuel Güemez de la Vega *Jaime Serra Puche *Jonathan Davis **Claudio L. Del Valle Cabello (Secretary) ***

Corporate Practice CommitteeManuel Güemez de la Vega (President) *Alejandro Garza Lagüera *Carlos Muñoz Olea *Ricardo Martín Bringas *Alejandro F. Sánchez Mújica (Secretary) ***

Finance & Planning CommitteeAdrián Sada González (President) Jaime Serra Puche *Tomás González SadaAndrés A. Yarte CantúHugo A. Lara GarcíaJaime Rico GarzaFederico Sada MeloClaudio L. Del Valle Cabello (Secretary) ***

* Independent Board member** Finance expert, non Board member*** Secretary, non Board member

ANDRÉS A. YARTE C. 1941 Member since 1991 Chairman of the Boards and Chief Executive Officer of Empresas Yarte, S.A. de C.V., and K-Inver, S.A. de C.V.

ALEJANDRO F. SÁNCHEZ MÚJICA 1954Secretary of the Board since 2007, non Board member Executive Vice President and General CounselMember of several Mexican and foreign corporations, such as of Empresas Comegua, S.A.; and of the Advisory Board of The University of Texas Lady Bird Johnson Wildflower Center; Secretary of the Board of Trustees of Chipinque Ecological Park; Formerly Senior Partner at Thompson & Knight (2003-2005) and currently Off-Counsel; Former General Counsel of Grupo Pulsar/Savia (1982-2003) and of one the divisions of Grupo Kuo (1975-1981) and Legal Manager of Indeval (1973-1975).

19

In addition to having well established Auditing and Business Practices committees within its Board of Directors, the Company has also estab-lished a special committee for Finance and Planning.

Each committee member diligently fulfill his duties and obligations in a timely manner. As of May 2007, the committee regulations have been put in writing, including clearly defined objectives, structure and composi-tion, functions and levels of authority for each individual committee.

The Company continues to establish and implement practices, poli-cies and guidelines on an ongoing basis to assure that Vitro and its sub-sidiaries are managed in a transparent manner. In September of 2009 the Company was awarded the “Best Ethical Business Practices Award” by the Mexican Center for Philanthropy, A.C. (Cemefi) as well as by the Alliance for Social Responsibility in Mexico (AliaRSE) for “Institutionaliza-tion and Corporate Transparency”.

These initiatives were designed to improve transparency and better institutionalize Vitro and its subsidiaries. To positively impact the Com-pany and related audiences, translating this benefit into increased eco-nomic strength.

Among the many different activities in place to support good corporate governance, Vitro is constantly monitoring and updating its Corporate Business Conduct and Code of Professional Ethics. In 2009, 98 percent of active employees studied and passed the orientation course. Vitro has also implemented a System of Anonymous Reporting, so anyone internal or external to Vitro can anonymously and confidentially disclose issues or concerns.

As of 2009, the Company implemented a new policy for Related Party Transactions to closely monitor and regulate any transaction of Vitro or any of its subsidiaries with any employee, shareholder, board member or any of their relatives, thus protecting the Company’s in-terests.

Vitro and its subsidiaries have adopted the highest standards of corporate governance and are continuously creating and implementing policies and practices that add value to its overall strategy, management, and its many different stakeholders.

Corporate Governance

Corporate governance is an important focus for Vitro, in order

to guarantee the Company’s institutionalization through the

professionalization of its management. For this reason we not only

strictly adhere to the guidelines and regulations that are mandated in

the Mexican Securities and Exchange Bylaws, but also seek to surpass

these standards.

20

ECONOMIC ENVIRONMENT

During 2009 the largest world economies continued to experience the financial and economic crisis which began during the second half of 2008 and, as of the first quarter of 2010, has not shown a clear indica-tion that the crisis is over. Its effects were reflected in extreme unem-ployment rate growth, credit scarcity, as well as in reduced demand from the automotive and construction industries, mainly in the United States and Spain where Vitro has a strong presence.

The havoc from this economic crisis drove Global GDP figures into negative territory in amounts of 2.2 percent contraction, a figure sharp-ly contrasting with the positive growth figures observed in 2007 and 2008, based on statistics from the International Monetary Fund.

Operating and Financial Analysis

According to figures provided by Mexico’s National Institute for Sta-tistics and Geography, the economy recorded a 6.5 percent decline in GDP, the sharpest contraction on the American continent and one of the worst worldwide. For 2010 it is expected that Mexico will resume growth at a projected rate of 3.9 percent following the expected recov-ery in the US economy.

Despite of the US government’s stimulus initiatives to avoid a sharp-er and more prolonged recession in its domestic economy and reactivate the more important sectors of the economy, the recovery has been slow and is anticipated to continue in a similar fashion during 2010.

The Mexican Peso devalued versus the US Dollar during the first four months of 2009. However, the negative tendency has since reversed itself and the Mexican Peso began its recovery vis-à-vis the US Dollar, due to interest rate differentials between the two currencies and lower risk aversion reflected in stock markets. As of December 31, 2009 the exchange rate was $13.06 Pesos per US$1.00 compared to $13.83 Pesos per US$1.00 at the end of 2008 resulting in a 5.6 percent an-nualized appreciation of the Mexican Peso. On average the Mexican Peso devalued 21 percent, moving from an average exchange rate of $11.19 Pesos during 2008 to an average exchange rate of $13.57 Pe-sos during 2009. For 2010, it is widely expected that the Mexican Peso will strengthen throughout most of the year, due to the US policy of maintaining low interest rates.

During the first nine months of 2009, as a consequence of the global economic deceleration, the price for natural gas, our main en-ergy source, dropped by 56 percent from the closing price of US$6.07 per MMBTU at the end of 2008. At the end of December, 2009 natu-ral gas prices were US$4.40 per MMBTU; an annualized drop of 28 percent.

GDP Growth 2007 2008 2009

Mexico 3.3% 1.3% (6.5)%

USA 2.1% 0.4% (2.4)%

Spain 3.6% 0.9% (3.6)%

Global 3.3% 3.4% (2.2)%

2007 2008 2009 Mexico Consumer Inflation Index (Based on the National Consumer Price Index) 3.8% 6.5% 3.6%

US Consumer Inflation Index (Based on the Consumer Price Index) 4.1% 0.1% 2.7%

Difference between US/Mexico Inflation (0.3)% 6.4% 0.9%

Devaluation (Revaluation) Mexican Peso 0.5% 27.3% (5.6)%

Reynosa Mix

Mar-09Dec-08Sep-08Jun-08Mar-08 Jun-09 Sep-09 Dec-09Dec-07

0

2

4

6

8

10

12

14

US$

/MM

BTU

21

CONSOLIDATED OPERATING RESULTS

SalesFor the year ended December 31, 2009 our Net Consolidated Sales were US$1,770 million, 32.6 percent less than Net Consolidated Sales in 2008. On a comparable basis, excluding Comegua which was consolidated un-til November 2008, our sales decreased by 27.4 percent year over year. The contraction in the markets serviced by the Company, mainly the beer segment, the US automotive industry and the construction industries in the US and Spain, had an adverse impact on Vitro’s sales volumes and consequently on 2009 operating results.

Glass ContainersNet sales for the Glass Containers business unit reached US$919 mil-lion in 2009, representing a 34.8 percent decrease when compared with 2008. On a comparable basis, excluding Comegua which was consoli-dated until November 2008, net sales decreased 24.6 percent during the period. This unfavorable comparison was the result of the significant contraction in the beer and food sectors as the economic crisis reduced our customers’ requirements. In addition, the average exchange rate in 2009 was higher than that of 2008 which makes a fair year over year comparison difficult, due to the effect of reporting in US Dollars, sales that were incurred in Pesos.

Flat GlassNet Sales for the Flat Glass business unit were US$845 million represent-ing a 29.3 percent decrease versus 2008. This decline reflects the de-celeration in the construction and automotive sectors in Mexico, the US and Spain, all key markets for Vitro. In addition a higher exchange rate during most of 2009 compared to 2008 makes it difficult to make a fair year over year comparison, due to the effect of reporting in US Dollars, sales that were incurred in Pesos.

Operating Income (EBIT)Consolidated Operating Income (EBIT) was US$98 million, a 38.7 percent decline from the US$160 million achieved in 2008. EBITDA decreased 27.8 percent from US$329 million at year end 2008 to US$237 million at the year end 2009. On a comparable basis, exclud-ing Comegua which had been consolidated until November 2008, the operating income (EBIT) decreased 34.1 percent while the operating cash flow fell 21.6 percent year over year. The decline in Operating

Flat Glass In million of US nominal dollars Consolidated Net Sales

Consolidated Net Sales In million of US nominal dollars

2005 2006 20082007 2009

Export Foreignsubsidiaries

Domestic Consolidated Net Sales

1,7702,560 2,6272,4012,2128251,078 1,1571,028916461881 870817708484601 600556588

Glass Containers In million of US nominal dollars Consolidated Net Sales

2006 2007 2008 20092005

9191,4101,3211,2221,051

2006 2007 2008 20092005

8451,1951,2121,1491,130

22

Income (EBIT) was mainly due to lower sales and production volumes which resulted in a reduction in fixed cost absorption and an impor-tant working capital recovery. This was partially compensated by the aggressive expense and cost reduction program implemented during the year and the positive impact of lower energy prices on Operating Income (EBIT).

The Operating Income (EBIT) and EBITDA margin moved from 6.1 percent and 12.5 percent in 2008 to 5.5 percent and 13.4 percent in 2009, respectively.

Total Comprehensive Financing ResultDuring 2009 the total comprehensive financing result decreased by 78.1 percent to US$165 million compared to US$752 million during 2008, principally due to a lower loss from hedging operations during 2009. Heading operations resulted in a US$39 million loss in 2009 com-pared to the US$325 million loss corresponding to the claim from the Company’s derivative counterparties during 2008. Additionally, and in sharp contrast to the prior year, Vitro experienced a foreign exchange gain of US$79 million during 2009 compared to a foreign exchange loss of US$240 million in 2008, due to the appreciation of the Mexican Peso vis-à-vis the US Dollar during 2009.

Other Expenses NetDuring 2009, Other Expenses Net decreased by US$17 million from US$38 million in 2008 to US$21 million in 2009. This was mainly driven by the gain derived from the sales of fixed assets which practically offset the expenses incurred in the debt restructuring program and the impairment charge from fixed assets in accordance with accounting regulations.

TaxesDuring 2009 we recognized a favorable deferred income tax in the amount of US$43 million compared to a favorable deferred income tax of US$172 million in 2008. This variation was mainly as a result of the foreign exchange referred in the Total Comprehensive Financ-ing Result.

Net LossNet loss for the period was US$47 million compared to a net loss of US$458 million in 2008. The reduction in net loss was driven primarily by the decrease in the loss from derivative financial instruments claimed by the counterparties and a foreign exchange gain in 2009 resulting from the appreciation of the Mexican Peso versus the US Dollar compared to a foreign exchange loss in the prior year.

Capital ExpendituresInvestments in plant, property and equipment were US$48 million com-pared to US$176 million in the prior year, a reduction of 72.7 percent. During the year, and in an effort to preserve liquidity, Vitro decided to rationalize investments and focus Capex on maintenance of productive facilities. The Glass Containers business unit represented 68 percent of total investments in fixed assets and was mainly applied to molds and furnace maintenance. The investment in Flat Glass represented 32 per-cent of the total investment in fixed assets and was used for mainte-nance of installed capacity.

Consolidated Financial PositionAs of December 31, 2009 the Company’s debt was US$1,540 million, a US$55 million decline from that reported in 2008 year end. The Net debt at the end of 2009 US$1,322 million, 9.9 percent lower than 2008. This was principally due to the sale of properties that took place in December 2009 which increased Vitro’s cash position by US$75 mil-lion. As a result of a new Mexican accounting regulation regarding corporate consolidations and specifically, the consolidation of special purpose entities, as of 2009 Vitro’s factoring and securitization pro-grams were consolidated into the Company’s Financial Statements. Therefore, debt at the end of both periods includes what was consid-ered off balance sheet debt in 2008.

Debt Restructuring StatusAs part of Vitro’s debt restructuring discussions with creditors, on July 20, 2010, the Company presented a restructuring counterproposal (the “Counterproposal”) to representatives of certain holders of Senior Notes, which in their three series aggregate US$1.216 billion outstanding prin-

Investments in Fixed AssetsIn millions of US nominal dollars

2006 2007 2008 20092005

48176 24210893

23

cipal amount. Said counterproposal, which was not accepted, provided the restructuring of approximately US$1.5 billion of Vitro’s debt.

While the proposal was not accepted, in order to reach a consen-sual restructuring agreement, the Company is working on a consent solicitation statement. The Company believes that the proposal includ-ed in the Consent will assure the sustainability of the Company and significantly enhancing the worthiness of its restructured debt. Ad-ditionally, the Company believes that the proposal represents a higher recovery than the average market price for the last six months of the senior notes due 2012, 2013 and 2017. The Company continues to negotiate with the Ad Hoc Bondholder Committee in an effort to se-cure their support of the Consent in advance of its launch but there can be no assurances that such support will be achieved.

Financial Derivative Instruments StatusDuring February and March 2009, the Company and several of it’s sub-sidiaries, received a total of six lawsuits from counterparties involved in financial derivative transactions. On April 12, 2010, the judge of the Supreme Court of the State of New York issued a ruling regarding the request for summary judgment made by Vitro’s counterparties in finan-cial derivatives transactions. The judge granted Vitro’s counterparties’ motions as to liability only and denied them as to the amounts sought by said counterparties, finding that the financial institutions had not provid-ed sufficient and reasonable detail to verify the methods and accuracy of their calculations. The Court then referred the issue of damages to a Spe-cial Referee for further proceedings and recommendation to the Court, and held the motions for summary judgment in abeyance pending re-ceipt of the report of the recommendations of the Special Referee.

On June 7, 2010, the Company reached an agreement to settle the amount related to derivative financial instruments (“DFIs”) with Calyon, London Branch (“Calyon”). In addition, on September 6, 2010, the Com-pany reached a settlement agreement with Fintech Investments Ltd. (“Fin-

tech”), the firm that recently acquired the DFIs claims, previously owned by Credit Suisse International, Deutsche Bank AG, London Branch, Merrill Lynch Capital Services, Citibank, N.A., Barclays Bank, PLC and Cargill, In-corporated. The amount of the settlement agreed with Calyon and Fintech was US$67.3 million and US$190.0 million, including interest of US$3.9 million y US$13.6 million, respectively, recognized by the Company.

As a result of these settlements, all of the lawsuits related with the DFIs have been dismissed.

Stock PerformanceOn June 22, 2009 the Company announced that it had notified the Bank of New York Mellon, the holder of the Ordinary Deposit Certifi-cates represented by its shares in circulation (CPO’s), of its decision to end its Depositary Contract that had been subscribed with this in-stitution and through which the corresponding American Depositary Receipts were issued. This action was due to the Company’s objective to focus on the attractiveness of its shares on the Mexican Stock Ex-change and eliminate the high costs involved with the maintenance of the ADR’s on the NYSE. On August 24, 2009 the Company’s ADR’s stopped trading on the New York Stock Exchange.

On September 8, 2010, the Company filed a Form 15-F with the U.S. Securities and Exchange Commission (the “SEC”) with the intention to deregister its American Depositary Shares (the “ADRs”), Vitro’s 8.625% Senior Notes due 2012, Vitro’s 11.75% Senior Notes due 2013 and Vitro’s 9.125% Senior Notes due 2017 (collectively, the “Notes”), and terminate its reporting obligations under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”).

Vitro is already eligible to suspend its Exchange Act reporting requirements as it complies with the rules of the Exchange Act given that there are no remaining holders of Vitro ADRs and each class of Notes are held of record by less than 300 persons registered in the Depositary Trust Commission worldwide basis.

Debt profile as of December 31, 2009 (1)

(1) Includes overdue debt (payment default)(2) LIBOR, TIIE and CETE base rates

Fixed RateFloating Rate Fixed spread (2)

Mkt Conditions (2)

Dollars Pesos Euros

MarketBanks

79% 13% 8%

88%

15% 85%

9% 3%Currency

Rate

Source

24

Derived from the decision of the Company to postpone the filing of its 2009 fourth quarter audited financial report and, subsequently, its an-nual report for the year ending December 31, 2009, since June 2, 2010, the Company’s share was suspended from trading from the Mexican Stock Exchange; once the Company presents said information it share will resume trading.

RELEVANT EVENTS

Financial PositionVitro Successfully Refinances its Credit Lines of its Spanish SubsidiaryOn August, 2010, the Company through Vitro Cristalglass S.L. (“Cris-talglass”), its Spanish subsidiary, has reached an agreement to refi-nance most of its credit lines (the “Agreement”) with its major banking institutions, allowing it to continue its business plan for the next three years. The Agreement was signed in Ponferrada, with eight financial institutions. The amount of the Agreement is €44.8 million euros.

Cristalglass is Vitro’s main subsidiary in Europe and has production sites in the province of León (Camponaraya and La Rozada in Paran-dones) and other parts of Spain (Madrid - Fuenlabrada, Valencia - Ná-quera and Asturias - Porceyo). It is also the holding company for the subsidiaries of France and Portugal.

By reaching this Agreement, Cristalglass is now positioned for sus-tainability and financial stability according to its business plan, which includes leadership in special construction projects and the diversifica-tion of its products and markets. This plan will allow the company to achieve new growth of its business and to preserve jobs.

Vitro Concluded the Sale of non Productive Real Estate Assets Contributed to the Bancomext TrustOn August 24, 2010, concluded the sale of non-productive real estate assets for US$63.8 million. The proceeds of such sale, plus US$5.5 million of the Company’s available cash, were applied to liquidate the Trust, with an outstanding balance of US$69.3 million, including accrued interest. The sale included unused ancillary property surrounding the corporate headquarters. As a result of such sale, the Company has regained title of its two corporate headquarters office buildings, and their respective land, which were part of the original assets contributed to the Trust.

Vitro Refinances Credit Line for Vitro AmericaOn June 2010, the Company refinanced a US$32.5 million credit line for Vitro America with Bank of America for an additional year.

Vitro Receives Notification Regarding Bonds Maturing in 2013On April 12, 2010 the Company announced that it received a docu-ment on letterhead of the U.S. Bank National Association, which serves as trustee of the Senior Notes due 2013 (the “2013 Notes”), entitled “Notice of Default and Acceleration” referenced to the 2013 Notes. The outstanding principal amount of the 2013 Notes, as of such date was $216 million.

A notice of acceleration is commonly issued when an issuer is in payment default and does not mean that such issuer has entered into a new litigation. Acceleration of the 2013 Notes has been anticipated by the Company and could not in any way impact Vitro’s ability to con-tinue to operate in the normal course while continuing the negotiation process with bondholders.

Vitro Receives Notification Regarding Bonds Maturing in 2012 and 2017On January 4, 2010 the Company announced that it had received no-tification by a group of bondholders which they labeled as an accelera-tion of payment. This notification refers exclusively to those bonds with maturities in 2012 (“2012 bonds”) and 2017 (“2017 bonds” together with the 2012 “the bonds”) totaling US$1 billion.

According to Vitro’s indenture agreements, a minority group of at least 25 percent of bondholders for each of the bonds may submit an acceleration notification.

Min Max Min Max

1st Quarter 3.80 8.30 0.70 1.85

2nd Quarter 4.40 8.12 0.91 1.92

3th Quarter 5.05 7.68 1.04** 1.71**

4th Quarter 6.16 8.24

BMV Per share (pesos) NYSE per ADR*(US dollars)

2009

* ADR: American Depositary Receipt, are equivalent to three regular shares of VitroA with non - voting rigths.** August 24, 2009 the Company’s ADR’s stopped trading on the New York Stock Exchange.

If the SEC has no objection, the deregistration and termination of re-porting obligations will become effective not later than 90 days after the filing. Upon filing of the Form 15-F, Vitro’s reporting obligations with the SEC are suspended until the deregistration is effective. How-ever, Vitro will continue to provide information to the Mexican Stock Exchange and will make such information available on its website.

Trading of Vitro’s shares on the Mexican Stock Exchange and the ADR’s on the New York Stock Exchange was as follows:

25

Vitro Strengthens its LiquidityOn December 16, 2009 the Company announced it had settled a trans-action for US$75 million with Fintech Advisory Limited (“Fintech”) through the creation of a Trust in Mexico (the “Trust”). Vitro and its subsidiaries: Industria del Álcali, S.A. de C.V., Vidriera Guadalajara, S.A. de C.V., Vidriera Monterrey, S.A. de C.V., Vidriera Querétaro, S.A. de C.V., Vidriera Los Reyes, S.A. de C.V. and Vidriera Toluca, S.A. de C.V. all contributed seven properties (land) to the Trust receiving in exchange through the Trust US$75 million that were contributed to the Trust by Fintech.

Vitro retained the right to repurchase these properties and signed a lease agreement for 15 years with the Trust which will allow the Com-pany to continue to use the properties. In an additional effort to increase the Company’s liquidity, Vitro also successfully concluded the refinanc-ing of its accounts receivable for three subsidiaries of Viméxico, S.A. de C.V. (Viméxico) originally due on August 22, 2010.

The original private issuance, which was for US$21.5 million, was replaced by a new issuance for $300 million Pesos maturing in 5 years. This transaction benefits Vitro’s cash position and improves its cash out-look for 2010 considerably.

Vitro Successfully Completes the Refinancing

of its Securitization of Trade Receivables ProgramOn April 1, 2009 the Company successfully completed the refinancing of its securitization of trade receivables program for two of its sub-sidiaries. The preferential portion of the securitization program, with a value of $550 million Pesos, was placed on the Mexican Stock Ex-change and purchased by Ixe Banco, S.A., Institución de Banca Múl-tiple, as well as by Ixe Grupo Financiero. The subordinated portion with a value of US$19 million was placed with a foreign bank. As of June 29, 2009 Vitro paid US$9 million for the subordinated portion to Rabobank and retained the remaining balance of US$10 million.

Legal SituationVitro Stock LitigationRegarding the lawsuit that the Company brought against Banamex, S.A., Institución de Banca Múltiple, subsidiary of Grupo Financiero Banamex, S.A, where the Company asked the courts to nullify the acquisition and holding of Vitro ‘s shares for violating the Company´s bylaws, on January 2010 a District judge ruled in favor of Banamex. Vitro is contesting the irregular purchase of these shares amounting to 14.9 percent of its shareholders’ equity. The Company has submit-ted its appeal in a timely and correct manner to this sentence issued by a lower court.

On August 18, 2010, the Appeals Court issued a resolution denying

the recourse presented by Vitro opposing the decision issued by the lower court. At this time, Vitro is preparing to present a final appeal through an “Amparo” against the decision issued by the Appeals Court.

Legal Proceedings on Certificados Bursátiles

Vitro 03 and RBS BankIn May 2009 the Company received notification of an executive mer-cantile trial initiated by Scotia Bank Inverlat, Casa de Bolsa, S.A. de C.V. Grupo Financiero Scotia Inverlat in its capacity as common rep-resentative for the holders of Certificados Bursátiles with the ticker symbol “VITRO 03” demanding payment of $150.3 million Pesos plus interest. Evidence and pleas were heard during September and Octo-ber 2009. At that time the court ruled that the plaintiff had wrongfully conducted this proceeding and therefore, the process would have to be handled as an ordinary mercantile trial. In October 2009, the judge made a definitive ruling against Vitro, and sentenced it to pay the disputed amount plus interest, therefore, the Company filed an ap-peal against this ruling, requesting that the proceedings begin again, to cancel the liens, to reverse the ruling and to pronounce judgment against the plaintiff and order payment of legal expenses. During April 2010, the appeals court granted Vitro its petition and revoked the de-cision of the lower court and invalidated the proceedings and ordered the parties to begin the case again.

In July 2009 the Company and other defendant subsidiaries re-ceived notification of an executive mercantile lawsuit brought by RBS Bank in its character as creditor demanding the payment of US$15 mil-lion plus interest.

During the months of September and October 2009 hearings ended on the evidence and pleas. In October a preliminary ruling was given requiring the Company to pay the principal amount plus ordinary and default interest. In January 18, 2010 the Company appealed this resolu-tion as well as others that were issued in this proceedings where certain evidence was dismissed. In September 2010 the Court of Appeals ac-cepted one of the appeals being revised, because it had merits due to violation of certain defense rights and order to restart the proceeding to gather evidence by the Company, leaving without effects the first instance judgement and the appeal without merits.

Receivable from Sale of Real EstateIn December 2006, Vitro sold real estate located in Mexico City for US$ 100 million, 80% payable on the date of sale and the remainder payable on the delivery date of the property. As of December 31, 2008, the Company fulfilled all the requirements demanded under the contract and as of the date is seeking legal remedies for payment of the remaining amount. On August 16, 2010, final decision in first instance was issued in which it absolved the purchaser of the real

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estate sold by the Company of the remaining payment claimed. The Company has filed an appeal against the decision, which is pending to be resolved. The Company and its legal counsel believe it has suf-ficient evidence to obtain a favorable final ruling on this issue.

Natural DisastersIn April, 2010, the float glass manufacturing facilitiy located in Mexi-cali was affected by an earthquake, causing damages in its infrastruc-ture and inventory; whithin seven days the plant was in full operation. As of today, we are working on full damage recovery through insur-ance, less applicable deductible.

On July 1st, 2010, as a result of the severe flooding and damages caused by Hurricane Alex to the State of Nuevo León’s infrastructure, particularly to the Municipality of García, Vitro’s Flat Glass, automo-tive manufacturing and processing facilities, as well as Álcali, were forced to temporarily interrupt operations. In particular:

• Two of our four automotive glass manufacturing facilities (both located in García) were affected by this event; however, because of current inven-tory levels and measures taken to restore production in the succeeding days, we were able to minimize the impact on our original equipment manufacturer (“OEM”) clients and auto glass replacement clients;

• Two of our three float glass manufacturing facilities (both located in García) were also affected by this event; one of the affected facilities resumed normal operations initially in the last week of July; however, its operations were temporarily suspended due to stability issues and it resumed full operations again in the last week of August; the other affected facility is expected to resume opera-tions in October; our float glass facility in Mexicali, which is cur-rently operating at 100 percent capacity, is temporarily supplying glass to our OEM glass processing plants; and

• Our facilities at Álcali suspended operations for a few days and a

portion of Álcali’s end-product, raw material and packaging in-ventories were damaged; however, we were able to minimize the impact on our clients by working jointly to supply only the minimal amount necessary for them to continue operating.

We have not yet determined the full impact on our operating results of the damage caused by Hurricane Alex. We expect such damages will be covered by insurance less any applicable deductibles; however, we can provide no assurance as to the amount and timing of such recovery.

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Organizational ChangesExecutive ChangesIn June 2009 the Company designated David González Morales as Pres-ident of Vitro’s Flat Glass business unit replacing Roberto Rubio who left the Company to join Libbey, Inc., Alfonso Gómez Palacio, who was President of Glass Containers prior to his retirement in 2007, assumed the responsibility of Interim President of the Glass Containers business unit during the Company’s restructuring process.

Vitro Temporarily Creates the Chief Restructuring Officer PositionIn April 2009 the Company designated, on a temporary basis, Claudio Del Valle as Chief Restructuring Officer responsible for carrying out the Company’s financial restructuring process. Claudio Del Valle continues as Vitro’s Chief Financial and Administrative Officer and is backed by an executive team that supports him in his current responsibilities.

Other EventsVitro Brings on Line its First Production Line of Low Emission Glass in MexicoIn line with its announced strategy of focusing on products with higher

value added and after more than two years of research and efforts to develop the necessary technology, Vitro brought on line its new Produc-tion Line CR1 of Low Emission and Solar Control glass Eficient-e® and Reflectasol®, both products destined for the architectural market.

Vitro and its Partners Agree on an Extension of the Period for the Purchase of 40 Percent of Vitro CristalglassIn January 2009 a new schedule for the payment of the purchase price of 40 percent of its partners’ share ownership in Vitro Cristalglass was agreed upon, moving it through the 2009-2010 periods.

Vitro Receives the Roveted Distinction for Best Ethical Business PracticesIn September 2009 Vitro was recognized by the Mexican Philanthropic Center, A.C. (Cemefi) as well as the Alliance for Social Responsibility in Mexico (AliaRSE) for the practice of “Institutionalization and Corporate Transparency” under the category of “Best Ethical Business Practices” in Mexico for 2009.

The evaluating committee gave Vitro the award after considering the value added that this practice generates to Vitro’s strategy and management that guarantee the institutionalization of the Company through the professionalization of its administration.

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One of Management’s many responsibilities is the preparation of the Company’s Financial Statements and the additional financial informa-tion included in this Report. This responsibility assures that the financial statements and accompanying notes are prepared in strict adherence with Mexican Financial Reporting Standards (NIF for its initials in Span-ish) currently in effect.

The Company relies on an administrative and IT structure deemed sufficient to confirm that the books and records reasonably reflect the transactions derived from day to day operations. Vitro maintains an internal control system that validates the correct use of its assets and, in addition, avoids the material depreciation of the Company’s assets.

To ensure the Company’s internal controls are adequate and con-form to the prevailing practices, Vitro has well established and commu-nicated policies and procedures in place throughout the organization. Their proper application is frequently validated through internal audit programs at all of its larger business operations.

The Company’s financial statements were audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., members of Deloitte Touche Tohmatsu, an independent certified public accountant firm. Their audit was conducted according to Generally Accepted Audit Norms. For additional information regarding said audit please refer to the complete external auditors’ report included as part if this Report.

The Audit Committee of the Board of Directors, among other duties, confirms that Management complies with the applicable regulations re-garding the correct registration and disclosure of the Company’s transac-tions. The Audit Committee meets with Management on a regular basis, as well as with the external and internal auditors. The Audit Committee determines and authorizes compensation and supervises the performance of the External Auditor. In addition, the Committee is the only entity that can authorize the hiring and compensation of the independent auditor for any services other than or complementary to the audit related tasks.

The external and internal auditors have free and total access to the Audit Committee and frequently meet to discuss its performance, inter-nal controls and all matters related to the financial statements.

Management’s Financial Responsibility

Hugo A. Lara García Claudio L. Del Valle Cabello Chief Executive Officer Chief Financial and Administrative Officer

September, 2010