EXHIBIT 1

VITROCRISA, S.A. DE C.V.

Financial Statements for the year ended
December 31, 1996 and Independent
Auditors' Report
2

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Vitrocrisa, S.A. de C.V.
Monterrey, N.L.

We have audited the accompanying balance sheet of Vitrocrisa, S.A. de C.V.
(a wholly-owned subsidiary of Vitro, Sociedad Anonima) as of December 31, 1996,
and the related statements of operations, variations in stockholders' equity and
changes in financial position for the year then ended, all expressed in
thousands of constant Mexican pesos as of June 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Mexico which are substantially the same as those followed in the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement and that they are prepared in accordance with accounting
principles generally accepted in Mexico. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Vitrocrisa, S.A. de C.V. as
of December 31, 1996, and the results of its operations, variations in its
stockholders' equity and changes in its financial position for the year ended at
December 31, 1996, in conformity with accounting principles generally accepted
in Mexico.

Accounting principles generally accepted in Mexico differ in certain
significant respects from accounting principles generally accepted in the United
States. The application of the latter would have affected the determination of
net income for the year ended December 31, 1996 and the determination of
stockholders' equity at December 31, 1996 to the extent summarized in note 15.

The accompanying financial statements and the independent auditors' report
have been translated into English language for the convenience of the reader.

/s/ Deloitte & Touche
Deloitte & Touche
Monterrey, N.L. Mexico
March 20, 1997.
(August 29, 1997 as to note 14.)

1
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VITROCRISA, S.A. DE C.V.

BALANCE SHEETS
(THOUSANDS OF CONSTANT MEXICAN PESOS AS OF JUNE 30, 1997)

DECEMBER 31, JUNE 30,
1996 1997
------------- -------------
(UNAUDITED)

ASSETS
Cash and cash equivalents..................................... Ps 10,556 Ps 7,881
Trade receivables, net of allowance for doubtful accounts of
Ps 12,130, at December 31, 1996 and Ps 14,663 at June 30,
1997 (unaudited)........................................... 190,360 186,328
Other receivables............................................. 5,290 4,994
Accounts receivable from affiliates........................... 12,802 22,608
Notes receivable from affiliates.............................. 493 9,630
Inventories (note 3).......................................... 138,046 158,234
------------ ------------
Current assets........................................ 357,547 389,675
Investment in shares.......................................... 9,278 8,621
Deferred income tax and deferred profit sharing to workers and
other assets (note 4)...................................... 108,423 104,592
Land and buildings (note 5)................................... 302,133 298,222
Machinery and equipment (note 5).............................. 696,253 648,471
Construction in progress...................................... 655 2,729
Intangible seniority premiums and pension asset............... 13,796 12,696
Amortizable expenses, net..................................... 4,589 2,613
------------ ------------
Total assets.......................................... Ps 1,492,674 Ps 1,467,619
------------ ------------
LIABILITIES
Current portion of long-term debt............................. Ps 7,796 Ps 7,242
Trade payables................................................ 98,856 107,500
Accounts payable to affiliates................................ 32,571 25,460
Notes payable to affiliates................................... 230,409 206,912
Accrued expenses payable...................................... 32,731 46,220
Other current liabilities..................................... 22,523 24,667
------------ ------------
Current liabilities................................... 424,886 418,001
------------ ------------
Long-term debt (note 6)....................................... 713,141 591,879
Seniority premium and pension plans (note 7).................. 37,580 37,031
------------ ------------
Long-term liabilities................................. 750,721 628,910
------------ ------------
Total liabilities..................................... 1,175,607 1,046,911
------------ ------------
STOCKHOLDERS' EQUITY
Capital stock: 166,682,900 shares issued and outstanding...... 2,402,931 2,402,931
Paid-in capital............................................... 63,757 63,757
Shortfall in restatement of capital........................... (1,700,678) (1,721,430)
Minimum pension liability adjustment.......................... (12,990) (11,954)
Accumulated losses............................................ (668,998) (435,953)
Net income for the period..................................... 233,045 123,357
------------ ------------
Stockholders' equity.................................. 317,067 420,708
------------ ------------
Total liabilities and stockholders' equity............ Ps 1,492,674 Ps 1,467,619
------------ ------------

The accompanying notes are an integral part of these financial statements.

LIC. CARLOS TREVINO GONZALEZ
Administrative Director

LIC. CARLOS NAVARRO LEAL
Manager of Comptrollership

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VITROCRISA, S.A. DE C.V.

STATEMENTS OF OPERATIONS
(THOUSANDS OF CONSTANT MEXICAN PESOS AS OF JUNE 30, 1997, EXCEPT PER SHARE
AMOUNTS)

SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------
1996 1997 1996
------------ ---------- -----------
(UNAUDITED)

Net sales............................................ Ps 1,326,707 Ps 657,410 Ps 654,793
Cost of sales........................................ 857,398 392,798 425,038
General, administrative and selling expenses......... 234,456 119,048 119,342
------------ ----------- -----------
Operating income................................... 234,853 145,564 110,413
------------ ----------- -----------
Interest expense..................................... 251,611 76,333 129,737
Interest income...................................... 5,792 1,331 1,620
Exchange loss (income), net (note 8-c)............... 13,269 7,228 (23,378)
Gain from monetary position.......................... (273,956) (70,774) (166,472)
------------ ----------- -----------
Total financing cost............................... (14,868) 11,456 (61,733)
------------ ----------- -----------
Income (loss) after financing...................... 249,721 134,108 172,146
Severance payments................................... 18,000 3,838 4,773
Other income, net.................................... 4,374 715 78
------------ ----------- -----------
Income before income tax, profit sharing to workers
and extraordinary item.......................... 236,095 130,985 167,451
Income and asset tax (note 11)....................... 82,596 44,139 50,018
Workers' profit sharing.............................. 756 398 358
------------ ----------- -----------
Income before extraordinary item................... 152,743 86,448 117,075
Extraordinary item (note 12)......................... 80,302 36,909 50,437
------------ ----------- -----------
Net income......................................... Ps 233,045 Ps 123,357 Ps 167,512
------------ ----------- -----------
Earnings per common share (based on 166,682,900
outstanding shares for all periods):
Income before extraordinary item................... Ps .92 Ps .52 Ps .70
Extraordinary item................................. .48 .22 .30
------------ ----------- -----------
Net income......................................... Ps 1.40 Ps .74 Ps 1.00
============ =========== ===========

The accompanying notes are an integral part of these financial statements.

3
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VITROCRISA, S.A. DE C.V.

STATEMENTS OF VARIATIONS IN STOCKHOLDERS' EQUITY
(THOUSANDS OF CONSTANT MEXICAN PESOS AS OF JUNE 30, 1997)

MINIMUM
PENSION SHORTFALL IN
CAPITAL PAID-IN LIABILITY RESTATEMENT ACCUMULATED NET STOCKHOLDERS'
STOCK CAPITAL ADJUSTMENT OF CAPITAL LOSSES INCOME EQUITY
------------ ---------- ---------- ------------- ----------- ----------- -------------

Balance at December 31,
1995................. Ps 2,112,505 Ps 63,757 Ps(12,235) Ps (1,264,515) Ps(652,136) Ps (101,646) Ps 145,730
Appropriation of net
loss from prior
year................. (101,646) 101,646
Merger................. 290,426 (371,558) 84,784 3,652
Loss from non-monetary
assets............... (64,605) (64,605)
Minimum pension
liability
adjustment........... (755) (755)
Net income............. 233,045 233,045
------------ ----------- ----------- ------------ ----------- ----------- -----------

Balance at December 31,
1996................. Ps 2,402,931 Ps 63,757 Ps(12,990) Ps (1,700,678) Ps(668,998) Ps 233,045 Ps 317,067
Appropriation of net
income from prior
year................. 233,045 (233,045)
Loss from non-monetary
assets............... (20,752) (20,752)
Minimum pension
liability
adjustment........... 1,036 1,036
Net income............. 123,357 123,357
------------ ----------- ----------- ------------ ----------- ----------- -----------

Balance at June 30,
1997 (unaudited)..... Ps 2,402,931 Ps 63,757 Ps(11,954) Ps (1,721,430) Ps(435,953) Ps 123,357 Ps 420,708

The accompanying notes are an integral part of these financial statements.

4
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VITROCRISA, S.A. DE C.V.

STATEMENTS OF CHANGES IN FINANCIAL POSITION
(THOUSANDS OF CONSTANT MEXICAN PESOS AS OF JUNE 30, 1997)

SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------
1996 1997 1996
------------ ------------ ------------
(UNAUDITED)

OPERATING ACTIVITIES:
Net income......................................... Ps 233,045 Ps 123,357 Ps 167,512
Add (deduct) non-cash items:
Depreciation and amortization................... 90,906 35,518 44,581
Provision for seniority premium and pension
plans......................................... (17,797) 1,588 (1,970)
Deferred income tax and profit sharing to
workers....................................... (11,039) 3,528 (12,743)
------------- ------------- -------------
295,115 163,991 197,380
Increase (decrease) in trade payables.............. 11,955 8,644 (7,215)
Decrease (increase) in trade receivables........... 56,215 (5,774) 39,173
Decrease (increase)in inventories.................. 14,431 (19,633) 12,496
Other current assets and liabilities, net.......... (56,203) (319) (86,155)
Effect of merger in operating activities........... (49,059) (49,059)
------------- ------------- -------------
Resources generated from operations............. 272,454 146,909 106,620
------------- ------------- -------------
FINANCING ACTIVITIES:
Notes payable to banks............................... 21,864 182 15,242
Notes payable to affiliates short-term............... (23,419) (23,497) (30,035)
Long-term loans...................................... 55,230 73,534 18,401
Monetary effect on liabilities with financing cost... (235,460) (57,783) (141,034)
Payment of short-term loans.......................... (114,430) (113) (17,644)
Payment of long-term loans........................... (111,867) (137,636) (4,736)
Effect of merger in financing activities............. 72,047 72,047
------------- ------------- -------------
Resources used in financing activities.......... (336,035) (145,313) (87,759)
------------- ------------- -------------
INVESTMENT ACTIVITIES:
Investment in shares................................. (3,952)
Sales of fixed assets................................ 92,396 47 97
Investment in property, machinery and equipment...... (12,123) (6,187) (10,092)
Amortizable expenses................................. 1,532 1,869 (42)
Effect of merger in investment activities............ (9,321) (9,321)
------------- ------------- -------------
Resources generated (used in) investment
activities.................................... 68,532 (4,271) (19,358)
------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents................................... 4,951 (2,675) (497)
Cash and cash equivalents at beginning of period... 5,605 10,556 5,605
------------- ------------- -------------
Cash and cash equivalents at end of period......... Ps 10,556 Ps 7,881 Ps 5,108
============= ============= =============

The accompanying notes are an integral part of these financial statements.

5
7

VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR INTERIM PERIODS AND SUBSEQUENT TO DECEMBER 31, 1996 IS
UNAUDITED)
(THOUSANDS OF CONSTANT MEXICAN PESOS AS OF JUNE 30, 1997)

1. ACTIVITIES OF THE COMPANY AND BASIS OF PRESENTATION:

a) Activities of the Company

Vitrocrisa, S.A. de C.V. (the "Company"), a wholly-owned subsidiary of
Vitro, Sociedad Anonima, is a company whose activity is the manufacture and
distribution of glass articles.

At the extraordinary stockholders' meeting held on March 29, 1996 it was
agreed to merge the Company with Proveedora del Hogar, S.A. de C.V. (merged
company), which was also a wholly-owned subsidiary of Vitro, Sociedad Anonima
and with Cristalerias Elefante, S.A. de C.V. (merged company). The Company
assumed all the rights and obligations of the merged companies.

On April 1, 1996 the Company consolidated the financial information of
Proveedora del Hogar, S.A. de C.V. and Cristalerias Elefante, S.A. de C.V. using
the purchase method.

The main balances at March 31, 1996 of the merged companies were as
follows:

TOTAL TOTAL STOCKHOLDERS'
ASSETS LIABILITIES EQUITY
---------- ----------- -------------

Proveedora del Hogar, S.A. de C.V.............. Ps 129,141 Ps 125,489 Ps 3,652
Cristalerias Elefante, S.A. de C.V............. 14,478 20,721 (6,243)

b) Basis of presentation

The financial statements presented herein are expressed in Thousands of
constant Mexican pesos as of June 30, 1997.

2. PRINCIPAL ACCOUNTING POLICIES:

a) Accounting method for the treatment of the effects of inflation

The financial statements of the Company have been prepared in accordance
with Bulletin B-10, "Recognition of the Effects of Inflation in the Financial
Information", as amended, issued by the Mexican Institute of Public Accountants
(IMCP), which recognizes the effects of inflation. The Third Amendment to
Bulletin B-10, requires the restatement of all comparative financial statements
to constant pesos as of the date of the most recent balance sheet presented. For
that purpose, the company uses the "Indice Nacional de Precios al Consumidor"
(Mexican National Consumer Price Index: "INPC"), published by Banco de Mexico.

Bulletin B-12 sets the rules related to the statement of changes in
financial position. This statement presents the sources and uses of funds of
changes in financial position during the period measured as the differences, in
constant pesos, between the beginning and ending balances adjusted by the excess
(shortfall) in restatement of capital. As regulated by Bulletin B-12, the
monetary effect and the effect of changes in exchange rates are not considered
non-cash items in the determination of funds generated from operations due to
the fact they affect the purchasing power of the entity.

The following is a description of the items that have been restated and of
the methods used:

- Inventories and cost of sales

Inventories are valued at the price of the last purchase made during
the period, or at standard cost, without exceeding the net realizable
value. Cost of sales is determined by using the standard cost at the time
of sale.

6
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VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

- Land, buildings, machinery and equipment

Investments in land, buildings, machinery and equipment (collectively
"fixed assets"), including expenditures for renewals and improvements which
extend useful lives, are capitalized. Until December 31, 1996, fixed assets
were restated at their current replacement cost as determined from
appraisals performed by independent appraisers. In accordance with the
Fifth Amendment to Bulletin B-10 issued by the IMCP, which is effective
January 1, 1997, the Company restates (1) machinery and equipment from
foreign origin by means of the index of inflation of the country of origin
and translating to the corresponding exchange rate at the date of the
valuation and (2) land, buildings, machinery and equipment of Mexican
origin by means of factors derived from INPC.

Depreciation is calculated using the straight-line method, taking into
consideration the useful life of the asset, in order to depreciate the
original cost and the revaluation. The depreciation begins in the month in
which the asset comes into service. The useful lives of the assets are as
follows:

YEARS
--------

Buildings................................................................... 27
Machinery and equipment..................................................... 4 to 14

- Investment in shares

The investment in shares in which the Company holds less than 10% of
capital stock, are accounted for at their acquisition cost.

- Amortizable expenses

The balances of amortizable expenses, and the accumulated and period
amortization are restated using INPC.

- Insufficiency in restatement of capital

This item, which is an element of stockholders' equity, reflects the
accumulated effect of holding non-monetary assets and the effect of the
initial monetary position gain or loss. The accumulated effect of holding
non-monetary assets represents the increase in the specific values of
non-monetary assets in excess of or below the increase attributable to
general inflation as measured by the INPC.

- Restatement of capital stock and retained earnings

Capital stock and retained earnings are restated using the INPC from
the respective dates such capital was contributed or income generated to
the date of the most recent balance sheet presented.

- Exchange fluctuations

Exchange gains or losses included in the cost of financing are
calculated by translating monetary assets and liabilities denominated in
foreign currencies at the exchange rate in effect at the end of each month.

- Results due to monetary position

The monetary position reflects the result of holding monetary assets
and liabilities during periods of inflation. Values stated in current
monetary units represent a decreasing purchasing power as time goes by.
This means that losses are incurred by holding monetary assets over time,
whereas gains are realized by maintaining monetary liabilities. The net
effect is presented in the income statement for the year as part of the
total financing cost.

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VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

b) Maintenance expenses

Maintenance and repair expenses are recorded as costs and expenses in the
period when they are incurred.

c) Amortization of deferred charges

Amortization is calculated using the straight-line method. The rates vary
according to the type of amortizable expense.

d) Seniority premiums, pension plans and severance payments

Statutory 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 the accounting pronouncement Bulletin
D-3, issued by the IMCP, and the actuarial computations were made by independent
actuaries using estimates of the salaries that will be in effect at the time of
payment. Personnel not yet eligible for seniority premiums are also taken into
account, with any necessary adjustments made in accordance with the probability
of their acquiring the required seniority. The cost of past service is amortized
over the average period required for workers to reach their retirement age.

Severance payments are charged to expense in the year in which such
payments are made.

e) Income tax and profit sharing to workers

Income tax and profit sharing to workers expense are computed in accordance
with the partial liability method, as required by Mexican Accounting Bulletin
D-4 issued by the IMCP, under which deferred taxes are provided for
identifiable, non-recurring timing differences and that are expected to reverse
over a definite period of time, at the tax rates in effect at the end of each
period.

3. INVENTORIES:

The breakdown is summarized as follows:

DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
(UNAUDITED)

Finished products.......................................... Ps 117,623 Ps 132,819
Raw materials.............................................. 3,711 3,133
Packaging materials........................................ 2,677 3,262
---------- ----------
124,011 139,214
Spare parts................................................ 4,631 4,310
Refractory................................................. 9,404 14,710
---------- ----------
Ps 138,046 Ps 158,234
========== ==========

8
10

VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

4. DEFERRED INCOME TAX AND PROFIT SHARING TO WORKERS AND OTHER:

The balances are summarized as follows:

DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
(UNAUDITED)

Deferred income tax and profit sharing to workers.......... Ps 107,677 Ps 104,587
Other...................................................... 746 5
---------- ----------
Ps 108,423 Ps 104,592
========== ==========

5. LAND, BUILDINGS, MACHINERY AND EQUIPMENT:

Land, buildings, machinery and equipment are summarized as follows:

DECEMBER 31, JUNE 30,
1996 1997
------------- -------------
(UNAUDITED)

Land.................................................... Ps 98,003 Ps 98,124
Buildings............................................... 381,349 379,999
Accumulated depreciation................................ (177,219) (179,901)
------------- -------------
Ps 302,133 Ps 298,222
============= =============
Machinery and equipment................................. 1,925,257 1,857,196
Accumulated depreciation................................ (1,229,004) (1,208,725)
------------- -------------
Ps 696,253 Ps 648,471
============= =============

6. LONG TERM DEBT:

Long-term debt consists of the following notes payable to banks:

DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
(UNAUDITED)

Unsecured guaranteed loan, in Mexican pesos, interbank
equilibrium interest rate plus 2.32 points, principal
payable in 1998.......................................... Ps 128,223 Ps 29,000
Unsecured guaranteed loan in Mexican pesos, interest based
on the unidades de inversion (UDIS) plus 10.5 points,
principal payable in 2006................................ 57,216 58,028
Secured guaranteed loan in U.S. dollars, interest based on
Libor plus 4.75 points................................... 3,898
Unsecured guaranteed loan in U.S. dollars, interest based
on Libor plus 4.0 points................................. 35,947 51,678
Unsecured guaranteed loan in U.S. dollars, interest based
on Libor plus 3.0 points................................. 487,857 453,173
---------- ----------
Ps 713,141 Ps 591,879
========== ==========

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VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

Maturity of long-term debt is as follows:

DECEMBER 31,
1996
------------

1998.......................... Ps 532,799
1999.......................... 41,042
2000.......................... 49,783
2001.......................... 50,579
2002.......................... 9,536
2003.......................... 9,536
2004.......................... 9,536
2005.......................... 9,536
2006.......................... 794
----------
Ps 713,141
==========

As of December 31, 1996, short-term bank loans in the amount of U.S.
$57,000 thousands of dollars used to finance export sales of the Company have
been reclassified as long-term debt, because the Company expects to obtain
similar financing in the future to finance export sales. In addition, the
Company has a committed long-term standby credit line with certain commercial
banks available to finance such export sales.

In some of the Company's long-term debt agreements certain restrictions and
covenants are set forth that require the maintenance of various financial
ratios.

7. SENIORITY PREMIUMS AND PENSION PLANS:

As mentioned in note 2 d), disclosures required by Bulletin D-3 and a
summary of data based on actuarial computations is given below:

JUNE 30,
DECEMBER 31, -----------------------
1996 1997 1996
------------ --------- ---------
(UNAUDITED)

Accumulated benefit obligation.................. Ps 37,580 Ps 37,031 Ps 49,820
Projected benefit obligation.................... 68,770 73,890 40,116
Unrecognized transition obligation.............. 15,964 21,084 9,312
Unrecognized net (gain) or loss................. 23,556 28,676 13,741
Projected net liability......................... 29,250 24,130 17,063
Additional minimum liability.................... 8,329 11,954 6,573
Net periodic cost............................... 11,830 7,116 6,717
Assumptions (nominal rates):
Discount rate................................... 13% 13% 12.50%
Compensation increase........................... 9% 9% 8.50%

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VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

8. FOREIGN CURRENCY BALANCES AND OPERATIONS:

a) Assets and liabilities denominated in foreign currency consist of the
following:

THOUSANDS OF DOLLARS MEXICAN PESOS
---------------------------- ----------------------------
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1996 1997 1996 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)

Monetary assets................... $ 6,265 $ 8,694 Ps 53,624 Ps 69,121
Fixed assets...................... 45,711 44,834 391,239 356,449
Monetary liabilities -- short
term............................ 34,174 33,736 292,492 268,216
Inventories....................... 1,162 1,947 9,945 15,427
Deferred charges.................. 266 177 2,277 1,407
Monetary liabilities -- long
term............................ 61,655 63,500 527,699 504,850

b) Foreign operations during the year of 1996 and six months ended June 30,
1997 (unaudited) consisted of the following:

Exports........................... $ 45,124 $26,607 Ps 372,264 Ps 209,826
Imports........................... 12,761 7,122 105,819 56,420
Interest expense net.............. 9,001 4,433 74,756 34,999

c) The exchange rates used for purposes of these financial statements were:
Ps 7.8765 per one U.S. dollar at December 31, 1996, Ps 7.9504 per one U.S.
dollar at June 30, 1997 (unaudited) and Ps 7.5853 per one U.S. dollar at June
30, 1996 (unaudited). On March 20, 1997, the date of issuance of these financial
statements, the exchange rate was Ps 7.9233 per one U.S. dollar.

9. STOCKHOLDERS' EQUITY:

a) Capital stock of the Company is represented by 166,682,900 nominal
common shares, with a par value of one peso each, divided into the following:

FIXED CAPITAL VARIABLE CAPITAL TOTAL
------------- ---------------- -----------

Series "A" shares.......................... 5,985,000 5,985,000
Series "B" shares.......................... 156,533,000 156,533,000
Series "B1" shares......................... 4,164,900 4,164,900
--------- ----------- -----------
5,985,000 160,697,900 166,682,900

b) Stockholders' equity includes accrued profits and results from the
restating of assets which, in case of distribution, will be subject, under
certain circumstances, to the payment of income tax by the Company.

11
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VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

10. UNAMORTIZED TAX LOSSES

At December 31, 1996 the company had tax loss carry forwards in the amount
of Ps 416,654 and asset tax to be recovered in the future in the amount of Ps
34,919. The income tax benefit resulting from their utilization will be
recognized, in the period in which they are utilized. The maturities are as
follows:

YEAR TAX LOSS ASSET
OF EXPIRATION CARRY FORWARDS TAX
---------------------------------------------- -------------- ---------

1999..................................... Ps 4,924
2000..................................... 3,616
2001..................................... 4,924
2002..................................... 3,616
2003..................................... 4,924
2004..................................... Ps 338,417 3,616
2005..................................... 78,237 3,255
2006..................................... 6,044
---------- ---------
Ps 416,654 Ps 34,919
========== =========

11. INCOME AND ASSET TAX:

a) The income and asset tax included in the results are:

SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------
1996 1997 1996
------------ --------- ---------
(UNAUDITED)

Tax benefit that results from the utilization
of tax loss carry forward.................... Ps 80,302 Ps 36,909 Ps 50,437
Deferred tax:
Provision of furnace repair.................. (5,430) (622) (2,393)
Benefit from the future deduction of
inventories held on December 31, 1986..... 2,572 1,657 1,217
Tax on asset................................... 5,152 6,195 757
--------- --------- ---------
Ps 82,596 Ps 44,139 Ps 50,018
========= ========= =========

b) At December 31, 1996, there were Ps 138,046 of previously deducted
inventories and Ps 37,580 of non-deductible provisions related to seniority
premium payments for which no deferred taxes have been provided in accordance
with generally accepted accounting principles.

12
14

VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

c) The reconciliation between the company's effective income tax rate and
the statutory income tax rate is as follows:

SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -----------------
1996 1997 1996
------------ ------ ------
(UNAUDITED)

Effective income tax rate......................... 34.98% 33.70% 29.87%
Add (deduct) quantity corresponding to:
Purchase deductions............................. (1.04) 8.10 .64
Difference between tax and financial accounting
for depreciation............................. (.74) 1.32 2.02
Difference between tax and financial accounting
for monetary gain............................ 4.92 (.77) 3.14
Others.......................................... (4.12) (8.35) (1.67)
----- ----- -----
Statutory income tax rate......................... 34% 34% 34%
===== ===== =====

12. EXTRAORDINARY ITEM:

For the year ended December 31, 1996 and the six months ended June 30, 1997
(unaudited) and June 30, 1996 (unaudited), the Company obtained a tax benefit
from the utilization of tax loss carry forwards in the amount of Ps 80,302, Ps
36,909 and Ps 50,437, respectively.

13. BALANCES AND TRANSACTIONS WITH AFFILIATED COMPANIES:

The main balances and transactions with affiliated companies (Vitro,
Sociedad Anonima and its consolidated subsidiaries and associated companies) are
as follows:

SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -------------------------
1996 1997 1996
------------ ---------- ----------
(UNAUDITED)

Cash......................................... Ps 1,294
Unsecured long-term loan payable............. 57,216 Ps 77,905 Ps 57,798
Net sales.................................... 260,006 102,610 148,345
Other income................................. 2,689 7,628 21,362
Purchases.................................... 25,494 5,401 9,207
Operating expenses........................... 25,985 14,215 12,344
Interest expenses............................ 4,846 19,670 (24,096)

14. SUBSEQUENT EVENTS:

On August 29, 1997, a series of definitive agreements were executed with
Libbey Inc. ("Libbey"), pursuant to which Libbey became a 49% joint venture
partner in the Company with Vitro, Sociedad Anonima, retaining a 51% interest.

15. DIFFERENCES BETWEEN MEXICAN AND UNITED STATES ACCOUNTING PRINCIPLES:

The Company's statements are prepared in accordance with Mexican GAAP,
which vary in certain significant respects from accounting principles generally
accepted in the United States (U.S. GAAP).

13
15

VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

The principal differences between Mexican GAAP and U.S. GAAP and their
effects on net income and total stockholders' equity are presented below with an
explanation of the adjustments:

RECONCILIATION OF NET INCOME

SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------------
1996 1997 1996
------------ ------------ ------------
(UNAUDITED)

Net income under Mexican GAAP.................. Ps 233,045 Ps 123,357 Ps 167,512
U.S. GAAP adjustments for:
Effects of inflationary accounting........... (127,383) (33,194) (134,348)
Deferred income taxes........................ (17,630) (23,599) (7,594)
Deferred employees' profit sharing........... 28,120 1,608 24,417
Effects of merger............................ (7,406) (7,406)
----------- ----------- -----------
Net income under U.S. GAAP..................... Ps 108,746 Ps 68,172 Ps 42,581
=========== =========== ===========

Adjustments for pension costs and accrued vacation cost were not material
individually or in the aggregate, for any of the periods presented.

RECONCILIATION OF STOCKHOLDERS' EQUITY

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------------
(UNAUDITED)

Total stockholders' equity reported under Mexican
GAAP.................................................. Ps 317,068 Ps 420,708
U.S. GAAP adjustments for:
Effects of inflationary accounting.................... (778,084) (791,561)
Deferred income tax................................... 207,901 184,302
Deferred employees' profit sharing.................... 42,279 43,887
----------- -----------
Stockholders' equity under U.S. GAAP............... Ps (210,836) Ps (142,664)
=========== ===========

Adjustments for pension costs and accrued vacation cost were not material
individually or in the aggregate, for any of the periods presented.

a) Effects of inflationary accounting

A significant difference between Mexican and U.S. GAAP relates to the
formal adoption in Mexico of inflationary accounting, which mitigates the
effects of inflation on financial information. Under Mexican GAAP, all basic
financial statements (including those of prior years) and related notes are
presented in pesos of purchasing power at the end of the latest period
presented. Inventories and fixed assets are valued at replacement cost or are
restated by applying INPC growth factors. Stockholders' equity components are
restated by applying INPC growth factors from the date on which the component
was contributed or generated.

b) Deferred Income Tax:

Under Mexican GAAP, deferred taxes are provided only for identifiable,
nonrecurring timing differences which are expected to reverse over a definite
period of time. For U.S. GAAP purpose, the Company has applied Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".

Under SFAS 109, deferred tax assets and liabilities are recognized for
future tax consequences of temporary differences between the financial statement
carrying amounts of assets and liabilities and their tax bases. Deferred

14
16

VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

tax assets are also recognized for the estimated future effects of tax loss
carry forwards. Deferred tax assets are reduced by any tax benefits that are not
expected to be realized.

The significant components of the deferred tax assets and liabilities for
purposes of U.S. GAAP reconciliation are as follows:

DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
(UNAUDITED)

DEFERRED TAX ASSETS
Noncurrent assets:
Reserves................................................ Ps 18,680 Ps 22,490
Tax loss carry forwards................................. 141,728 113,906
Inventories............................................. 19,128 12,271
Seniority premium and pension plans..................... 3,377 4,210
Tax on assets........................................... 34,919 38,359
Fixed assets............................................ 35,063 37,962
Other................................................... 1,194 1,380
------- -------
Total deferred tax assets............................... Ps 254,089 Ps 230,578
======= =======

c) Deferred employees' profit sharing

The Company calculates a deferred employees' profit sharing liability for
U.S. GAAP purposes based on temporary differences between the financial
reporting bases and employees' profit sharing bases of assets. Under U.S. GAAP,
employee profit sharing expense would be considered as a component of operating
expenses.

The significant components of the deferred employees' profit sharing for
purposes of U.S. GAAP reconciliation are as follows:

DECEMBER 31, JUNE 30,
1996 1997
------------ ---------
(UNAUDITED)

Inventories................................................ Ps 5,626 Ps 3,609
Exchange fluctuation....................................... 43,961 45,307
Reserves................................................... 5,494 6,614
Fixed assets............................................... (5,986) (5,290)
Seniority premium and pension plan......................... 993 1,238
Other...................................................... 352 405
---------- ----------
Net deferred profit sharing assets......................... Ps 50,440 Ps 51,883
========== ==========

d) Effects of merge

For U.S. GAAP purposes the business combination of Proveedora del Hogar,
S.A. de C.V. was accounted for as an enterprise under common control similar to
a pooling of interest and the financial information is consolidated as of
January 1, 1996.

e) Other Differences and Supplemental U.S. GAAP Disclosures

1) Extraordinary Items. -- Mexican GAAP requires that utilization of tax
loss carry forwards be classified as extraordinary items in the
statement of operations, whereas U.S. GAAP requires the benefit from
utilization of tax loss carry forwards to be classified as a component
of income tax expense attributable to continuing operations. The
benefits from utilization of tax loss carry forwards were Ps 80,302 for
the

15
17

VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

year ended December 31, 1996 and Ps 36,909 (unaudited) and Ps 50,437
(unaudited) for the six months ended June 30, 1997 and 1996,
respectively.

2) Post-retirement Benefits -- Under U.S. GAAP, Statement of financial
Accounting Standards No. 106, "Employer's Accounting for Post-retirement
Benefits Other Than Pensions" (SFAS 106) requires accrual of
post-retirement benefits other than pensions (such as health care
benefits) during the years an employee provides services. The Company
does not and is not required to provide post-retirement benefits.

3) Pension Disclosures. -- The Company maintains pension plans and
seniority premium plans. The Company adopted Bulletin D-3 issued by the
IMCP, the accounting treatment for pensions set forth in this Bulletin
are substantially the same as those set forth in Statement of Financial
Accounting Standards No. 87 "Employer's Accounting For Pensions" (SFAS
87). The company records the pensions cost determined by actuarial
computations, as described in notes 2(d) and 7. The differences between
principles applied by the Company under Mexican GAAP and requirements of
SFAS No. 87 are not material.

For purposes of determining pension cost and seniority premium under U.S.
GAAP the Company applies SFAS 87. The disclosures under SFAS 87 for the Company
are presented below.

Pension and seniority premium costs are summarized below:

SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------
1996 1997 1996
------------ -------- --------
(UNAUDITED)

Service costs........................................... Ps 1,966 Ps 2,103 Ps 1,147
Interest cost........................................... 7,999 3,018 4,666
Net amortization and deferral........................... 1,865 1,995 904
--------- -------- --------
Net period pension cost................................. Ps 11,830 Ps 7,116 Ps 6,717
========= ======== ========

4) Supplement Cash flow Information Required by U.S. GAAP

SIX MONTHS ENDED
DECEMBER 31, ------------------------
1996 1997 1996
------------ --------- ----------
(UNAUDITED)

Net cash provided by operating activities
reflects net cash payments of interest and
income taxes as follows:
Interest....................................... Ps 200,518 Ps 46,586 Ps 110,390
Income taxes, net.............................. 4,506 4,064 1,418

For the year ended December 31, 1996 and the six months ended June 30, 1997
(unaudited) and June 30, 1996 (unaudited), the Company's statement of changes in
financial position includes under the caption of "Resources generated from
operations" the exchange loss (income) occurred during such periods in the
amount of Ps 13,269, Ps 7,228 and Ps (23,378) respectively, before taxes.

For the year ended December 31, 1996 and the six months ended June 30, 1997
(unaudited) and June 30, 1996 (unaudited), the Company's statement of changes in
financial position includes under the caption of "Resources generated from
operations" the monetary gain which occurred during such periods in the amount
of Ps 273,956, Ps 70,774 and Ps 166,472, respectively. This monetary gain
includes the monetary gain of current monetary assets and current monetary
liabilities which occurred during such periods in the amounts of Ps 38,496,

16
18

VITROCRISA, S.A. DE C.V.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

Ps 12,991 and Ps 25,438, respectively. These amounts are already included in
resources generated from operations as a change in current assets and current
liabilities.

For the year ended December 31, 1996 and the six months ended June 30, 1997
(unaudited) and June 30, 1996 (unaudited), the Company's statement of changes in
financial position includes under the caption of "Resources used in financing
activities" the restatement to constant pesos of current and long-term debt
which occurred during such periods in the amount of Ps 235,460, Ps 57,783 and Ps
141,034, respectively. The line item in the statement of changes in financial
position for this concept is "Monetary effect on liabilities with financing
cost".

The company considers all highly liquid short-term investments with
original maturity of ninety days or less, consisting primarily of Mexican
Government treasury bonds and money market instruments to be classified as cash
equivalents.

5) Fair value of financial instruments -- Statement of Financial Accounting
Standards No. 107. "Disclosures about Fair Value of Financial Instruments"
requires disclosure of the estimated fair values of certain financial
instruments. The estimated fair value amounts have been determined using
available market information or other appropriate valuation methodologies that
require considerable judgment in interpreting market data and developing
estimates. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could realize in a current market
exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
The carrying amount of the Company's financial instruments approximate their
estimated fair values.

The fair value information presented herein is based on information
available to management as of December 31, 1996. Although management is not
aware of any factors that would significantly affect the estimated fair valued
amounts, such amounts have not been comprehensively revalued for purposes of
these financial statements since that date and, therefore, the current estimates
of fair value may differ significantly form the amounts presented herein.

6) Earnings Per Common share in Accordance with U.S. GAAP -- Earnings per
share in accordance with US GAAP are based on the weighted average number of
common shares outstanding during each period. Primary earnings per share are
based upon, 166,682,900 shares for the year ended December 31, 1996 and the six
months ended June 30, 1997 (unaudited) and 1996 (unaudited). Earnings per common
share computed in accordance with US. GAAP are presented below:

SIX MONTHS ENDED
DECEMBER 31, -----------------
1996 1997 1996
------------ ------ ------
(UNAUDITED)

Earnings per common share (pesos)..................... Ps .65 Ps .41 Ps .25

* * * * *