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Consolidated Results                                                  

               Segmented Information                                                    20

On April 1, 2009, the Company announced that it successfully completed the refinancing of its two-tranche trade receivables securitization for two of its wholly owned subsidiaries. The senior tranche is a $550 million peso variable rate investment grade bond. The senior tranche is funded by Ixe Banco, Institucion de Banca Multiple, and Ixe Grupo Financiero, a local Mexican bank. The subordinate tranche is an unrated US$19 million dollar fixed rate bond funded by a multinational bank with recourse back to Vitro. Finacity Corporation structured the transaction, and will act as, master servicer, servicer and bond administrator. The funding of the senior tranche with private institutions provides Vitro's Glass Containers business unit with enhanced liquidity to successfully continue its normal operations.

Vitro provides update on financial situation

On February 5, 2009, the Company announced that in order to preserve the necessary cash to continue its operations and consistent with the Senior Notes interest payments to bondholders announcement, it elected not to make a scheduled payment of $150 million pesos, plus accrued interest, due February 5, 2009 on its Certificados Bursatiles issued in 2003 ("CEBURES 03"). Although the documents governing the CEBURES 03 grant the Company a 3-day grace period, the Company did not make the payment in such term; instead Vitro is holding discussions with the holders of the CEBURES 03 in an effort to reach a mutually acceptable agreement to restructure this financial obligation along with the rest of the financial creditors. Vitro also announced that it was informed that Credit Suisse International (CSIN) has filed a lawsuit against one of its subsidiaries in the Supreme Court of the State of New York demanding payment of approximately US$85 million. This complaint arises out of a derivative financial instrument (this amount is part of the US$293 million previously announced) and therefore the Company is analyzing alternatives. Additionally, the Company informed that an accounts receivable credit facility with The Royal Bank of Scotland, which provided funds to one of Vitro's subsidiaries, with a balance of approximately US$19 million, which was scheduled to end April, 2009, was concluded.

Vitro is continuing its discussions with the counterparties of the derivative financial instruments ("Counterparties"), its bondholders and its creditors to achieve an organized financial restructuring to improve its balance sheet. There can be no assurance that the Company's discussions with the Counterparties, its bondholders, and other creditors will be successful. Vitro will provide updates on these discussions, from time to time, as appropriate. Vitro is committed to providing the quality products and services its broadly diversified customers need. Vitro intends to maintain its operations and continue its business relationships with its customers and suppliers as it seeks to achieve a restructuring of its indebtedness. Vitro, which is commemorating its first century in 2009, has a strong foundation in place with solid business operations, strong franchise and market positions and superior quality products.

Vitro provides update on financial situation and cost reduction initiatives

On January 29, 2009, the Company announced that four of the Counterparties (the "Counterparties") with whom the Company and/or its subsidiaries entered into derivative financial instruments had provided notice to the Company, invoking the agreements governing the derivative financial instruments (the "DFI Agreements"), stating that the failure of the Company to pay an aggregate of approximately US$293 million (including approximately US$80 million held as cash collateral by such Counterparties) constitutes events of default under the DFI Agreements, and have effectively demanded payment of such amounts. As of December 31st 2008, the Company had a net loss of approximately US$358 million according to the claims by its derivative counterparties (not including accrued interest), including a loss of approximately US$33 million related to the only open derivative financial instruments covering natural gas contracts from 2009-2011 with Pemex.

The events of default under the DFI Agreements result in an event of default under the indentures governing the Senior Notes, as described below and the 11.75 percent Senior Notes due 2013 (the "2013 Notes"), enabling the trustees of such Notes, or with respect to each of the 2012 Notes, the 2017 Notes, and the 2013 Notes, the holders of 25 percent or more in principal amount of such Notes, to declare the US$300 million principal amount (and accrued interest) of the 2012 Notes, the US$700 million principal amount (and accrued interest) of the 2017 Notes, respectively and the US$216 million principal outstanding amount (and accrued interest) of the 2013 Notes, to be immediately due and payable.

The failure of the Company to make the payments due under the DFI Agreements also results in events of default under various other financing agreements of the Company and its subsidiaries, aggregating approximately US$81 million and permitting lenders under such facilities to declare borrowings under these agreements to be immediately due and payable. In addition, the Company and its subsidiaries are also in default under loan agreements of approximately US$17 million, and the Lenders may declare such debt to immediately due and payable. As of December 31, 2008, the Counterparties held an aggregate of approximately US$85 million (not including accrued interest), as cash collateral for the obligations of the Company and/or its subsidiaries under the DFI Agreements. In light of these four Counterparties notices and in order to preserve the necessary cash to continue operations, the Company does not intend to make scheduled payments due February 2, 2009 of interest of US$12.9 million on its 8.625 percent Senior Notes due 2012 (the "2012 Notes") and US$31.9 million on its 9.125 percent Senior Notes due 2017 (the "2017 Notes", and together with the 2012 Notes, the "Senior Notes"). The failure of the Company to make the interest payments within 30 days after the scheduled payment date would constitute a separate event of default under the indentures governing the 2012 Notes and the 2017 Notes. Vitro intends to maintain its operations and continue its business relationships with its customers and suppliers as it seeks to achieve a restructuring of its indebtedness. As of December 31, 2008, the Company had unrestricted cash on hand and cash equivalents of approximately US$103 million, for operating costs and expenses. As previously disclosed, Vitro has initiated discussions with the Counterparties, its bondholders and its creditors to achieve an organized financial restructuring to improve its balance sheet and it continues to analyze its alternatives in regard with the DFI Agreements. There can be no assurance that the Company's discussions with the Counterparties, its bondholders, and other creditors will be successful. Vitro will provide information, from time to time, as appropriate, about developments of these discussions with the Counterparties, its bondholders, and its creditors.

The Company has adopted a significant and focused cost reduction plan, which includes reducing the Company's workforce, canceling airplane leasing contracts, divesture of non productive assets and eliminating the outsourcing of non-strategic services, as part of the measures that have been adopted by the Company to improve its Balance Sheet. It is estimated that these initiatives, as well as those aimed at reducing operating costs, drastically reducing corporate expenses and improve efficiency, will represent annual savings between $80 and US$120 million. Vitro is confident that it is taking the right steps to position the Company for the future. Vitro, with almost 100 years of existence, has a strong foundation in place with solid business operations, strong franchise and market positions and superior quality products. Vitro sees this as a temporary measure to allow the necessary time to negotiate with all parties involved while ensuring it will be able to continue providing the quality products and services its broadly diversified customers need, and also provide it with the wherewithal to pay for the materials and services it needs to manufacture such products. For many of our customers and suppliers these are trying times as well and Vitro will be there to help them get through with its continuous operation and production of quality products and services as it has done in the past.

Vitro creates the temporary Chief Restructuring Officer Position

On April 27, 2009 the Company announced that to focus the efforts necessary to carry out the financial restructuring process required by the Company, Claudio Del Valle has been designated Chief Restructuring Officer on a temporary basis. While Mr. Del Valle will continue as Chief Financial and Administrative Officer, many of his current responsibilities will be performed by Mr. Del Valle's current team. During this restructuring process the areas of Financing and Investor Relations, Administration and Tax Compliance and IT will report to Mr. Del Valle. In addition, during this period, and on a temporary basis, the areas of Corporate Procurement, Human Development, Medical Services, and Vitro Europe will report directly to Hugo Lara, CEO of Vitro. This will allow Vitro to efficiently focus the necessary resources in order to conclude the financial restructuring process as soon as possible and to assure that we continue serving our customers in an efficient way.

Vitro is once again awarded the distinction of being a Socially Responsible Company for 2009

On March 12, 2009 the Company announced that its business units Glass Containers and Flat Glass as well as its subsidiary Clinica Vitro and its Corporate Offices were awarded, for the second consecutive year, the coveted certification of being a Socially Responsible Company (ESR 2009) that is awarded by the Mexican Philanthropic Center, A.C. (CEMEFI). This special distinction was awarded to Vitro in virtue of having met the established standards in the strategic area of corporate social responsibility in Mexico. These standards cover the areas of: environment, community, integral development of its employees and corporate governance.

LEGAL

Vitro Files Initial Responsive Pledging to Lawsuits in the Court of New York

On April 24, 2009, the Company announced that it filed initial responsive pledging to the lawsuits filed by counterparties of derivative financial instruments (the "Counterparties") in the Supreme Court of the State of New York as previously agreed with its Counterparties in the stay agreement which ended April 24, 2009. The Company continues conversations and negotiations with its Counterparties and wishes to reiterate its commitment to continue exploring different alternatives and searching for creative ways to reach a favorable settlement. As the conversations and negotiations continue, Vitro is committed to provide the quality products and services its broadly diversified customers need. For many of our customers and suppliers these are trying times and Vitro will provide support through continued production of quality products and services while these negotiations take place. Vitro, in existence for 100 years, has a strong foundation in place with solid business operations, durable strong franchise and market positions and superior quality products.

Notice in fulfillment to the provisions of article 367 paragraph I of the Ley del Mercado de Valores (Mexican Securities Law)

On April 7, 2009, the Company announced that to fund the irrevocable trust (the "Trust") that manages the stock option plan for employees of Vitro and its subsidiaries, 28,019,069 VITROA shares that were held as treasury stock were allocated and transferred to the Trust. The allocation and transfer announced herein and the relevant event thereof, were executed pursuant to article 367 section I of the Ley del Mercado de Valores (Mexican Securities Law) and articles 58 and 60 of the general provisions applicable to the issuers of securities and other participants of the securities market.

Second Collegiate Court confirms decision of first instance and appeal courts denying Pilkington's opposition to the merger of Vitro Plan into Vimexico

On February 23, 2009, the Company announced that its subsidiary Vimexico, S.A. de C.V. ("Vimexico"), was notified of the final non appealable decision issued by the Second Collegiate Court for Civil Affairs of the Fourth Circuit, ratifying the decision issued by the First Instance and Appeal Courts denying Pilkington Group Limited's ("Pilkington") opposition to the resolutions adopted at the Extraordinary Shareholders Meeting held on December 11, 2006, when the merger of Vitro Plan, S.A. de C.V. ("Vitro Plan") into Vimexico was approved. As a result of this decision of the Second Collegiate Court for Civil Affairs of the Fourth Circuit, in accordance with article 200 of the Mexican General Law of Corporations, it was ratified that all of the above mentioned resolutions are valid and binding for all shareholders, including those who voted against such resolutions. In addition, the Collegiate Court confirmed the dismissal of all claims demanded by Pilkington in its original complaint and confirmed the validity of the merger of Vitro Plan into Vimexico approved at the Extraordinary Shareholders Meeting of the now extinct Vitro Plan. The company was represented by the Mexican law firm Rivera Gaxiola y Asociados, S.C.

The Collegiate Court confirmed the decision to condemn Pilkington to pay Vimexico attorneys fees and expenses including those incurred during the appeals proceedings. Vimexico will timely file an incidental complaint to liquidate such fees and expenses. The original opinion of counsel to Vimexico that the company shall also prevail in the separate lawsuit that Pilkington initiated in October 2007, claiming that the same Extraordinary Shareholders Meeting was null and void, was likewise reinforced by this final and non appealable decision.

RATINGS

S&P reaffirms the VENACB 05 certificates' rating and removes it from Credit

On March 25, 2009 Standard & Poor's ("S&P") reaffirmed the long-term Mexican domestic scale (CaVal) of 'mxAAA' for the VENACB 05 certificates backed by trade receivables generated by Compania Vidriera, S.A. de C.V. ("Covisa"), Industria del Alcali, S.A. de C.V. ("Alcali") and Comercializadora Alcali ("Comercializadora"), S. de R.L. de C.V. which are three subsidiaries of Vitro Envases Norteamerica S.A. de C.V.("VENA", subsidiary of Vitro S.A.B. de C.V.) and removed the rating from its CreditWatch list where it had been put on January 30, 2009 with negative outlook. S&P reaffirmed this rating after it received revised information from Finacity Corporation, in its role as manager of this transaction, and from Vitro, which shows an adequate and stable performance of the trade receivables that back the certificates.

VENACB 05 certificates downgraded by Moody's

On March 20, 2009 Moody's Investors Service ("Moody's") downgraded to Ba1 from Baa1 (Global Scale, Local Currency) and to Aa3.mx from Aaa.mx (Mexican National Scale) the ratings of VENACB 05 certificates of Covisa, Alcali and Comercializadora issued in March 2005 by ABN AMRO Bank (Mexico), S.A., Institucion de Banca Multiple, Division Fiduciaria, acting solely in its capacity as trustee.

The certificates are backed by trade receivables generated by Covisa and Alcali (Comercializadora was merged with Covisa in mid 2008), which are glass container subsidiaries of Vitro. The rating action was driven by the following events. First, according to the most recent servicer report for the transaction (for the month of January 2009), transaction performance has deteriorated. The monthly default ratio increased from 0.63 percent in September 2008 to 2.79 percent in December 2008. While in January 2009 this ratio decreased to 2.54 percent it continues to be well above its historical average of 0.47 percent. Similarly, the 3-month average default ratio has increased steadily from 0.82 percent in September 2008 to 2.42 percent in January 2009. Historically, this ratio has been below 1 percent. According to the January 2009 servicer report the transaction has reserves of 25.56 percent. According to the company, the system migration from J.D. Edwards to S.A.P. that started in late September 2008 impacted some of the reports. Vitro and Finacity continue to review the reported information. Second, on January 26, 2009, Moody's downgraded Vitro's rating to Ca from Caa1. In addition, the current economic environment may pressure the company's business and may place further stress in the performance of the securitized receivables. The rating action also reflects the uncertainties related to a potential bankruptcy of the originator and its impact on the transaction, as well as the fact that the transaction is scheduled to start amortizing on March 26, 2009.

Vitro's rating downgraded by Fitch

On February 9, 2009, the Company's Issuer Default Ratings ("IDRs") were downgraded to 'D' from 'C', while the national scale long-term rating and the Certificados Bursatiles issuances were downgraded to 'D(mex)' from 'C(mex)' by Fitch Ratings ("Fitch"). In addition, Fitch has affirmed the following ratings:

-- US$300 million senior notes due 2012 at 'CC/RR4';

-- US$225 million senior notes due 2013 at 'CC/RR4';

-- US$700 million senior notes due 2017 at 'CC/RR4'.

According to Fitch, the rating downgrades followed Vitro's announcement that it was not going to make the payment of the Certificados Bursatiles 'VITRO 03' for approximately $150 million pesos plus accrued interest. The 'CC/RR4' rating on Vitro's Sr. notes reflects average recovery prospects given default.

Vitro's rating downgraded by Standard & Poor's

On February 2, 2009, the Company's global scale ratings, including the long-term corporate credit rating, were downgraded to 'D' from 'CC' by S&P. At the same time, S&P lowered the Company's long-term Mexican national scale (CaVal) rating to 'mxD' from 'mxCCC'. The recovery rating on the notes remains at '3'. According to S&P, the downgrade is based on Vitro's failure to pay its coupon payments due Feb. 2. Although the notes allow a 30-day grace period, the Company has indicated that it does not intend to make scheduled payments of interest of US$12.9 million on its 8.625 percent senior notes due 2012 and US$31.9 million on its 9.125 percent senior notes due 2017. Vitro is Mexico's leading producer of glass containers and has a significant share of the Mexican flat-glass market. Vitro's export activities and international operations contribute to about 58 percent of total revenues.

Vitro's rating downgraded by Moody's

On January 26, 2009, the Company's unsecured debt and corporate family ratings were downgraded to Ca from Caa1 by Moody's. This rating action concludes the rating review initiated on October 30, 2008. The ratings outlook is negative. The downgrade reflects Moody's belief that Vitro's liquidity has continued to weaken in the past several weeks as economic conditions in the company's key markets have deteriorated further, increasing the likelihood that it may not be able to meet its upcoming near term financial obligations. The latter include a US$45 million coupon payment on February 1, 2009 under its 2012 and 2017 notes and an estimated US$20 million in long term debt maturities during 1Q09. The company also has a contractual commitment to pay about US$29 million in remaining ten monthly installments during 2009, related to the put option exercised by its Spanish joint venture partner in 2008.

The Ca rating reflects the Moody's expectation of modest recovery for the senior unsecured debt class in the case of default. The negative outlook reflects the risk that ultimate recovery level may be lower than currently expected. The last rating action on Vitro was on October 30, 2008, when Moody's downgraded the company's ratings to Caa1 from B2 and left the ratings on review for further downgrade.

OTHER

Vitro commemorates Earth Month by supporting the campaign for sustainable consumption

On April 23, 2009, the Company announced that in the framework of Earth Month, it is supplying Coca-Cola de Mexico with one million limited edition glass bottles, that are 100 percent recyclable, and will be in the marketplace from April 16, 2009 to May 3, 2009 to support Wal-Mart de Mexico's promotion of consumption of green products throughout all of their stores.

Vitro collaborates with the Renove Plan for windows in Madrid

On April 15, 2009, the Company announced that with the purpose of improving the efficiency and energy savings in buildings, Vitro Cristalglass, an affiliate of Vitro in Europe, is actively cooperating with the community of Madrid for the promotion of Plan Renove, a plan begun in 2008, for window replacements in single and multifamily homes. The Plan, authorized by the Government Council for the community of Madrid and agreed upon between Madrid's Economic and Housing Council and the National Manufacturer's Association of insulation materials (ANDIMAT) consists in the replacement of single pane windows with double pane reinforced thermal insulation windows in housing. Through this plan, Madrid becomes the first Spanish community to put in place a Renove plan for windows which will contribute to energy savings in the region as well as the individual consumer.

Vitro and its Joint Venture partners agree on extended payment period for purchase of Vitro Cristalglass shares

On January 9, 2009, the Company announced that its subsidiary Vimexico, S.A. de C.V. in conjunction with the Prado Family members and Invergar Participaciones Inmobiliarias, S.L., the joint venture partners in its Spanish subsidiary Vitro Cristalglass, S.L. ("Vitro Cristalglass"), agreed to extend the distribution of payment for the purchase by Vimexico of its joint venture partners' 40 percent stake in Vitro Cristalglass through the remainder of 2009. During the third quarter of 2008, Vimexico made a partial payment to its joint venture partners of approximately 4 million Euros. The agreement to extend the payment period for its joint venture partners' interest in Vitro Cristalglass is consistent with a number of actions Vitro has undertaken to strengthen its balance sheet and enhance liquidity.

Vitro launches in Europe its new line of self cleaning glass ECOPURE

On January 23, 2009, the Company announced the launching of its new product line ECOPURE, its new self cleaning glass, through its European affiliate Vitro Cristalglass. ECOPURE is a glass called hydrophobic that is very resistant and colorless which substantially improves visibility during and after it rains. Its exclusive coating destroys organic contaminants on its surface and increases the sliding action of the water over the glass thus allowing for easy elimination of dirt and reduces considerably the frequency of manual window washing. ECOPURE is a glass that can be combined with other products from the product selection of Vitro Cristalglass as the treatment is applied on just one face of the glass surface.

(53 percent of LTM 2009 Consolidated Sales)

Sales

Sales for the quarter decreased 37.1 percent YoY to US$211 million from US$336 million. On a comparable basis, excluding Comegua, which was deconsolidated in December 2008, sales decreased 25.7 percent YoY.

The main drivers behind the 22.2 percent YoY decrease in domestic sales were a 34.0 percent depreciation of the peso during last twelve months 1Q'09 coupled with lower volumes across all segments, except for CFT (Cosmetics, Fragrances & Toiletries) which remained stable, due to the effect of the tough economic environment on demand.

Export sales decreased 32.2 percent due to lower volumes in almost every segment, except for food, which were partially offset by an improved price mix in the food, CFT and soft drinks markets.

Sales from Glass Containers' foreign subsidiaries decreased to US$1 million from US$53 million due to the deconsolidation of Comegua, the Company's subsidiary in Central America, starting December 1st 2008.

EBIT and EBITDA

EBIT for the quarter decreased 13.1 percent YoY to US$31 million from US$36 million in 1Q'08. EBITDA for the same period decreased 15.1 percent to US$49 million from US$58 million. On a comparable basis, excluding Comegua which was deconsolidated in December 2008, EBITDA decreased 3.9 percent YoY.

During this quarter, EBIT and EBITDA were affected by a 34.0 percent depreciation of the peso during last twelve months 1Q'09, lower volumes (lower fixed-cost absorption), higher raw materials prices and the deconsolidation of Comegua which were partially offset by the workforce adjustment according to market demand, the ongoing cost-reduction projects and lower energy costs.

EBITDA from Mexican glass containers operations, which is Glass Container's core business and represents approximately 77 percent of total EBITDA, decreased 18 percent YoY due to the above mentioned factors.

(46 percent of LTM 2009 Consolidated Sales)

Sales

Flat Glass sales for the quarter decreased 31.5 percent YoY to US$203 million from US$296 million.

Domestic sales decreased 32.4 percent YoY mainly as result of lower volumes in the automotive business line and in the float glass market coupled with the effect on prices of the 34.0 percent peso depreciation during last twelve months 1Q'09.

Export sales decreased 46.7 percent YoY due to lower volumes in the automotive business line. This situation was partially offset by stable float glass volumes sold to Central American markets and new South markets.

Automotive sales declined 49 percent YoY driven by lower Original Equipment Manufacturer ("OEM") volumes as a result of the slowdown in the industry demand, the exchange rate effect on the prices of both the domestic Auto Glass Replacement ("AGR") market and the OEM sales portion that is not dollar-denominated, and lower export AGR sales as the Company continues to focus on the domestic replacement market. These factors were partially offset by a 9 percent volume increase YoY in the domestic AGR market during 1Q'09.

Sales from foreign subsidiaries decreased 25.7 percent YoY to US$121 million from US$163 million as a result of weakening markets and softening demand.

EBIT and EBITDA

EBIT for the quarter decreased YoY to negative US$11 million from US$9 million while EBITDA decreased 97.1 percent YoY to US$1 million from US$22 million. During the same period, EBIT and EBITDA margins decreased 8.4 and 7.2 percentage points respectively.

On a YoY comparison, EBIT and EBITDA were affected by lower fixed-cost absorption derived from lower volumes linked to the sluggish construction and automotive markets, float glass inventory reduction in Mexico as well as a decrease in the output of certain of the Company's float glass furnaces. In addition to these factors, higher raw materials costs also impacted results. On the other hand, this business unit continues with the emphasis on cost reduction projects and value-added products in order to cope with the difficult economic environment.

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on it's behalf by the undersigned, thereunto duly authorized.


VITRO, S.A.B. DE C.V.

By  /s/ Claudio L. Del Valle Cabello
Name: Claudio L. Del Valle Cabello
Title: Attorney in Fact



Date: April 30, 2009

Below is additional information regarding the position of derivative financial instruments at the end of the first quarter, requested by the Mexican Authorities "Comision Nacional Bancaria y de Valores" (unofficial English translation for readers' convenience).

A. Qualitative and quantitative information

Issuers must include the information to assess the importance of derivatives to the financial position and results of the Company (Vitro, S.A.B. de C.V. and its Subsidiaries "the Company"), including, but not limited, to the following:

1. Management discussion on policies for the use of derivative financial instruments, explaining whether these policies allow these instruments to be used solely for hedging                 purposes or for other purposes, such as negotiation.

The Company's policy is to use derivative financial instruments (DFIs) to mitigate its exposure to liquidity and market risks related to its production and financial operations, caused mainly by its natural gas needs, as well as by future commitments made in foreign currencies. The DFIs that the Company uses to mitigate the aforementioned risks are Swaps, Options and Forwards, both simple and structured, the latter in order to obtain better conditions, such as a reduction or fees elimination.

From an economic point of view, DFIs are entered for hedging purposes, however, for accounting purposes DFIs have not been designated as hedges because they do not meet all the requirements of the Mexican Financial Reporting Standards and therefore have been classified as negotiation instruments. DFIs employed by the Company are operated in the Over the Counter (OTC) market with international financial institutions. The main conditions of the transactions refer to the obligation to buy or sell a certain underlying given certain characteristics such as cap rate, trigger level, spread, strike, among others.

The counterparties act as the calculation agent for the valuations of the operations that the Company holds, in accordance with what is set out in the contracts of the International Securities Dealers Association (ISDA).

The counterparties with whom the Company has performed DFIs are Credit Suisse, Citibank, Deutsche Bank, Merrill Lynch, Calyon, Barclays, Morgan Stanley, Cargill and PEMEX.

Since the counterparties with whom the Company performs DFIs are considered highly solvents, there is no formal guarantees policy and credit lines. However, ISDA contracts establish regulatory framework regarding those requirements.

The Company has a policy for Financial Derivatives Instruments Operations ("the policy") which sets guidelines for the analysis, negotiation, authorization, contracting, operating, monitoring and recording DFIs, in order to analyze the risk exposure to financial markets, commodities and fluctuations in the economic and financial variables. All the above mentioned is on the premise that it is forbidden to celebrate DFIs for speculative purposes.

For the risk strategies and the surveillance regarding the compliance of the chosen risk, there is a Risk Committee (RC) which acts in compliance with the policy, and which is comprised by various Company officials.

The RC must meet at least once a month and the agenda is developed and presented by the Company's Risk Administration (RA) department, who documents the issues and agreements addressed at these meetings.

The DFIs celebrated by the Company, are executed by the RA department who analyzes, reports and trades these instruments.

The policy also establishes that transactions must be authorized by different organizational levels according to the notional amounts.

The RC must define the strategy to be implemented in order to hedge its financial risks, taking into consideration the following aspects:

• Risk tolerance
• Market variations in which the Company prefers or not to have exposure
• Business cycles in which the Company prefers or not to have exposure
• Types of DFIs to use
• Time frames for the strategy
• Circumstances in which the Company must change its hedging strategy
• Operating Income budgets and projections

In order to monitor the strategy and ensure its control, the RC must establish measuring parameters for the financial risk that must be monitored so as not to exceed the established risk tolerance. The definition of measuring parameter considers:

• Identification of variables to monitor
• Definition of authorized instruments for the risk management strategy
• Maximum and minimum control limits
• Monitoring frequency
• Responsible for monitoring the variables

The policy requires the annual appointment of an expert to assess and certify the DFIs operation process. During August 2008, the internal audit department, which is a third party hired by the Company as an outsourcing service, conducted a review regarding the operation, segregation of duties, valuation and compliance of external and internal regulation regarding DFIs. The following are the main observations from the review:

• The minutes of the RC's meetings need to address the RC decisions on the following topics:

• Hedging strategy

• Review of existing open positions

• Financial risks analysis

• Authorization from RC members for DFIs operations

• The current policy to operate DFI is not updated on some issues.
• Need for a third party or independent valuation of the market values of complex DFIs provided by the counterparty

2. Generic description of the valuation techniques, distinguishing the instruments which are valued at cost or fair value in terms of the applicable accounting standards, as well as methods and valuation techniques with relevant reference variables and the applied assumptions. In addition, description of the policies and valuation frequency and actions set according to the obtained valuation.

All DFIs celebrated by the Company are valued at their fair value, which is determined by recognized market prices, and in case the instruments are not traded on a market then their fair value is determined by technical valuation models recognized in the financial industry.

The Company's Policy states that among the main activities of the AR area are the valuation of exposures and DFI's positions to measure the market risk, and the analysis risks measurements and possible deviations versus the Company's short-term planning (VCP).

Moreover, the strategies introduced by the AR area must be accompanied by the assessment of the impact between the risk and the return of the hedge on the proposed transaction, including forward-looking and stress tests, as well as sensitivity analysis.

On a daily or weekly basis:

• The increase/decrease in the portfolio's value
• Possible results information
• Analysis on abnormal market conditions

Additionally, on a monthly basis

• Deviations of price versus VCP (monthly and cumulative impact)
• Deviations of price versus market (monthly and cumulative impact)
• Deviations of VCP versus market (monthly and cumulative impact)
• Monitoring the concentration risk
• Monitoring the impact on price changes

All valuations reported by the Company are provided by the counterparties of DFIs hired, because in all cases and under the provisions set on the ISDAs, those counterparties act as calculation agents of the operations.

At least once a month the RA area conducts an analysis of variations in order to validate whether the change in fair value reported by the counterparties is in line with the changes presented by the risk factors used in the valuation models, for example, natural gas prices, interest rates and exchange rates.

3. Management discussion about the internal and external sources of liquidity that could be used to meet requirements related to derivative financial instruments. 

As of March 30, 2009, the Company had cash for $ 87 million dollars, of which $ 5 million dollars were restricted guaranteeing debt.

Additionally, the cash deposited as collateral for derivative instruments ($ 85 million dollars) nets the derivative instruments liability claimed by our counterparties.

4. Explanation about the changes in the exposure to the main identified risks and the management of this exposure, as well as contingencies and events known or anticipated by Management, which could affect future reports.

The main risks to which the Company is exposed are: natural gas prices, interest rates and exchange rate MXP / USD and MXP / EURO.

The Company has a short position in each of the above risks, which were originated by the following situations: predicted purchases of natural gas, bond issuance with maturities in 2012 and 2017 denominated in U.S. dollars, obligation to purchase the remainder percentage of the shares of Cristalglass in Spain, among others.

Below is an example of the impacts the Company could have at an upward or downward change of the above mentioned risks.

In order to mitigate such risks and in accordance with the Company's analysis of the market perspectives and with the recommendation done by the counterparties, the Company has celebrated various DFIs always pursuing that those instruments to allow better conditions, for example, an attractive hedging level for which the Company would have to pay the least amount of cash flow in advance, even implying a leverage level that commits the Company to pay double volumes or lose positions at certain level of earnings, scenarios that at that time have a very low probability to materialize.

Derived from the high volatility that the markets had experienced in recent months which resulted in a devaluation of the parity of MXP / USD and MXP / EURO, as well as in a significant reduction in the energy prices, the Company's Management was adversely affected by such effects and decided to unwind most of its positions at DFIs during the fourth quarter of 2008.

Some of the DFIs that the Company had in position during the second semester of 2008 were significantly affected by movements in the market's variables, primarily volatility, which detonated 35 margin calls for a total of $ 85 million dollars from the counterparties that affected the liquidity of the Company.

As of March 30, 2008, and subject to the clarification included in the penultimate paragraph of this "Section A", the fair value of the total position is approximately negative $ 384 million dollar, including negative $ 59 million dollars related to the only open positions with PEMEX linked to natural gas hedging while the remainder of the positions have been closed, accounting for approximately negative $ 325. The deposited collateral related to the approximately negative $ 325 million dollars, continues to have a value of $ 85 million dollars.

As we have publicly disclosed, the Company has been sued in the U.S. by most of its counterparties. The Company has formally filed an answer to the complaints, and as part of the answer has asserted affirmative defenses including, among others, challenging the validity of the derivative agreements. As discovery commences and the case develops, the Company will continue evaluating additional facts that may surface.

Also, as to other laws that may result applicable in Mexico and abroad, the Company will continue evaluating, assisted by its external advisors and counsel, the enforceability, amounts claimed and legality of the derivative financial instruments and transactions described above. Therefore, the above mentioned amounts are claims stated by the Counterparties that in no manner or under no concept should be considered as an express or implied acknowledgement of the same by the Company, and neither should be considered as a renunciation of the Company to any right, which it has purposely and expressly reserved and continues to do so, included the right to adjust or eliminate, depending on the circumstances, in such case, those amounts.

It is important to note that due to the decrease in natural gas prices, the Company will have significant savings in the purchase of the physical gas supplied by PEMEX, for every dollar / MMBTU that the price of natural gas decreases, the annual saving is approximately $ 20 million.

B. Quantitative information

Following is the requested information with respect to the summary of DFIs.

C. Sensitivity Analysis

1. Valuation Models