S23: IN THIS ACCOUNT OF THE ACTUAL YEAR ARE INCLUDED THE CURRENT LIABILITIES WITH COST OF THE COMPANY, EVEN WHEN THESE ARE NOT BANK LOANS.

SIFIC / ICS

STOCK EXCHANGE CODE: CERAMIC QUARTER: 3 YEAR 2004

INTERNACIONAL DE CERAMICA, S.A. DE C.V.

Interceramic recorded sales of US $89.4 million in the third quarter of 2004, growing 7.12 percent over sales of US $83.5 million in the same quarter of 2003 . Gross income for the quarter grew by 13.83 percent over the third quarter of 2003, up to US $32.6 million. With operating expenses held relatively in check during this year, consolidated operating income for the third quarter of 2004 was US $7.3 million, 15.70 percent above the US $6.3 million posted in the same quarter last year and the highest for any quarter in two years.

Despite the cancellation of our traditional "Patria Sale" in Mexico this year, third quarter 2004 sales in Mexico were slightly ahead of sales in the third quarter last year, increasing by almost one percent to US $48.6 million from third quarter 2003 sales in Mexico of US $48.2 million. The modest sales growth is encouraging, given that the averaged 20 percent discount offered in the discontinued Patria Sale, boosted a high level of sales during the third quarter of previous years.

Things continue to improve in the International markets, as sales in the third quarter of 2004 increased by 15.77 percent over sales in the third quarter of 2003, up to US $40.8 million from US $35.3 million for the third quarter last year. We increased the amount of product sold in the International markets during the third quarter of 2004 substantially as well, with volume sales increasing by 14.42 percent over last year.

With operating income of about US $1.0 million greater during the quarter than in the third quarter last year, the Company's EBITDA increased nicely too, up to US $11.8 million from the US $10.2 million recorded in the third quarter of 2003-an increase of 15.16 percent. Our EBITDA for the third quarter was 6.23 percent higher than EBITDA in the second quarter of this year, and represents the best quarterly figure for EBITDA since the third quarter in 2002. The extra cash flow has helped brighten our important financial ratios, with our debt service coverage ratio at the end of the third quarter of 2004 at 6.9 times compared to 5.8 times at the end of the same quarter of last year. Also, the ratio of debt to EBITDA decreased considerably at 2.8 times for the third quarter of 2004 compared to 3.3 times at the end of the third quarter 2003.

During the third quarter of 2004, our shareholders approved a project to delist our securities from the listing on the New York Stock Exchange that we have maintained since 1994. The delisting is expected to be finalized on or about October 29, 2004. Our securities are also listed and will continue to trade on the Mexican Stock Exchange, where our promotion efforts will be better focused. Management at Interceramic is encouraged by the Company's steadily improving performance, and believe that all pieces are securely in place for further progress in coming quarters.

Oscar E. Almeida

Chairman of the Board

Chief Executive Officer

1.- Comprehensive Financing Cost.- Comprehensive Financing Cost for the for the third quarter of 2004 was a gain of $14.7 millions compared to a loss of $64.3 millions registered during the same period of 2003. This increased gain was mainly due to a foreign exchange gain which at $11.1 million gain in the third quarter of 2004, represents a completely adverse number than the $60.7 million loss registered during the same period of 2003. This change was generated by the gain of value of the Pesos against the Dollar.

2.- Other Income or Expenses.- Other income or expenses is an account composed by non continuous ordinary transactions, such as, write down of assets, obsolete inventories, waste of raw materials, etc.

Other expenses during the third quarter of 2004 represented a net expense of $0.7 millions, compared to a product of $0.9 millions registered during the same period of 2003.

3.- Minority Net Income.- This account in the Financial Statements relates to the interest of Dal-Tile Inc in "Recubrimientos Interceramic, S.A. de C.V." and Custom's Inc. interest in "Adhesivos y Boquillas, S. de R.L. de C.V.". Minority net income posted during the third quarter of 2004 was $6.8 million, compared to $13.3 million in the same period of 2003, representing a decrease of 48.7 percent.

4.- Majority Net Income.- This account in the Financial Statements consists of consolidated net income, less the portion attributable to Dal-Tile's Inc. ownership interest in Recubrimientos Interceramic, S.A. de C.V. and that of Custom's Inc. in "Adhesivos y Boquillas, S. de R.L. de C.V.".

Majority net income for the quarter increased to an income of $63.1 million in the third quarter of 2004 from a majority net loss of $26.3 million in same quarter of 2003. The increase in the majority income was mainly due to the effect of the Integral Cost of Financing.

1).- DEBT.- At the end of the third quarter of 2004 net debt for the Company was of US $88.1 million, mainly composed of the balance due regarding the Syndicated Loan of US $71.9 million. At the date the Company has not failed to make any payment of any of the different loans obtained from different banks (see Annex 5). At the date of the report the Company is in compliance with all of it's credit agreements.

2).- LIQUIDITY.- The main source of fund for the Company is basically the obtained from the sales of the products that manufacture and in a leaser extent that commercializes. For the year of 2004, of the total sales of the Company, 54.60 percent were denominated in Mexican Pesos, while the remaining 45.40 percent were denominated in US Dollars.

CHANGES IN MAIN CONCEPTS IN THE LAST THREE YEARS.

SIFIC / ICS

STOCK EXCHANGE CODE: CERAMIC QUARTER: 3 YEAR 2004

INTERNACIONAL DE CERAMICA, S.A. DE C.V.

Pursuant to Bulletin B-15 financial statements previously reported have been restated to take into account a common actualization factor determined by weighting the Company's respective sales in Pesos and Dollars, each as effected by inflation and devaluation in the applicable currencies. This factor for the 12 month period from October '03 to September '04 was 5.44% compared to the inflation for the same period of 4.88%.

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in Mexico ("Mexican GAAP").

I. Recognition of the effects of inflation.- The Company recognizes the effects of inflation on financial information as required by Mexican Accounting Principles Bulletin B-10, "Accounting Recognition of the Effects of Inflation on Financial Information".

Certain concepts and procedures required by the application of Bulletin B-10 are explained below:

II. Cash equivalents.- Cash equivalents are shown at cost plus accrued interest through the balance sheet date. The stated value approximates fair value.

All highly liquid investments with a maturity of three months or less at the time of purchase are considered cash equivalents and are carried at cost which approximates their fair market value.

III. Inventories and Cost of Sales.- Inventories are recorded initially at acquisition or production cost and then restated to reflect replacement cost, which is not in excess of market value. Cost of sales represents the estimated replacement cost at the time sales were realized, expressed in constant pesos at the end of the year.

IV. Investment in shares of affiliated companies.- Investments in companies in which the Company has an ownership interest of between 10% and 50% and for which the Company exercises significant influence, are accounted for using the equity method. Investments in companies in which the Company has an ownership interest of less than 10% are recorded at cost and restated for changes in the NCPI.

V. Property, plant and equipment.- Through December 31, 1996, the values of property, plant and equipment were determined by an independent appraiser registered with the National Banking and Securities Commission ("NBSC").

Effective January 1, 1997, Bulletin B-10 eliminated the use of appraisals to present property, plant and equipment in the financial statements, and currently is restated as follows:

The appraised value of imported machinery as of December 31, 1996, as well as the cost of subsequent additions to such machinery, were restated based on the rate of inflation in the respective country of origin and then translated using the prevailing exchange rate at the balance sheet date (specific inflation factors).

The appraised value of land, buildings and other fixed assets of domestic origin at December 31, 1996, and the cost of subsequent additions to such assets were restated based on the NCPI.

Depreciation is computed on the restated values, using the straight-line method based on the estimated useful lives of the assets as determined periodically by management based on technical studies.

VI. Exchange differences.- Transactions in foreign currency are recorded at the exchange rate at the time of the transactions. Exchange differences are determined from the date of the transactions to the time of settlement or valuation at the balance sheet date and are charged or credited to income.

VII. Labor obligations.- Under Mexican labor law, employees are entitled to a compensation payment ("seniority premium") upon death, dismissal or at retirement after 15 or more years of service. Seniority premium costs are recognized periodically during the years of service rendered by employees, based on actuarial computations made by an independent actuary, using the projected unit credit method and financial assumptions, net of inflation, as required by Mexican Accounting Principles Bulletin D-3 ("Labor Obligations"). Termination payments are charged to income in the year in which the decision to dismiss an employee is made.

VIII. Income taxes and employee profit sharing.- Effective January 1, 2000, the Company adopted the requirements of the Mexican Accounting Bulletin D-4, "Accounting for Income Tax, Asset Tax and Employee Profit Sharing." Bulletin D-4 requires the recognition of deferred taxes on all temporary differences in balance sheet accounts for financial and tax reporting purposes, using enacted income tax rates. Through December 31, 1999, deferred taxes were recognized only on temporary differences that were considered to be non-recurring and that had a known turnaround period.

As established in Bulletin D-4, the cumulative effect of deferred taxes, at the beginning of 2000, was applied to stockholders' equity, without restating the financial statements of prior years.

The Company periodically evaluates the possibility of recovering deferred tax assets and if necessary, adjusts the related valuation reserve.

Employee profit sharing is a statutory obligation payable to employees that is determined in accordance with the provisions of both Mexican labor and income tax law.

In conformity with Bulletin D-4, deferred employee profit sharing is recognized only on temporary differences determined in the reconciliation of current year net income for financial and tax reporting purposes, provided there is no indication that the related liability or asset will not be realized in the future.

Current year employee profit sharing is charged to results of operations and represents a current liability due and payable in a period of less than one year.

Asset tax, which is a minimum income tax is payable based on the average value of most assets net of certain liabilities. Since income tax may be credited against asset tax, the latter is actually payable only to the extent that it exceeds current year income tax.

Current year income tax is charged to results of operations and represents the tax liability due and payable in less than one year.

IX. Long-lived assets.- The Company periodically evaluates potential impairment loss relating to long-lived assets by assessing whether the unamortized carrying amount can be recovered over the remaining life of the assets through undiscounted future expected cash flows generated by the assets. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, a loss is recognized for the difference between the carrying value of the assets and the expected future undiscounted cash flows. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Effective January 1, 2004 the Company will be required to adopt Bulletin C-15 for Mexican GAAP which modifies the method in which companies must measure potential impairment losses relating to long-lived assets. Under the provisions of the bulletin an impairment loss of long-lived assets will be required to be recognized when the carrying value of assets, measured at the cash generating unit level, exceeds the recoverable value. A cash generating unit (joint venture, subsidiary, production line, division or segment) is the minimum identifiable grouping of assets that generate cash flows that are independent of other groups of assets. The recoverable value is defined as the greater of the value in use (present value of the estimated future net cash flows using an appropriate discount rate) or an estimated net selling price between interested parties, which is reasonable and verifiable. Impairment losses may be reversed in future periods when the recoverable value exceeds the carrying value of the related assets and it can clearly justified and demonstrated that the change is permanent and verifiable. The Company has evaluated the effect of this new rule standard, and it is not expected any change.

X. Revenue recognition.- The Company recognizes revenue when goods are shipped and invoiced. Revenue from retail operations is recognized, generally, at the point of sale. Returns and allowances are estimated and accrued based on historical results.

XI. Net income per unit.- Net income per unit is determined on the basis of the average weighted number of units issued and outstanding. The Company's units are each comprised of two common shares that are traded together as one unit. A "UB" unit is comprised of two Series "B" Shares and a "ULD" unit is comprised of one Series "L" Share and one Series "D" Share.

XII. Comprehensive income.- Mexican Accounting Bulletin B-4, "Comprehensive Income," became effective January 1, 2001. Bulletin B-4 establishes the rules with respect to reporting and presenting comprehensive income and the component elements of such income. Bulletin B-4 has no effect on net income or stockholders' equity. Comprehensive income consists of net income or loss for the year plus those items that are reflected directly in stockholders' equity and that do not constitute capital contributions, reductions or distributions such as deficit from restatement of stockholders' equity, effect of translation of foreign subsidiaries and deferred taxes allocated to equity.

On October 19^th 1999 a merge agreement was approved by the Shareholders in which Ceramica Industrial Maquinada, S.A. de C.V. merged into Internacional de Ceramica, S.A. de C.V., which was a 100% subsidiary of Internacional de Ceramica, S.A. de C.V.

On April, 9^th, 2002 a merge agreement was approved by the Shareholders in which Procesadora de Materiales Cerro Grande, S.A. de C.V. and Interacabados de Noroeste, S.A. de C.V. merged into Internacional de Ceramica, S.A. de C.V.. The merged companies were a 100% subsidiary of Internacional de Ceramica, S.A. de C.V.