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## Note 10 – Related Party Transactions (continued) 

As a result of the acquisition of FabTech from LSC, the Company is indebted to LSC in the amount of $3,750,000 as of December 31, 2004. Terms of the debt are indicated in Note 4. As per the terms of the acquisi- tion agreement, LSC entered into a volume purchase agreement with FabTech pursuant to which LSC is obli- gated to purchase from FabTech, and FabTech is obligated to manufacture and sell to LSC, silicon wafers. 

As part of the FabTech acquisition, the Company entered into management incentive agreements with several members of FabTech’s management. The agree- ments provide a guaranteed aggregate $375,000 annual payment as well as contingent bonuses based on the annual profitability of FabTech (subject to a maximum annual amount). Any portion of the guaranteed and con- tingent liability paid by FabTech is reimbursed by LSC. Guaranteed and maximum contingent bonus payments provided for by the management incentive agreements for the year ended December 31, 2004 (the final year of the agreements) were $375,000 and $1.2 million, respec- tively. Because the profitability targets were not met, no contingent bonus was earned or paid in the years 2002 through 2004. 

Other related party – The Company sells product to, and purchases inventory from, companies owned by its 5% minority shareholder, Keylink International (for- merly Xing International), in Diodes-China and Diodes- Shanghai. In addition, Diodes-China and Diodes- Shanghai each leases its manufacturing facilities from, subcontracts a portion of its manufacturing process (metal plating and environmental services) to, and pays a consulting fee to, its 5% minority shareholder. Total amounts for these services for the years ended December 31, 2002, 2003, and 2004 were $2,699,000, $3,464,000, and $4,760,000. Such transactions are on terms no less favor- able to the Company than could be obtained from unaf- filiated third parties. As required by Nasdaq, the Audit Committee of the Board of Directors has approved the contracts associated with the related party transactions. 

Net sales to, and purchases from, companies owned by Keylink International were as follows for years ended December 31: 

<img src='content_image/20683.jpg'>

Accounts receivable from, and accounts payable to, related parties were as follows as of December 31: 

<img src='content_image/20684.jpg'>

## Note 11 – Geographic Information 

An operating segment is defined as a component of an enterprise about which separate financial information is available that is evaluated regularly by the chief deci- sion maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief decision-making group consists of the President and Chief Executive Officer, Chief Financial Officer, Vice President of Sales and Marketing, and Senior Vice President of Operations. The Company operates in a single segment, discrete semiconductor devices, through its various manufacturing and distribu- tion facilities. 

The Company’s operations include the domestic oper- ations (Diodes, Inc. and FabTech) located in the United States and the Asian operations (Diodes-Taiwan located in Taipei, Taiwan, Diodes-China and Diodes-Shanghai both located in Shanghai, China, and Diodes-Hong Kong located in Hong Kong, China). European opera- tions are consolidated within the U.S. operations. 

