notes to consolidated financial statements Diodes Incorporated and Subsidiaries Note 10 – Related Party Transactions (continued) Note 11 – Geographic Information 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. Net sales to, and purchases from, companies owned  by Keylink International were as follows for years ended  December 31: Accounts receivable from, and accounts payable to,  related parties were as follows as of December 31: 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. 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. 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. 2002  2003  2004 Net sales  $1,885,000  $1,484,000  $1,677,000 Purchases  4,394,000  2,961,000  4,789,000 2003  2004 Accounts receivable LSC $3,111,000  $4,180,000 Other  827,000  1,346,000 $3,938,000  $5,526,000 Accounts payable LSC $2,914,000  $3,308,000 Other  539,000  628,000 $3,453,000  $3,936,000 44