management ’ s discussion and analysis of financial condition  and results of operations Diodes Incorporated and Subsidiaries In June 2001, according to the Company’s U.S. bank  covenants, Diodes-FabTech was not permitted to make  regularly scheduled principal and interest payments to  LSC on the remaining $10.0 million payable related to  the FabTech acquisition note, but was, however, able  to renegotiate with LSC the terms of the note. Under  the terms of the amended and restated subordinated  promissory note, monthly payments of approximately  $417,000 plus interest were scheduled to begin again  in July 2002, provided the Company met the terms of  its U.S. bank’s covenants. In May 2002, the Company  renegotiated the terms of the note with LSC to extend  the payment period from two years to four years, and  accordingly, monthly payments of approximately  $208,000 plus interest began in July 2002. The credit agreements have certain covenants and  restrictions, which, among other matters, require the  maintenance of certain financial ratios and operating  results, as defined in the agreements, and prohibit the  payment of dividends. The Company was in compli- ance with its covenants as of December 31, 2004. The Company has used its credit facilities primar- ily to fund the capacity expansion at Diodes-China  and Diodes-Shanghai and to a lesser extent Diodes- FabTech, as well as for the FabTech acquisition, and to  support all operations. The Company believes that the  continued availability of these credit facilities, together  with internally generated funds, will be sufficient to  meet the Company’s current foreseeable operating cash  requirements. Cash provided by financing activities was $2.2 mil- lion in 2004, compared to $1.9 million in 2003, and cash  used by financing activities of $14.0 million in 2002.  The primary source of cash in 2004 was the receipt of  $5.8 million from stock option exercises. At December  31, 2004, the Company’s total bank credit facility of  $46.5 million encompasses one major U.S. bank, three  banks in Mainland China and five in Taiwan. As of  December 31, 2004, the total credit lines were $12.5  million, $25.0 million, and $9.0 million, for the U.S.  facility secured by substantially all assets, the unsecured  Chinese facilities, and the unsecured Taiwanese facili- ties, respectively. As of December 31, 2004, the available  credit was $5.1 million, $19.0 million, and $9.0 million,  for the U.S. facility, the Chinese facilities, and the Tai- wanese facilities, respectively.  The Company had entered into an interest rate swap  agreement with a major U.S. bank which expired No- vember 30, 2004, to hedge its exposure to variability in  expected future cash flows resulting from interest rate  risk related to a portion of its long-term debt. The in- terest rate under the swap agreement was fixed at 6.8%  and is based on the notional amount. The swap contract  was inversely correlated to the related hedged long- term debt and was therefore considered an effective  cash flow hedge of the underlying long-term debt. The  level of effectiveness of the hedge is measured by the  changes in the market value of the hedged long-term  debt resulting from fluctuation in interest rates. As a  matter of policy, the Company does not enter into de- rivative transactions for trading or speculative purposes. In February 2003, the Company and its U.S. bank  renewed its $7.5 million revolving credit line, extending  it for two years. In July 2004, Diodes-FabTech obtained  a $5.0 million credit facility to be used for capital expen- diture requirements at its wafer fabrication facility. This  $5.0 million facility brought the Company’s total credit  facility to $46.5 million, with the total available and  unused credit at December 31, 2004 of $32.3 million. Total working capital increased 82.6% to $49.6  million as of December 31, 2004, from $27.2 million  as of December 31, 2003. The Company believes that  such working capital position will be sufficient for  foreseeable operations and growth opportunities. The  Company’s total debt to equity ratio improved to 0.50  at December 31, 2004, from 0.73 at December 31, 2003.  It is anticipated that this ratio may increase should the  Company use its credit facilities to fund additional  inventory sourcing opportunities. The Company has no material plans or commitments  for capital expenditures other than in connection with  manufacturing expansion at Diodes-China, Diodes- Shanghai and Diodes-FabTech. However, to ensure  24