In addition to being our largest external supplier of  products, in 2004, we sold silicon wafers to LSC totaling  11.1% (10.7% in 2003) of our total sales, making LSC  our largest customer. The Company has a long-stand- ing sales agreement where the Company is the exclusive  North American distributor for certain of LSC product  lines. In addition, the Company leases warehouse space  from LSC for its operations in Hong Kong. Such trans- actions are on terms no less favorable to the Company  than could be obtained from unaffiliated third parties.  The Audit Committee of the Board of Directors has approved the contracts related to the transactions. In December 2000, the Company acquired the  wafer foundry, FabTech, Inc., from LSC. As part of  the purchase price, at December 31, 2004, LSC holds a  subordinated, interest-bearing note for approximately  $3.8 million. In May 2002, the Company renegotiated  the terms of the note to extend the payment period from  two years to four years, and therefore, monthly pay- ments of approximately $208,000 plus interest began in  July 2002. In connection with the terms of the acquisi- tion, LSC entered into a volume purchase agreement to  purchase wafers from FabTech. In addition, as per the  terms of the stock purchase agreement, the Company  has entered into several management incentive agree- ments with members of FabTech’s management. The  agreements provide members of FabTech’s manage- ment guaranteed annual payments as well as contingent  bonuses based on the annual profitability of FabTech,  subject to a maximum annual amount. Any portion of  the guaranteed and contingent liability paid by FabTech  is reimbursed by LSC. Year 2004 is the final year of the  management incentive agreements, with final payment by March 31, 2005. In addition to the 3.5% of our sales of product manu- factured by companies owned by Keylink International,  in 2004, the Company sold silicon wafers to companies  owned by Keylink International totaling 0.9% (1.1% in  2003) of the Company’s total sales. In addition, Diodes- China and Diodes-Shanghai both lease their manufac- turing facilities from, and subcontract a portion of its  manufacturing process (metal plating and environmen- tal services) to Keylink International. The Company  We conduct business with two related party companies,  LSC (and its subsidiaries) and Keylink International  (formerly Xing International) (and its subsidiaries).  LSC, a 32.3% shareholder, is our largest shareholder,  and Keylink International is owned by our 5% joint  venture partner in Diodes-China and Diodes-Shanghai.  C.H. Chen, our President and Chief Executive Officer,  and a member of our Board of Directors, is also Vice- Chairman of LSC. M.K. Lu, a member of our Board of  Directors, is President of LSC, while Raymond Soong,  our Chairman of the Board, is the Chairman of the Lite- On Group, a significant shareholder of LSC. All of the raw materials we use in our manufacturing  operations are available both domestically and abroad.  Although we believe alternative sources exist for the  products of any of our suppliers, the loss of any one of  our principal suppliers or the loss of several suppliers in  a short period of time could have a materially adverse  effect on our financial statements until an alternate  source is located and has commenced providing such  products or raw materials. In 2004, our largest external supplier of products was  LSC, a related party. Approximately 17.2% and 17.3%  of our sales were from product manufactured by LSC  in 2004 and 2003, respectively. Also, in 2004 and 2003,  approximately 3.5% and 4.6%, respectively, of our sales  were from product manufactured by companies owned  by Keylink International (a related party). In addition,  sales of products manufactured by Diodes-China and  Diodes-FabTech were approximately 49% and 20% in  2004, respectively, versus 39% and 23% in 2003, respec- tively. We anticipate that Diodes-China will become an  increasingly valuable supplier. No other manufacturer  of discrete semiconductors accounted for more than 4%  and 9% of our sales in 2004 and 2003, respectively. Related Parties 16 Diodes Incorporated and Subsidiaries management ’ s discussion and analysis of financial condition  and results of operations