Gross margins were 23.3% for the three months ended December 31, 2012, up 120 basis points from 22.1% in the fourth quarter of 2011 and a slight improvement from the previous quarter. This is the fifth consecutive quarter of gross margin improvement for the Company, and represents the highest quarterly gross margin for Himax since the fourth quarter of 2008. The trend in the Company's margin expansion is a direct result of a richer mix of higher margin products like those in its non-driver categories and the fast-growing small and medium-sized panel drivers. Gross margin improvement will continue to be one of Himax's key business goals going forward.

Fourth quarter 2012 GAAP operating expenses were $25.2 million, down 3.8% from $ 26.2 million a year ago and down 19.1% from $31.1 million in the previous quarter. The significant sequential decrease was primarily the result of the difference in RSU charges. The third quarter RSU expense was $6.3 million while it was just $0.5 million in the fourth quarter. In accordance with its protocol, the Company grants annual RSUs to its staff at the end of September each year, which, given all other things equal, leads to higher third quarter GAAP operating expenses compared to the other quarters of the year. Discounting the higher RSU expenses in the third quarter of 2012, the Company's Q4 operating expenses were stable compared to the previous quarter and down $1.0 million from the same quarter last year.

GAAP operating income for the fourth quarter of 2012 was $19.2 million, or 10.1% of sales, up $8.1 million, or 72.0%, compared to the same period last year and up $6.1 million, or 46.1%, from $13.2 million, or 6.9% of sales, in the previous quarter. Excluding RSU expenses, operating income for the fourth quarter remained around flat compared to the previous quarter.

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