8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_______________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report: April 28, 2011
(Date of earliest event reported)

_______________

GSI COMMERCE, INC.
(Exact name of registrant as specified in its charter)

Delaware	0-16611	04-2958132
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

935 First Avenue, King of Prussia, PA 19406
(Address of principal executive offices and zip code)

(610) 491-7000
(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02   RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On April 28, 2011, GSI Commerce, Inc. (“we” or the “Registrant”) issued a press release announcing its results for the first quarter of fiscal year 2011. A copy of the press release is furnished as part of this report.

The press release (included as Exhibit 99.1) contains the non-GAAP financial measures non-GAAP income from operations and free cash flow.  We also discuss certain ratios that use those measures. These financial measures are not intended to be considered in isolation of, as a substitute for or superior to our GAAP financial information. The non-GAAP financial measures included in the press release and to be included the conference call have been reconciled to the nearest GAAP measure as is required under Securities and Exchange Commission rules.  As used herein, “GAAP” refers to accounting principles generally accepted in the United States.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate our performance. In our opinion, these non-GAAP measures provide meaningful supplemental information regarding our performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by institutional investors and the analyst community to help them analyze the health of our business. These measures may be different from non-GAAP measures used by other companies.

Non-GAAP income from operations. We define non-GAAP income from operations as income from operations excluding stock-based compensation, depreciation and amortization expenses, and the following expenses relating to acquisitions: transaction expenses, due diligence expenses, integration expenses, non-cash inventory valuation adjustments, the cash portion of any deferred acquisition payments recorded as compensation expense, changes in fair value of deferred acquisition payments, and goodwill and intangible asset impairment charges. We consider non-GAAP income from operations to be a useful metric for management and investors because it excludes certain non-cash and non-operating items. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when valuing equity awards under ASC 718 / SFAS 123R, we believe that viewing income from operations excluding stock-based compensation expense allows investors to make meaningful comparisons between our operating performance and those of other businesses. Because we are growing our business and operate in an emerging and changing industry, we believe that our level of capital expenditures and consequently the level of depreciation and amortization expense relative to our revenues could be meaningfully greater today than it will be over time. As a result, we believe it is useful supplemental information to view income from operations excluding depreciation and amortization expense as it provides a potential indicator of the future operating margin potential of the business. We believe the exclusion of the following acquisition-related expenses permits evaluation and a comparison of results for on-going business operations, and it is on this basis that management internally assesses the company's performance: transaction expenses, due diligence expenses, integration expenses, non-cash inventory valuation adjustments, the cash portion of any acquisition earn-out payments recorded as compensation expense, and changes in fair value of deferred acquisition payments, and goodwill and intangible asset impairment charges.

Free cash flow. We define free cash flow as net cash provided by operating activities minus cash paid for fixed assets, including internal use software. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure, can be used for strategic opportunities, including investing in the business, making strategic acquisitions and strengthening the balance sheet. Analysis of free cash flow also facilitates management’s comparisons of our operating results to the operating results of comparable companies. A limitation of using free cash flow as a means for evaluating our performance is that free cash flow reflects changes in working capital which is impacted by short-term changes in cash flow and the seasonality of our business which may not be indicative of long-term performance. Another limitation of free cash flow is that it excludes fixed assets purchased and placed in service, but not paid for during the applicable period.  Our management compensates for this limitation by providing supplemental information about capital expenditures accrued, but not paid for during the applicable periods on the face of the cash flow statement in our Forms 10-K and 10-Q.

ITEM 9.01   FINANCIAL STATEMENTS AND EXHIBITS.

99.1     Press Release, dated April 28, 2011

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		GSI COMMERCE, INC.
		By:	/s/ Michael R. Conn
		Michael R. Conn
		Executive Vice President Finance and
		Chief Financial Officer
Dated:	April 28, 2011

Exhibit Index

Exhibit No.	Description
99.1	Press Release, dated April 28, 2011

EX-99.1

Exhibit 99.1

GSI Commerce Reports Fiscal 2011 First Quarter Operating Results

KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--April 28, 2011--GSI Commerce Inc. (Nasdaq: GSIC) today announced its financial results for its fiscal first quarter ended April 2, 2011.

Fiscal 2011 First Quarter Compared to Fiscal 2010 First Quarter

• Net revenues were $323.5 million compared to $272.6 million.
• Loss from operations was $27.9 million compared to $12.9 million and includes $7.3 million of expenses related to the pending acquisition of GSI by eBay, $3.5 million of expenses related to the acquisition of Fanatics, Inc. and $3.3 million of earn-out expenses related to the acquisition of Fetchback, Inc.
• Non-GAAP income from operations (NGIO) was $14.8 million compared to $17.4 million.
• Core NGIO was $19.3 million compared to $18.5 million.*
• Emerging NGIO loss was $4.6 million compared to $1.2 million.**
• Net loss was $13.6 million or $0.20 per share compared to net loss of $8.1 million or $0.13 per share.
• Trailing 12 month loss from operations was $32.2 million compared to income from operations of $11.9 million.
• Trailing 12 month NGIO was $132.1 million compared to $114.5 million.
• Trailing 12 month Core NGIO was $144.6 million compared to $114.3 million.
• Trailing 12 month Emerging NGIO loss was $12.6 million compared to NGIO profit of $0.2 million.
• Trailing 12 month cash flow from operating activities was $132.8 million compared to $127.7 million.
• Trailing 12 month free cash flow was $59.3 million compared to $76.2 million.

*Core includes Global e-Commerce Services, Global Marketing Services and corporate overhead.

**Emerging includes Rue La La and ShopRunner without allocation of corporate overhead.

The definitions of non-GAAP income from operations, free cash flow, and a discussion of the importance of these non-GAAP financial metrics to GSI’s business can be found under “Non-GAAP Financial Measures” provided later in this news release.

Non-GAAP Financial Measures

GSI’s consolidated financial statements are prepared and presented in accordance with GAAP. To supplement our consolidated financial statements in this release, we use the non-GAAP financial measures of non-GAAP income from operations and free cash flow. We also discuss certain ratios that use those measures. The non-GAAP measures and ratios presented are not intended to be considered in isolation of, as a substitute for, or superior to our GAAP financial information. We have included reconciliations later in this release of the non-GAAP measures to the nearest GAAP measure.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate our performance. In our opinion, these non-GAAP measures provide meaningful supplemental information regarding our performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by institutional investors and the analyst community to help them analyze the health of our business. These measures may be different from non-GAAP measures used by other companies.

Non-GAAP income from operations. We define non-GAAP income from operations as income from operations excluding stock-based compensation, depreciation and amortization expenses, and the following expenses relating to acquisitions: transaction expenses, due diligence expenses, integration expenses, non-cash inventory valuation adjustments, the cash portion of any deferred acquisition payments recorded as compensation expense, changes in fair value of deferred acquisition payments, and goodwill and intangible asset impairment charges. We consider non-GAAP income from operations to be a useful metric for management and investors because it excludes certain non-cash and non-operating items. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when valuing equity awards under ASC 718 / SFAS 123R, we believe that viewing income from operations excluding stock-based compensation expense allows investors to make meaningful comparisons between our operating performance and those of other businesses. Because we are growing our business and operate in an emerging and changing industry, we believe that our level of capital expenditures and consequently the level of depreciation and amortization expense relative to our revenues could be meaningfully greater today than it will be over time. As a result, we believe it is useful supplemental information to view income from operations excluding depreciation and amortization expense as it provides a potential indicator of the future operating margin potential of the business. We believe the exclusion of the following acquisition-related expenses permits evaluation and a comparison of results for on-going business operations, and it is on this basis that management internally assesses the company's performance: transaction expenses, due diligence expenses, integration expenses, non-cash inventory valuation adjustments, the cash portion of any acquisition earn-out payments recorded as compensation expense, changes in fair value of deferred acquisition payments, and goodwill and intangible asset impairment charges.

Free cash flow. We define free cash flow as net cash provided by operating activities minus cash paid for fixed assets, including internal use software. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure, can be used for strategic opportunities, including investing in the business, making strategic acquisitions and strengthening the balance sheet. Analysis of free cash flow also facilitates management’s comparisons of our operating results to the operating results of comparable companies. A limitation of using free cash flow as a means for evaluating our performance is that free cash flow reflects changes in working capital which is impacted by short-term changes in cash flow and the seasonality of our business which may not be indicative of long-term performance. Another limitation of free cash flow is that it excludes fixed assets purchased and placed in service, but not paid for during the applicable period. Our management compensates for this limitation by providing supplemental information about capital expenditures accrued, but not paid for during the applicable periods on the face of the cash flow statement in our Forms 10-K and 10-Q.

About GSI Commerce

GSI Commerce® enables e-commerce, multichannel retailing and digital marketing for global enterprises in the U.S. and internationally. GSI’s e-commerce services which include technology, order management, payment processing, fulfillment and customer care, are available on a modular basis or as part of an integrated solution. GSI’s Global Marketing Services division provides innovative digital marketing products and services comprised of database management and segmentation, marketing distribution channels, a global digital agency to drive strategic and creative direction and an advanced advertising analytics and attribution management platform. Additionally, GSI provides brands and retailers platforms to engage directly with consumers through RueLaLa.com, an online private sale shopping destination, and ShopRunner.com, a members-only shopping service that offers unlimited free two-day shipping and free shipping on returns for a $79 annual subscription.

GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
	January 1,			April 2,
	2011			2011
ASSETS
Current assets:
Cash and cash equivalents	$	242,146		$	109,624
Accounts receivable, net		96,382			72,151
Inventory, net		62,412			92,099
Deferred tax assets		16,439			19,235
Prepaid expenses and other current assets		16,984			21,497
Total current assets		434,363			314,606
Property and equipment, net		188,829			212,282
Goodwill		318,179			494,822
Intangible assets, net		132,972			204,953
Long-term deferred tax assets		2,279			-
Other assets, net		30,540			39,283
Total assets	$	1,107,162		$	1,265,946
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	144,323		$	84,387
Accrued expenses and other		197,417			154,277
Deferred revenue		23,808			28,088
Current portion - long-term debt		11,136			17,985
Total current liabilities		376,684			284,737
Convertible notes		123,391			125,107
Long-term debt		32,287			183,793
Deferred acquisition payments		1,750			4,673
Deferred tax liabilities		-			6,450
Deferred revenue and other long-term liabilities		10,017			9,300
Total liabilities		544,129			614,060
Stockholders' equity:
Preferred stock, $0.01 par value:
Authorized shares - 5,000
Issued and outstanding shares - none		-			-
Common stock, $0.01 par value:
Authorized shares - 180,000 and 180,000
Issued and outstanding shares - 66,984 and 72,246		670			722
Additional paid in capital		765,857			867,195
Accumulated other comprehensive loss		(1,378	)		(306	)
Accumulated deficit		(202,116	)		(215,725	)
Total stockholders' equity		563,033			651,886
Total liabilities and stockholders' equity	$	1,107,162		$	1,265,946

GSI COMMERCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
			Three Months Ended
			April 3,			April 2,
			2010			2011
Revenues:
	Net revenues from product sales		$	159,275		$	178,940
	Service fee revenues			113,317			144,554
		Net revenues		272,592			323,494
Costs and expenses:
	Cost of revenues from product sales			117,474			129,100
	Marketing			10,807			14,691
	Account management and operations			77,694			91,284
	Product development			34,317			46,587
	General and administrative			24,397			46,519
	Depreciation and amortization			18,761			23,165
	Changes in fair value of deferred acquisition payments			2,074			-
		Total costs and expenses		285,524			351,346
Loss from operations				(12,932	)		(27,852	)
Other (income) expense:
	Interest expense			5,208			5,248
	Interest income			(234	)		(65	)
	Other (income) expense			474			(1,098	)
		Total other expense		5,448			4,085
Loss before income taxes and equity-method
	investment earnings			(18,380	)		(31,937	)
Benefit for income taxes				(10,255	)		(17,874	)
Equity-method investment earnings				-			(454	)
Net loss			$	(8,125	)	$	(13,609	)
Loss per share- basic and diluted			$	(0.13	)	$	(0.20	)
Weighted average shares outstanding - basic and diluted				60,446			68,156

GSI COMMERCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
			Three Months Ended
			April 3,			April 2,
			2010			2011
Cash Flows from Operating Activities:
	Net loss		$	(8,125	)	$	(13,609	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation		14,646			18,024
		Amortization		4,115			5,141
		Amortization of discount on convertible notes		2,809			1,716
		Changes in fair value of deferred acquisition payments		2,074			-
		Stock-based compensation		6,931			5,012
		Foreign currency transaction losses (gains)		475			(1,006	)
		Equity-method investment earnings		-			(454	)
		Deferred income taxes		(11,191	)		(18,598	)
	Changes in operating assets and liabilities:
		Accounts receivable, net		16,420			27,221
		Inventory, net		(2,621	)		4,739
		Prepaid expenses and other current assets		(561	)		(1,114	)
		Other assets, net		149			(1,706	)
		Accounts payable and accrued expenses		(110,530	)		(117,402	)
		Deferred revenue		238			(465	)
		Net cash used in operating activities		(85,171	)		(92,501	)
Cash Flows from Investing Activities:
	Payments for acquisitions of businesses, net of cash acquired			-			(169,875	)
	Cash paid for property and equipment, including internal use software			(15,868	)		(18,485	)
		Net cash used in investing activities		(15,868	)		(188,360	)
Cash Flows from Financing Activities:
	Proceeds from long term borrowing			-			115,000
	Borrowings on revolving credit loan			-			40,000
	Debt issuance costs paid			(856	)		(5,674	)
	Repayments of capital lease obligations			(1,473	)		(2,832	)
	Repayments of mortgage note			(50	)		(53	)
	Excess tax benefit in connection with exercise of stock options and awards			978			856
	Proceeds from exercise of common stock options			6,933			448
		Net cash provided by financing activities		5,532			147,745
Effect of exchange rate changes on cash and cash equivalents				(520	)		594
Net decrease in cash and cash equivalents				(96,027	)		(132,522	)
Cash and cash equivalents, beginning of period				228,430			242,146
Cash and cash equivalents, end of period			$	132,403		$	109,624

GSI COMMERCE, INC. AND SUBSIDIARIES
NON-GAAP INCOME FROM OPERATIONS AND RECONCILIATION TO GAAP RESULTS
(In thousands)
(Unaudited)
		Three Months Ended						Twelve Months Ended
		April 3,			April 2,			April 3,			April 2,
		2010			2011			2010			2011
Reconciliation of GAAP (loss) income from operations to
non-GAAP income from operations:
	GAAP (loss) income from operations	$	(12,932	)	$	(27,852	)	$	11,868		$	(32,238	)
	Acquisition related integration, transaction, due diligence expenses,
	inventory valuation adjustments, and the cash portion of deferred
	acquisition payments recorded as compensation expense		2,547			14,441			8,095			24,930
	Stock-based compensation		6,931			5,012			24,739			25,924
	Depreciation and amortization (1)		18,761			23,165			66,755			88,167
	Changes in fair value of deferred acquisition payments		2,074			-			3,025			(63,037	)
	Impairment of goodwill and intangible assets		-			-			-			88,318
	Non-GAAP income from operations	$	17,381		$	14,766		$	114,482		$	132,064
	GAAP income (loss) from operations as a percentage
	of GAAP net revenues		(4.7	%)		(8.6	%)		1.1	%		(2.3	%)
	Non-GAAP income from operations as a percentage
	of GAAP net revenues		6.4	%		4.6	%		10.6	%		9.4	%

⁽¹⁾ Includes amortization expense of acquisition related intangibles of $5,123 and $21,116 for the three- and twelve-months ended April 2, 2011 and $4,105 and $12,379 for the three- and twelve-months ended April 3, 2010.

		Three Months Ended April 2, 2011									Twelve Months Ended April 2, 2011
		Core(2)			Emerging(2)			Consolidated			Core(2)		Emerging(2)			Consolidated
Reconciliation of GAAP income (loss) from operations to
non-GAAP income (loss) from operations:
	Income (loss) from operations	$	(20,249	)	$	(7,603	)	$	(27,852	)	$	12,676	$	(44,914	)	$	(32,238	)
	Acquisition related integration, transaction, due diligence expenses,
	inventory valuation adjustments, and the cash portion of deferred
	acquisition payments recorded as compensation expense		14,354			87			14,441			23,226		1,704			24,930
	Stock-based compensation		4,888			124			5,012			25,666		258			25,924
	Depreciation and amortization		20,328			2,837			23,165			76,308		11,859			88,167
	Changes in fair value of deferred acquisition payments		-			-			-			-		(63,037	)		(63,037	)
	Impairment of goodwill and intangible assets		-			-			-			6,769		81,549			88,318
	Non-GAAP income (loss) from operations	$	19,321		$	(4,555	)	$	14,766		$	144,645	$	(12,581	)	$	132,064
		Three Months Ended April 3, 2010									Twelve Months Ended April 3, 2010
		Core(2)			Emerging(2)			Consolidated			Core(2)		Emerging(2)			Consolidated
Reconciliation of GAAP income (loss) from operations to
non-GAAP income (loss) from operations:
	Income (loss) from operations	$	(5,452	)	$	(7,480	)	$	(12,932	)	$	22,296	$	(10,428	)	$	11,868
	Acquisition related integration, transaction, due diligence expenses,
	inventory valuation adjustments, and the cash portion of deferred
	acquisition payments recorded as compensation expense		983			1,564			2,547			3,973		4,122			8,095
	Stock-based compensation		6,931			-			6,931			24,739		-			24,739
	Depreciation and amortization		16,077			2,684			18,761			63,255		3,500			66,755
	Changes in fair value of deferred acquisition payments		-			2,074			2,074			-		3,025			3,025
	Impairment of goodwill and intangible assets		-			-			-			-		-			-
	Non-GAAP income (loss) from operations	$	18,539		$	(1,158	)	$	17,381		$	114,263	$	219		$	114,482

⁽²⁾ Core results include the Global e-Commerce Services segment and the Global Marketing Services segment. Emerging results include the Consumer Engagement Segment.

GSI COMMERCE, INC. AND SUBSIDIARIES
FREE CASH FLOW AND RECONCILIATION TO GAAP RESULTS
(In thousands)
(Unaudited)
		Twelve Months Ended
		April 3,			April 2,
		2010			2011
Reconciliation of GAAP operating cash flow to free cash flow:
	GAAP cash flow from operating activities	$	127,663		$	132,799
	Cash paid for property and equipment, including internal use software		(51,464	)		(73,530	)
	Free cash flow	$	76,199		$	59,269

GSI COMMERCE, INC. AND SUBSIDIARIES
RESULTS BY SEGMENT
(In thousands)
(Unaudited)
	Three Months Ended April 3, 2010
	Global		Global
	E-Commerce		Marketing		Consumer			Intersegment
	Services		Services		Engagement			Eliminations			Consolidated
Net revenues	$	201,372	$	38,371	$	44,454		$	(11,605	)	$	272,592
Segment costs and expenses (1)		192,164		29,040		45,612			(11,605	)		255,211
Segment profit (loss)	$	9,208	$	9,331	$	(1,158	)	$	-		$	17,381
	Three Months Ended April 2, 2011
	Global		Global
	E-Commerce		Marketing		Consumer			Intersegment
	Services		Services		Engagement			Eliminations			Consolidated
Net revenues	$	231,768	$	50,322	$	57,587		$	(16,183	)	$	323,494
Segment costs and expenses (1)		219,404		43,365		62,142			(16,183	)		308,728
Segment profit (loss)	$	12,364	$	6,957	$	(4,555	)	$	-		$	14,766

(1) Segment costs and expenses are GAAP costs and expenses excluding stock-based compensation expenses, depreciation and amortization expenses, and the following expenses related to acquisitions: transaction expenses, due diligence expenses, integration expenses, non-cash inventory valuation adjustments, the cash portion of any deferred acquisition payments recorded as compensation expense, changes in fair value of deferred acquisitions payments, and goodwill and intangible asset impairment charges.

CONTACT:
GSI Commerce, Inc.
Steve Somers, CFA
Sr. Director, Corporate Development,
Investor Relations & Treasury
610-491-7068
ir@gsicommerce.com