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: November 3, 2006

(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) 265-3229

(Registrant’s telephone number, including area code)

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 7.01. Regulation FD Disclosure.

The Registrant will be presenting to investors third quarter fiscal 2006 results. A copy of the Registrant’s presentation materials, appearing as Exhibit 99.1, is furnished and not filed pursuant to Regulation FD.

Item 9.01 Financial Statements and Exhibits.

99.1 Presentation Materials

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 G. Rubin
Michael G. Rubin
Chairman, President and Chief Executive Officer

Dated: November 3, 2006

Exhibit Index

Exhibit No.	Description
99.1	Presentation Materials

EX-99.1

©

Copyright 2006 –

GSI Commerce proprietary & confidential

GSI Commerce

Fourth Quarter 2006

Exhibit 99.1

2

Safe Harbor Statement

All statements made in this presentation, other than statements of historical fact, are forward-

looking statements. The words “anticipate,”

“believe,”

“estimate,”

“expect,”

“intend,”

“may,”

“plan,”

“will,”

“would,”

“should,”

“guidance,”

“potential,”

“continue,”

“project,”

“forecast,”

“confident,”

“prospects,”

“schedule”

and similar expressions typically are used to identify forward-

looking statements.  Forward-looking statements are based on the then-current expectations,

beliefs,

assumptions,

estimates

and

forecasts

about

the

business

of

GSI

Commerce.

These

statements are not guarantees of future performance and involve risks, uncertainties and

assumptions which are difficult to predict.  Therefore, actual outcomes and results may differ

materially from what is expressed or implied by these forward-looking statements.  Factors which

may affect GSI Commerce’s business, financial condition and operating results include the effects

of changes in the economy, consumer spending, the financial markets and the industries in which

GSI Commerce and its partners operate, changes affecting the Internet and e-commerce, the ability

of GSI Commerce to develop and maintain relationships with strategic partners and suppliers and

the

timing

of

its

establishment,

extension

or

termination

of

its

relationships

with

strategic

partners,

the

ability

of

GSI

Commerce

to

timely

and

successfully

develop,

maintain

and

protect

its

technology, confidential and proprietary information, and product and service offerings, the ability

of GSI Commerce to execute operationally and attract and retain qualified personnel, the ability of

GSI

Commerce

to

successfully

integrate

its

acquisitions

of

other

businesses,

if

any,

the

performance of any acquired businesses and the impact of SFAS 123(R).  More information about

potential

factors

that

could

affect

GSI

Commerce

can

be

found

in

its

most

recent

Form

10-K,

Form

10-Q and other reports and statements filed by GSI Commerce with the SEC. GSI Commerce

expressly disclaims any intent or obligation to update these forward-looking statements.

3

Non-GAAP Financial Measures

This presentation contains the non-GAAP measures merchandise sales, adjusted EBITDA and

certain ratios that use those measures.  Merchandise sales represent the retail value of all sales

transactions,

inclusive

of

freight

charges

and

net

of

allowances

for

returns

and

discounts,

which

flow through the GSI Commerce platform, whether or not the company is the seller of the

merchandise or records the full amount of such sales on its financial statements.  GSI Commerce

uses merchandise sales as a metric for operating its business.  Variable costs such as fulfillment

and customer service labor expense, order processing costs such as credit card and bank

processing fees and organizational costs such as business management are related to the amount

of sales made through GSI Commerce’s platform, whether or not GSI Commerce records the

revenue from such sales.  GSI Commerce believes that investors will have a more thorough

understanding of its historical expenses and expense trends if they have visibility to GAAP net

revenue as well as the non-GAAP financial measure merchandise sales and the percentages that

such expenses bear to net revenues and merchandise sales.

GSI Commerce also uses adjusted EBITDA, which represents earnings (or losses) before interest

income/expense, loss on investment, income taxes, depreciation and amortization, cumulative

effect

of

change

in

accounting

principle

related

to

the

adoption

of

SFAS

123(R)

and

stock-based

compensation.  GSI Commerce uses adjusted EBITDA as a means to evaluate its performance

period to period without taking into account certain expenses, particularly stock-based

compensation expense, which historically has been materially impacted by fluctuations in the

price of GSI Commerce’s common stock both on a quarterly and annual basis, and is now

materially

impacted

by

the

adoption

of

SFAS

123(R),

and

does

not

consistently

reflect

GSI

Commerce’s results from its core business activities.

These financial measures should be considered in addition to, and not as a substitute for, or

superior

to,

other

measures

of

financial

performance

prepared

in

accordance

with

GAAP.

The

non-GAAP financial measures included in this presentation have been reconciled to the nearest

GAAP measures as required under Securities and Exchange Commission rules and can be found in

the appendices of this presentation.

4

Leading Platform for Outsourced e-Commerce

Approximately 60 major retailers &

brands, 11 merchandise categories

*

and an international offering

End-to-end e-commerce

platform

Technology

Logistics and customer care

Marketing services

Delivers customized solutions

to partners through platform

Marketing Services

Marketing Services

Target retail categories include apparel, accessories & footwear, appliances & tools, baby products, consumer electronics, cosmetics &

fragrances, home furnishings, jewelry, music & videos, personal care, sporting goods & apparel, toys & video games as reported in the

“US e-Commerce: Five-Year Forecast and Data Overview”

published by Forrester Research, Inc., Oct. 2006.

5

Large Addressable Domestic Market

2006 U.S. Online General

2006 U.S. Online General

Merchandise Market *

Merchandise Market *

$105 billion

$105 billion

*

GSI

Commerce

excludes

automobiles

and

parts,

food,

beverage,

grocery,

travel,

and

event

and

movie

tickets,

when

discussing

the

U.S.

online general merchandise market.  Source: “US e-Commerce: Five-Year Forecast and Data Overview,”

Forrester Research, Inc., Oct. 2006.

$ in billions

$ in billions

Baby Products

Baby Products

Apparel, Accessories & Footwear

Apparel, Accessories & Footwear

Consumer

Consumer

Electronics

Electronics

Music &

Music &

Video

Video

Personal

Personal

Care

Care

Jewelry

Jewelry

Cosmetics &

Cosmetics &

Frangrances

Frangrances

Toys & Video Games

Toys & Video Games

$13.8

$13.8

$5.9

$5.9

$1.6

$1.6

2006 Estimated

Target Categories

Worth $67.2 billion

2006 Estimated

Target Categories

Worth $67.2 billion

$9.8

$9.8

$10.2

$10.2

$0.8

$0.8

$4

$4

$8.2

$8.2

$1.3

$1.3

$5.8

$5.8

$5.8

$5.8

Appliances & Tools

Appliances & Tools

Home

Home

Furnishings

Furnishings

Sporting Goods & Apparel

Sporting Goods & Apparel

6

The U.S. Online General Merchandise Market *

The U.S. Online General Merchandise Market *

The U.S. Online General Merchandise Market *

$ in billions

$ in billions

$ in billions

Strong Growth Projected for e-Commerce

*

GSI

Commerce

excludes

automobiles

and

parts,

food,

beverage,

grocery,

travel,

and

event

and

movie

tickets,

when

discussing

the

U.S.

online general merchandise market.  Source: “US e-Commerce: Five-Year Forecast and Data Overview,”Forrester

Research, Inc., Oct. 2006.

$50

$100

$150

$200

$250

2011E

$211.3

$211.3

2010E

$190.2

$190.2

2009E

$168

$168

2008E

$146

$146

2007E

$124.5

$124.5

2006E

$104.9

$104.9

7

Compelling Reason for Prospects to Outsource

Online

business

is too large to

ignore, but

not large

enough to

justify the

investment

required to

achieve

in-house

competency

for multi-

channel

e-commerce.

Total estimated sales of retail categories* targeted by GSI Commerce

Estimated online sales of retail categories targeted by GSI Commerce

expressed as a % of total sales of the same categories

$ billions

$ billions

2006E

2007E

2008E

2009E

2010E

2011E

$1,004.2

$1,004.2

Target retail categories include apparel, accessories & footwear, appliances & tools, baby products, consumer electronics, cosmetics &

fragrances, home furnishings, jewelry, music & videos, personal care, sporting goods & apparel, toys & video games.  For GSI Commerce

partners, online sales generally average 3% to 4% of total sales. Source: “US e-Commerce: Five-Year Forecast and Data Overview,”

Forrester Research, Inc., Oct. 2006.

800

850

900

950

1,000

1,050

8.0%

8.0%

9.3%

9.3%

10.7%

10.7%

12.0%

12.0%

13.2%

13.2%

14.4%

14.4%

$967.8

$967.8

$933.2

$933.2

$900.3

$900.3

$868.9

$868.9

$838.3

$838.3

8

GSI Offers a Strong Value Proposition

A Complete Solution

Increased efficiency –

one vendor

Improved integration –

built to work together

360°

understanding of business

GSI Commerce is Invisible to Consumers

Uncompromised

Not in conflict with partner’s business

Scale & Operating Leverage with Enterprise Focus

Platform expertise

Premium quality components

Focus on Growth and Innovation

International platform

Marketing services

New/enhanced functionality (e.g., parametric search / alternative payments /

multivariate testing)

Win/Win Economics

Financial predictability and aligned interests through

long-term contracts

9

Platform Enables E-Commerce for Top Brands

1. Apparel, Accessories &

1. Apparel, Accessories &

Footwear

Footwear

2. Consumer Electronics

2. Consumer Electronics

6. Cosmetics & Fragrances

6. Cosmetics & Fragrances

7. Personal Care

7. Personal Care

5. Sporting Goods &

5. Sporting Goods &

Apparel

Apparel

8. Music & Video

8. Music & Video

3. Home Furnishings

3. Home Furnishings

4. Appliances & Tools

4. Appliances & Tools

9. Jewelry

9. Jewelry

10. Toys & Video Games

10. Toys & Video Games

11. Baby Products

11. Baby Products

10

Growth Strategy

Compounding

effect of

long-term

agreements

Yr. 5

Yr. 4

Yr. 3

Yr. 2

Yr. 1

Add new partners

Grow transaction revenues from each partner

Develop incremental revenue streams

from each partner

Marketing & design services

International

Multichannel

capabilities

Site enhancements

11

Competition

Web Platform

IBM, ATG, Microsoft, Amazon Services

Customer/Web Analytics /CRM

Siebel, E.piphany, Omniture,

WebSideStory, Coremetrics

Order Processing /Warehouse Mgmt.

/Merchandising Systems

SAP, JDA, Yantra, Manhattan Assoc.

Drop Ship

Commerce Hub, Vcommerce

Call Center

West, Convergys, PRC

Fulfillment & Logistics

DHL/Exel, UPS

Content

RR Donnelly

E-mail Management

Experian/CheetahMail,

DoubleClick/Performics,

Epsilon Interactive

Online Marketing

aQuantive, Digitas, ValueClick,

Grey Interactive, LinkShare

Fraud Management

CyberSource, Retail Decisions

Strategic Consulting

McKinsey & Co., Boston

Consulting Group, Accenture

System Integrator

Accenture, IBM, BearingPoint,

Sapient

Design

aQuantive/Razorfish, AKQA,

Blast Radius, Digitas

12

Growing Faster than the Industry

2001

2002

2003

2004

44%

44%

GSI Commerce Merchandise Sales **

GSI Commerce Merchandise Sales **

E-Commerce Sales

Total Retail Sales

Total Retail Sales

Percent Growth Y/Y *

Percent Growth Y/Y *

* E-commerce Sales and Total Retail Sales Source: Census Bureau, U.S. Department of Commerce.  ** For a reconciliation of non-GAAP

financial

measures,

see

Appendices

A

thru

B-1

and/or

see

our

results

for

fiscal

years

2001

-

2005

at

www.gsicommerce.com/news/news.jsp.

Prior

to

2002,

GSI

Commerce

did

not

use

merchandise

sales,

so

total

net

total

revenue

is

used

in

this presentation for fiscal year 2001.

2005

24.6%

24.6%

7.7%

7.7%

68.0%

68.0%

24.3%

24.3%

7.1%

7.1%

58.2%

58.2%

24.7%

24.7%

4.2%

4.2%

81.4%

81.4%

31.0%

31.0%

2.3%

2.3%

3.0%

3.0%

26.1%

26.1%

135.2%

135.2%

50%

100%

150%

13

Category & Geographic Expansion Partner Growth

10

10

20

20

1999

4

4

1

1

2000

3

3

7

7

1

1

2001

6

6

13

13

2002

10

10

23

23

2003

8

8

31

31

2004

8

8

39

39

2005

10

10

49

49

Total partners

Total partners

Current partners that launched or will launch

Current partners that launched or will launch

with GSI Commerce during that year

with GSI Commerce during that year

2006

59

59

6

6

30

30

40

40

50

50

60

60

4

4

International partners

International partners

1

1

4

4

6

6

7

7

9

9

11

11

Number of Categories

Number of Categories

GSI Commerce participates in 11 retail categories as defined by Forrester Research: apparel, accessories & footwear, appliances & tools,

baby products, consumer electronics, cosmetics & fragrances, home furnishings, jewelry, music & videos, personal care, sporting goods &

apparel, toys & video games.

14

Net Revenues –

Trailing Four Quarters

Net Revenue

$ in millions

3Q

00

3Q

01

3Q

02

3Q

03

3Q

04

4Q

99

4Q

00

4Q

01

4Q

02

4Q

03

4Q

04

2Q

00

2Q

01

2Q

02

2Q

03

2Q

04

2Q

05

1Q

00

1Q

01

1Q

02

1Q

03

1Q

04

1Q

05

3Q

05

4Q

05

1Q

06

2Q

06

$100

$100

$600

$200

$300

$400

$500

3Q

06

15

Business Models Provide Balanced Gross Profit

Contribution

Owned

Owned

Inventory

Inventory

Non-Owned

Inventory

100%

100%

2005

2005

Merchandise Sales

Merchandise Sales

0%

0%

$682.0

$682.0

48%

$326.6

48%

$326.6

2005

2005

Gross Profit

Gross Profit

$176.6

$176.6

48%

$85

48%

$85

52%

$91.6

52%

$91.6

2005

2005

Net Revenue

Net Revenue

$440.4

$440.4

81%

$355.4

81%

$355.4

$ in millions

$ in millions

19%

$85

19%

$85

52%

$355.4

52%

$355.4

For a reconciliation of non-GAAP financial measures, see Appendices A thru B-1 and/or see our results for fiscal years

2001 -

2005  at www.gsicommerce.com/news/news.jsp

.

16

$28.4 M

$28.4 M

$20.7 M

$20.7 M

$23.2 M

$23.2 M

Adjusted

Adjusted

EBITDA

EBITDA

G&A and

G&A and

Other

Other

Gross

Gross

Profit

Profit

$176.6 M

$176.6 M

$104.3 M

$104.3 M

Sales &

Sales &

Marketing

Marketing

Product

Product

Develop.

Develop.

2005 Expense Breakdown

-

-

Fulfillment

Fulfillment

-

-

Credit card proc.

Credit card proc.

-

-

Customer care

Customer care

-

-

Revenue share

Revenue share

-

-

Business mgmt.

Business mgmt.

-

-

Marketing services

Marketing services

-

-

Technology

Technology

-

-

HR

HR

-

-

Legal

Legal

-

-

Finance

Finance

-

-

Business develop.

Business develop.

-

-

Minority interest

Minority interest

-

-

Other

Other

For a reconciliation of non-GAAP financial measures, see Appendices A thru B-1 and/or see our results for fiscal years

2001 -

2005  at www.gsicommerce.com/news/news.jsp

.

17

Multiple Drivers of Margin Expansion

Gross

Gross

Margin

Margin

Sales &

Sales &

Marketing

Marketing

Product

Product

Development

Development

G&A and

G&A and

Other

Other

Gross Profit

Gross Profit

35.2%

35.2%

40.1%

40.1%

Sales & Marketing

Sales & Marketing

31.6%

31.6%

23.7%

23.7%

Product Develop.

Product Develop.

8.4%

8.4%

6.5%

6.5%

G&A and Other

G&A and Other

9.9%

9.9%

5.2%

5.2%

2001

2005

As a % of

As a % of

net revenues

net revenues

790 bp

790 bp

190 bp

190 bp

470 bp

470 bp

490 bp

490 bp

+1,940 basis points

+1,940 basis points

18

Cash *

Cash *

$156.7

$156.7

$112.2

$112.2

$103.5

$103.5

Inventory

Inventory

$34.6

$34.6

$34.0

$34.0

$43.3

$43.3

Net Fixed Assets

Net Fixed Assets

$87.9

$87.9

$86.0

$86.0

$96.7

$96.7

Total Assets

Total Assets

$332.6

$332.6

$276.2    

$276.2    

$308.4

$308.4

Debt

Debt

$71.2

$71.2

$71.4

$71.4

$70.8

$70.8

A/P & Accrued

A/P & Accrued

$101.7

$101.7

$57.3

$57.3

$74.7

$74.7

Total Liabilities

Total Liabilities

$179.5

$179.5

$135.0

$135.0

$157.7

$157.7

Equity

Equity

$153.2

$153.2

$141.1

$141.1

$150.7

$150.7

* Cash and cash equivalents and marketable securities.

Strong Balance Sheet

($ millions)

($ millions)

Dec. 31, 2005

Oct. 1, 2005

Sept. 30, 2006

19

Appendix A

GSI COMMERCE, INC. AND SUBSIDIARIES

ADJUSTED EBITDA AND RECONCILIATION TO GAAP RESULTS

(In thousands)

(Unaudited)

January 1,

December 31,

2005

2005

Adjusted EBITDA:

Net gain (loss) excluding interest income and expense,

income taxes and charges for stock-based compensation

and depreciation and amortization

13,559

$              

20,736

$              

Reconciliation of Adjusted EBITDA to GAAP results:

Adjusted EBITDA

13,559

$              

20,736

$              

Interest expense

538

2,220

Interest income

(1,162)

(2,944)

Income taxes

-

321

Stock-based compensation

3,576

3,805

Depreciation and amortization

10,944

14,635

Net income (loss)

(337)

$                  

2,699

$                

Twelve Months Ended

20

January 3,

January 1,

2004

2005

Merchandise sales

(1)

-

(a non-GAAP financial measure):

Category:    

Sporting goods

128,489

$           

200,394

$           

Other

(2)

153,537

274,586

Total merchandise sales

(1)

-

(a non-GAAP

financial measure)

282,026

$           

474,980

$           

Net revenues -

(GAAP basis):

Net revenues from product sales:

Category:    

Sporting goods

128,360

$           

164,530

$           

Other

(2)

88,150

110,458

Total net revenues from product sales

216,510

274,988

Service fee revenues

25,409

60,116

Total net revenues -

(GAAP basis)

241,919

$           

335,104

$           

GSI COMMERCE, INC. AND SUBSIDIARIES

MERCHANDISE SALES

(1)

AND RECONCILIATION TO GAAP RESULTS

(Dollars in thousands)

(Unaudited)

Appendix B

December 28,

2002

96,669

$           

81,631

178,300

$           

96,669

$           

58,150

154,819

17,819

172,638

$           

Fiscal Year 2004

Fiscal Year 2003

Fiscal Year 2002

Year Ended

December 31,

2005

261,568

$           

420,429

681,997

$           

212,932

$           

142,442

355,374

85,018

440,392

$           

Fiscal Year 2005

21

Appendix B . . . continued

January 3,

January 1,

2004

2005

Year Ended

GSI COMMERCE, INC. AND SUBSIDIARIES

MERCHANDISE SALES

(1)

AND RECONCILIATION TO GAAP RESULTS

(Dollars in thousands)

(Unaudited)

Reconciliation of merchandise sales

(1)

to net revenues:

Merchandise sales

(1)

-

(a non-GAAP financial measure):

Category:    

Sporting goods

128,489

$           

200,394

$           

Other

(2)

153,537

274,586

Total merchandise sales

(1)

-

(a non-GAAP

financial measure)

282,026

474,980

Less:

Sales by partners

(3)

:

Category:    

Sporting goods

(129)

(35,864)

Other

(65,387)

(164,128)

Total sales by partners

(3)

(65,516)

(199,992)

Add:

Service fee revenues

25,409

60,116

Net

revenues

-

(GAAP

basis)

241,919

$           

335,104

$           

(1)  Merchandise

sales

represents

the

retail

value

of

all

sales

transactions,

inclusive

of

freight

charges

and

net

of

allowances

for

returns

and

discounts,

which

flow

through

the

GSI

Commerce

platform,

whether

or

not

GSI

Commerce

is

the

seller

of

the

merchandise

or

records

the

full

amount

of

such

sales

on its financial statements.

(2)   The "Other" categories of both merchandise sales and net revenues from product sales include $1,034 and $10 for the year

ended

January

3,

2004

and

January

1,

2005,

respectively,

related

to

Ashford.com.

(3)   Represents the retail value of all product sales through the GSI Commerce platform where the inventory is owned by the partner and the partner is the

seller

of

the

merchandise.

GSI

Commerce

records

service

fee

revenues

on

these

sales.

December 28,

2002

96,669

$           

81,631

178,300

--

(23,481)

(23,481)

17,819

172,638

$           

Fiscal Year 2004

Fiscal Year 2003

Fiscal Year 2002

December 31,

2005

Fiscal Year 2005

261,568

$           

420,429

681,997

(48,636)

(277,987)

(326,623)

85,018

440,392

$