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: February 20, 2007

(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 its 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: February 20, 2007

Exhibit Index

Exhibit No.	Description
99.1	Presentation Materials

EX-99.1

©

Copyright 2007 –

GSI Commerce

GSI Commerce

First Quarter 2007

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 or may mention the non-GAAP measures merchandise sales, adjusted EBITDA, non-GAAP

net income, free cash flow and certain ratios that use those measures.

Merchandise sales –

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

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’s platform, whether or not GSI records

the revenue from such sales.  GSI 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.

Adjusted

EBITDA

–

GSI

defines

adjusted

EBITDA

as

income

from

operations

excluding

stock-based

compensation

and

depreciation and amortization expenses.  Although we previously defined adjusted EBITDA by reference to net

income, there is no material difference in the resulting adjusted EBITDA calculation.  We consider adjusted EBITDA to

be a useful metric for management and investors because it excludes certain non-cash items.  We believe that given

the recent adoption of SFAS 123R, it is difficult for investors to evaluate our income from operations relative to prior

periods because our income from operations prior to fiscal 2006 calculated our stock-based compensation expense in

a manner differently than required under SFAS 123R.

Non-GAAP

Net

Income

–

GSI

defines

non-GAAP

net

income

as

net

income

excluding

stock-based

compensation

expense, amortization of acquisition-related intangibles, cumulative effect of change in accounting principle related

to the adoption of SFAS 123R and income tax benefits related to the release of the company’s valuation allowances.

Free Cash Flow –

GSI defines free cash flow as net cash provided by operating activities minus capital expenditures,

including capitalized software development.  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.

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

2007 U.S. Online General

2007 U.S. Online General

Merchandise Market *

Merchandise Market *

$124.5 billion

$124.5 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 &

Fragrances

Fragrances

Toys & Video Games

Toys & Video Games

Appliances & Tools

Appliances & Tools

Home

Home

Furnishings

Furnishings

Sporting Goods & Apparel

Sporting Goods & Apparel

$16.4

$16.4

$7.0

$7.0

$1.9

$1.9

$11.9

$11.9

$12.5

$12.5

$1.0

$1.0

$4.8

$4.8

$9.9

$9.9

$1.6

$1.6

$7.0

$7.0

$6.8

$6.8

2007 Estimated

Target Categories

Worth $80.8 billion

2007 Estimated

Target Categories

Worth $80.8 billion

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

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

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

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

/

express

shop

&

mini

cart

)

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, WebSideStory, Coremetrics

Order Processing /Warehouse Mgmt.

/Merchandising Systems

SAP, Yantra, Manhattan Assoc.

Fulfillment and Logistics

DHL/Exel, UPS, Accretive Commerce

Design

aQuantive/Razorfish, AKQA,

Blast Radius, Digitas

E-mail Management

Experian/CheetahMail,

DoubleClick/Performics,

Epsilon Interactive

Online Marketing

aQuantive, Digitas,

Grey Interactive, LinkShare

Strategic Consulting

McKinsey & Co., Boston

Consulting Group, Accenture

System Integrator

Accenture, IBM, BearingPoint,

EDS, Sapient

Call Center

West, Convergys

12

Growing Faster than the Industry

GSI Commerce Merchandise Sales **

E-Commerce 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

2002

-

2006

at

www.gsicommerce.com/news.

2005

20%

40%

60%

80%

100%

2002

81.3%

31.0%

2.3%

2003

58.2%

24.7%

4.2%

2004

68.0%

24.3%

7.1%

44.0%

24.6%

7.7%

2006

74.0%

23.5%

5.8%

13

Category & Geographic Expansion Partner Growth

10

10

20

20

1999

4

4

1

1

2000

3

3

7

7

1

1

30

30

2001

6

6

13

13

1

1

2002

10

10

23

23

4

4

2003

8

8

31

31

6

6

2004

8

8

39

39

7

7

2005

10

10

49

49

9

9

2006

60

60

6

6

5

5

11

11

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.

Total domestic partners

Current partners that launched or will launch

with GSI Commerce during that year

40

40

50

50

60

60

International partners

Number of Categories

14

Net Revenues –

Trailing Four Quarters

Net Revenue

$ in millions

4Q

99

1Q

00

2Q

00

3Q

00

4Q

00

1Q

01

2Q

01

3Q

01

4Q

01

1Q

02

2Q

02

3Q

02

4Q

02

1Q

03

2Q

03

3Q

03

4Q

03

1Q

04

2Q

04

3Q

04

4Q

04

1Q

05

2Q

05

3Q

05

4Q

05

1Q

06

2Q

06

$100

$100

$600

$200

$300

$400

$500

3Q

06

4Q

06

$700

15

Business Models Provide Balanced Gross Profit

Contribution

Owned

Owned

Inventory

Inventory

Non-Owned

Inventory

100%

100%

2006

2006

Merchandise Sales

Merchandise Sales

0%

0%

$1,187.8

$1,187.8

61%

$726.6

61%

$726.6

2006

2006

Gross Profit

Gross Profit

$278.3

$278.3

53%

$148.4

53%

$148.4

47%

$129.9

47%

$129.9

2006

2006

Net Revenue

Net Revenue

$609.6

$609.6

76%

$461.2

76%

$461.2

$ in millions

$ in millions

24%

$148.4

24%

$148.4

39%

$461.2

39%

$461.2

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

2001 -

2006  at www.gsicommerce.com/news/news.jsp.

16

2006 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 development

Business development

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

2001

-

2006

at

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

Expense

lines

and

adjusted

EBITDA

exclude

stock-based

compensation.

Gross

Gross

Profit

Profit

Adjusted

Adjusted

EBITDA

EBITDA

$38.5 M

$38.5 M

Product

Product

Development

Development

$44.4 M

$44.4 M

General

General

& Admin.

& Admin.

$33.1 M

$33.1 M

$278.3 M

$278.3 M

Sales &

Sales &

Marketing

Marketing

$162.3 M

$162.3 M

17

Multiple Drivers of Margin Expansion

Gross Margin

Gross Margin

Sales & Marketing

Sales & Marketing

Product Development

Product Development

General & Admin.

General & Admin.

Gross Profit

Gross Profit

35.2%

35.2%

45.7%

45.7%

Sales & Marketing

Sales & Marketing

31.6%

31.6%

26.6%

26.6%

Product Develop.

Product Develop.

8.4%

8.4%

7.3%

7.3%

G&A

G&A

9.9%

9.9%

5.4%

5.4%

2001

2006

As a % of

As a % of

net revenues

net revenues

+2,110 basis points

+2,110 basis points

1,050 bp

1,050 bp

500 bp

500 bp

110 bp

110 bp

450 bp

450 bp

18

Cash *

Cash *

$156.7

$156.7

$184.5

$184.5

Inventory

Inventory

$34.6

$34.6

$46.8

$46.8

Net Fixed Assets

Net Fixed Assets

$87.9

$87.9

$106.2

$106.2

Total Assets

Total Assets

$332.6

$332.6

$463.6

$463.6

Debt

Debt

$71.2

$71.2

$70.9

$70.9

A/P & Accrued

A/P & Accrued

$101.7

$101.7

$149.3

$149.3

Total Liabilities

Total Liabilities

$179.5

$179.5

$235.9

$235.9

Equity

Equity

$153.2

$153.2

$227.7

$227.7

* Cash and cash equivalents and marketable securities.

Strong Balance Sheet

($ millions)

($ millions)

Dec. 31, 2005

Dec. 30, 2006

19

Appendix A

December 31,

December 30,

December 31,

December 30,

2005

2006

2005

2006

Reconciliation of GAAP Income from operations to Adjusted EBITDA:

GAAP Income from operations

12,287

$              

23,462

$              

2,878

$                

9,647

$                

Stock-based compensation

1,231

1,692

3,805

7,578

Depreciation and amortization

4,203

6,385

14,635

21,297

Adjusted EBITDA

17,721

$              

31,539

$              

21,318

$              

38,522

$              

(1)

Adjusted EBITDA no longer includes other income (expense) as a

reconciling item between Adjusted EBITDA and GAAP results.

Twelve Months Ended

Three Months Ended

GSI COMMERCE, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

(1)

AND RECONCILIATION TO GAAP RESULTS

(In thousands)

(Unaudited)

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

385,950

$           

801,849

1,187,799

$        

314,696

$           

146,487

461,183

148,370

609,553

$           

December 30,

2006

Fiscal Year 2006

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

$           

385,950

$           

801,849

1,187,799

(71,254)

(655,362)

(726,616)

148,370

609,553

$           

December 30,

2006

Fiscal Year 2006