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 9, 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) 491-7000

(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 third quarter fiscal 2007 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 9, 2007

Exhibit Index

Exhibit No.	Description
99.1	Presentation Materials

EX-99.1

investor presentation

Exhibit 99.1

2

safe harbor statement

All statements made in this presentation, other than statements of historical fact, are forward-looking statements. This presentation contains

forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “look forward to,”

“anticipate,”

“believe,”

“estimate,”

“expect,”

“intend,”

“may,”

“plan,”

“will,”

“would,”

“should,”

“could,”

“guidance,”

“potential,”

“opportunity,”

“continue,”

“project,”

“forecast,”

“confident,”

“prospects,”

“schedule,”

“designed,”

“future”

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

qualified

personnel,

the

ability

of

GSI

Commerce

to

successfully

integrate

its

acquisitions

of

other

businesses,

if

any,

and

the

performance

of

acquired businesses. 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.

GSI’s

consolidated

financial

statements

are

prepared

and

presented

in

accordance

with

GAAP.

To

supplement

our

consolidated

financial

statements,

in

this

release

and

on

the

conference call, we use the non-GAAP financial measures of merchandise sales, adjusted EBITDA, non-GAAP net income 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 presentation 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

as

well

as

to

the

operating

results

of

comparable

companies.

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.

Merchandise sales. We define merchandise sales as the retail value of all sales transactions, inclusive of freight charges and net of allowances for returns and discounts, which flow

through our platform, whether we record the full amount of such transaction as a product sale or a percentage of such transaction as a service fee on our financial statements.

Merchandise

sales

exclude

the

retail

value

of

all

sales

transactions

from

partners

acquired

through

the

acquisition

of

Accretive

Commerce

as

such

sales

do

not

flow

through

our

platform.

Merchandise sales do, however, include the value of freight services sold by Accretive Commerce to its partners. We consider merchandise sales to be a useful metric for management

and investors because a significant portion of our sales and marketing expenses, including 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 our platform, whether or not we record the revenue from

such sales. As a result, we use this metric as part of our revenue and expense forecasting process and for capacity planning purposes. We monitor this metric on a daily basis and

consider it to be a critical measure of the health of our business.

Adjusted EBITDA. We have defined adjusted EBITDA as income from operations excluding stock-based compensation and depreciation and amortization expenses. Beginning with this

release

we

are

also

excluding

acquisition-related

integration

expenses.

We

consider

adjusted

EBITDA

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 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

rapidly

and

operate

in

an

emerging

and

rapidly

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

acquisition-related

integration

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.

Non-GAAP net income. We have defined non-GAAP net income as net income plus stock-based compensation expense and amortization of acquisition-related intangibles minus

cumulative effect of change in accounting principle related to the adoption of SFAS 123R and plus/minus the provision/benefit for income taxes. Beginning with this release, we are also

adding back acquisition-related integrated expenses to net income. This figure is then taxed at our current annual effective tax rate to arrive at non-GAAP net income. We believe it is

useful to exclude stock-based compensation expense and acquisition-related integration expenses from non-GAAP net income for the same reasons we exclude them from adjusted

EBITDA.

We

believe

it

is

useful

to

exclude

amortization

of

acquisition-related

intangibles

because

in

our

opinion

the

benefits

of

these

assets

could

exceed

the

amortization

period

and

this supplemental view enables management and investors to measure the business without this potential effect. The gain we recorded from the cumulative effect of change in

accounting principle related to the adoption of SFAS 123R is an item we view as non-recurring in nature. We believe it is useful to view net income without the benefit of this non-

recurring item. We exclude the GAAP income tax provision in order to compute the non-GAAP pre-tax income. The non-GAAP pre-tax income is then taxed at our current annual

effective tax rate to arrive at non-GAAP net income.

Free

cash

flow.

We

define

free

cash

flow

as

net

cash

provided

by

operating

activities

minus

cash

paid

for

fixed

assets,

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.

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 information about capital expenditures on the face of the cash

flow statement and in supplemental disclosures in our Forms 10-K and 10-Q.

4

agenda

core domestic business

emerging growth opportunities

marketing services –

gsi interactive SM

gsi international SM

financials

agenda

core domestic business

emerging growth opportunities

financials

5

technology

fulfillment

customer care

premium e-commerce solutions

end-to-end or modular

integrated components

customized

~ 80 major retailers / brands

13 retail categories

~ 3,400 employees

$672 million in trailing 12-month net revenues ended sept. 29, 2007

core domestic business

agenda

core domestic business

emerging growth opportunities

financials

6

Acquisition of Accretive Commerce expands domestic market position

announced aug. 16 / closed sept. 11

integration targeted for completion during second half 2008

adds 14 marquee partners

more depth added in key apparel, home, health & beauty and specialty foods categories

opportunity to provide new partners with services and platform options

increases scale and infrastructure

adds ~ 1 million sq. ft. of fulfillment space

adds 600 call center seats

enhances long-term growth

$83.6 million in 12-months trailing net revenues ended June 2007

opportunity

for

additional

services

/

platform

options

including

marketing

and

international

agenda

core domestic business

emerging growth opportunities

financials

7

healthy and growing U.S. e-commerce market

agenda

core domestic business

emerging growth opportunities

financials

“The

channel

continues

to

move

full

steam

ahead

while

capturing

a

larger

share

of

total

retail sales ( ~ 7%). This strong growth is an indication that the online retail channel is

still years away from reaching its saturation level and still has several years of double-

digit growth ahead.”

The State of Retailing Online 2007 –

a Shop.org

study conducted by Forrester Research

* GSI Commerce excludes automobiles and parts, travel, and event

and movie tickets, when discussing the U.S. online general merchandise market.  GSI target retail

categories include apparel, accessories & footwear, appliances &

tools, baby products, consumer electronics, cosmetics & fragrances, home furnishings; jewelry;

music & videos (media entertainment); personal care; sporting goods & apparel; toys & video games; food, beverages and groceries

(gifting / specialty foods) and pet

supplies as reported in the “US e-Commerce: Five-Year Forecast and Data Overview”

published by Forrester Research Inc., Oct. 2006.

current categories total $88.7 billion in 2007 *

0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2006

2007

2008

2009

2010

2011

$73.9

$88.7

$105.3

$122.6

$140.3

$159

20.3%

18.7%

16.4%

14.4%

13.3%

8

~ 80 leading retailers and brands

*  Slide shows selected partners.

agenda

core domestic business

emerging growth opportunities

financials

9

adding 5 to 10 new partners and 1 to 2 categories per year

total domestic partners

current partners that launched or

are expected to launch with GSI during that year

number of categories

23

31

39

49

55

4

4

6

6

7

7

9

9

11

11

1999

2000

2001

2002

2003

2004

2005

2006

4

0

10

20

30

40

50

60

6

8

8

10

6

1

1

7

1

1

13

1

1

3

10

78

13

13

2007

70

9

acquisition partners

80

14

agenda

core domestic business

emerging growth opportunities

financials

10

2007 partner renewals

agenda

core domestic business

emerging growth opportunities

financials

partner since 2004;

multiyear extension

partner since 1999;

10-year extension

partner since 2005;

multiyear extension and

international expansion

partner since 2003;

multiyear extension

partner since 2003;

FY 2016 extension

partner since 2004;

FY 2014 extension

partner since 2006;

FY 2012 extension

11

value proposition

complete solution

enterprise scale & scope

focus on partner’s growth, brand and customer experience

agenda

core domestic business

emerging growth opportunities

financials

12

value proposition –

complete premium solution

end-to-end, integrated, multichannel,

e-commerce platform

shared infrastructure

and customized solutions

increased efficiency –

one vendor

proven integration –

built to work together

e-commerce expertise -

360°understanding of business

agenda

core domestic business

emerging growth opportunities

financials

technology

fulfillment

customer care

13

value proposition –

enterprise scale & scope

not partner core competency –

e-commerce ~ 2% to 4% of total sales

~ 3,400 employees

redundant, geographically

separate data centers

4 customer care facilities

~ 1,600 seats

6 primary fulfillment centers

2.7 million sq. ft.

agenda

core domestic business

emerging growth opportunities

financials

Edwardsville, Ill.

Louisville, Ky.

Shepherdsville, Ky.

Richwood, Ky.

Los Angeles, Calif.

Pacoima, Calif.

Martinsville,

Va.

Nashville, Ten.

Melbourne, Fla.

Eau Claire, Wis.

Brunswick, Ga.

King of Prussia, Pa.

14

value proposition –

focus on partner growth, brand and customer experience

agenda

core domestic business

emerging growth opportunities

financials

decision wizards

15

value proposition –

focus on partner growth, brand and customer experience

buy online, pick up in store

buy online, ship to store

buy online, return to store

digital versions of print media (e.g.

catalogs, circulars)

online/offline gift card redemption and

purchase

online/offline loyalty program integration

online/offline private label credit card

integrated registries

agenda

core domestic business

emerging growth opportunities

financials

multichannel

capabilities

16

value proposition –

focus on partner growth, brand and customer experience

agenda

core domestic business

emerging growth opportunities

financials

leveraging relationships

17

value proposition –

focus on partner growth, brand and customer experience

More than

100,000 NFL

jerseys

decorated

in-house by

GSI July –

Dec.

2006

More than

9,000

customized

NFL team

jerseys were

ordered on

QVC.com

in a

single day.

agenda

core domestic business

emerging growth opportunities

financials

customization / personalization

18

value proposition –

focus on partner growth, brand and customer experience

~ 41 partner web stores use one or more alternative payment methods

black friday

thru cyber monday, 2006 –

Bill Me Later, Google Checkout and

PayPal accounted for more than 18% of purchases made on GSI Commerce’s

partner sites using those services

1x login & account set up

track all order & shipping

info. in one account

virtual wallet

extensive network

quick, easy credit

“90 days same as cash”

agenda

core domestic business

emerging growth opportunities

financials

alternative payments

19

competition

outsource

insource

web platform

IBM, ATG, Microsoft

customer care

West, Convergys

fulfillment /logistics

DHL, UPS

design

aQuantive, Grey Interactive

online marketing

aQuantive, ValueClick

strategy/sys.  integrators

McKinsey, Accenture

order proc/merch

systems

SAP, Yantra

e-mail mgmt.

Experian, epsilon

retailer

e-commerce decision

GSI

web

platform

custom

solutions

marketing

services

fulfillment

/logistics

customer

care

one-stop, full-service

solution provider

agenda

core domestic business

emerging growth opportunities

financials

20

marketing services

agenda

core domestic business

emerging growth opportunities

financials

21

marketing services

full-service, interactive marketing services

creative –

user experience & site design

online marketing (search, affiliate, comparison shopping engines, display)

e-mail

content development & digital photography

catalog services

provides services to ~ 50 partners

155 staff and growing

complementary acquisitions possible

agenda

core domestic business

emerging growth opportunities

financials

22

marketing services –

online advertising market

estimated U.S. online advertising as

% of total U.S. advertising spend

estimated U.S. online

advertising revenues

2006

2007

2008

2009

2010

2011

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

0%

2%

4%

6%

8%

10%

12%

$19.3

$24.7

$29.5

$34.0

6.6%

8.1%

9.2%

11.4%

10.0%

10.8%

$38.2

$42.0

16.9% CAGR

Source: Piper Jaffray, U.S. Online Advertising Forecast.

$ in millions

agenda

core domestic business

emerging growth opportunities

financials

23

marketing services –

a multichannel requirement

almost $400 billion of store sales –

or 16% of total retail sales –

were directly influenced by the Web

(cross-channel sales) in 2006. This will grow at a 17% CAGR over the next five years resulting in

cross-channel sales by consumers of more than $1 trillion by 2012 *

51% of online consumers have researched and then purchased offline *

45% of online consumers buy additional products once inside an offline store *

main reason consumers purchased offline: wanted product immediately *

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2006

2007

2008

2009

2010

2011

2012

16%

20%

24%

28%

32%

35%

38%

$2,481

$2,552

$2,627

$2,705

$2,787

$2,873

$2,954

total cross-channel sales -

% *

total retail sales, excluding travel *

CAGR = 17%

* Source: Forrester Research Inc., “The Web’s Impact on In-Store Sales: U.S. Cross-Channel Sales Forecast, 2006 to 2012.”, May 7, 2007.

$ in millions

agenda

core domestic business

emerging growth opportunities

financials

24

marketing services –

enhancing the customer experience

agenda

core domestic business

emerging growth opportunities

financials

usability lab

25

marketing services –

brand integration

agenda

core domestic business

emerging growth opportunities

financials

26

international

agenda

core domestic business

emerging growth opportunities

financials

27

international

executive presence in Barcelona, Spain

senior executive relocated in August

leveraging 2006 acquisition of Aspherio and incrementally developing core platform

europe

followed by asia

size of the market, current Barcelona presence, and fewer language & cultural challenges

interest of domestic partners

ability to gain traction with new partners

buy / build assets to assemble end-to-end solution

an end-to-end solution is strategic differentiator

two international deals signed in 2007 for 2008 launches

iRobot

--

launching in three countries in 2008

Unnamed men’s apparel partner --

launching two stores each in six countries in 2008

agenda

core domestic business

emerging growth opportunities

financials

28

international –

european

e-commerce market

*

Includes the following European countries: United Kingdom, Germany, France, Italy, Spain, Netherlandds, Belgium, Luxembourg, Norway, Sweden,

Denmark, Finland, Austria, Switzerland, Ireland, Portugal and Greece.  Source: Forrester Research Inc., “Europe’s e-Commerce Forecast: 2006 to

2011,”

June 29, 2006.  Euros were converted to U.S. dollars for this presentation.  As of 5/10/07 that rate was 1 Euro = $1.354

projected growth of european

online sales

european

online population expected to grow from 189 million in 2006 to 242 million in 2011, or

from 58% to 74% of the adult population.

*

in 2003, 19% of europe’s

online population shopped online --

that number is expected to grow to

54% by 2011.

*

2006

2007

2008

2009

2010

2011

$ in billions

$309.9

$138.9

$177.2

$219.3

$264.0

$356.1

$0

$50

$100

$150

$200

$250

$300

$350

$400

23.7%

20.4%

17.4%

14.9%

27.5%

agenda

core domestic business

emerging growth opportunities

financials

29

financials

agenda

core domestic business

emerging growth opportunities

financials

30

growth strategy for the business

core enterprise market

add new partners (5 –

10 per year) –

long-term, exclusive deals

grow annuity transaction volume

increase incremental revenue –

technology & multichannel projects

renew / extend agreements

emerging growth opportunities

marketing services -

gsi interactive SM

international –

gsi international SM

agenda

core domestic business

emerging growth opportunities

financials

31

net revenues –

trailing four quarters

$0

$100

$200

$300

$400

$500

$600

$700

$5.5

FY99

$42.8

FY00

$102.6

FY01

$172.6

FY02

$241.9

FY03

$335.1

FY04

$440.4

FY05

$609.6

FY06

$ in millions

agenda

core domestic business

emerging growth opportunities

financials

32

changing revenue mix . . .

product sales % contribution to net revenue

service fees  % contribution to net revenue

% net revenue

0%

20%

40%

60%

80%

100%

1999

2000

2001

2002

2003

2004

2005

2006

100%

97.7%

95.8%

89.7%

89.5%

82.0%

80.7%

75.7%

2.3%

4.2%

10.3%

10.5%

18.0%

19.3%

24.3%

service fees compounded annual growth rate from 2002 –

2006 = 70%

product sales compounded annual growth rate from 2002 –

2006 = 31.4%

agenda

core domestic business

emerging growth opportunities

financials

33

. . . more fully impacts gross profit contribution

product sales  % contribution to gross profit

service fees  % contribution to gross profit

0%

20%

40%

60%

80%

100%

1999

2000

2001

2002

2003

2004

2005

2006

% gross profit

100%

92.4%

87.7%

69.5%

70.9%

54.5%

51.9%

46.7%

7.6%

12.3%

30.5%

29.1%

45.5%

48.1%

53.3%

agenda

core domestic business

emerging growth opportunities

financials

34

Delivering revenue growth & margin expansion

For a reconciliation of non-GAAP financial measures, see

Appendices A thru D and/or see our results for fiscal years

2001

-

2006

at

www.gsicommerce.com/news/news.jsp

.

net revenue

$ in millions

adjusted

EBITDA

-467.3%

$0

$100

$200

$300

$400

$500

$600

$700

1999

2000

2001

2002

2003

2004

2005

2006

$5.5

$42.8

$102.6

$172.6

$241.9

$335.1

$440.4

$609.6

0.1%

4.4%

4.9%

6.4%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

-95.4%

-16.2%

-11.3%

agenda

core domestic business

emerging growth opportunities

financials

35

annual free cash flow –

2006 positive milestone

$ in millions

-$25

-$20

-$15

-$10

-$5

$0

$5

$10

$15

$20

$25

$30

2002

2003

2004

2005

2006

-$19.4

-$7.5

-$13.6

-$5.3

$23.5

For

a

reconciliation

of

non-GAAP

financial

measures,

see

Appendices

A

thru

D

and/or

see

our

results

for

fiscal

years

2001

-

2006

at

www.gsicommerce.com/news/news.jsp

.

agenda

core domestic business

emerging growth opportunities

financials

36

strong balance sheet

cash *

$103.5

$184.5

$166.2

inventory

$43.3

$46.8

$52.8

net fixed assets

$96.7

$106.2

$148.3

total assets

$308.4

$463.6

$608.5

debt

$70.8

$70.9

$236.8

a/p & accrued expenses

$74.7

$149.3

$127.3

total liabilities

$157.7

$235.9

$383.7

stockholders’

equity

$153.2

$227.7

$224.8

* cash and cash equivalents and marketable securities.

($ millions)

sept. 30, 2006

dec. 30, 2006

sept. 29, 2007

agenda

core domestic business

emerging growth opportunities

financials

37

appendices

38

appendix a

January 1,

December 30,

December 29,

December 28,

January 3,

January 1,

January 3,

January 1,

2000

2000

2001

2002

2004

2005

2005

2006

(29,083)

$          

(53,557)

$          

(32,497)

$          

(34,437)

$          

(13,064)

$          

(401)

$                

2,878

$              

9,647

$              

2,655

4,983

10,282

401

1,935

3,576

3,805

7,578

728

8,074

6,662

10,509

11,386

10,944

14,635

21,297

(25,700)

$          

(40,500)

$          

(15,553)

$          

(23,527)

$          

257

$                 

14,119

$           

21,318

$           

38,522

$           

Twelve Months Ended

GSI COMMERCE, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

(1)

AND RECONCILIATION TO GAAP RESULTS

(In thousands)

(Unaudited)

FY1999

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

Reconciliation of GAAP Income from

operations to Adjusted EBITDA:

GAAP Income from operations

Stock-based compensation

Depreciation and amortization

Adjusted EBITDA

(1)

Adjusted EBITDA no longer includes other income (expense) as a reconciling item between Adjusted EBITDA and GAAP results.

39

appendix b

GSI COMMERCE, INC. AND SUBSIDIARIES

MERCHANDISE SALES

(1)

AND RECONCILIATION TO GAAP RESULTS

(Dollars in thousands)

(Unaudited)

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

$           

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

40

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 salesto net revenues:

(1)

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

41

appendix c

December 28,

January 3,

January 1,

December 31,

December 30,

2002

2004

2005

2005

2006

Reconciliation of GAAP operating cash flow to free cash flow

GAAP cash flow from operating activities

10,041

$            

475

$                  

21,094

$            

24,285

$            

66,077

$            

Cash paid for fixed assets, including capitalized

software development

(29,480)

(7,999)

(34,717)

(29,551)

(42,621)

Free Cash Flow

(19,439)

$           

(7,524)

$              

(13,623)

$           

(5,266)

$              

23,456

$            

Twelve Months Ended

GSI COMMERCE, INC. AND SUBSIDIARIES

FREE CASH FLOW AND RECONCILIATION TO GAAP OPERATING CASH FLOW

(In thousands)

(Unaudited)