-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SevK8J5yk6kjl7UBRrtRunXPfkvViNDFI/1hE6vmzqisSW5YoNOFp/gBfI7blEfP Xf4Ww+iIgyj2iupE54jrBw== 0001275287-05-002783.txt : 20050727 0001275287-05-002783.hdr.sgml : 20050727 20050727163052 ACCESSION NUMBER: 0001275287-05-002783 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050727 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050727 DATE AS OF CHANGE: 20050727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSI COMMERCE INC CENTRAL INDEX KEY: 0000828750 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 042958132 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16611 FILM NUMBER: 05977657 BUSINESS ADDRESS: STREET 1: 935 FIRST AVE CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6102653229 MAIL ADDRESS: STREET 1: 935 FIRST AVE CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL SPORTS INC DATE OF NAME CHANGE: 19971223 8-K 1 gc3193.txt ================================================================================ 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: JULY 27, 2005 (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 (Commission File No.) (IRS Employer jurisdiction of incorporation) 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) (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 July 27, 2005, GSI Commerce, Inc. (the "Registrant") issued a press release announcing its results for the second fiscal quarter ended July 2, 2005 and certain other information. A copy of this press release is furnished as part of this report and incorporated herein by reference. This press release (included as Exhibit 99.1) contains adjusted EBITDA, merchandise sales and certain ratios that use merchandise sales which may be considered non-GAAP financial measures. The Registrant 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 may fluctuate materially due to fluctuations in the price of the Registrant's common stock both on a quarterly and annual basis, and does not consistently reflect the Registrant's results from its core business activities. The Registrant also 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 business management costs such as department staffing levels in partner services are related to the amount of sales made through the Registrant's platform, whether or not the Registrant records the revenue from such sales. The Registrant 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. In the Registrant's conference call to be held on July 27, 2005 at 4:45 p.m. EDT to discuss the Registrant's fiscal 2005 second quarter results and expectations for future performance, the Registrant plans to use incremental adjusted EBITDA and certain ratios that use incremental adjusted EBITDA. Incremental adjusted EBITDA is the change in adjusted EBITDA period to period. The Registrant believes that investors will have a more detailed understanding of the Registrant's performance period to period without taking into account certain expenses which do not consistently reflect the Registrant's results from its core business activities. A reconciliation of incremental adjusted EBITDA and certain ratios that use incremental adjusted EBITDA is included in this Form 8-K. These non-GAAP 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 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. GSI COMMERCE, INC. AND SUBSIDIARIES INCREMENTAL NET REVENUE AND INCREMENTAL ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS (In thousands) (Unaudited)
2Q03 2Q04 2Q05 (3 months ended) (3 months ended) (3 months ended) ----------------- ----------------- ----------------- Net Revenue $ 50,348 $ 64,689 $ 91,646 Adjusted EBITDA (929) (535) 2,526 Period over period change in Net Revenue (Incremental Net Revenue) 14,341 26,957 Period over period change in Adjusted EBTIDA (Incremental Adjusted EBITDA) 394 3,061 Incremental Adjusted EBITDA/Incremental Net Revenue 2.7% 11.4% Adjusted EBITDA $ (929) $ (535) $ 2,526 Interest expense - 54 413 Interest income (290) (242) (475) Taxes - - - Stock-based compensation 404 153 1,748 Depreciation and amortization 2,734 2,646 3,617 ----------------- ----------------- ----------------- Net Income (loss) $ (3,777) $ (3,146) $ (2,777) ================= ================= ================= Incremental Net Income (loss) $ 631 $ 369 Incremental Net Loss/Incremental Net Revenue 4.4% 1.4% PRIOR 12 MONTHS LAST 12 MONTHS (July 03-June 04) July 04-June 05) ----------------- ----------------- Net Revenue $ 273,649 $ 387,379 Adjusted EBITDA 2,262 19,519 Period over period change in Net Revenue (Incremental Net Revenue) 113,730 Period over period change in Adjusted EBTIDA (Incremental Adjusted EBITDA) 17,257 Incremental Adjusted EBITDA/Incremental Net Revenue 15.2% Adjusted EBITDA $ 2,262 $ 19,519 Interest expense 54 1,130 Interest income (1,038) (1,448) Taxes - - Stock-based compensation 2,023 4,338 Depreciation and amortization 11,199 12,438 ----------------- ----------------- Net Income (loss) $ (9,976) $ 3,061 ================= ================= Incremental Net Income (loss) $ 13,037 Incremental Net Loss/Incremental Net Revenue 11.5%
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. 99.1 Press Release, dated July 27, 2005 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, Co-President and Chief Executive Officer Dated: July 27, 2005 Exhibit Index Exhibit No. Description - ----------- ----------------------------------------------------------------- 99.1 Press Release, dated July 27, 2005 EX-99.1 2 gc3193ex991.txt Exhibit 99.1 GSI COMMERCE REPORTS RECORD FISCAL 2005 SECOND QUARTER OPERATING RESULTS; COMPANY SIGNS MULTIYEAR AGREEMENTS WITH THREE NEW PARTNERS KING OF PRUSSIA, Pa., July 27 /PRNewswire-FirstCall/ -- GSI Commerce Inc. (Nasdaq: GSIC) today announced results for the second fiscal quarter ended July 2, 2005. "The second quarter was very exciting for GSI Commerce, highlighted by strong operating results, continued new partner momentum and the addition of international capabilities," said Michael G. Rubin, chairman and CEO of GSI Commerce. "Our solid top- and bottom-line results reflect the strength of our partner base and platform as well as robust underlying e-commerce trends. The addition of three new partners brings our total for the year to nine new partners and already has us at the high end of our expected range of five to 10 new partners for the year. This reflects what we believe is a growing interest in e-commerce outsourcing and GSI Commerce's leadership position in the market. Through our agreement to acquire control of Aspherio, we now are able to offer international capabilities to our partners, opening up what we believe could be a significant growth opportunity for GSI Commerce. Overall, GSI Commerce had a strong first half of fiscal 2005 and we believe we are well positioned to deliver solid results for the balance of the year." Net Revenues and Merchandise Sales -- Net revenues were $91.7 million for the second quarter of fiscal 2005, a 42 percent increase compared to $64.7 million in the same period in fiscal 2004. -- Merchandise sales were $136.8 million for the second quarter of fiscal 2005, a 53 percent increase compared to $89.6 million in the same period in fiscal 2004. A definition of merchandise sales appears later in this news release under "Non-GAAP Financial Measures." Components of Net Revenues and Merchandise Sales -- Net revenues from product sales from the sporting goods category were $41.9 million for the second quarter of fiscal 2005, a 25 percent increase compared to $33.6 million for the same period last year. -- Merchandise sales from the sporting goods category were $51.4 million for the second quarter of fiscal 2005, a 36 percent increase compared to $37.9 million in the same period last year. -- Net revenues from product sales from other categories were $33.3 million for the second quarter of fiscal 2005, a 70 percent increase compared to $19.5 million for the same period last year. -- Merchandise sales from other categories were $85.4 million for the second quarter of fiscal 2005, a 65 percent increase compared to $51.7 million in the same period last year. -- Service fee revenues were $16.5 million in the second quarter of fiscal 2005, a 43 percent increase compared to $11.6 million in the same period last year. Net Loss, EPS and Adjusted EBITDA -- Net loss was $2.8 million or $0.07 per share for the second quarter of fiscal 2005, compared to a net loss of $3.1 million or $0.08 per share in the same period last year. -- Stock-based compensation expense was $1.7 million in the second quarter of fiscal 2005, compared to $153,000 in the same period last year. The increase in stock-based compensation was primarily due to the impact that the increase in the price of the company's common stock during the second quarter had on historical stock awards subject to variable accounting and the issuance of restricted stock awards under its new long-term incentive compensation program. -- Adjusted EBITDA was $2.5 million for the second quarter of fiscal 2005, compared to an adjusted EBITDA loss of $535,000 in the same period last year. A definition of adjusted EBITDA appears later in this news release under "Non-GAAP Financial Measures." Gross Profit and Operating Expenses -- Gross profit was $34.6 million in the second quarter of fiscal 2005, an increase of 38 percent compared to $25.1 million in the same period last year. -- Gross margin was 37.8 percent in the second quarter of fiscal 2005, a decline of 100 basis points from 38.8 percent in the same period last year. The decline in gross margin was primarily due to product sales from other categories, which carry lower gross margins on a relative basis, growing more rapidly than product sales from sporting goods. -- Total operating expenses were $37.6 million for the second quarter of fiscal 2005, a 32 percent increase compared to $28.5 million for the same period last year. -- Total operating expenses, as a percentage of net revenues, decreased to 41.0 percent in the second quarter of fiscal 2005 compared to 44.0 percent in the second quarter of fiscal 2004. -- Total operating expenses of $37.6 million, as a percentage of merchandise sales of $136.8 million, were 27.5 percent in the second quarter of fiscal 2005. This compared to total operating expenses of $28.5 million in the same period last year, which as a percentage of merchandise sales of $89.6 million, was 31.8 percent. Balance Sheet -- The company's cash, cash equivalents, short-term investments and marketable securities at the end of the second fiscal quarter of 2005 were $117.5 million compared to $75.4 million at the end of fiscal year 2004, and $48.2 million at the end of second fiscal quarter of 2004. Key Events Since April 27, 2005 -- The company signed a multiyear agreement to provide a comprehensive e-commerce solution for General Nutrition Corporation (GNC), the largest global specialty retailer of nutritional supplements. The agreement calls for GSI Commerce to provide GNC with an e-commerce solution that includes core technology, fulfillment and customer care operations. GNC's new e-commerce business is expected to launch in the fourth quarter of this year. -- The company signed a multiyear agreement with Zale Corporation (NYSE: ZLC) to provide North America's largest specialty retailer of fine jewelry with multichannel e-commerce solutions for each of its brands - Zales Jewelers, Zales Outlet, Gordon's Jewelers, Bailey Banks & Biddle Fine Jewelers and Piercing Pagoda in the United States as well as Peoples Jewellers and Mappins Jewellers in Canada. The e-commerce solution includes the core technology platform, customer care operations and multichannel initiatives. -- In addition, the company signed multiyear agreements with three new partners. All three partners are expected to launch their new e-commerce operations during the third and fourth quarters of this year. Revenues from all three new partners will be recorded as service fees. GSI Commerce will provide its core technology platform and fulfillment services to all three new partners and customer care operations for two of the new partners. -- The company announced it had entered into a definitive agreement pursuant to which it would acquire control of privately held Aspherio, S.L., a Barcelona, Spain-based provider of outsourced e-commerce solutions (http://www.aspherio.com). Subject to the satisfaction of certain conditions, the acquisition is expected to close in late 2005 or early 2006. -- The company successfully raised approximately $80 million of net proceeds through the concurrent sale of 1.8 million common shares and $57.5 million aggregate principal amount of 3 percent convertible notes due 2025. The company will use the net proceeds for working capital and general corporate purposes, including possible acquisitions. Fiscal 2005 Third Quarter and Annual Financial Guidance The following forward-looking statements reflect GSI Commerce's expectations as of July 27, 2005. GSI Commerce provides guidance for its business based only on signed partner agreements. Given the potential changes in general economic conditions and consumer spending, the emerging nature of e-commerce and various other risk factors discussed below and in our public reports, actual results may differ materially. At this time, GSI Commerce has decided not to early adopt FASB 123(R) and, accordingly, the company's guidance does not include any impact from this accounting provision. In calculating stock-based compensation expense, which is included in the company's financial guidance, it is assumed the company's stock price will remain unchanged from period to period for future quarters. The company provides the following guidance for the fiscal 2005 third quarter: -- Net revenues are expected to be in the range of $79.0 million to $84.0 million. -- Merchandise sales are expected to be in the range of $122.0 million to $132.0 million. -- Net loss is expected to be in the range of $2.5 million to $3.0 million. -- Adjusted EBITDA is expected to be in the range of $1.5 million to $2.0 million. The company provides the following updated guidance for fiscal year 2005: -- Net revenues are expected to be in the range of $430.0 million to $445.0 million. -- Merchandise sales are expected to be in the range of $675.0 million to $695.0 million. -- Net income is expected to be in the range of $9.5 million to $10.5 million. -- Adjusted EBITDA is expected to be in the range of $28.0 million to $29.0 million. "Our updated guidance reflects higher net revenue and merchandise sales expectations compared to our previous guidance primarily due to the addition of five new partners. Our third quarter guidance reflects the normal seasonality of our business. In fiscal 2004, launch activity in the second fiscal quarter drove higher sequential net revenue in the third fiscal quarter, whereas, in fiscal 2005, launch activity is expected to be concentrated late in the fiscal third quarter and early in the fiscal fourth quarter," commented Jordan Copland, executive vice president and chief financial officer. "We have raised the low end of our adjusted EBITDA guidance, but kept the top end the same due to higher expected volume, offset to a large extent by higher launch costs attributable to the addition of new partners more quickly than expected during the year. While we are incurring the launch expenses for these new partners in 2005, we expect the principal benefit to be realized in 2006 and beyond. Our expected net income range has been adjusted primarily to take into consideration higher anticipated stock- based compensation expense. The expected increase in stock-based compensation expense for 2005 is due to the increase in our stock price in the second quarter of fiscal 2005 and the issuance or expected issuance of restricted stock awards as a portion of compensation for certain employees. Historically, GSI Commerce issued stock options to employees, for which there was no required earnings charge. In anticipation of adopting FASB 123(R) (Share-Based Payments), the company instituted a revised long-term incentive compensation program that emphasizes restricted stock awards and which required the expensing of certain grants beginning in the second quarter of fiscal 2005." Non-GAAP Financial Measures This news release contains the non-GAAP measures merchandise sales, certain ratios that use merchandise sales and adjusted EBITDA. 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 business management costs such as department staffing levels in partner services 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 both 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, taxes, depreciation, amortization, 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 may fluctuate materially due to fluctuations in the price of GSI Commerce's common stock both on a quarterly and annual basis, 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 press release have been reconciled to the nearest GAAP measures as required under Securities and Exchange Commission rules and are contained later in this release. Second Quarter 2005 Conference Call GSI Commerce has scheduled a conference call on July 27, at 4:45 p.m. EDT to discuss the company's fiscal 2005 second quarter results and expectations for future performance. For access to the conference call, please call the toll-free conference number, 1-800-591-6923, by 4:30 p.m. EDT on July 27. The conference passcode is "38701957." Alternatively, to listen to the call live on the Web, go to the GSI Commerce Web site, http://www.gsicommerce.com, and click on the link provided on the home page. Please do this at least 15 minutes prior to the call (4:30 p.m. EDT) to register, download and install any necessary audio software. The conference call also will be broadcast live on the Web through CCBN StreetEvents (http://www.streetevents.com). For those who cannot listen to the live Webcast, a telephone replay of the conference call will be available one hour after the completion of the call and remain available through Aug 29. Access to a recording of the conference call can be made by calling toll-free, 1-888-286-8010. The telephone replay passcode is "54171910." In addition, access to a replay of the conference call's Webcast can be found on the home page of the GSI Commerce Web site. Access to the Webcast replay also will remain available through Aug. 29. About GSI Commerce GSI Commerce is a leading provider of e-commerce solutions that enable retailers, branded manufacturers, entertainment companies and professional sports organizations to operate e-commerce businesses. We provide solutions for our partners through our integrated e-commerce platform, which is comprised of three components: core technology, supporting infrastructure and partner services. We either operate, or will operate pursuant to signed agreements, all or portions of the e-commerce businesses for approximately 50 partners. Forward-Looking Statements All statements made in this release and to be made in GSI Commerce's fiscal 2005 second quarter conference call, including those in the tape recording, live audio and live Webcast of the call, other than statements of historical fact, are or will be forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would," "should," "guidance," "potential," "continue," "project," "forecast," "confident," "prospects," 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 and the industries and markets in which GSI Commerce operates. 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, the impact of FASB 123(R), 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 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, except as otherwise specifically stated by GSI Commerce. GSI COMMERCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended -------------------------------- July 3, July 2, 2004 2005 -------------- -------------- (as restated) Cash Flows from Operating Activities: Net loss $ (7,174) $ (4,453) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 5,245 6,739 Stock-based compensation 780 1,518 Gain on exchange of note receivable (6) - Changes in operating assets and liabilities: Accounts receivable, net (2,385) 3,765 Inventory 879 4,665 Prepaid expenses and other current assets 346 (759) Notes receivable 32 - Other assets, net (182) (2,464) Accounts payable and accrued expenses and other (6,656) (38,338) Deferred revenue (3,229) (1,923) Net cash used in operating activities (12,350) (31,250) Cash Flows from Investing Activities: Acquisition of property and equipment, net (23,658) (11,702) Payments received on notes receivable 826 - Deferred cost in other - (572) Net cash paid for equity investment - (136) Purchases of marketable securities (1) (17,308) (81,728) Sales of marketable securities (1) 15,105 43,000 Net cash used in investing activities (25,035) (51,138) Cash Flows from Financing Activities: Proceeds from convertible notes - 57,500 Repayments of loan - (339) Repayments of capital lease obligations - (268) Proceeds from mortgage note 13,000 - Repayments of mortgage note - (71) Proceeds from sale of common stock - 26,380 Proceeds from exercises of common stock options 1,052 2,605 Net cash provided by financing activities 14,052 85,807 Net (decrease) increase in cash and cash equivalents (23,333) 3,419 Cash and cash equivalents, beginning of year 38,808 20,064 Cash and cash equivalents, end of period $ 15,475 $ 23,483
(1) The Company's consolidated financial statements for the year ended January 1, 2005 were restated to change the classification of the investment in auction rate securities from cash and cash equivalents to marketable securities. Accordingly, the Company restated its Condensed Consolidated Statement of Cash Flows for the six-month period ended July 3, 2004 to reflect the purchases of $11.2 million and sales of $12.5 million of these investments as investing activities rather than as a component of cash and cash equivalents. GSI COMMERCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
January 1, July 2, 2005 2005 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 20,064 $ 23,483 Marketable securities 55,359 94,006 Accounts receivable, net of allowance of $408 and $291, respectively 14,908 11,143 Inventory 37,773 33,108 Prepaid expenses and other current assets 2,382 3,141 Total current assets 130,486 164,881 Property and equipment, net 74,286 79,262 Goodwill 13,453 13,453 Other equity investments 2,847 5,108 Other assets, net of accumulated amortization of $4,416 and $5,640, respectively 10,824 12,107 Total assets $ 231,896 $ 274,811 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 58,762 $ 26,332 Accrued expenses and other 31,691 25,779 Deferred revenue 9,370 7,447 Current portion - long-term debt and other 971 600 Total current liabilities 100,794 60,158 Long-term debt and other 13,564 13,257 Convertible notes - 57,500 Total liabilities 114,358 130,915 Commitments and contingencies Stockholders' equity: Common stock, $0.01 par value, 90,000,000 shares authorized; 41,584,061 and 43,919,755 shares issued as of January 1, 2005 and July 2, 2005, respectively; 41,582,851 and 43,919,552 shares outstanding as of January 1, 2005 and July 2, 2005, respectively 416 439 Additional paid in capital 294,495 323,811 Accumulated other comprehensive (loss) income (104) 1,368 Accumulated deficit (177,269) (181,722) Total stockholders' equity 117,538 143,896 Total liabilities and stockholders' equity $ 231,896 $ 274,811
GSI COMMERCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended ---------------------------- ---------------------------- July 3, July 2, July 3, July 2, 2004 2005 2004 2005 ------------ ------------ ------------ ------------ Revenues: Net revenues from product sales $ 53,131 $ 75,158 $ 110,009 $ 151,810 Service fee revenues 11,558 16,488 20,948 31,194 Net revenues 64,689 91,646 130,957 183,004 Cost of revenues from product sales 39,564 57,046 81,072 114,672 Gross profit 25,125 34,600 49,885 68,332 Operating expenses: Sales and marketing, exclusive of $195, $934, $690 and $1,124 reported below as stock-based compensation, respectively 16,787 21,288 34,236 42,199 Product development, exclusive of ($47), $253, $2 and $223 reported below as stock-based compensation, respectively 4,498 6,436 8,981 13,025 General and administrative, exclusive of $5, $561, $88 and $171 reported below as stock-based compensation, respectively 4,375 4,519 8,295 9,744 Stock-based compensation 153 1,748 780 1,518 Depreciation and amortization 2,646 3,617 5,245 6,739 Total operating expenses 28,459 37,608 57,537 73,225 Other (income) expense: Other (income) expense 2 (169) 3 (268) Interest expense 54 413 54 646 Interest income (244) (475) (535) (818) Total other (income) expense (188) (231) (478) (440) Net income (loss) $ (3,146) $ (2,777) $ (7,174) $ (4,453) Earnings (loss) per share - basic and diluted: Net income (loss) - basic $ (0.08) $ (0.07) $ (0.18) $ (0.11) Net income (loss) - diluted $ (0.08) $ (0.07) $ (0.18) $ (0.11) Weighted average shares outstanding: basic 40,991 42,551 40,930 42,106 diluted 40,991 42,551 40,930 42,106
GSI COMMERCE, INC. AND SUBSIDIARIES ADJUSTED EBITDA AND RECONCILIATION TO GAAP RESULTS (In thousands) (Unaudited)
Three Months Ended Six Months Ended ---------------------------- ---------------------------- July 3, July 2, July 3, July 2, 2004 2005 2004 2005 ------------ ------------ ------------ ------------ Adjusted EBITDA: Net gain (loss) excluding interest income and expense, taxes and charges for stock- based compensation and depreciation and amortization $ (535) $ 2,526 $ (1,627) $ 3,632 Reconciliation of Adjusted EBITDA to GAAP results: Adjusted EBITDA $ (535) $ 2,526 $ (1,627) $ 3,632 Interest expense 54 413 54 646 Interest income (242) (475) (532) (818) Taxes - - - - Stock-based compensation 153 1,748 780 1,518 Depreciation and amortization 2,646 3,617 5,245 6,739 Net loss $ (3,146) $ (2,777) $ (7,174) $ (4,453)
GSI COMMERCE, INC. AND SUBSIDIARIES MERCHANDISE SALES (1) AND RECONCILIATION TO GAAP RESULTS (Dollars in thousands) (Unaudited)
Three Months Ended ---------------------------- Variance July 3, July 2, ---------------------------- 2004 2005 Amount % ------------ ------------ ------------ ------------ Merchandise sales (1) - (a non-GAAP financial measure): Category: Sporting goods $ 37,912 $ 51,392 $ 13,480 36% Other 51,669 85,367 33,698 65% Total merchandise sales (1) - (a non- GAAP financial measure) $ 89,581 $ 136,759 $ 47,178 53% Net revenues - (GAAP basis): Net revenues from product sales: Category: Sporting goods $ 33,586 $ 41,899 $ 8,313 25% Other 19,545 33,259 13,714 70% Total net revenues from product sales 53,131 75,158 22,027 41% Service fee revenues 11,558 16,488 4,930 43% Total net revenues - (GAAP basis) $ 64,689 $ 91,646 $ 26,957 42% Reconciliation of merchandise sales (1) to net revenues: Merchandise sales (1) - (a non-GAAP financial measure): Category: Sporting goods $ 37,912 $ 51,392 $ 13,480 36% Other 51,669 85,367 33,698 65% Total merchandise sales (1) - (a non- GAAP financial measure) 89,581 136,759 47,178 53% Less: Sales by partners (2): Category: Sporting goods (4,326) (9,493) (5,167) 119% Other (32,124) (52,108) (19,984) 62% Total sales by partners (2) (36,450) (61,601) (25,151) 69% Add: Service fee revenues 11,558 16,488 4,930 43% Net revenues - (GAAP basis) $ 64,689 $ 91,646 $ 26,957 42%
(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) 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. GSI COMMERCE, INC. AND SUBSIDIARIES MERCHANDISE SALES (1) AND RECONCILIATION TO GAAP RESULTS (Dollars in thousands) (Unaudited)
Six Months Ended ---------------------------- Variance July 3, July 2, ---------------------------- 2004 2005 Amount % ------------ ------------ ------------ ------------ Merchandise sales (1) - (a non-GAAP financial measure): Category: Sporting goods $ 72,998 $ 98,889 $ 25,891 35% Other 102,470 174,112 71,642 70% Total merchandise sales (1) - (a non-GAAP financial measure) $ 175,468 $ 273,001 $ 97,533 56% Net revenues - (GAAP basis): Net revenues from product sales: Category: Sporting goods $ 67,124 $ 81,686 $ 14,562 22% Other 42,885 70,124 27,239 64% Total net revenues from product sales 110,009 151,810 41,801 38% Service fee revenues 20,948 31,194 10,246 49% Total net revenues - (GAAP basis) $ 130,957 $ 183,004 $ 52,047 40% Reconciliation of merchandise sales (1) to net revenues: Merchandise sales (1) - (a non-GAAP financial measure): Category: Sporting goods $ 72,998 $ 98,889 $ 25,891 35% Other 102,470 174,112 71,642 70% Total merchandise sales (1) - (a non-GAAP financial measure) 175,468 273,001 97,533 56% Less: Sales by partners (2): Category: Sporting goods (5,874) (17,203) (11,329) 193% Other (59,585) (103,988) (44,403) 75% Total sales by partners (2) (65,459) (121,191) (55,732) 85% Add: Service fee revenues 20,948 31,194 10,246 49% Net revenues - (GAAP basis) $ 130,957 $ 183,004 $ 52,047 40%
(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) 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. Contacts: Michael Conn Greg Ryan Senior Vice President, Corp. Development Director, Corp. Communications tel: 610-491-7002 tel: 610-491-7294 e-mail: connm@gsicommerce.com e-mail: ryang@gsicommerce.com SOURCE GSI Commerce Inc. -0- 07/27/2005 /CONTACT: Michael Conn, Senior Vice President, Corp. Development, +1-610-491-7002 or connm@gsicommerce.com, or Greg Ryan, Director, Corp. Communications, +1-610-491-7294 or ryang@gsicommerce.com, both of GSI Commerce/ /Web site: http://www.gsicommerce.com/ -----END PRIVACY-ENHANCED MESSAGE-----