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 (Date of earliest event reported): November 4, 2008

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 Number)	(IRS Employer Identification No.)

935 First Avenue, King of Prussia, Pennsylvania	19406
(Address of Principal Executive Offices)	(Zip Code)

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

Not Applicable

(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:

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

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

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

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

Item 8.01 Other Events.

As previously announced, on February 13, 2008, GSI Commerce, Inc. (the “Company”) acquired e-Dialog, Inc. (“e-Dialog”) pursuant to that Agreement and Plan of Merger, dated January 23, 2008, by and among the Company, Dolphin Acquisition Corporation, a wholly owned subsidiary of the Company, e-Dialog and the Stockholders’ Representative (as defined therein). The Company is filing this Current Report on Form 8-K for the purpose of incorporating the audited financial statements of e-Dialog and pro forma financial information of the Company described in Item 9.01 below into the Registration Statement on Form S-4 that the Company intends to file in connection with the Company’s previously announced acquisition of Innotrac Corporation (“Innotrac”) pursuant to that Agreement and Plan of Merger, dated October 5, 2008, among the Company, Bulldog Acquisition Corp., a wholly owned subsidiary of the Company, and Innotrac.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are filed herewith:

(a) Financial Statements of Business Acquired.

The audited consolidated balance sheet of e-Dialog as of December 31, 2007, and the related consolidated statements of operations and cash flows, together with the report of independent auditor thereto, are included as Exhibit 99.1 to this report and incorporated by reference herein.

(b) Pro Forma Financial Information.

The Company’s unaudited pro forma condensed consolidated statements of operations for the fiscal year ended December 29, 2007 and the six-month period ended June 28, 2008 are included as Exhibit 99.2 to this report and incorporated by reference herein.

(d) Exhibits.

Exhibit No.	Description
23.1	Consent of Independent Auditors of E-Dialog.
99.1	Audited Consolidated Financial Statements of e-Dialog for the year ended December 31, 2007.
99.2	Unaudited Pro Forma Consolidated Financial Information of the Company.

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.

Dated: November 4, 2008	GSI COMMERCE, INC.
	By:	/s/ Arthur H. Miller
		Name: Arthur H. Miller Title: Executive Vice President and Secretary

2

EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of Independent Auditors of E-Dialog.
99.1	Audited Consolidated Financial Statements of e-Dialog for the year ended December 31, 2007.
99.2	Unaudited Pro Forma Consolidated Financial Information of the Company.

3

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-49363, 333-53982, 333-54062, 333-54060, 333-65694, 333-109043, 333-122186, 333-132523, 333-132526, 333-145923 and 333-152896) and on Form S-3 (No. 333-145921) of GSI Commerce, Inc. our report dated May 30, 2008, with respect to the consolidated financial statements of e-Dialog, Inc. for the year ended December 31, 2007, which was included in this Current Report on Form 8K of GSI Commerce, Inc. filed with the Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
October 28, 2008

EX-99.1

Exhibit 99.1

Consolidated Financial Statements

e-Dialog, Inc.
Year Ended December 31, 2007
With Report of Independent Auditors

e-Dialog, Inc.

Consolidated Financial Statements

Year Ended December 31, 2007

Contents

Audited Consolidated Financial Statements
Report of Independent Auditors	1
Consolidated Balance Sheet	2
Consolidated Statement of Income	3
Consolidated Statement of Stockholders’ Equity	4
Consolidated Statement of Cash Flows	5
Notes to Consolidated Financial Statements	6

Report of Independent Auditors

The Board of Directors and Stockholders
e-Dialog, Inc.

We have audited the accompanying consolidated balance sheet of e-Dialog, Inc. (a Delaware corporation) as of December 31, 2007, and the related consolidated statement of income, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2007, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

May 30, 2008

1

e-Dialog, Inc.

Consolidated Balance Sheet

December 31, 2007

Assets
Current assets:
Cash and cash equivalents	$	4,297,441
Accounts receivable, net of allowance for doubtful accounts of $118,028 as of December 31, 2007		7,235,721
Deferred tax asset		657,645
Prepaid expenses and other current assets		697,689
Total current assets		12,888,496
Property and equipment:
Computer software and hardware		6,254,755
Furniture and fixtures		339,571
Construction in Progress		584,187
Leasehold improvements		163,463
		7,341,976
Less accumulated depreciation		(4,051,058	)
		3,290,918
Deferred tax asset — long term		2,715,659
Other assets — long-term portion		549,495
	$	19,444,568
Liabilities and stockholders’ equity
Current liabilities:
Capital leases — current portion	$	513,435
Accounts payable		775,214
Accrued expenses and other current liabilities		3,082,120
Income tax payable		538,566
Deferred revenue		20,000
Total current liabilities		4,929,335
Long-term liabilities:
Capital lease — long-term portion		253,478
Series C redeemable preferred stock warrants (Note 6)		24,412
Other long-term liabilities		54,040
Total liabilities		5,261,265
Commitments (Note 3)
Stockholders’ equity:
Series A redeemable convertible preferred stock, at liquidation and redemption value:
Authorized, issued and outstanding — 7,805,556 shares		7,025,000
Series B redeemable convertible preferred stock, at liquidation and redemption value:
Authorized, issued and outstanding — 10,500,000 shares		10,500,000
Series C redeemable convertible preferred stock, at liquidation and redemption value:
Authorized, issued and outstanding — 3,389,831 shares		2,000,000
Series C-1 redeemable convertible preferred stock, 1,800,000 shares authorized, no shares issued and outstanding		—
Common stock, $0.01 par value:
Authorized — 50,000,000 shares, issued — 10,922,638 shares as of December 31, 2007		109,224
Additional paid-in capital		268,109
Less: treasury stock at cost, 1,921,600 shares		(138,284	)
Accumulated deficit		(5,580,746	)
Total stockholders’ equity		14,183,303
	$	19,444,568

See accompanying notes.

2

e-Dialog, Inc.

Consolidated Statement of Income

Year Ended December 31, 2007

Net revenues	$	37,574,266
Cost of revenues		15,416,388
Gross profit		22,157,878
Operating expenses:
Sales and marketing		4,213,827
Research and development		5,286,870
General and administrative		6,942,299
Stock-based compensation		75,968
Total operating expenses		16,518,964
Income from operations		5,638,914
Other income (expense):
Interest expense, net		(30,942	)
Foreign currency exchange gain (loss)		119,570
Total other income (expense)		88,628
Income before income taxes		5,727,542
(Benefit) provision for income taxes		(2,834,739	)
Net income	$	8,562,281

See accompanying notes.

3

e-Dialog, Inc.

Consolidated Statements of Stockholders’ Equity

	Series A				Series B				Series C
	Redeemable Convertible				Redeemable Convertible				Redeemable Convertible
	Preferred Stock				Preferred Stock				Preferred Stock				Common Stock				Additional		Treasury Stock								Total
	Number of		Liquidation		Number of		Liquidation		Number of		Liquidation		Number of		Par		Paid-in		Number of					Accumulated			Stockholders’
	Shares		Value		Shares		Value		Shares		Value		Shares		Value		Capital		Shares		Amount			Deficit			Equity
Balance at December 31, 2006		7,805,556	$	7,025,000		10,500,000	$	10,500,000		3,389,831	$	2,000,000		10,751,838	$	107,516	$	188,631		1,921,600	$	(138,284	)	$	(14,143,027	)	$	5,539,836
Exercise of common stock options		—		—		—		—		—		—		170,800		1,708		3,510		—		—			—			5,218
Stock-based compensation		—		—		—		—		—		—		—		—		75,968		—		—			—			75,968
Net income		—		—		—		—		—		—		—		—		—		—		—			8,562,281			8,562,281
Balance at December 31, 2007		7,805,556	$	7,025,000		10,500,000	$	10,500,000		3,389,831	$	2,000,000		10,922,638	$	109,224	$	268,109		1,921,600	$	(138,284	)	$	(5,580,746	)	$	14,183,303

See accompanying notes.

4

e-Dialog, Inc.

Consolidated Statements of Cash Flows

Year Ended December 31, 2007

Operating activities
Net income	$	8,562,281
Adjustments to reconcile net income to net cash provided by operating activities:
Valuation of Series C Redeemable Warrants		7,505
Depreciation and amortization		1,377,930
Stock-based compensation		75,968
Deferred tax asset		(3,373,304	)
Amortization of lease concession		(162,120	)
Changes in assets and liabilities, net of acquisition:
Accounts receivable		(1,730,815	)
Prepaid expenses and other assets		(237,384	)
Accounts payable		397,235
Accrued expenses and other current liabilities		1,483,157
Income tax payable		538,565
Deferred revenue		393
Net cash provided by operating activities		6,939,411
Investing activities
Purchases of property and equipment		(2,803,832	)
Increase in other assets		(292,073	)
Net cash used in investing activities		(3,095,905	)
Financing activities
Proceeds from exercise of common stock options		5,218
Repayments of capital leases		(403,798	)
Net cash used in financing activities		(398,580	)
Net increase in cash and cash equivalents		3,444,926
Cash and cash equivalents at beginning of year		852,515
Cash and cash equivalents at end of year	$	4,297,441
Supplemental disclosure of cash flow information
Cash paid for interest	$	47,917
Cash paid for taxes	$	43,000
Non-cash investing and financing activities
Assets acquired under capital leases	$	296,500

See accompanying notes.

5

e-Dialog, Inc.

Notes to Consolidated Financial Statements

December 31, 2007

1. Nature of Business and Basis of Presentation

e-Dialog, Inc. (the Company) provides precision marketing services. Services provided include strategic planning, implementation, and analysis of e-mail marketing programs. The Company is subject to a number of risks common to rapidly growing technology-based companies, including rapid technological changes, competition from substitute products and larger companies, and the need to successfully develop and market its commercial products and services.

On February 13, 2008, GSI Commerce, Inc. (GSI) completed the acquisition of the Company. Pursuant to an Agreement and Plan of Merger dated as of January 23, 2008 among GSI, Dolphin Acquisition Corporation (Newco), a wholly-owned subsidiary of GSI, the Company, and the stockholders’ representative, Newco merged with the Company and the Company survived the merger as a wholly-owned subsidiary of GSI.

2. Summary of Significant Accounting Policies

The accompanying financial statements reflect the application of certain significant accounting policies described in this note and elsewhere in the accompanying notes to financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, E-Dialog UK, Ltd. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers highly liquid investments purchased with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Investments with maturity dates in excess of three months at the time of purchase, but within one year of the balance sheet date, are considered short-term investments. Cash equivalents consisted mainly of money market accounts as of December 31, 2007. Restricted cash as of December 31, 2007 consists of certificates of deposit collateralizing rental deposits.

6

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Property and Equipment

Property and equipment are stated at cost, and are depreciated by the straight-line method with a half-year convention at rates that are intended to depreciate the cost of these assets over their estimated useful lives as follows:

Asset Classification	Useful Life
Computer software and hardware	3-4 years
Furniture and fixtures	5 years
Leasehold improvements	Life of lease

At the end of 2007, the Company entered into a new facility lease to expand their London based operations. The lease was effective on January 1, 2008. As a result of improvement of the leased space, the Company recorded $584,187 in payments made for Construction in Progress. The amount will be capitalized in Leasehold Improvements in 2008.

Financial Instruments

The estimated fair value of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, line of credit, and capital leases, approximates their carrying value due to the short-term nature of these instruments.

Foreign Currency Translation

The accounts of e-Dialog UK, Ltd. are translated in accordance with Statements of Financial Accounting Standards (SFAS) No. 52, Foreign Currency Translation. The functional currency of e-Dialog UK, Ltd. is the U.S. dollar and, accordingly, translation gains and losses are reflected in the consolidated statements of income. Revenue and expense accounts were translated using the weighted-average exchange rate in effect during the period. Balance sheet accounts were translated using current and historical exchange rates, as appropriate. Foreign currency transaction gains or losses are also reflected in the consolidated statements of income in other income/expense. e-Dialog UK, Ltd. had a foreign currency exchange gain (loss) of $119,570 for the year ended December 31, 2007.

7

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109. The statement requires the Company to recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Revenue Recognition

The Company applies Staff Accounting Bulletin (SAB) 104, Revenue Recognition, and recognizes revenue when persuasive evidence of an arrangement exists, the service has been delivered, the fee is fixed and determinable, and collection of the resulting receivable is reasonably assured.

The Company generates revenue from the sale of services, such as design and execution of Internet direct marketing or e-marketing campaigns. Revenue is recognized under these arrangements upon completion of the campaign. For any multi-element arrangement, revenue is recognized once all elements of the arrangement have been delivered, as the Company does not have fair value for each separate element per EITF 00-21. The Company also enters into contractual arrangements to provide a number of e-mail campaigns for a related fee. Revenue is recognized based on completion of campaigns.

In addition, the Company generates revenue through the rental of lists of e-mail addresses and digital printing. The Company records revenue on the rental of lists and digital printing upon delivery on a net basis which represents the difference between the purchase price paid for the service and sales price of the service in accordance with Emerging Issues Task Force (EITF) Issue No. 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent.

Cost of Revenue

Cost of revenue includes payroll of the personnel involved in design and execution of Internet direct marketing or e-marketing campaigns.

Research and Development Costs

Research and development costs have been charged to operations as incurred.

8

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Stock-Based Compensation

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment, or SFAS No. 123(R). SFAS No. 123(R) addresses the accounting for transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. SFAS No. 123(R) supersedes APB Opinion No. 25 and requires that such transactions be accounted for using a fair value-based method. SFAS No. 123(R) requires companies to recognize an expense for compensation cost related to share-based payment arrangements, including stock options and employee stock purchase plans.

Until December 31, 2005, as permitted by SFAS No. 123, the Company accounted for share-based payments to employees using APB Opinion No. 25’s minimum value method and, as such, generally recognized no compensation cost for employee stock options.

On January 1, 2006, the Company adopted SFAS No. 123(R) on a prospective transition basis as permissible under the standard. The Company granted 1,870,599 options in 2007, and established fair value of these awards using the Black-Scholes valuation model. The awards granted in 2007 are service-based awards and expense will be recognized ratably over the four year service period. The fair values of incentive stock options granted in 2007 were $383,805, and the Company recorded compensation expense of $75,968, respectively. The remaining amount will be expensed over four years.

The weighted-average fair values per share of options granted were $0.20 in 2007, respectively. The fair value of each option grant was estimated on the grant date using the following weighted-average assumptions.

	2007
Volatility	44%
Risk-free interest rate	3.79% – 4.97%
Expected life of options	6.25 years
Dividend yield	—

9

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

As there is no public market for the Company’s common stock, the volatility for options granted in 2007 has been determined based on the analysis of reported data for a peer group of companies that issued options with substantially similar terms. The expected life of options has been determined utilizing the “simplified” method as prescribed by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment. The risk-free interest rate is based on a zero coupon United States Treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its shares of common stock; therefore, the expected divided yield is assumed to be zero. SFAS No. 123(R) requires companies to utilize an estimated forfeiture when calculating the expense for the period. As a result, the Company estimated forfeitures based upon a history of grants, exercises, terminations for the period 1998 through early 2008, for both officers and non-officers, the corresponding forfeiture rates being 24% and 29%, respectively. These percentages were applied to the 2007 Black-Scholes valuation models, being the Company’s best estimate of future forfeitures.

Comprehensive Income

Comprehensive income represents net income plus the change in equity of a business enterprise resulting from transactions and circumstances from non-owner sources. The Company’s comprehensive income equaled net income for the year ended December 31, 2007.

Concentration of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. The Company’s cash and cash equivalents are held at accredited financial institutions. For the Company’s accounts receivable, the Company performs ongoing credit evaluations of its customers’ financial condition, but does not require collateral. The Company continuously monitors collections from customers and maintains a provision for estimated credit losses based upon historical experience and any specific customer collections issues that the Company has identified. Historically, the Company has not experienced significant losses related to its accounts receivable. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The Company had no customers that represented greater than 7% of net revenues for the year ended December 31, 2007. The Company had one customer that represented 6% of total accounts receivable as of December 31, 2007.

10

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2007. The adoption of FIN 48 is not expected to have a material impact on the Company’s financial condition, results of operations, or liquidity.

3. Commitments

The Company leases its facility under an operating lease that expires in 2012. The Company also leases various equipment under capital leases that expire through 2009. Future minimum lease payments under noncancelable operating leases, and the present value of future minimum lease payments under capital leases as of December 31, 2007 are as follows:

	Capital			Operating
	Leases			Leases
Years Ended December 31,
2008	$	564,853		$	611,409
2009		224,461			243,562
2010		51,308			42,070
2011		—			43,332
Total minimum lease payments		840,622			940,373
Less amount representing interest		(73,709	)
Present value of future minimum lease payments		766,913
Less current installments of obligations under capital leases		(513,435	)
Obligation under capital leases, excluding current portion	$	253,478

11

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

3. Commitments (continued)

The Company maintains capital lease agreements with several different lending institutions. In October 2005, the Company entered into a master lease agreement with a bank to provide up to $2,000,000 of growth capital financing. Under the terms of the agreement, the Company may draw down against the line at any time through September 1, 2008, with no minimum. The master lease agreement requires the Company to maintain a certain financial covenant, which the Company was in compliance with at December 31, 2007. As of December 31, 2007, the Company has not drawn down any financing under this agreement.

In August 2004, the Company entered into a master lease agreement with a venture debt lender to provide up to $750,000 of growth capital financing, which is included in the total obligations under capital leases. The master lease agreement does not require the Company to maintain covenants. In connection with the lease agreement, the Company issued warrants to the lender to purchase up to 44,491 shares of the Company’s Series C-1 preferred stock at $0.59 per share. The fair value of the warrants was deemed to be immaterial at the date of issuance. (See Note 6). As of December 31, 2007, the Company has not drawn down any financing under this agreement.

At December 31, 2007, assets under capital leases were approximately $2,825,500. Accumulated amortization of leased assets at December 31, 2007 was approximately $2,142,284.

In June 2005, the Company executed an addendum to its facilities lease, which included an increase in space of 13,644 square feet. This addendum was executed for a period of 46 months, which is co-terminus with the existing facilities lease that will terminate in April 2009.

Rental expense under the Company’s operating leases for 2007 was $1,693,338.

4. Financing Arrangement

In October 2005, the Company entered into an agreement for a revolving line of credit with a bank that provides up to $2,000,000 to finance operations. The line of credit is available to the Company through September 1, 2007 and can be renewed on annual go-forward basis from that date. Borrowings bear interest at the bank’s prime rate less 0.5%. Borrowings are secured by equipment, inventory and accounts receivable of the Company. The agreement requires the Company to maintain certain financial covenants, which the Company was in compliance with at December 31, 2007. There were no borrowings outstanding as of December 31, 2007. As of December 31, 2007, the Company has renewed this line of credit.

12

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

5. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets for financial reporting purposes and the amounts used for income tax purposes. The principal components of deferred taxes assets/(liabilities) are as follows:

	2007
Net operating loss carryforwards	$	1,474,201
Research and development credit carryforwards		1,112,691
Other tax credits		128,767
Accruals, reserves and other temporary differences		657,645
Gross deferred tax asset		3,373,304
Valuation allowance		—
Net deferred tax asset	$	3,373,304

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not, based upon the weight of all available evidence, that some portion or all of the deferred tax assets may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses and tax credits are allowed to be carried forward or temporary differences become deductible. During 2007, the Company determined, based on the cumulative impact of recent operating results and future projections of income that it was more likely than not that the tax benefit of the deferred tax assets would be realized and fully reduced the valuation allowance against the deferred taxes.

As of December 31, 2007, the Company had federal net operating losses of $4,332,445 available to offset future income taxes. The federal net operating losses begin to expire in 2024. The Company also has federal and state research and development tax credits of $838,456 and $415,508, respectively, The federal credits begin to expire in 2021 and the state credits begin to expire in 2015. If substantial changes in the Company’s ownership were to occur, as defined by Section 382 of the Internal Revenue Code, there could be annual limitations on the amount of carryforwards that can be utilized in the future periods.

13

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

5. Income Taxes (continued)

The provision for income taxes consisted of the following:

	2007
Current:
Federal and state (including Alternative Minimum Tax)	$	373,334
Foreign		36,464
Total current provision		409,798
Deferred:
Federal and state		(3,244,537	)
Foreign		—
Total deferred (benefit) provision		(3,244,537	)
Income tax (benefit) expense	$	(2,834,739	)

During 2007, the Company utilized a part of its net operating loss carryforwards to offset the majority of its federal tax liability and a portion of its state tax liabilities. The current income tax provision as of December 31, 2007 represents primarily the alternative minimum tax due, state taxes on current year income and the foreign income tax liabilities.

6. Stockholders’ Equity

Redeemable Convertible Preferred Stock

The rights and preferences of the Series A, B, C, and C-1 preferred stock are as follows:

Voting

Series A, B, and C preferred stockholders are entitled to vote with the shares of the Company’s voting common stock at any annual or special meeting, and are entitled to the number of votes equal to the number of shares of common stock into which each share of preferred stock is then convertible. All matters impacting the terms of Series A, B, and C preferred stockholders must be approved by a majority of the preferred stockholders. The holders of Series C-1 preferred stock have no voting rights.

Dividends

Series A, B, C, and C-1 preferred stockholders are entitled to participate in all dividends (other than stock dividends in the nature of a stock split or the like) that are declared and paid on common stock on the same basis as if all of the shares of Series A, B, C, and C-1 held by such holders had been converted to common stock.

14

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

6. Stockholders’ Equity (continued)

Liquidation Rights

Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, before any distribution of payments is made to common shareholders, the holders of Series A, B, C, and C-1 preferred stock are entitled to be paid an amount equal to $0.90, $1.00, $0.59, and $0.59, respectively (subject to appropriate adjustment for any stock splits, stock dividends, reclassifications and the like with respect to such series of preferred stock) plus any declared or unpaid dividends to which such holder is entitled. Any net assets remaining after payment of such preferential amount to the holders of preferred stock will be shared ratably by the holders of preferred stock and common stock, provided that such amounts shall not exceed $5.40, $6.00, $3.54, and $3.54 per share of the Series A, B, C, and C-1 preferred stock, respectively.

Conversion

At any time, any holder of Series A, B, C, and C-1 shall have the right, at its option, to convert all or a portion of the preferred stock held by such holder into a number of shares of fully paid and non-assessable common stock computed by dividing the purchase price of preferred stock by the conversion price in effect on the conversion date. The initial conversion price shall be the purchase price, which may be adjusted from time to time based on consideration received for the issuance of securities in the future. In addition, each share of preferred stock will automatically convert into fully paid and non-assessable shares of common stock upon the consummation of (1) a public offering with the approval of the conversion by the requisite percentage (greater than 50%) of preferred stock outstanding at the time of the approval or (ii) upon the completion of a public stock offering involving aggregate gross proceeds of at least $20,000,000 at a price per share of not less than $5.00, subject to certain adjustments.

Redemption

The Series A, B, C, and C-1 are redeemable in whole, at the option of the holders of the requisite percentage (greater than 50%) of preferred stock, commencing on January 2, 2009. The redemption price for each share of Series A preferred stock shall be cash in an amount equal to the greater of (i) the preferred stock preference amount on the date the redemption is completed or (ii) the fair market value of the preferred stock as of the date of the redemption notice. The redemption price for each share of Series B, C, and C-1 stock shall be cash in the amount equal to the fair value of preferred stock as of the date of redemption notice. Series B and Series C stock fair value is equal to the preference amount plus the residual distribution amount.

The Company may elect to redeem the preferred stock in three equal installments; the first installment shall be payable on the determination date and the balance shall be due and payable on the first and second anniversary dates of the determination date. In the event of such election, the installments not paid on the determination date shall bear interest at the prime rate plus 2%.

15

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

6. Stockholders’ Equity (continued)

Management Bonus Plan

Concurrent with the Series C financing, and in accordance with the amended and restated stockholders’ agreement, the Company has agreed to adopt for the benefit of certain of its key employees a Cash Incentive Plan whereby upon any consolidation, reorganization or merger (as further defined) employees would receive an aggregate amount of the sum of 5% of the first $10,000,000 of liquidation preference and 20% of the next $10,000,000 of Liquidation Preference payable to the Company’s stockholders but in no event to exceed $2,500,000. In case of the liquidation event or change in control, such amount will be paid on a pari passu basis with the liquidation preference. In connection with the acquisition of the Company discussed in Note 1, the Company recognized $2.5 million of compensation expense under the Cash Incentive Plan.

Deferred Stock Plan

On December 19, 2001, the Board and stockholders of the Company authorized the creation of a new incentive for certain employees by adopting the e-Dialog Deferred Stock Plan (the Plan), and authorizing the issuance of restricted shares of a new series of preferred stock of the Company pursuant to the Amended Stock Plan (the Restricted Stock Grants). Under the terms of the Plan, certain employees of the Company will be eligible, on a quarterly basis, to receive allocations of rights to obtain shares of the Company’s new Series C-1 preferred stock. For the year ended December 31, 2007, no shares were allotted or issued. As of December 31, 2007, 624,482 shares were allocated to the preferred stock bonus account and remain unissued.

Stock Options

The Company’s 1998 Stock Option Plan (the 1998 Plan) provides for the grant of incentive stock options and nonqualified stock options. The Board has the authority to select the employees and non-employees to whom options are granted, and determine the terms of each option, including (1) the number of shares of common stock subject to the option; (ii) when the option becomes exercisable; (iii) the option exercise price, which, in the case of incentive stock options, must be at least 100% (110% in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company’s common stock) of the fair market value of the common stock as of the date of grant; and (iv) the duration of the option, which, in the case of incentive stock options, may not exceed ten years (five years in the case of an incentive option granted to a stockholder owning in excess of 10% of the Company’s common stock). Options granted under the 1998 Plan vest monthly over a four-year period, following a one-year cliff vesting provision. On March 29,2007, an additional 2,000,000 common, non-voting shares were authorized and added to the option pool. As of December 31, 2007, there were 773,425 available for grant under the 1998 Plan.

16

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

6. Stockholders’ Equity (continued)

A summary of the activity under the 1998 Option Plan is as follows:

				Weighted-		Aggregate
	Number of			Average		Intrinsic
	Options			Price		Value
Outstanding at December 31, 2006		3,372,477		$	0.11
Granted		1,870,599			0.41
Exercised		(122,600	)		0.04
Canceled		(275,201	)		0.16
Outstanding at December 31, 2007		4,845,275		$	0.23	$	1,017,508
Exercisable at December 31, 2007		1,523,673		$	0.11	$	502,812

The weighted-average remaining contractual lives for options outstanding at December 31, 2007 is approximately 8.41 years.

The following table summarizes information relating to currently outstanding and exercisable stock options as of December 31, 2007:

			Weighted-
			Average
	Number of		Remaining		Number of
Exercise	Shares		Contractual		Shares
Price	Outstanding		Life (Years)		Exercisable
$0.02		748,049		7.27		470,044
0.09		59,582		4.59		86,963
0.15		2,393,110		8.44		961,854
0.44		1,644,534		9.53		4,812
Balance at December 31, 2007		4,845,275				1,523,673

17

e-Dialog, Inc.

Notes to Consolidated Financial Statements (continued)

7. Warrants

At December 31, 2007, the Company had 44,491 warrants outstanding to purchase Series C-1 preferred stock at an exercise price of $0.59 per share. The Company accounted for warrants at the time of issuance in accordance with EITF 96-18 at the fair value of the warrants. The warrants expire in August 2011. These warrants provide for net share settlement under which the maximum number of shares that could be issued represents the total amount of shares under the warrant agreements. The Company had previously determined in accordance with EITF 00-19, that these warrants be properly classified as permanent equity. The Company has reserved 44,491 shares of Series C-1 preferred stock for the exercise of these warrants. On January 1, 2006, the Company adopted FASB Staff Position FAS 150-5 (FSP FAS 150-5), Issuer’s Accounting Under FASB Statement No. 150 for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable, and upon adoption, the warrants to purchase redeemable preferred stock were required to be reclassified to liabilities as of January 1, 2006. The difference between original valuation of the warrants upon their issuance and their fair value at January 1, 2006 (FSP 150-5 adoption date) of $16,907 has been recorded as a cumulative effect type adjustment. For the year ended December 31, 2007, an additional charge was recorded for $7,515 and is included in the interest expense, net.

18

EX-99.2

Exhibit 99.2

Unaudited Pro Forma Combined Financial Information

On February 13, 2008, GSI Commerce, Inc. (the “Company”) completed the acquisition of e-Dialog, Inc. (“e-Dialog”). Pursuant to an Agreement and Plan of Merger dated as of January 23, 2008 among the Company, Dolphin Acquisition Corporation (“Newco”), a wholly-owned subsidiary of the Company, e-Dialog and the stockholders’ representative, Newco merged with e-Dialog and e-Dialog survived the merger as a wholly-owned subsidiary of the Company. The accompanying unaudited pro forma combined statements of operations give pro forma effect to the Company’s acquisition of e-Dialog using the purchase method of accounting assuming a cash purchase price of approximately $149.3 million including acquisition costs of $1.6 million. In addition, the Company will be obligated to make an additional cash payment of $0.75 million in fiscal 2009 if e-Dialog achieves net revenue targets in fiscal 2008. In connection with the acquisition, the Company issued approximately $9.3 million of restricted common stock and restricted stock units to certain employees of e-Dialog based on the market price of the Company’s common stock on the closing date. Recipients are required to remain employed for specified periods of time subsequent to the acquisition for their restricted stock or restricted stock units to vest. The $9.3 million will be recognized as compensation cost, net of estimated forfeitures, over the required service period.

The following unaudited pro forma combined statements of operations were prepared using the historical consolidated financial statements of the Company and e-Dialog. This information should be read in conjunction with, and is qualified in its entirety, by the consolidated financial statements and accompanying notes of the Company and e-Dialog incorporated by reference into this current report.

The pro forma adjustments related to the acquisition are based on a preliminary valuation, and the Company’s estimates and assumptions are subject to change. The areas that are not yet finalized relate primarily to goodwill and deferred income taxes, as the Company is still in the process of completing its valuation of e-Dialog’s net assets. Final adjustments could result in a materially different purchase price and/or allocation of the purchase price, which would affect the value assigned to the tangible or intangible assets and the amount of depreciation and amortization expense recorded in the consolidated statements of operations. The effect of any changes to the consolidated statements of operations would depend on the final purchase price and the nature and amount of the final purchase price allocation and could be material.

The pro forma financial information does not reflect potential revenue opportunities and cost savings that we expect to realize after the acquisition of e-Dialog. No assurance can be given with respect to the estimated revenue opportunities and operating cost savings that are expected to be realized as a result of the acquisition of e-Dialog. The pro forma financial information also does not reflect non-recurring charges related to integration activity or exit costs that may be incurred by the Company or e-Dialog in connection with the acquisition of e-Dialog.

The accompanying unaudited pro forma combined statements of operations for the fiscal year ended December 29, 2007 and the six-months ended June 28, 2008 assume that the acquisition took place on December 31, 2006, the first day of the Company’s fiscal 2007. The unaudited pro forma combined statement of operations for the fiscal year ended December 29, 2007 combines the Company’s audited consolidated statement of operations for the fiscal year ended December 29, 2007 with e-Dialog’s audited consolidated statement of operations for the year ended December 31, 2007. e-Dialog’s revenues, expenses and net income for December 30 and December 31, 2007 were immaterial. The unaudited pro forma combined statement of operations for the six-months ended June 28, 2008 combines the Company’s unaudited consolidated statement of operations for the six-months ended June 28, 2008 with e-Dialog’s unaudited consolidated statement of operations for the six-weeks ended February 13, 2008. Reclassifications have been made to the consolidated statements of operations of e-Dialog in order to conform to the Company’s statement of operations classifications as described in “Note 2 — Unaudited Pro Forma Adjustments.”

The pro forma financial information is based on the estimates and assumptions set forth in the notes to such information. The pro forma financial information is preliminary and is being furnished solely for information purposes and, therefore, is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the dates or periods indicated, nor is it necessarily indicative of the results of operations or financial position that may occur in the future.

GSI COMMERCE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(In thousands, except per share data)

	GSI Commerce, Inc.			e-Dialog, Inc.			Preliminary
	Fiscal Year Ended			Year Ended			Pro Forma			Pro Forma
	December 29, 2007			December 31, 2007			Adjustments			Combined
Revenues:
Net revenues from product sales	$	512,194		$	—		$	—		$	512,194
Service fee revenues		237,763			37,574			—			275,337
Net revenues		749,957			37,574			—			787,531
Costs and expenses:
Cost of revenues		—			15,416			(15,416	)(a)		—
Cost of revenues from product sales		356,541			—			—			356,541
Marketing		64,573			—			—			64,573
Account management and operations		177,333			—			9,362	(b)		186,695
Sales and Marketing		—			4,214			(4,214	)(c)		—
Product development		65,898			—			13,026	(d)		78,924
Research and development		—			5,287			(5,287	)(e)		—
General and administrative		43,333			6,942			1,271	(f)		51,546
Stock-based compensation		—			76			(76	)(g)		—
Depreciation and amortization		37,337			—			8,143	(h)		45,480
Total costs and expenses		745,015			31,935			6,809			783,759
Income (loss) from operations		4,942			5,639			(6,809	)		3,772
Other (income) expense:
Interest expense		6,016			31			—			6,047
Interest income		(9,270	)		—			7,581	(i)		(1,689	)
Other expense (income), net		237			—			(119	)(j)		118
Foreign currency gain		—			(119	)		119	(j)		—
Loss on investments		5,007			—			—			5,007
Total other (income) expense		1,990			(88	)		7,581			9,483
Income (loss) before income taxes		2,952			5,727			(14,390	)		(5,711	)
Benefit for income taxes		(87	)		(2,835	)		(5,756	)(k)		(8,678	)
Net income (loss)	$	3,039		$	8,562		$	(8,634	)	$	2,967
Basic earnings per share	$	0.07								$	0.06
Diluted earnings per share	$	0.06								$	0.06
Weighted average shares outstanding — basic		46,433									46,433
Weighted average shares outstanding — diluted		48,739									48,739

See accompanying notes to unaudited pro forma combined financial statements, including Note 2 for an explanation of the preliminary pro forma adjustments.

GSI COMMERCE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(In thousands, except per share data)

	GSI Commerce, Inc.			e-Dialog, Inc.			Preliminary
	Six Months Ended			Six Weeks Ended			Pro Forma			Pro Forma
	June 28, 2008			February 13, 2008			Adjustments			Combined
Revenues:
Net revenues from product sales	$	230,175		$	—		$	—		$	230,175
Service fee revenues		158,577			4,971			—			163,548
Net revenues		388,752			4,971			—			393,723
Costs and expenses:
Cost of revenues from product sales		163,861			—			—			163,861
Marketing		28,729			—			—			28,729
Account management and operations		116,607			1,391			—			117,998
Product development		47,620			1,992			—			49,612
General and administrative		34,333			1,054			—			35,387
Depreciation and amortization		32,635			184			583	(l)		33,402
Total costs and expenses		423,785			4,621			583			428,989
(Loss) income from operations		(35,033	)		350			—			(35,266	)
Other (income) expense:
Interest expense		4,524			8			—			4,532
Interest income		(1,207	)		(11	)		643	(m)		(575	)
Other expense, net		353			—			—			353
Total other (income) expense		3,670			(3	)		643			4,310
(Loss) income before income taxes		(38,703	)		353			(1,226	)		(39,576	)
Benefit for income taxes		(10,178	)		—			(490	)(n)		(10,668	)
Net (loss) income	$	(28,525	)	$	353		$	(736	)	$	(28,908	)
Basic and diluted loss per share	$	(0.61	)							$	(0.61	)
Weighted average shares outstanding — basic and diluted		47,144									47,144

See accompanying notes to unaudited pro forma combined financial statements, including Note 2 for an explanation of the preliminary pro forma adjustments.

GSI COMMERCE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(in thousands)

NOTE 1—BASIS OF PRESENTATION

On February 13, 2008, GSI Commerce, Inc. (the “Company”) completed the acquisition of e-Dialog, Inc. (“e-Dialog”). Pursuant to an Agreement and Plan of Merger dated as of January 23, 2008 among the Company, Dolphin Acquisition Corporation (“Newco”), a wholly-owned subsidiary of the Company, e-Dialog and the stockholders’ representative, Newco merged with e-Dialog and e-Dialog survived the merger as a wholly-owned subsidiary of the Company. e-Dialog is an e-mail marketing solutions provider that offers e-mail marketing and marketing strategies.

The total preliminary cash purchase price is approximately $149,300, including estimated acquisition related transaction costs of approximately $1,600. In addition, the Company will be obligated to make an additional cash payment of $750 in fiscal 2009 if e-Dialog achieves net revenue targets in fiscal 2008.

The accompanying unaudited pro forma combined statements of operations for the fiscal year ended December 29, 2007 and the six-months ended June 28, 2008 assume that the acquisition took place on December 31, 2006, the first day of the Company’s fiscal 2007. The unaudited pro forma combined statement of operations for the fiscal year ended December 29, 2007 combines the Company’s audited consolidated statement of operations for the fiscal year ended December 29, 2007 with e-Dialog’s audited consolidated statement of operations for the year ended December 31, 2007. e-Dialog’s revenues, expenses and net income for December 30 and December 31, 2007 were immaterial. The unaudited pro forma combined statement of operations for the six-months ended June 28, 2008 combines the Company’s unaudited consolidated statement of operations for the six-months ended June 28, 2008 with e-Dialog’s unaudited consolidated statement of operations for the six-weeks ended February 13, 2008.

The pro forma combined statements of operations have been prepared for informational purposes only and do not purport to be indicative of the actual results that would have been achieved by the Company or the combined Company for the periods presented or that will be achieved by the Company or the combined Company in the future.

NOTE 2—UNAUDITED PRO FORMA ADJUSTMENTS

The pro forma adjustments related to the acquisition are based on a preliminary valuation, and the Company’s estimates and assumptions are subject to change. The areas that are not yet finalized relate primarily goodwill and deferred income taxes, as the Company is still in the process of completing its valuation of e-Dialog’s net assets. Final adjustments could result in a materially different purchase price and/or allocation of the purchase price, which would affect the value assigned to the tangible or intangible assets and the amount of depreciation and amortization expense recorded in the consolidated statements of operations. The effect of any changes to the consolidated statements of operations would depend on the final purchase price and the nature and amount of the final purchase price allocation and could be material.

The pro forma adjustments included in the unaudited pro forma combined statement of operations for the fiscal year ended December 29, 2007 are as follows:

(a)

Represents a reclassification of e-Dialog’s reported cost of revenues of $15,416. e-Dialog’s cost of revenues included payroll for the personnel involved in design and execution of Internet direct marketing and e-marketing campaigns. The Company reclassified e-Dialog’s cost of revenues of $10,100 to account management and operations expenses and $5,316 to product development expenses to conform to the presentation of the Company’s Statement of Operations.

(b)

Represents the following:

• an increase of $10,100 for the reclassification of a portion of e-Dialog’s reported cost of revenues, as stated in footnote (a) above;

• an increase of $44 for the reclassification of a portion of e-Dialog’s stock-based compensation expense, as stated in footnote (g) below;

• a decrease of $782 for the reclassification of e-Dialog’s depreciation and amortization. e-Dialog’s sales and marketing expenses included depreciation and amortization expenses. The Company reclassified e-Dialog’s depreciation and amortization expense from sales and marketing expenses to depreciation and amortization expenses to conform to the presentation of the Company’s Statement of Operations;

(c)

Represents a decrease of $4,214 for the reclassification of e-Dialog’s reported sales and marketing expenses that relate to the Company’s classification of general and administrative expenses. e-Dialog’s sales and marketing included payroll for personnel involved with corporate communication and business development. The Company reclassified sales and marketing of $4,214 to general and administrative expenses to conform to the presentation of the Company’s Statement of Operations.

(d)

Represents the following:

• an increase of $5,316 for the reclassification of a portion of e-Dialog’s reported cost of revenues, as stated in footnote (a) above;

• an increase of $5,287 for the reclassification of e-Dialog’s research and development information technology expenses to product development expenses to conform to the presentation of the Company’s Statement of Operations;

• an increase of $2,745 for the reclassification of a portion of e-Dialog’s reported general and administrative expenses that relate to product development expenses to conform to the presentation of the Company’s Statement of Operations;

• an increase of $20 for the reclassification of a portion of e-Dialog’s stock-based compensation expense, as stated in footnote (g) below;

• a decrease of $342 for the reclassification of e-Dialog’s depreciation and amortization expenses from product development expenses to depreciation and amortization expenses to conform to the presentation of the Company’s Statement of Operations.

(e) Represents a decrease of $5,287 for the reclassification of e-Dialog’s research and development expenses, as stated in footnote (d) above, to product development expenses to conform to the presentation of the Company’s Statement of Operations.

(f) Represents the following:

• an increase of $4,214 for the reclassification of a portion of e-Dialog’s reported sales and marketing expense, as stated in footnote (c) above;

• a decrease of $2,745 for the reclassification of a portion of e-Dialog’s reported general and administrative expenses to product development expenses, as stated in (d) above;

• a decrease of $210 for the reclassification of e-Dialog’s depreciation and amortization expense from general and administrative expenses to depreciation and amortization expenses to conform to the presentation of the Company’s Statement of Operations;

• an increase of $12 for the reclassification of a portion of e-Dialog’s stock-based compensation expense, as stated in footnote (g) below.

(g)	Represents a decrease of $76 for the reclassification of e-Dialog’s stock-based compensation expenses to account management and operations expenses ($44), product development expenses ($20), and general and administrative expenses ($12) from stock-based compensation expense to conform to the presentation of the Company’s Statement of Operations.
(h)	Represents the following:

• an increase of $1,334 for the reclassification of e-Dialog’s depreciation and amortization expenses from sales and marketing expenses ($782), product development expenses ($342) and general and administrative expenses ($210) to depreciation and amortization expense to conform to the presentation of the Company’s Statement of Operations;

• an increase of $523 to reflect the additional depreciation expense per the increase in the preliminary valuation of e-Dialog’s fixed assets;

• an increase of $6,286 to reflect the amortization expense per the preliminary valuation of e-Dialog’s intangible assets.

(i)	Represents a $7,581 reduction to interest income to reflect the use of the Company’s cash and cash equivalents to fund the acquisition on the first day of the period presented.
(j)	Represents a $119 reclassification of e-Dialog’s foreign currency gain to other expense (income), net to conform to the presentation of the Company’s Statement of Operations.
(k)	Represents an increase to the income tax benefit of $5,756 for the income tax effect of the pro forma adjustments, recorded at the Company’s estimated statutory tax rate of 40.0%. This rate is not necessarily indicative of the Company’s future effective tax rate.

The pro forma adjustments included in the unaudited pro forma combined statement of operations for the six-months ended June 28, 2008 are as follows:

(l) Represents the following:

• an increase of $8 to reflect the additional depreciation expense per the increase in the preliminary fair valuation of e-Dialog’s fixed assets;

• an increase of $575 to reflect the amortization expense per the preliminary fair valuation of e-Dialog’s intangible assets.

(m)	Represents a $643 reduction to interest income to reflect the use of the Company’s cash and cash equivalents to fund the acquisition on the first day of the period presented.
(n)	Represents an increase to the income tax benefit of $490 for the income tax effect of the pro forma adjustments, recorded at the Company’s estimated statutory tax rate of 40.0%. This rate is not necessarily indicative of the Company’s future effective tax rate.