Exhibit 99.1
GSI COMMERCE REPORTS FISCAL 2006 FOURTH QUARTER AND FULL FISCAL YEAR 2006
OPERATING RESULTS
FISCAL YEAR 2006 NET REVENUE GROWTH RATE ACCELERATED TO 38 PERCENT AND INCOME
FROM OPERATIONS INCREASED 235 PERCENT
KING OF PRUSSIA, Pa., Feb. 13 /PRNewswire-FirstCall/ -- GSI Commerce Inc.
(Nasdaq: GSIC) today announced financial results for its 2006 fiscal fourth
quarter and year ended Dec. 30, 2006.
Fiscal Year 2006 Compared to Fiscal Year 2005
* Net revenue increased 38 percent to $609.6 million from $440.4 million.
* Merchandise sales increased 74 percent to $1.2 billion from $682.0
million.
* Income from operations increased 235 percent to $9.6 million from $2.9
million.
* Adjusted EBITDA (income from operations plus stock-based compensation
and depreciation and amortization) increased 81 percent to $38.5 million
from $21.3 million.
* Net income increased to $53.7 million or $1.10 per diluted share from
$2.7 million or $0.06 per diluted share. Fiscal year 2006 net income is
inclusive of a favorable non-cash income tax benefit of $44.4 million.
* Non-GAAP net income (net income plus stock-based compensation,
amortization of acquisition-related intangibles and cumulative effect of
accounting change, minus non-cash income tax benefit) increased 162
percent to $17.0 million or $0.34 per diluted share from $6.5 million or
$0.14 per diluted share.
* Cash, cash equivalents and marketable securities increased to $184.5
million from $156.7 million.
* Cash provided by operating activities was $66.1 million compared to
$24.3 million.
* Free cash flow (cash provided by operating activities minus cash paid
for fixed assets, including capitalized software development) was $23.5
million, compared to negative $5.3 million.
Definitions of the non-GAAP measures merchandise sales, adjusted EBITDA,
non-GAAP net income and free cash flow and a discussion of the importance of
these financial metrics to GSI's business can be found under "Non-GAAP Financial
Measures" provided later in this news release.
"Our 2006 achievements demonstrate our ability to execute our strategy,
highlighted by record financial results, nine new multiyear partner agreements
and the extension of five partner relationships," said Michael G. Rubin,
chairman and CEO of GSI Commerce. "Continuing investment in our platform fueled
our growth as we delivered new functions, features, facilities and services to
our partners. I am excited about the company's outlook for 2007, and I am
confident we will continue to deliver strong financial results while
simultaneously investing in our business. Specifically, we plan to invest an
estimated $12 million in discretionary fixed operating expenses in fiscal 2007
to enhance our global capabilities, strengthen our technology infrastructure,
nearly double the investment in our technology product roadmap, automate our
newest fulfillment center, increase our sales and marketing organization, and
expand our management team. I expect that the combination of these investments
and our strategic focus will further strengthen our leadership position in the
industry."
"GSI's fiscal year 2006 financial performance exceeded expectations driven
by a solid performance in our seasonally strong fourth quarter. Notable
accomplishments included an accelerated revenue growth rate, our seventh
consecutive year of increased operating and adjusted EBITDA margins, significant
growth in our cash flow from operations and our first year of positive free cash
flow," said Michael Conn, CFO of GSI Commerce. "Our fiscal 2007 guidance
reflects expectations for continued momentum in our business. Similar to fiscal
2006, we expect that our investment spending will cause year-over-year earnings
declines in the first three quarters of the year followed by strong
year-over-year growth in income from operations, adjusted EBITDA and non-GAAP
net income in the fourth quarter of fiscal 2007. However, due to the large
non-cash income tax benefit we recorded in fiscal 2006, we would expect
year-over-year declines in GAAP net income in all four quarters of fiscal 2007."
Fiscal 2006 Fourth Quarter Compared to Fiscal 2005 Fourth Quarter
* Net revenue increased 49 percent to $257.2 million from $172.3 million.
* Merchandise sales increased 97 percent to $555.9 million from $282.4
million.
* Income from operations increased 91 percent to $23.5 million from $12.3
million.
* Adjusted EBITDA (income from operations plus stock-based compensation
and depreciation and amortization) increased 78 percent to $31.5 million
from $17.7 million.
* Net income increased to $67.9 million or $1.33 per diluted share from
$11.7 million or $0.25 per diluted share. Fiscal 2006 fourth quarter net
income is inclusive of a favorable non-cash income tax benefit of $44.4
million.
* Non-GAAP net income (net income plus stock-based compensation,
amortization of acquisition-related intangibles and cumulative effect of
accounting change, minus non-cash income tax benefit) increased 97
percent to $25.5 million or $0.50 per diluted share from $13.0 million
or $0.26 per diluted share.
Key Events Since Oct. 25, 2006
* In November 2006, GSI launched fulfillment and customer care
operations for the online store (http://store.babycenter.com ) of
BabyCenter LLC, the leading online resource for new and expectant
parents. This partner was announced but not named in our 2006 fiscal
third quarter news release.
* In January 2007, GSI announced that Wilsons, The Leather Experts
Inc. (http://www.wilsonsleather.com), a leading specialty retailer
of leather outerwear, accessories and apparel in the United States,
had signed a multiyear extension to its e-commerce agreement for Web
technology, fulfillment, customer care and marketing services.
* In February 2007, GSI launched the new Web store for RacingOne
(http://store.racingone.com), a company of International Speedway
Corporation, which is a leading promoter of motorsports activities
in the United States. GSI provides RacingOne's online store with Web
technology, fulfillment, customer care operations and marketing
services. This partner was announced but not named in our 2006
fiscal third quarter news release.
* Also in February 2007, GSI launched the Web store for Elizabeth
Arden, a global prestige beauty products company, at
http://shop.elizabetharden.com. GSI provides the new online store
with Web technology, fulfillment, customer care operations and
marketing services. GSI announced the new e-commerce agreement in
our 2006 fiscal third quarter news release but did not name
Elizabeth Arden.
2007 Fiscal Year and First Quarter Financial Guidance
The following forward-looking statements reflect GSI's expectations as of
Feb. 13, 2007. 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.
The company provides the following guidance for fiscal year 2007 (dollars in
millions):
GAAP Guidance Range Non-GAAP Guidance Range
- ---------------------- ------------ ----------------------- ---------------
Net revenue $685 - $735 Merchandise sales (a) $1,500 - $1,600
Income from operations $8 - $13 Adjusted EBITDA (b) $50 - $55
Net income $34 - $39 Non-GAAP net income (c) $19.5 - $24.5
The following additional fiscal 2007 year guidance is presented to reconcile
the GAAP financial metric to its corresponding non-GAAP financial metric:
a) Merchandise sales: add to projected net revenue estimated
merchandise sales from non-owned inventory of approximately $1.0-
$1.1 billion and subtract estimated service fees of approximately
$200 million.
b) Adjusted EBITDA: add to projected income from operations estimated
depreciation and amortization of $33 million and estimated stock-
based compensation of $9 million.
c) Non-GAAP net income: add to projected net income estimated
stock-based compensation of $9 million and estimated amortization of
acquisition-related intangibles of $1.5 million and subtract
estimated non-cash income tax benefit of $25 million.
Capital expenditures for fiscal year 2007 are estimated to be approximately
$50 million.
The company provides the following guidance for fiscal 2007 first quarter
(dollars in millions):
GAAP Guidance Range Non-GAAP Guidance Range
- ---------------------- --------------- --------------------- ---------------
Net revenue $128 - $138 Merchandise sales (a) $265 - $285
Loss from operations $(7.5) - $(6.5) Adjusted EBITDA (b) $1.5 - $2.5
Net loss $(6.5) - $(5.5) Non-GAAP net loss (c) $(4.1) - $(3.1)
The following additional fiscal 2007 first quarter guidance is presented to
reconcile the GAAP financial metric to its corresponding non-GAAP financial
metric:
a) Merchandise sales: add to projected net revenue estimated
merchandise sales from non-owned inventory of approximately
$172-$182 million and subtract estimated service fees of
approximately $35 million.
b) Adjusted EBITDA: add to projected loss from operations estimated
depreciation and amortization of $7 million and estimated stock-
based compensation of $2 million.
c) Non-GAAP net loss: add to projected net loss estimated stock-based
compensation of $2 million and estimated amortization of
acquisition-related intangibles of $0.4 million for fiscal 2007
first quarter.
Non-GAAP Financial Measures
GSI's consolidated financial statements are prepared and presented in
accordance with GAAP. To supplement our consolidated financial statements, in
this release and on the conference call, we use the non-GAAP financial measures
of merchandise sales, adjusted EBITDA, non-GAAP net income and free cash flow.
We also discuss certain ratios that use those measures. The non-GAAP measures
and ratios presented are not intended to be considered in isolation of, as a
substitute for or superior to our GAAP financial information. We have included
reconciliations later in this release of the non-GAAP measures to the nearest
GAAP measure.
We use these non-GAAP financial measures for financial and operational
decision making and as a means to evaluate our performance. In our opinion,
these non-GAAP measures provide meaningful supplemental information regarding
our performance. We believe that both management and investors benefit from
referring to these non-GAAP financial measures in assessing our performance and
when planning, forecasting and analyzing future periods. These non-GAAP
financial measures also facilitate management's internal comparisons to our
historical performance and liquidity as well as comparisons to our competitors'
operating results. We believe these non-GAAP financial measures are useful to
investors both because (1) they allow for greater transparency with respect to
key metrics used by management in its financial and operational decision making
and (2) they are used by institutional investors and the analyst community to
help them analyze the health of our business.
Merchandise sales. We define merchandise sales as the retail value of all
sales transactions, inclusive of freight charges and net of allowances for
returns and discounts, which flow through GSI's platform, whether or not we are
the seller of the merchandise or record the full amount of such sales on our
financial statements. We consider merchandise sales to be a useful metric for
management and investors because a significant portion of our sales and
marketing expenses, including fulfillment and customer service labor expense,
order processing costs such as credit card and bank processing fees and
organizational costs such as business management, are related to the amount of
sales made through our platform, whether or not we record the revenue from such
sales. As a result, we use this metric as part of our revenue and expense
forecasting process and for capacity planning purposes. We monitor this metric
on a daily basis and consider it to be a critical measure of the health of our
business.
Adjusted EBITDA. Beginning with this release, we are defining adjusted
EBITDA as income from operations excluding stock-based compensation and
depreciation and amortization expenses. Although we previously defined adjusted
EBITDA by reference to net income, there is no material difference in the
resulting adjusted EBITDA calculation. We consider adjusted EBITDA to be a
useful metric for management and investors because it excludes certain non-cash
items. We believe that given the recent adoption of SFAS 123R, it is difficult
for investors to evaluate our income from operations relative to prior periods
because our income from operations prior to fiscal 2006 calculated our
stock-based compensation expense in a manner differently than required under
SFAS 123R. Moreover, because of varying available valuation methodologies,
subjective assumptions and the variety of award types that companies can use
when adopting SFAS 123R, we believe that viewing income from operations
excluding stock-based compensation expense allows investors to make meaningful
comparisons between our operating performance and those of other businesses.
Because we are growing rapidly and operate in an emerging and rapidly changing
industry, we believe that our level of capital expenditures and consequently the
level of depreciation and amortization expense relative to our revenues could be
meaningfully greater today than it will be over time. As a result, we believe it
is useful supplemental information to view income from operations excluding
depreciation and amortization expense as it provides a potential indicator of
the future operating margin potential of the business.
Non-GAAP net income. We define non-GAAP net income as net income excluding
stock-based compensation expense, amortization of acquisition-related
intangibles, cumulative effect of change in accounting principle related to the
adoption of SFAS 123R and income tax benefits related to the release of the
company's valuation allowances. We believe it is useful to exclude stock-based
compensation expense from non-GAAP net income for the same reason we exclude it
from adjusted EBITDA. We believe it is useful to exclude amortization of
acquisition-related intangibles because in our opinion the benefits of these
assets could exceed the amortization period and this supplemental view enables
management and investors to measure the business without this potential effect.
The gain we recorded from the cumulative effect of change in accounting
principle related to the adoption of SFAS 123R is an item we view as
non-recurring in nature. We believe it is useful to view net income without the
benefit of this non-recurring item. Because we generated significant net losses
prior to fiscal 2005, we have a large deferred tax asset that represents the
value to us of our future net operating loss carry forwards. Prior to fiscal
2006, we had fully reserved this asset because we lacked a track record of
profitability. In fiscal 2006, due to establishing a track record of
profitability, we reversed a portion of this reserve which resulted in a
non-cash benefit. We will continue to evaluate our profitability trends and
believe we may further release this reserve over time. Because this benefit is
non-cash, is difficult to forecast, was not recorded historically and is not
typically contained in the financial statements of other companies, we believe
that it is useful to view net income without giving effect to this benefit.
Free cash flow. We define free cash flow as net cash provided by operating
activities minus capital expenditures, including capitalized software
development. We consider free cash flow to be a liquidity measure that provides
useful information to management and investors about the amount of cash
generated by the business that, after the acquisition of property and equipment,
including information technology infrastructure, can be used for strategic
opportunities, including investing in the business, making strategic
acquisitions and strengthening the balance sheet. Analysis of free cash flow
also facilitates management's comparisons of our operating results to
competitors' operating results. A limitation of using free cash flow as a means
for evaluating our performance is that free cash flow reflects changes in
working capital which is impacted by short-term changes in cash flow and the
seasonality of our business which may not be indicative of long-term
performance. Another limitation of free cash flow is that it excludes fixed
assets purchased and placed in service but not paid for during the applicable
period. Our management compensates for this limitation by providing information
about capital expenditures on the face of the cash flow statement in
supplemental disclosures in our Forms 10-K and 10-Q.
Fiscal Fourth Quarter 2006 and Fiscal Year 2006 Conference Call
GSI Commerce has scheduled a conference call for today at 4:45 p.m. EST to
review its fiscal 2006 fourth quarter and fiscal year 2006 operating results and
to discuss the company's expectations for future performance. For access to the
conference call, please call the toll-free conference number, 1-866- 271-0675,
by 4:30 p.m. EST. The conference passcode is "26255509." Alternatively, to
listen to the call live on the Web, go to GSI Commerce's 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. EST) 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 March 13. Access to a
recording of the conference call can be made by calling toll-free,
1-888-286-8010. The telephone replay passcode is "49999440." In addition, access
to an audio replay of the conference call's Webcast can be found on the home
page of the GSI Commerce Web site. Access to the audio replay of the Webcast
also will remain available through March 13.
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. The company provides
solutions for our partners through its integrated e-commerce platform, which is
comprised of three components: technology, logistics and customer care, and
marketing services. GSI provides e-commerce solutions for approximately 60
partners.
Forward-Looking Statements
All statements made in this release and to be made in GSI Commerce's fiscal
2006 fourth quarter conference call, including those in the tape recording,
Webcast replay, 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," "schedule" and similar expressions typically are used
to identify forward-looking statements. Forward-looking statements are based on
the then-current expectations, beliefs, assumptions, estimates and forecasts
about our business. 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 our business, financial condition and operating results include the
effects of changes in the economy, consumer spending, the financial markets and
the industries in which we and our partners operate, changes affecting the
Internet and e-commerce, our ability to develop and maintain relationships with
strategic partners and suppliers and the timing of the establishment, extension
or termination of our relationships with strategic partners, our ability to
timely and successfully develop, maintain and protect our technology,
confidential and proprietary information, and product and service offerings and
execute operationally, our ability to attract and retain qualified personnel,
our ability to successfully integrate its acquisitions of other businesses, if
any, the performance of acquired businesses and the impact of SFAS 123R. More
information about potential factors that could affect us can be found in our
most recent Form 10-K, Form 10-Q and other reports and statements filed by us
with the SEC. We expressly disclaim any intent or obligation to update these
forward-looking statements.
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
December 31, December 30,
2005 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 48,361 $ 71,382
Marketable securities 108,298 113,074
Accounts receivable, net of allowance
of $727 and $1,078 24,288 38,681
Inventory 34,601 46,816
Deferred income taxes - 10,403
Prepaid expenses and other current assets 3,135 6,409
Total current assets 218,683 286,765
Property and equipment, net 87,851 106,204
Goodwill 13,932 17,786
Equity investments and other 1,210 2,435
Long-term deferred income taxes - 36,792
Other assets, net of accumulated amortization
of $7,885 and $12,367 10,970 13,575
Total assets $ 332,646 $ 463,557
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 58,720 $ 76,553
Accrued expenses and other 42,949 72,740
Deferred revenue 6,573 11,790
Current portion - long-term debt 637 510
Total current liabilities 108,879 161,593
Convertible notes 57,500 57,500
Long-term debt 13,094 12,856
Deferred revenue and other - 3,901
Total liabilities 179,473 235,850
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value,
4,990,000 shares authorized;
0 shares issued and outstanding
as of December 31, 2005 and December 30, 2006 - -
Common stock, $0.01 par value,
90,000,000 shares authorized; 44,469,969
and 45,878,527 shares issued as of
December 31, 2005 and December 30, 2006,
respectively; 44,469,766 and 45,878,324
shares outstanding as of December 31, 2005
and December 30, 2006, respectively 445 458
Additional paid in capital 329,103 347,676
Accumulated other comprehensive loss (2,344) (97)
Accumulated deficit (174,031) (120,330)
Total stockholders' equity 153,173 227,707
Total liabilities and stockholders' equity $ 332,646 $ 463,557
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
December 31, December 30, December 31, December 30,
2005 2006 2005 2006
------------ ------------ ------------ ------------
Revenues:
Net revenues from product sales $ 135,080 $ 190,327 $ 355,374 $ 461,183
Service fee revenues 37,174 66,880 85,018 148,370
Net revenues 172,254 257,207 440,392 609,553
Cost of revenues from product sales 98,079 130,339 263,829 331,253
Gross profit 74,175 126,868 176,563 278,300
Operating expenses:
Sales and marketing, inclusive of
$1,391, $608, $3,200, and
$3,654, of stock-based
compensation 41,938 71,521 107,503 165,919
Product development, inclusive of
$24, $301, $398, and $936, of
stock-based compensation 8,020 14,264 28,833 45,375
General and administrative,
inclusive of ($184), $783,
$207, and $2,988, of
stock-based compensation 7,727 11,236 22,714 36,062
Depreciation and amortization 4,203 6,385 14,635 21,297
Total operating expenses 61,888 103,406 173,685 268,653
Income from operations 12,287 23,462 2,878 9,647
Other (income) expense:
Interest expense 786 775 2,220 3,107
Interest income (1,111) (1,647) (2,944) (6,075)
Other (income) expense 553 (65) 582 37
Loss on investment - 110 - 2,873
Total other (income) expense 228 (827) (142) (58)
Income before income taxes and
cumulative effect of change in
accounting principle 12,059 24,289 3,020 9,705
Provision (benefit) for income taxes 321 (43,579) 321 (43,728)
Net income before cumulative effect of
change in accounting principle 11,738 67,868 2,699 53,433
Cumulative effect of change in
accounting principle - - - 268
Net income $ 11,738 $ 67,868 $ 2,699 $ 53,701
Basic earnings per share:
Prior to cumulative effect of
change in accounting principle $ 0.26 $ 1.49 $ 0.06 $ 1.18
Cumulative effect of change in
accounting principle $ - $ - $ - $ 0.01
Earnings per share - basic $ 0.26 $ 1.49 $ 0.06 $ 1.19
Diluted earnings per share:
Prior to cumulative effect of
change in accounting principle $ 0.25 $ 1.33 $ 0.06 $ 1.09
Cumulative effect of change in
accounting principle $ - $ - $ - $ 0.01
Earnings per share - diluted $ 0.25 $ 1.33 $ 0.06 $ 1.10
Weighted average shares outstanding:
basic 44,450 45,679 43,216 45,174
diluted 49,781 51,287 45,321 50,625
Prior period Sales and marketing expenses, Product development expenses, and
General and administrative expenses have been reclassified to be inclusive of
stock-based compensation. The purpose of the reclassifications are to conform
the prior period amounts to the classifications used in the current period.
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended
----------------------------
December 31, December 30,
2005 2006
------------ ------------
Cash Flows from Operating Activities:
Net income $ 2,699 $ 53,701
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,635 21,297
Stock-based compensation 3,805 7,578
Tax benefit in connection with exercise of stock
options and awards 83 -
Loss on investment - 2,873
Loss on disposal of equipment 78 329
Deferred income taxes - (44,404)
Cumulative effect of change in
accounting principle - (268)
Changes in operating assets and liabilities:
Accounts receivable, net (9,317) (14,280)
Inventory 3,171 (12,204)
Prepaid expenses and other current assets (659) (3,272)
Other assets, net (397) (2,256)
Accounts payable and accrued expenses and other 13,005 48,377
Deferred revenue (2,818) 8,606
Net cash provided by operating activities 24,285 66,077
Cash Flows from Investing Activities:
Payments for acquisitions of
businesses, net of cash acquired (768) (5,849)
Cash paid for property and equipment, including
internal use software (29,551) (42,621)
Proceeds from government grant related to corporate
headquarters - 3,000
Funding of restricted cash escrow funds - (1,052)
Other deferred cost (95) 95
Cash paid for equity investments (136) (2,435)
Purchases of marketable securities (176,789) (226,968)
Sales of marketable securities 123,480 222,685
Net cash used in investing activities (83,859) (53,145)
Cash Flows from Financing Activities:
Proceeds from convertible notes 57,500 -
Proceeds from long-term borrowing - 343
Debt issuance costs paid (2,589) -
Repayments of loan (339) -
Repayments of capital lease obligations (452) (469)
Repayments of mortgage note (153) (170)
Proceeds from sales of common stock 27,782 -
Equity issuance costs paid (1,839) -
Excess tax benefit in connection with exercise of
stock options and warrants - 145
Proceeds from exercise of common
stock options and warrants 7,949 10,166
Net cash provided by financing activities 87,859 10,015
Effect of exchange rate changes on
cash and cash equivalents 12 74
Net increase in cash and cash equivalents 28,297 23,021
Cash and cash equivalents, beginning of period 20,064 48,361
Cash and cash equivalents, end of period $ 48,361 $ 71,382
GSI COMMERCE, INC. AND SUBSIDIARIES
ADJUSTED EBITDA (1) AND RECONCILIATION TO GAAP RESULTS
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
December 31, December 30, December 31, December 30,
2005 2006 2005 2006
------------ ------------ ------------ ------------
Reconciliation of GAAP Income from
operations to Adjusted EBITDA:
GAAP Income from operations $ 12,287 $ 23,462 $ 2,878 $ 9,647
Stock-based compensation 1,231 1,692 3,805 7,578
Depreciation and amortization 4,203 6,385 14,635 21,297
Adjusted EBITDA $ 17,721 $ 31,539 $ 21,318 $ 38,522
(1) Adjusted EBITDA no longer includes other income (expense) as a reconciling
item between Adjusted EBITDA and GAAP results.
GSI COMMERCE, INC. AND SUBSIDIARIES
NON-GAAP NET INCOME AND RECONCILIATION TO GAAP RESULTS
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
December 31, December 30, December 31, December 30,
2005 2006 2005 2006
------------ ------------ ------------ ------------
Reconciliation of GAAP net income to
non-GAAP net income
GAAP net income $ 11,738 $ 67,868 $ 2,699 $ 53,701
Income taxes (1) - (44,404) - (44,404)
Stock-based compensation 1,231 1,692 3,805 7,578
Cumulative effect of change in
accounting principle - - - (268)
Amortization of acquisition-
related intangibles 9 391 9 432
Non-GAAP net income $ 12,978 $ 25,547 $ 6,513 $ 17,039
Diluted non-GAAP net income per
share $ 0.26 $ 0.50 $ 0.14 $ 0.34
Weighted average shares
outstanding diluted 49,781 51,287 45,321 50,625
(1) Income taxes = Portion of the income tax benefit that represents the
reduction of the income tax valuation allowance
GSI COMMERCE, INC. AND SUBSIDIARIES
FREE CASH FLOW AND RECONCILIATION TO GAAP OPERATING CASH FLOW
(In thousands)
(Unaudited)
Twelve Months Ended
----------------------------
December 31, December 30,
2005 2006
------------ ------------
Reconciliation of GAAP operating cash
flow to free cash flow
GAAP cash flow from operating activities $ 24,285 $ 66,077
Cash paid for fixed assets, including
capitalized software development (29,551) (42,621)
Free Cash Flow $ (5,266) $ 23,456
GSI COMMERCE, INC. AND SUBSIDIARIES
MERCHANDISE SALES (1) AND RECONCILIATION TO GAAP RESULTS
(Dollars in thousands)
(Unaudited)
Three Months Ended
---------------------------- Variance
December 31, December 30, ----------------------------
2005 2006 Amount %
------------ ------------ ------------ ------------
Merchandise sales (1) - (a non-GAAP financial measure):
Category:
Sporting goods $ 116,223 $ 177,920 $ 61,697 53%
Other 166,140 377,979 211,839 128%
Total merchandise sales (1)
- (a non-GAAP financial measure) $ 282,363 $ 555,899 $ 273,536 97%
Net revenues - (GAAP basis):
Net revenues from product sales:
Category:
Sporting goods $ 93,136 $ 147,839 $ 54,703 59%
Other 41,944 42,488 544 1%
Total net revenues from product sales 135,080 190,327 55,247 41%
Service fee revenues 37,174 66,880 29,706 80%
Total net revenues - (GAAP basis) $ 172,254 $ 257,207 $ 84,953 49%
Reconciliation of merchandise sales (1) to net revenues:
Merchandise sales (1) - (a non-GAAP financial measure):
Category:
Sporting goods $ 116,223 $ 177,920 $ 61,697 53%
Other 166,140 377,979 211,839 128%
Total merchandise sales (1)
- (a non-GAAP financial measure) 282,363 555,899 273,536 97%
Less:
Sales by partners (2):
Category:
Sporting goods (23,087) (30,081) (6,994) 30%
Other (124,196) (335,491) (211,295) 170%
Total sales by partners (2) (147,283) (365,572) (218,289) 148%
Add:
Service fee revenues 37,174 66,880 29,706 80%
Net revenues - (GAAP basis) $ 172,254 $ 257,207 $ 84,953 49%
(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)
Twelve Months Ended
---------------------------- Variance
December 31, December 30, ----------------------------
2005 2006 Amount %
------------ ------------ ------------ ------------
Merchandise sales (1) - (a non-GAAP financial measure):
Category:
Sporting goods $ 261,568 $ 385,950 $ 124,382 48%
Other 420,429 801,849 381,420 91%
Total merchandise sales (1)
- (a non-GAAP financial measure) $ 681,997 $ 1,187,799 $ 505,802 74%
Net revenues - (GAAP basis):
Net revenues from product sales:
Category:
Sporting goods $ 212,932 $ 314,696 $ 101,764 48%
Other 142,442 146,487 4,045 3%
Total net revenues from product sales 355,374 461,183 105,809 30%
Service fee revenues 85,018 148,370 63,352 75%
Total net revenues - (GAAP basis) $ 440,392 $ 609,553 $ 169,161 38%
Reconciliation of merchandise sales (1) to net revenues:
Merchandise sales (1) - (a non-GAAP financial measure):
Category:
Sporting goods $ 261,568 $ 385,950 $ 124,382 48%
Other 420,429 801,849 381,420 91%
Total merchandise sales (1)
- (a non-GAAP financial measure) 681,997 1,187,799 505,802 74%
Less:
Sales by partners (2):
Category:
Sporting goods (48,636) (71,254) (22,618) 47%
Other (277,987) (655,362) (377,375) 136%
Total sales by partners (2) (326,623) (726,616) (399,993) 122%
Add:
Service fee revenues 85,018 148,370 63,352 75%
Net revenues - (GAAP basis) $ 440,392 $ 609,553 $ 169,161 38%
(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
Chief Financial Officer 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- 02/13/2007
/CONTACT: Michael Conn, Chief Financial Officer, +1-610-491-7002,
connm@gsicommerce.com; Greg Ryan, Director, Corp. Communications,
+1-610-491-7294, ryang@gsicommerce.com, both of GSI Commerce Inc./
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