UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
    FORM 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    January 1, 2011oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    fromto
    .   Commission file number 0-16611
      GSI COMMERCE, INC.
 (Exact name of registrant as
    specified in its charter)
  DELAWARE


04-2958132(State or other jurisdiction
    of


(I.R.S. Employerincorporation or
    organization)


Identification No.
)   935 FIRST AVENUE, KING OF PRUSSIA, PA


19406(Address of principal executive
    offices)


(Zip Code
)  Registrants telephone number, including area code
    (610) 491-7000
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $.01 per share

NASDAQ Global Select MarketPreferred Stock Purchase Rights

NASDAQ Global Select Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
  (1)
        DOCUMENTS
    INCORPORATED BY REFERENCE (Specific
    sections incorporated are identified under applicable items
    herein)
  Form 10-K,
    (1)
    
    This amount equals the number of
    outstanding shares of the registrants common stock reduced
    by the number of shares that may be deemed held by the
    registrants executive officers, directors and stockholders
    owning in excess of 10% of the registrants common stock,
    multiplied by the last reported sale price for the
    registrants common stock on July 2, 2010 the last
    trading day prior to the last day of registrants second
    fiscal quarter. This information is provided solely for record
    keeping purposes of the Securities and Exchange Commission and
    shall not be construed as an admission that any executive
    officer, director or 10% stockholder of the registrant is an
    affiliate of the registrant or is the beneficial owner of any
    such shares. Any such inference is hereby disclaimed.




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GSI
    COMMERCE, INC.
    ANNUAL REPORT ON
    FORM 10-K
    FOR THE YEAR ENDED JANUARY 1, 2011
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


1Item 1A.


Risk Factors


6Item 1B.


Unresolved Staff Comments


20Item 2.


Properties


21Item 3.


Legal Proceedings


21Item 4.


Removed and Reserved


22PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


22Item 6.


Selected Financial Data


24Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


39Item 8.


Financial Statements and Supplementary Data


40Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


40Item 9A.


Controls and Procedures


40Item 9B.


Other Information


43PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


43Item 11.


Executive Compensation


43Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


43Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


44Item 14.


Principal Accountant Fees and Services


44PART IVItem 15.


Exhibits and Financial Statement Schedule


45Signatures


49      References To

Refer to The Years Ended/EndingFiscal 2006

December 30, 2006Fiscal 2007

December 29, 2007Fiscal 2008

January 3, 2009Fiscal 2009

January 2, 2010Fiscal 2010

January 1, 2011Fiscal 2011

December 31, 2011Fiscal 2012

December 29, 2012Fiscal 2013

December 28, 2013Fiscal 2014

January 3, 2015Fiscal 2015

January 2, 2016




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PART I  ITEM 1:
    BUSINESS  Company
    Overview
  e-Commerce ® ® ® ® ® ® ® 2008-2010.
  2008


2009


2010Revenues


% of


Revenues


% of


Revenues


% ofRevenue By Segment

(MM)


Total


(MM)


Total


(MM)


TotalGlobal
    e-Commerce
    Services

$
900.0



93
%

$
879.6



87
%

$
1,024.4



75
%Global Marketing Services

$
84.5



9
%

$
127.6



13
%

$
189.9



14
%Consumer Engagement









$
26.3



3
%

$
216.7



16
%Inter-Company Elimination

$
(17.6
)


−2
%

$
(29.3
)


−3
%

$
(73.0
)


−5
%TOTAL

$
966.9






$
1,004.2






$
1,358.0   Global
    e-Commerce
    Services
  e-Commerce e-Commerce e-commerce e-commerce
  Technology &
    Payments
  e-commerce
  
    Webstore & Mobile:  GSI
    Commerces webstore & mobile store offering is a
    global platform that includes secure shopping cart and checkout
    offerings, analytical tools, site management tools, including
    catalog, content and promotions management, and guided product
    discovery. Additionally, GSIs front-end solution will
    offer full mobile store capabilities in its new version planned
    to launch in 2011.
    Commerce Exchange &
    Multi-Channel:  Commerce exchange is a global
    platform with transactional capabilities, including order
    management, inventory management and fulfillment integration.
    Multi-channel is a suite of software products that enables
    in-store pickup, ship-from-store,
    ship-to-store,
    and drop ship capabilities. The foundation of the multi-channel
    offering utilizes the CommerceSuite product from VendorNet, a
    company acquired in May 2010. 1




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
    Payments:  GSI Commerce provides a robust
    online payment processing engine with capabilities including
    price, tax and shipping calculations, address verification,
    order review and fraud prevention, credit card authorization and
    settlement, and alternative payment processing.  e-commerce
  e-commerce next-day
  Operations
  e-commerce
  
    Fulfillment & Freight Services:  GSI
    Commerce operates five
    e-commerce
    fulfillment centers in the United States and one in Canada,
    encompassing over 2.7 million square feet as well as two
    facilities in the United Kingdom. Within these facilities, GSI
    Commerce utilizes a multi-level pick mezzanine infrastructure
    and world-class warehouse management systems to provide
    customized
    direct-to-consumer
    fulfillment solutions, including order management, real-time
    order status updates, and reverse logistics services. Through
    scale and partnership with leading freight providers, the
    Company offers clients favorable shipping rates and innovative
    freight programs, including its ShipQuick shipping program.
    Under this program, packages are presorted by customer zip code
    shortening time in transit.
    Customer Care:  Through three call centers in
    the United States and a network of at-home agents, plus one call
    center in the United Kingdom, GSI Commerce provides customer
    care capabilities for
    e-commerce
    via telephone and email. The Company combines proprietary and
    third-party technologies, including automatic call distribution,
    computer telephony integration, interactive voice response
    (IVR),
    e-mail,
    workforce management, voice recording/monitoring and customer
    relationship management systems in the customer care platform.
    The U.K. call center offers customer care in 11 languages.
    Direct Response:  Direct response provides
    fulfillment, call center and related value added services to the
    direct response television industry. The Company operates
    fulfillment and call center facilities that are located near the
    port of Los Angeles, which enables it to quickly turnaround
    inbound containers from Asia. Direct response utilizes a
    proprietary technology system that supports the unique needs of
    the direct response industry, including multi-pay, upsells and
    backorder management.  Licensed
    Sports Merchandise (LSM)
  e-commerce end-to-end e-commerce
 2




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##### 



e-commerce
    Hart-Scott-Rodino
  Global
    Marketing Services
    
    ClearSaleing:  ClearSaleing provides a
    marketing attribution and analytics platform that assists
    clients in determining which online marketing expenditures along
    the purchase chain are driving conversion and helps clients
    craft optimized online marketing spending plans.
    ClearSaleings platform is a leader in the interactive
    attribution analysis category due to its ease of use, custom
    analytics and appeal to a wide array of marketers. ClearSaleing
    was acquired in January 2011.
    e-Dialog:e-Dialog
    is a leading provider of advanced
    e-mail
    marketing and database technologies, products, strategies and
    services for permission based
    e-mail
    marketers.
    e-Dialog
    operates globally with locations in Boston, Seattle, London, and
    Singapore.
    e-Dialog
    opened its Singapore office in June 2010.
    e-Dialog was
    acquired in February 2008.
    Fetchback:  Fetchback is a leading service
    provider in the retargeting display ad space. Fetchback utilizes
    an advanced proprietary technology to deliver targeted display
    ads to consumers after they leave a clients site and
    convert these lost prospects into customers. Fetchback was
    acquired in June 2010.
    M3 Mobile:  M3 Mobile provides SMS-based mobile
    messaging and marketing solutions, including text-based online
    and in-store offers as well as mobile gift cards. Through its
    proprietary content management web interface tool, M3 builds and
    tracks sophisticated and flexible mobile programs. M3 Mobile was
    acquired in April 2010.
    MBS Insight:  MBS provides sophisticated
    customized database and analytics solutions that help clients
    optimize marketing programs by integrating online and offline
    customer data. MBS offers a range of outsourced direct marketing
    services, including: strategic services for goal setting,
    measurement, and meaningful data identification and patterning;
    analytical solutions that help clients optimize marketing
    program response, revenue, and efficiency; customized database
    solutions enabling marketers to access a holistic view of a
    customers multichannel activity; and customer data
    integration services, including merge/purge, address hygiene,
    and proprietary processes. MBS was acquired in May 2010.
    PepperJam:  PepperJam is a dynamic,
    pay-for-performance
    retail and lead-generation affiliate network platform.
    PepperJams proprietary technology provides enhanced levels
    of reporting, tracking and communication between merchants and
    affiliates that drives improved marketing efficiency. Pepperjam
    was acquired in September 2009.
    Silverlign:  Silverlign is a digital agency,
    whose competencies include research and strategy, integrated
    design and digital solutions. The agency provides integrated
    brand and marketing strategy, Web strategy and design, brand
    communications and advertising, online marketing, search engine
    optimization, user experience and usability, and emerging media
    services. Silverlign was acquired in May 2009. 3




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
    TrueAction:  TrueAction is a full service
    digital marketing agency offering website and graphics design,
    online media campaign buying and management, affiliate program
    management, full-service digital photo services in its
    ~10,000 sq. ft.
    of studios, search engine marketing (SEM) and search engine
    optimization (SEO) services, video and content marketing and
    online brand management services.  Consumer
    Engagement
  e-commerce
  
    Rue La La:  Rue La La operates a
    members-only online shopping site that gives its members access
    to limited duration sales of discounted merchandise from well
    known brands and manufacturers. Membership is by invitation-only
    and is primarily attained through existing member referrals. Rue
    La La focuses its offerings on a broad array of
    premium brands and categories and curates an assortment of
    brands for womens & mens apparel,
    shoes & accessories, watches & jewelry,
    home, and beauty, as well as travel and experience offerings.
    Rue La La also offers daily local deals in select
    cities in the United States for products and services. Since
    launching in 2008, Rue La La has grown its member base
    to over 3.0 million members. Rue La La provides
    manufacturers and vendors an effective liquidation channel
    designed to protect brand integrity. Rue La La also
    operates a website called SmartBargains that predominantly
    functions as a final liquidation vehicle for unsold merchandise
    from Rue La La. Rue La La was acquired in
    November 2009.
    ShopRunner:  ShopRunner is a consumer
    membership program that offers members free
    2-day
    shipping and free return shipping from online retailers for an
    annual membership fee. Members are also offered select
    promotional deals from participating merchants. Merchants
    participate in ShopRunner for the opportunity to gain increased
    purchases from members based on the ShopRunner value
    proposition. ShopRunner was launched in the fourth quarter of
    2010 and currently has approximately 70 participating merchants.  Competition
    Global e-Commerce Services

Global Marketing Services

Consumer EngagementIBM

PFSWeb

Convergys

Omnicomm Group

ValueClick

Experian

Gilt Groupe

Amazon.comUPS

Innotrac

Sykes Enterprises

WPP Group

TradeDoubler

Harte-Hanks

Hautelook

Overstock.comArt Technology Group

West Communications



Publicis

LinkShare

Axicom

IdeeliIPG

Google   Employees
  e-commerce
  Intellectual
    Property
   4




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e-commerce e-commerce
    Executive
    Officers
    Name

Age

TitleMichael G. Rubin


38


Chairman, President and Chief Executive OfficerMichael R. Conn


40


Executive Vice President, Finance and Chief Financial OfficerJ. Scott Hardy


49


Executive Vice President, Business ManagementDamon Mintzer


45


Executive Vice President, Strategic Business DevelopmentChristopher D. Saridakis


42


Chief Executive Officer, Global Marketing Services     Michael G. Rubin co-president
  Michael R. Conn
  J. Scott Hardy
  Damon Mintzer
  Christopher D. Saridakis
  Investor
    Information
  1-800-SEC-0330.
 5




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(http://www.sec.gov)
  Form 10-K, Form 10-Q, Form 8-K Form 10-K
  (610) 491-7000.
  ITEM 1A:
    RISK
    FACTORS  We
    operate in rapidly changing industries which makes our operating
    results difficult to predict.
    We
    have recently entered new lines of business which may not be
    successful.
    We may
    not achieve the expected benefits of acquisitions.
    
    failure of acquired companies to achieve planned results;
    unanticipated problems and liabilities of acquired companies,
    including patent and trademark infringement claims, violations
    of laws, commercial disputes and tax liabilities;
    difficulties resolving indemnification disputes with previous
    owners;
    difficulties in retention and assimilation of the employees of
    the acquired business;
    difficulties in integration of acquired operations, technology,
    products
    and/or
    services to accomplish planned revenue and expense synergies and
    permit effective management;
    diversion of management and employee time and focus;
    potential disputes with sellers about the achievement of
    milestones requiring the payment of contingent
    consideration; and
    adverse impact on morale of employees of acquired companies
    entitled to contingent consideration if such contingent
    consideration is not earned.   6




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We may
    not achieve the expected benefits of minority
    investments.
    
    failure of the commercial agreements to achieve planned results;
    disputes with shareholders of investment targets, which could
    interfere with our commercial agreements with the investment
    targets;
    our minority interest in Intershop Communications AG, is
    governed by German law, which could subject us to liability for
    certain disadvantages to Intershop if we were deemed to be in
    control of Intershop; and
    valuations supporting our acquisitions and investments could
    change. We could determine that such valuations have experienced
    impairments or
    other-than-temporary
    declines in fair value which could adversely impact our
    financial results.  Our
    failure to manage growth and diversification of our business
    could harm us.
    We
    plan to continue to expand our business internationally which
    may cause our business to become increasingly susceptible to
    numerous international business risks and challenges that could
    adversely affect our business. We have limited experience in
    international operations.
    
    substantial competition with local companies;
    compliance with international legal and regulatory requirements
    and tariffs (see also  Existing or future laws
    or regulations could harm our business or marketing
    efforts, below);
    managing fluctuations in currency exchange rates;
    difficulties in staffing and managing foreign operations;
    greater difficulty in accounts receivable collection;
    potential adverse tax consequences; 7




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
    uncertain political and economic climates;
    potentially higher incidence of fraud;
    different employer/employee relationships;
    cultural ambivalence toward, or non-acceptance of,
    e-commerce
    businesses;
    language barriers;
    price controls or other restrictions on foreign
    currency; and
    difficulties in obtaining export and import licenses and
    compliance with applicable export controls.    We may
    not be able to compete successfully against current and future
    competitors.
    e-commerce e-commerce e-commerce e-commerce and/or
  and/or
  e-commerce
    Our
    business is highly seasonal; a weak fourth quarter could have a
    material adverse effect on our operating results for the
    year.
   8




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General
    economic conditions may adversely affect our results of
    operations and financial condition.
    We
    have an accumulated deficit and may incur additional
    losses.
  and/or
  We may
    not be able to access on satisfactory terms, or at all, the
    credit and capital markets as needed to finance our growth
    plans, working capital requirements and liquidity
    needs.
      The
    terms of our secured revolving bank credit facility impose
    financial and operating restrictions on us.
    
    incur additional indebtedness or pre-pay or repurchase existing
    indebtedness;
    pay dividends or make other distributions in respect of,
    including repurchases of, our equity securities;
    sell assets, including the capital stock of us and our
    subsidiaries;
    enter into certain transactions with our affiliates;
    transfer any capital stock of any subsidiary or permit any
    subsidiary to issue capital stock;
    create liens;
    make certain loans or investments; and
    effect a consolidation or merger or transfer of all or
    substantially all of our assets. 9




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Our
    leverage and debt service obligations could adversely affect our
    financial condition and our ability to fulfill our obligations
    and operate our business.
      
    our debt level increases our vulnerability to general adverse
    economic and industry conditions;
    we may have difficulty obtaining financing in the future for
    working capital, capital expenditures, acquisitions or other
    purposes;
    we may need to use a substantial portion of our cash flow from
    operations to pay interest and principal on our debt, which
    would reduce the amount of money available to finance our
    operations and other business activities;
    our debt level could limit our flexibility in planning for, or
    reacting to, changes in our business and in our industry in
    general; and
    our substantial amount of debt and the amount we must pay to
    service our debt obligations could place us at a competitive
    disadvantage compared to our competitors that have less debt.  We may
    become obligated to make earnout payments to the former
    stockholders and employees of companies we have acquired, which
    may limit our available cash or affect our ability to engage in
    other business activities that may be in our best
    interests.
  and/or
  We
    have entered into long-term incentive plans with certain of our
    employees and executives which obligate us to make payments to
    these employees and executives in future years.
  and/or
 10




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If we
    fail to protect our cash and cash equivalents, manage our
    exposure to global financial and securities market risk
    successfully, our operating results and financial condition
    could be materially impacted.
  other-than-temporary,
  Our
    growth and success depend, in part, on our ability to add new
    clients, our ability to maintain and expand our relationships
    with existing clients, and the financial condition of our
    clients.
  and/or
  Our
    GeC segment is tied to the online growth of our clients and
    impacted by the offline businesses of our clients.
  e-commerce e-commerce
 11




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A
    large percentage of our revenue is derived from our
    relationships with a small number of our clients.
        We are
    subject to significant inventory risks.
  e-commerce e-commerce e-commerce
    Our
    business could suffer if we are unsuccessful in making,
    integrating, and maintaining commercial agreements and other
    business relationships.
  Relationships
    with Manufacturers, Retailers and Other Suppliers
  e-commerce
   12




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Marketing
    and Promotional Arrangements
  e-commerce e-commerce
  Shipping
    Vendors
    Payment
    Processors
  and/or
    Telecommunications
    and Data Providers
    Our
    licensed sports business depends on continued customer interest
    in professional sports leagues and could be adversely affected
    by any decrease in fan interest in the professional sports
    leagues, their teams or their players.
  and/or
 13




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A
    disruption at any of our facilities could materially and
    adversely affect our business, results of operations and
    financial condition.
      
    fire, flood, hurricane, tornado, earthquake or other natural
    disasters;
    power losses and interruptions;
    Internet, telecommunications or data network failures;
    physical and electronic break-ins or security breaches;
    computer viruses;
    acts of terrorism;
    outbreak of disease; and
    other similar events.    Our
    success is tied to the adequacy of the Internet
    infrastructure.
  and/or e-commerce
  We are
    dependent upon consumers willingness to use the Internet
    for commerce.
    We may
    be liable if third parties misappropriate our or our
    clients customers personal information from our
    network.
   14




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If we
    do not respond to rapid technological changes, our services and
    proprietary technology and systems may become
    obsolete.
    e-commerce and/or and/or
      Our
    business is dependent on the use of
    e-mail, and
    any decrease in the use of
    e-mail or
    our ability to use
    e-mail may
    harm our business, results of operations and financial
    condition.
  e-mail e-mail e-mail E-mail
  
    problems with technology that make our
    e-mail
    communications more difficult for us to deliver and for
    consumers to read, such as the ability of smart phones or
    similar communications devices to adequately display our
    e-mail;
    consumers may disregard marketing
    e-mails due
    to the large volume of such
    e-mails they
    receive;
    the inability of filters to effectively screen for unwanted
    e-mails,
    resulting in increased levels of junk mail, or SPAM,
    which may overwhelm consumers
    e-mail
    accounts;
    increased use of social networking sites may result in decreased
    use of
    e-mail as a
    primary means of communication;
    continued security concerns regarding Internet usage in general
    from viruses, worms or similar problems; and
    increased governmental regulation or restrictive policies
    adopted by Internet service providers, or ISPs, that
    make it more difficult or costly to utilize
    e-mail for
    marketing communications.  e-mail e-mails. e-commerce e-mail
 15




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##### 



We may
    be unable to protect our proprietary technology and intellectual
    property rights.
    We
    have been, and may in the future be subject to intellectual
    property claims or competition or trade practices claims that
    could be costly and could disrupt our business.
    We may
    be subject to product liability claims that could be costly and
    time-consuming.
    Credit
    card and payment fraud could adversely affect our
    business.
    If one
    or more states successfully assert that we should collect or
    should have collected sales or other taxes on the sale of our
    merchandise, our business could be harmed.
  out-of-state e-commerce.
 16




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We may
    have exposure in excess of our recorded tax
    liabilities.
    Our
    ability to use net operating loss carryforwards to reduce future
    tax payments may be limited.
      We
    rely on insurance to mitigate some risks facing our business,
    and to the extent our insurance does not mitigate the risks
    facing our business or our insurers are unable to meet their
    obligations, our operating results may be negatively
    impacted.
    Variability
    in self-insurance liability estimates could significantly impact
    our financial results.
    
    historical claims experience;
    medical inflation;
    legislative changes to benefit levels;
    jury verdicts; and
    claim settlement patterns. 17




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Existing
    or future laws or regulations could harm our
    business.
  e-commerce
    e-commerce, e-commerce,
  and/or
  Future
    changes in financial accounting standards or practices may
    adversely affect our reported financial results.
  and/or
  Our
    success is dependent upon our executive officers and other key
    personnel.
   18




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##### 



We may
    be unable to hire and retain skilled personnel which could limit
    our growth.
    There
    are limitations on the liabilities of our directors and
    executive officers. Under certain circumstances, we are
    obligated to indemnify our directors and executive officers
    against liability and expenses incurred by them in their service
    to us.
    If we
    fail to maintain an effective system of internal controls, we
    may not be able to accurately report our financial results or
    prevent fraud.
    The
    price of our common stock has and may continue to fluctuate
    significantly.
   19




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Future
    sales of our common stock in the public market or the issuance
    of our common stock or securities senior to our common stock
    could adversely affect the trading price of our common
    stock.
    We
    have never paid dividends on our common stock and do not
    anticipate paying dividends in the foreseeable
    future.
    It may
    be difficult for a third party to acquire us and this could
    depress our stock price.
    and/or
    Holders
    of our common stock will be subordinated to our Existing Credit
    Facility and New Credit Facility, convertible notes and other
    indebtedness.
    ITEM 1B:
    UNRESOLVED
    STAFF COMMENTS.   20




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ITEM 2:
    PROPERTIES.    SquareUse

Footage


Locations

Segment(In thousands)Principal Office


104


King of Prussia, PAOffices


181


Los Angeles, CA;


Global e-Commerce ServicesPacoima, CA;San Jose, CA;Boynton Beach, FL;Winter Park, FL;King of Prussia, PA;Chattanooga, TN;Roanoke, VA;Tokyo, Japan;Barcelona, Spain; andChadderton, United KingdomOffices


237


Tempe, AZ;


Global Marketing ServicesCampbell, CA;Burlington, MA;Central Islip, NY;New York, NY;Columbus, OH;King of Prussia, PA;Wilkes-Barre, PA;Bellevue, WA;London, England; and 
    SingaporeOffices


78


Boston, MA; and


Consumer EngagementNew York, NYFulfillment Centers


3,000


Pacoima, CA;


Global e-Commerce ServicesLouisville, KY;Richwood, KY;Shepherdsville, KY;Martinsville, VA;Mississauga, Ontario, Canada; andChadderton, United KingdomCall Centers


212


Pacoima, CA;


Global e-Commerce ServicesMelbourne, FL;Brunswick, GA;Eau Claire, WI; andChadderton, United Kingdom       ITEM 3:
    LEGAL
    PROCEEDINGS.   21




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##### 



and/or
  ITEM 4:
    (REMOVED
    AND RESERVED). PART II  ITEM 5:
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.    Common StockPriceHigh


LowFiscal 2009First Quarter

$
13.77


$
7.35Second Quarter

$
15.59


$
12.29Third Quarter

$
19.75


$
14.09Fourth Quarter

$
26.00


$
18.09Fiscal 2010First Quarter

$
28.49


$
22.53Second Quarter

$
31.35


$
24.26Third Quarter

$
29.99


$
20.87Fourth Quarter

$
26.45


$
21.74            22




---



##### 



STOCK
    PERFORMANCE GRAPH
    COMPARISON
    OF CUMULATIVE TOTAL RETURN
  
 ASSUMES
    $100  INVESTED ON JAN 01, 2006
 ASSUMES DIVIDEND
    REINVESTED
  Total
    Return Analysis
  Period
    Ending
  Company/Market/Peer Group


12/31/2005


12/30/2006


12/29/2007


1/3/2009


1/2/2010


1/1/2011GSI Commerce, Inc.


$
100.00



$
124.25



$
129.49



$
71.50



$
168.26



$
153.94NASDAQ Composite


$
100.00



$
110.39



$
123.05



$
75.75



$
106.35



$
125.52Morgan Stanley Internet


$
100.00



$
109.49



$
148.26



$
82.14



$
155.30



$
205.11     EQUITY
    COMPENSATION PLAN INFORMATION
  Form 10-K.
 23




---



##### 



ITEM 6:
    SELECTED
    FINANCIAL DATA.  Form 10-K. Form 10-K.
  Fiscal Year EndedDecember 30,


December 29,


January 3,


January 2,


January 1,2006


2007


2009


2010


2011Revenues:Net revenues from product sales

$
461,183


$
512,194


$
577,073


$
542,249


$
777,348Service fee revenues


148,370



237,763



389,853



461,966



580,646Net revenues


609,553



749,957



966,926



1,004,215



1,357,994Total costs and expenses(1)


600,116



745,638



977,186



993,949



1,375,312Income (loss) from operations


9,437



4,319



(10,260
)


10,266



(17,318
)Total other expense, net


2,916



8,165



20,296



18,950



18,902Income (loss) before income taxes


6,521



(3,846
)


(30,556
)


(8,684
)


(36,220
)Provision (benefit) for income taxes(2)


(38,140
)


(2,887
)


(7,585
)


2,344



660Equity-method investment earnings


















(378
)Net income (loss) before cumulative effect of change in
    accounting principle


44,661



(959
)


(22,971
)


(11,028
)


(36,502
)Cumulative effect of change in accounting principle


268















Net income (loss)

$
44,929


$
(959
)

$
(22,971
)

$
(11,028
)

$
(36,502
)Basic earnings (loss) per share:Prior to cumulative effect of change in accounting principle

$
0.98


$
(0.02
)

$
(0.49
)

$
(0.21
)

$
(0.57
)Net income (loss) per share

$
0.99


$
(0.02
)

$
(0.49
)

$
(0.21
)

$
(0.57
)Diluted earnings (loss) per share:Prior to cumulative effect of change in accounting principle

$
0.93


$
(0.02
)

$
(0.49
)

$
(0.21
)

$
(0.57
)Net income (loss) per share(3)

$
0.94


$
(0.02
)

$
(0.49
)

$
(0.21
)

$
(0.57
)BALANCE SHEET DATA:Total assets

$
457,456


$
670,104


$
716,025


$
1,061,848


$
1,107,162Total long-tem liabilities(4)


60,083



185,364



201,398



227,073



167,445Working capital(5)


125,172



165,822



40,938



21,789



57,679Stockholders equity(5)(6)


235,778



280,900



274,496



476,340



563,033  24




---



##### 



(1)
    
    In fiscal 2010, we recorded an $88.3 million impairment of
    goodwill and intangible assets. For additional information, see
    Note 5, Goodwill and Other Intangible Assets, to our
    consolidated financial statements included in Item 15,
    Exhibits and Financial Statement Schedules, of this
    Annual Report on
    Form 10-K.In fiscal 2010, we recorded income of $61.0 million from
    changes in fair value of deferred acquisition payments. For
    additional information, see Note 3, Fair Value of
    Financial and Nonfinancial Instruments, to our consolidated
    financial statements included in Item 15, Exhibits and
    Financial Statement Schedules, of this Annual Report on
    Form 10-K.(2)
    
    Included in fiscal 2006 was a $38.1 million non-cash income
    tax benefit resulting from the reversal of valuation allowance.(3)
    
    For additional information on the diluted earnings (loss) per
    share calculation, see Note 12, Loss Per Share, to
    our consolidated financial statements included in Item 15,
    Exhibits and Financial Statement Schedules, of this
    Annual Report on
    Form 10-K.(4)
    
    In fiscal 2007, we completed a subordinated convertible note
    offering of $150 million. For additional information, see
    Note 7, Long-Term Debt and Credit Facility, to our
    consolidated financial statements included in Item 15,
    Exhibits, Financial Statement Schedules, of this Annual
    Report on
    Form 10-K.
    In fiscal 2010 we converted our $57.5 million
    3% subordinated convertible notes into 3.2 million
    shares of our common stock.(5)
    
    In fiscal 2008, we acquired
    e-Dialog,
    Inc. for approximately $150 million in cash, including
    acquisition costs. In fiscal 2009, we acquired Retail
    Convergence, Inc. (Rue La La) for
    (i) $186 million at closing consisting of cash of
    $92 million and shares of our common stock valued at
    $94 million, and (ii) the obligation to make earnout
    payments of up to $170 million over a three year period
    beginning with fiscal year 2010 depending on Rue
    La Las achievement of certain financial performance
    targets. In fiscal 2010, we acquired MBS Insight, Inc. for
    $22 million in cash. For additional information, see
    Note 6, Acquisition and Investments, to our
    consolidated financial statements included in Item 15,
    Exhibits and Financial Statement Schedules, of this
    Annual Report on
    Form 10-K.(6)
    
    In fiscal 2009, we received approximately $88 million of
    net proceeds from the sale of 5.4 million shares of our
    common stock. 25




---



##### 



ITEM 7:
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  All
    statements made in this Annual Report on
    Form 10-K,
    other than statements of historical fact, are forward-looking
    statements, as defined under federal securities law. The words
    look forward to, anticipate,
    believe, estimate, expect,
    intend, may, plan,
    will, would, should,
    could, guidance, potential,
    opportunity, continue,
    project, forecast,
    confident, prospects,
    schedule, designed, future
    discussions, if 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 clients operate; changes affecting the Internet
    e-commerce
    and marketing service, our ability to develop and maintain
    relationships with clients and suppliers and the timing of our
    establishment, extension or termination of our relationships
    with clients; our ability to timely and successfully develop,
    maintain and protect our technology, confidential and
    proprietary information, and to timely and successfully enhance,
    develop and maintain our product and service offerings; our
    ability to execute operationally to attract and retain qualified
    personnel, close our recently announced agreement to acquire
    Fanatics, Inc. (Fanatics), to successfully integrate
    our recent acquisitions of other businesses, including Fanatics;
    and the performance of acquired businesses, including Fanatics.
    More information about potential factors that could affect us is
    described in Item 1A of Part I, Risk
    Factors. We expressly disclaim any intent or obligation to
    update these forward-looking statements.
  Executive
    Overview
    
    Net revenues increased by $353.8 million, or 35%; net
    revenues from product sales increased by $235.2 million, or
    43%; and service fee revenues increased by $118.6 million,
    or 26%.
    Income from operations decreased to a loss of $17.3 million
    in fiscal 2010 compared to income of $10.3 million in
    fiscal 2009.
    Net loss was $36.5 million in fiscal 2010, inclusive of a
    provision for income taxes of $0.7 million, compared to net
    loss of $11.0 million in fiscal 2009, inclusive of an
    income tax provision of $2.3 million.
    We made the following acquisitions:  
    MBS Insight (MBS), a database solutions provider;
    FetchBack, a provider of comprehensive retargeting solutions;
    VendorNet, a provider of supply chain management software and
    services; and
    M3 Mobile, a mobile marketing agency.  
    We purchased a 27% equity interest in Intershop Communications,
    AG., a provider of
    e-commerce
    software.
    In March 2010, we amended and expanded our existing secured
    revolving credit facility by $60 million to
    $150 million (the Existing Credit Facility).
    The Existing Credit Facility is available for letters of credit,
    working capital and general corporate purposes, including
    possible acquisitions and expires in March 2013.
    In June 2010, we called our outstanding $57.5 million 3%
    convertible notes due 2025 for redemption and substantially all
    of the notes were converted into 3.2 million shares of our
    common stock.
    In the fourth quarter of fiscal 2010, we recorded an
    $88.3 million impairment of goodwill and intangible assets
    comprised of $81.5 million for the Rue
    La La reporting unit and $6.8 million for the
    International
    e-Commerce
    reporting unit. 26




---



##### 




    In fiscal 2010, we recorded income of $61.0 million due to
    the reduction in the fair value of deferred acquisition payments
    for Rue La La to $0 based on revised estimates of Rue
    La Las financial projections for fiscal years 2011
    and 2012.
    Subsequent Events:  
    On February 9, 2011 we signed a definitive agreement to
    acquire Fanatics, Inc. (Fanatics), an online
    retailer of licensed sports merchandise for approximately
    $277 million, including $171 million of cash and
    4.8 million shares of our common stock, which were valued
    at $106 million at the time of signing. We expect the
    acquisition to close in the second quarter of fiscal 2011.
    We entered into a new $400 million credit agreement
    (the New Credit Facility) that will close
    simultaneously with and will be contingent upon the closing of
    the Fanatics acquisition. The New Credit Facility will replace
    our $150 million Existing Credit Facility and includes a
    $285 million revolving line of credit and a
    $115 million term loan, with the option to increase the
    commitments under these facilities by up to an additional
    $50 million to a total of $450 million. The New Credit
    Facility becomes effective if our acquisition of Fanatics closes
    on or before May 10, 2011.
    We have authorized a share buy-back program of up to an
    aggregate of $50 million of our common stock over the next
    two years, commencing on the closing of the Fanatics
    acquisition. Shares may be repurchased from time to time at
    prevailing prices in the open market, including pursuant to
    Rule 10(b)5-1
    trading plans.  Consolidated
    Results (amounts in tables in millions):
  Comparison
    of Fiscal 2010 and 2009:
  Total Net
    Revenues, Costs and Expenses and Income (Loss) from
    Operations
  Fiscal


% of Net


Fiscal


% of Net


Increase/2009


Revenues


2010


Revenues


(Decrease)


% ChangeRevenues:Net revenues from product sales

$
542.2



54
%

$
777.4



57
%

$
235.2



43
%Service fee revenues


462.0



46
%


580.6



43
%


118.6



26
%Total net revenues


1,004.2



100
%


1,358.0



100
%


353.8



35
%Costs and expenses:Cost of revenues from product sales


398.6



40
%


565.4



41
%


166.8



42
%Marketing


54.8



6
%


63.6



5
%


8.8



16
%Account management and operations


273.1



27
%


361.9



27
%


88.8



33
%Product development


120.2



12
%


161.3



12
%


41.1



34
%General and administrative


82.9



8
%


112.0



8
%


29.1



35
%Depreciation and amortization


63.4



6
%


83.8



6
%


20.4



32
%Changes in fair value of deferred acquisition payments


0.9



0
%


(61.0
)


−4
%


(61.9
)Impairment of goodwill and intangible assets






0
%


88.3



6
%


88.3Total costs and expenses


993.9



99
%


1,375.3



101
%


381.4



38
%Income (loss) from operations

$
10.3



1
%

$
(17.3
)


−1
%

$
(27.6
)


−268
%  27




---



##### 



Net
    Revenues from Product Sales
  e-Commerce
  Service
    Fee Revenues
    Costs and
    Expenses
  Cost
    of Revenues from Product Sales
  Fiscal 2009


Fiscal 2010Cost of revenues from product sales

$
398.6


$
565.4As a percentage of net revenues from product sales


74
%


73
%     Marketing
    Account
    Management and Operations
    Product
    Development
    General
    and Administrative
    Depreciation
    and Amortization
   28




---



##### 



Changes
    in Fair Value of Deferred Acquisition Payments
    Impairment
    of Goodwill and Intangible Assets
  e-Commerce e-Commerce
  e-Commerce
    e-Commerce
  Other
    (Income) Expense
  Fiscal 2009


Fiscal 2010


ChangeInterest expense

$
19.4


$
17.3


$
(2.1
)Interest income


(0.5
)


(0.3
)


0.2Other (income) expense






1.2



1.2Loss on investments






0.7



0.7Total other expense

$
18.9


$
18.9


$
0.0    29




---



##### 



Income
    Taxes
  Income Taxes Exhibits and Financial
    Statement Schedules Form 10-K
  Segment
    Results
  Fiscal 2009

Fiscal 2010

$ Change

% ChangeGeC:Net revenues

$
879.6


$
1,024.4


$
144.8



16
%Segment profit(1)

$
74.4


$
95.5


$
21.1



28
%GMS:Net revenues

$
127.6


$
189.9


$
62.3



49
%Segment profit(1)

$
30.6


$
48.4


$
17.8



58
%Consumer engagement:Net revenues

$
26.3


$
216.7


$
190.4



100
%Segment profit (loss)(1)

$
1.4


$
(9.2
)

$
(10.6
)


100
%Segment Margins:GeC


8.5
%


9.3
%GMS


24.0
%


25.5
%Consumer engagement


5.3
%


(4.2
%)     (1)
    
    Segment profit (loss) equals net revenues less costs and
    expenses excluding stock-based compensation expense,
    depreciation and amortization expenses, and the following
    expenses related to acquisitions: transaction expenses, due
    diligence expenses, integration expenses, non-cash inventory
    valuation adjustments, the cash portion of any deferred
    acquisition payments recorded as compensation expense, changes
    in fair value of deferred acquisition payments, and impairment
    of goodwill and intangible assets.  GeC
    Segment:
      GMS
    Segment:
   30




---



##### 



Consumer
    Engagement Segment:
    Comparison
    of Fiscal 2009 and 2008 (amounts in tables in
    millions):
  Total Net
    Revenues, Costs and Expenses and Loss from Operations
  Fiscal 2009vs.Fiscal 2008Fiscal 2008


Fiscal 2009


$ Change


% ChangeNet Revenues by Type:Net revenues from product sales

$
577.1



60
%

$
542.2



54
%

$
(34.9
)


−6
%Service fee revenues


389.8



40
%


462.0



46
%


72.2



19
%Total net revenues

$
966.9



100
%

$
1,004.2



100
%

$
37.3



4
%Net Revenues by Segment:e-Commerce
    services

$
900.0



93
%

$
879.6



87
%

$
(20.4
)


−2
%Interactive marketing services


84.5



9
%


127.6



13
%


43.1



51
%Consumer engagement






0
%


26.3



3
%


26.3



100
%Intersegment eliminations


(17.6
)


−2
%


(29.3
)


−3
%


(11.7
)


66
%Total net revenues

$
966.9



100
%

$
1,004.2



100
%

$
37.3



4
%   Net Revenues from Product Sales. e-commerce
    Service Fee Revenues. e-commerce E-commerce e-commerce E-commerce
  e-commerce
 31




---



##### 



rd
  Net
    Revenues by Segment
  E-Commerce
    Services Segment Revenues. e-commerce
  e-commerce
  Interactive Marketing Services Segment
    Revenues. e-mail e-Dialog,
  Consumer Engagement Segment Revenues.
  Fiscal 2008


Fiscal 2009


Fiscal 2009% of





% of


vs.Net





Net


Fiscal 2008$


Revenues


$


Revenues


$ Change


% ChangeCost of revenues from product sales

$
405.3



42
%

$
398.6



40
%

$
(6.7
)


−2
%Marketing


70.3



7
%


54.8



6
%


(15.5
)


−22
%Account management and operations


260.3



27
%


273.1



27
%


12.8



5
%Product development


104.2



11
%


120.2



12
%


16.0



15
%General and administrative


69.0



7
%


82.9



8
%


13.9



20
%Depreciation and amortization


68.1



7
%


63.4



6
%


(4.7
)


−7
%Changes in fair value of deferred acquisition payments






0
%


0.9



0
%


0.9



100
%Total costs and expenses

$
977.2



101
%

$
993.9



99
%

$
16.7



2
%   Costs and
    Expenses
  Fiscal 2008

Fiscal 2009Cost of revenues from product sales

$
405.3


$
398.6As a percentage of net revenues from product sales


70
%


74
%       Fiscal 2008

Fiscal 2009Marketing

$
70.3


$
54.8As a percentage of net revenues from product sales


12
%


10
%  32




---



##### 



Marketing:
    Account Management and Operations:
  Product Development: e-commerce
  General and Administrative:
  Depreciation and Amortization: e-Dialog
  Changes in Fair Value of Deferred Acquisition
    Payments:
  Other
    (Income) Expense
  Fiscal 2008


Fiscal 2009


ChangeInterest expense

$
18.8


$
19.4


$
0.6Interest income


(1.8
)


(0.5
)


1.3Other (income) expense


1.6







(1.6
)Loss on investments


1.7







(1.7
)Total other expense

$
20.3


$
18.9


$
(1.4
)   other-than-temporary
 33




---



##### 



Seasonality
  Quarterly Results
    (Unaudited) Exhibits and Financial Statement
    Schedules Form 10-K.
  Liquidity
    and Capital Resources
  Fiscal Year EndedJanuary 3,

January 2,

January 1,2009

2010

2011(In millions)Cash and cash equivalents

$
130.3


$
228.4


$
242.1Percentage of total assets


18
%


21
%


22
%         Sources
    of Cash
         34




---



##### 



Uses
    of Cash
    e-commerce
  e-Dialog.
  Commitments and Contingencies Exhibits and Financial Statement Schedules Form 10-K,
  Outlook
        e-commerce
     35




---



##### 



lines-of-credit
  Contractual
    Obligations
    Payments due by fiscal yearLess thanContractual Obligation(1)(2)(4)

Total


1 Year


1-3 Years


4-5 Years


ThereafterOperating lease obligations

$
103.0


$
22.5


$
40.0


$
26.0


$
14.5Marketing commitments


8.4



0.7



5.1



2.6



Client revenue share payments


118.9



21.9



47.7



23.6



25.7Debt interest


17.2



5.5



9.1



2.6



Debt obligations


166.0



1.1



2.9



162.0



Capital lease obligations, including interest


29.8



11.4



16.6



1.8



Deferred acquisition payments(3)


3.3



1.5



1.8







Total contractual obligations

$
446.6


$
64.6


$
123.2


$
218.6


$
40.2     (1)
    
    For additional information, see Note 7, Long-Term Debt
    and Credit Facility, and Note 8, Commitments and
    Contingencies, of the Notes to Consolidated Financial
    Statements, included in Item 15, Exhibits and Financial
    Statement Schedules, of this Annual Report on
    Form 10-K.(2)
    
    Approximately $3.9 million of unrecognized tax benefits
    have been recorded as liabilities in accordance with accounting
    standards for Accounting for Uncertainty in Income
    Taxes, and we are uncertain as to if or when such amounts
    may be settled; as a result, these obligations are not included
    in the table above.(3)
    
    The $3.3 million of deferred acquisition payments in the
    table above represent fixed contractual future payments. We are
    also obligated to pay up to an additional $208.4 million
    from fiscal 2011 through fiscal 2016 based on the achievement of
    certain financial targets by some of our acquired companies, of
    which we have the ability to pay up to $45.8 million with
    shares of our common stock. We are uncertain as to if or when
    such amounts may be settled; as a result, these obligations are
    not included in the table above.(4)
    
    We have entered into long-term incentive plans with certain of
    our employees and executives which obligates us to pay up to
    $50 million to certain employees based on the performance
    of the business for which the employee is responsible. Amounts
    due under these incentive plans are payable in cash and/or stock
    from fiscal 2012 through fiscal 2015. We are uncertain as to if
    or when such amounts may be settled; as a result, these
    obligations are not included in the table above.  Off
    Balance Sheet Arrangements
    Critical
    Accounting Estimates
   36




---



##### 



Summary of Significant Accounting Policies Exhibits and Financial Statement Schedules Form 10-K.
  Accounting
    for Inventory
    Accounting
    for Internal Use Software
    and/or and/or
 37




---



##### 



Goodwill
    and Other Intangible Assets
      e-Commerce e-commerce
    e-Commerce e-Commerce
  Income
    Taxes and Deferred Taxes
     38




---



##### 



Fair
    Value of Deferred Acquisition Payments
  and/or
    Recent
    Accounting Pronouncements
  Summary of Significant Accounting
    Policies Exhibits and Financial Statement
    Schedules Form 10-K.
  ITEM 7A:
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.       39




---



##### 



Subsequent Events Exhibits and Financial Statement Schedules Form 10-K.
    ITEM 8:
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA.  Form 10-K Form 10-K.
  ITEM 9:
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.    ITEM 9A:
    CONTROLS
    AND PROCEDURES.  Evaluation of disclosure controls and
    procedures.
  Rule 13a-15(e). Rule 13a-15(e),
  Changes in internal control over financial
    reporting. Rule 13a-15(d),
 40




---



##### 



Managements annual report on internal control over
    financial reporting. Rule 13a-15(f).
  Internal Control  Integrated
    Framework Internal
    Control  Integrated Framework
   41




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control  Integrated Framework
          Internal Control  Integrated Framework
    
    42




---



##### 



ITEM 9B:
    OTHER
    INFORMATION.   PART III  ITEM 10:
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.    Business Form 10-K.
  Form 8-K
  ITEM 11:
    EXECUTIVE
    COMPENSATION.    ITEM 12:
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.    Equity
    Compensation Plan Information as of the End of Fiscal
    2010
    Number of SecuritiesNumber of Securities





Remaining Available forto be Issued


Weighted-Average


Future Issuance Underupon Exercise of


Exercise Price of


Equity Compensation PlansOutstanding Options,


Outstanding Options,


(Excluding SecuritiesWarrants and Rights


Warrants and Rights


Listed in Column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved by stockholders(1)


4,715,256


$
12.57



3,698,852Equity compensation plans not approved by stockholders





$




Total


4,715,256


$
12.57



3,698,852     (1)
    
    These plans are the 1996 Equity Incentive Plan, the 2005 Equity
    Incentive Plan and the 2010 Equity Incentive Plan (the
    Plans). The 2010 Equity Incentive Plan provides for
    the grant of incentive stock options, nonstatutory stock
    options, restricted stock awards, restricted stock unit awards,
    stock appreciation rights, performance stock awards, and other
    forms of equity compensation. No future awards may be granted
    pursuant to the 1996 Equity Incentive Plan or the 2005 Equity
    Incentive Plan. We have issued stock options, restricted 43




---



##### 



stock units and restricted stock awards under these Plans. The
    stock options generally expire 10 years from the date of
    grant. The stock options, restricted stock units and restricted
    stock awards generally vest over four years, although some
    restricted stock units and restricted stock awards vest in less
    than four years. Performance stock awards generally vest one or
    two years after a determination has been made about achievement
    against the performance criteria. Upon the occurrence of a
    change in control, certain awards will immediately become
    exercisable in full.  ITEM 13:  CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.
    ITEM 14:
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.   44




---



##### 



PART IV  ITEM 15:
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  (a)
    1.
    CONSOLIDATED FINANCIAL STATEMENTS  PageReport of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets


F-2Consolidated Statements of Operations


F-3Consolidated Statements of Stockholders
    Equity


F-4Consolidated Statements of Cash Flows


F-5Notes to Consolidated Financial Statements


F-6   2.
    FINANCIAL
    STATEMENT SCHEDULES  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
  Balance at

Charged toBeginning

Costs and



Balance atof Year

Expenses

Deductions*

End of Year(In thousands)Allowance for Doubtful Accounts:Fiscal Year 2008

$
1,833


$
5,475


$
(4,561
)

$
2,747Fiscal Year 2009

$
2,747


$
6,477


$
(4,576
)

$
4,648Fiscal Year 2010

$
4,648


$
5,317


$
(5,639
)

$
4,326     *
    
    Deductions include write-offs  Balance at



ChargedBeginning

Charged

(Credited) to

Balance atof Year

to Expense

Goodwill

End of Year(In thousands)Valuation Allowance for Deferred Tax Assets:Fiscal Year 2008

$
40,402


$
2,463


$
(389
)

$
42,476Fiscal Year 2009

$
42,476


$
3,122


$
4,199


$
49,797Fiscal Year 2010

$
49,797


$
2,411


$



$
52,208      45




---



##### 



3.
    EXHIBITS  ExhibitNumber

Description2
.1

Agreement and Plan of Merger, dated as of October 27, 2009,
    by and among GSI Commerce, Inc, Cola Acquisition Corporation,
    Retail Convergence, Inc., certain principal stockholders of
    Retail Convergence, Inc. and William J. Fitzgerald (as
    Stockholders Representative). The schedules and exhibits
    to the merger agreement are omitted pursuant to
    Item 601(b)(2) of
    Regulation S-K.
    GSI agrees to furnish supplementally to the SEC, upon request, a
    copy of any omitted schedule or exhibit. (filed with
    GSI Commerce, Inc.s Current Report on
    Form 8-K/A
    filed on April 6, 2010 and incorporated herein by
    reference)2
.2

Stock Purchase Agreement by and among
    e-Dialog,
    Inc. (a wholly-owned subsidiary of GSI Commerce, Inc.), MBS
    Insight, Inc., and World Marketing, Inc., dated April 30,
    2010. The schedules and exhibits to the merger agreement are
    omitted pursuant to Item 601(b)(2) of
    Regulation S-K.
    GSI agrees to furnish supplementally to the SEC, upon request, a
    copy of any omitted schedule or exhibit. (filed with
    GSI Commerce, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2010 and incorporated herein
    by reference)3
.1

Amended and Restated Certificate of Incorporation of Global
    Sports, Inc. (filed as Appendix B to GSI Commerce,
    Inc.s Definitive Proxy Statement on Schedule 14A
    filed on April 27, 2001 and incorporated herein by
    reference)3
.2

Certificate of Amendment to Amended and Restated Certificate of
    Incorporation of Global Sports, Inc. (filed with GSI Commerce,
    Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended June 29, 2002 and incorporated herein
    by reference)3
.3

Certificate of Amendment to Amended and Restated Certificate of
    Incorporation of GSI Commerce, Inc. (filed as Appendix B to
    GSI Commerce, Inc.s Definitive Proxy Statement on
    Schedule 14A filed with the Securities and Exchange
    Commission on April 13, 2010 and incorporated herein by
    reference)3
.4

Amended and Restated Bylaws of GSI Commerce, Inc. (filed with
    GSI Commerce, Inc.s Current Report on
    Form 8-K
    filed on March 16, 2009 and incorporated herein by
    reference)3
.5

Certificate of Designations, Preferences and Rights of
    Series A Junior Participating Preferred Stock (filed with
    GSI Commerce, Inc.s Current Report on
    Form 8-K
    filed on April 3, 2006 and incorporated herein by reference)4
.1

Specimen Common Stock Certificate (filed with GSI Commerce,
    Inc.s Quarterly Report on
    Form 10-Q
    for the Quarter ended June 29, 2002 and incorporated herein
    by reference)4
.2

Registration Rights Agreement, dated July 31, 1995, by and
    between Global Sports, Inc. and MR Acquisitions, Inc.
    (filed with GSI Commerce, Inc.s Current Report on
    Form 8-K
    filed on July 31, 1995 and incorporated herein by reference)4
.3

Registration Rights Agreement dated as of November 17, 2009
    between GSI Commerce, Inc. and the holders named therein (filed
    with GSI Commerce, Inc.s Registration Statement on
    Form S-3
    dated November 18, 2009 and incorporated herein by
    reference)4
.4

Rights Agreement, dated as of April 3, 2006, between GSI
    Commerce, Inc. and American Stock Transfer &
    Trust Company, as Rights Agent, including all exhibits
    thereto (filed with GSI Commerce, Inc.s Current Report on
    Form 8-K
    filed on April 3, 2006 and incorporated herein by reference)4
.5

Indenture dated as of July 2, 2007 between the Company and
    The Bank of New York, as trustee (filed with GSI Commerce,
    Inc.s Current Report on
    Form 8-K
    dated July 5, 2007 and incorporated herein by reference)4
.6

Form of 2.50% Convertible Senior Note due 2027 (filed with
    GSI Commerce, Inc.s Current Report on
    Form 8-K
    dated July 5, 2007 and incorporated herein by reference)4
.7

Senior Indenture of GSI Commerce, Inc. with The Bank of New York
    Mellon, as trustee (filed with GSI Commerce, Inc.s
    Registration Statement on
    Form S-3
    dated November 18, 2009 and incorporated herein by
    reference)4
.8

Subordinated Indenture of GSI Commerce, Inc. with The Bank of
    New York Mellon, as trustee (filed with GSI Commerce,
    Inc.s Registration Statement on
    Form S-3
    dated November 18, 2009 and incorporated herein by
    reference) 46




---



##### 



ExhibitNumber

Description10
.1+

GSI Commerce, Inc.s 1996 Equity Incentive Plan, amended
    and restated as of March 5, 2008 (filed with GSI Commerce,
    Inc.s Annual Report on
    Form 10-K
    for the fiscal year ended December 29, 2007 and
    incorporated herein by reference)10
.2+

GSI Commerce, Inc.s 2005 Equity Incentive Plan as amended
    (filed as Appendix A to GSI Commerce, Inc.s
    Definitive Proxy Statement on Schedule 14A filed with the
    Securities Exchange Commission on April 25, 2008 and
    incorporated herein by reference)10
.3+

GSI Commerce, Inc. 2010 Equity Incentive Plan (filed as
    Appendix A to GSI Commerce, Inc.s Definitive Proxy
    Statement on Schedule 14A filed with the Securities and
    Exchange Commission on April 13, 2010 and incorporated
    herein by reference)10
.4+

Form of Restricted Stock Unit Grant Notice Under the GSI
    Commerce, Inc. 2010 Equity Incentive Plan (filed with GSI
    Commerce, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2010 and incorporated herein
    by reference)10
.5+

Form of Performance Restricted Stock Unit Award Under the GSI
    Commerce, Inc. 2010 Equity Incentive Plan (filed with GSI
    Commerce, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2010 and incorporated herein
    by reference)10
.6+

Form of Restricted Stock Unit Grant Notice Issued to Directors
    Under the GSI Commerce, Inc. 2010 Equity Incentive Plan (Initial
    Award) (filed with GSI Commerce, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2010 and incorporated herein
    by reference)10
.7+

Form of Restricted Stock Unit Grant Notice Issued to Directors
    Under the GSI Commerce, Inc. 2010 Equity Incentive Plan (Annual
    Award) (filed with GSI Commerce, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2010 and incorporated herein
    by reference)10
.8+

GSI Commerce, Inc. Leadership Team Incentive Plan (filed as from
    Appendix B to GSI Commerce, Inc.s Definitive Proxy
    Statement on Schedule 14A filed with the Securities
    Exchange Commission on April 25, 2008 and incorporated
    herein by reference)10
.9+

Leadership Team Deferral Plan, as amended and restated effective
    March 5, 2008 (filed with GSI Commerce, Inc.s
    Annual Report on
    Form 10-K
    for the fiscal year ended December 29, 2007 and
    incorporated herein by reference)10
.10+

Form of Change in Control Agreement (filed with GSI Commerce,
    Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended April 3, 2010 and incorporated herein
    by reference)10
.11+

Form of Indemnification Agreement (filed with GSI Commerce,
    Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended October 2, 2010 and incorporated
    herein by reference)10
.12+

Employment Agreement, dated August 23, 2006, by and between
    GSI Commerce, Inc. and Michael G. Rubin (filed with GSI
    Commerce, Inc.s Current Report on
    Form 8-K
    filed on August 29, 2006 and incorporated herein by
    reference)10
.13+

Amendment
    2008-1 to
    the Employment Agreement between GSI Commerce, Inc. and Michael
    G. Rubin, dated as of December 30, 2008 (filed with GSI
    Commerce, Inc.s Annual Report on
    Form 10-K
    filed on March 16, 2009 and incorporated herein by
    reference)10
.14+

Form of Performance Restricted Stock Unit Award Issued to
    Michael Rubin Under the GSI Commerce, Inc. 2010 Equity Incentive
    Plan (filed with GSI Commerce, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended October 2, 2010 and incorporated
    herein by reference)10
.15+

Michael Rubin Form of Restricted Stock Unit Agreement10
.16+

Offer Letter, dated January 31, 2005, between GSI Commerce,
    Inc. and Stephen J. Gold (filed with GSI Commerce,
    Inc.s Current Report on
    Form 8-K
    on February 2, 2005 and incorporated herein by reference)10
.17+

Amendment, dated July 31, 2009, to Offer Letter, dated
    January 31, 2005, between GSI Commerce, Inc. and Stephen J.
    Gold (filed with GSI Commerce, Inc.s Current Report on
    Form 8-K
    on August 6, 2009 and incorporated herein by reference)10
.18+

Separation Agreement, dated May 28, 2010, between GSI
    Commerce, Inc. and Stephen J. Gold (filed with GSI Commerce,
    Inc.s Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    June 3, 2010 and incorporated herein by reference) 47




---



##### 



ExhibitNumber

Description10
.19+

Offer Letter, dated March 26, 2007, between GSI Commerce,
    Inc. and Scott Hardy (filed with GSI Commerce, Inc.s
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 29, 2008 and incorporated
    herein by reference)10
.20+

Employment Agreement, between GSI Commerce, Inc. and Christopher
    Saridakis, dated March 23, 2010 (filed with GSI Commerce,
    Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2010 and incorporated herein
    by reference)10
.21

Amended and Restated Credit Agreement, dated as of
    March 24, 2010, by and among GSI Commerce Solutions, Inc.,
    the Guarantors named therein, the Lenders named therein, PNC
    Bank, National Association, as administrative agent, and PNC
    Capital Markets LLC and Bank of America, N.A., as joint lead
    arrangers and joint bookrunners (filed with GSI Commerce,
    Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended October 2, 2010 and incorporated
    herein by reference)12
.1

Statement Regarding Computation of Ratios of Earnings to Fixed
    Charges21
.1

List of Subsidiaries23
.1

Consent of Deloitte & Touche LLP24
.1

Power of Attorney, incorporated by reference to the signature
    page of this Annual Report on
    Form 10-K31
.1

Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 193431
.2

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 193432
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     +
    
    Management contract or compensatory plan or arrangement
    
    Confidential treatment has been requested for certain portions
    of this exhibit. Omitted portions have been filed separately
    with the Securities and Exchange Commission. 48




---



##### 



SIGNATURES  Pursuant to the requirements of Section 13 or 15(d) of
    the Securities Exchange Act of 1934, the registrant has duly
    caused this Report to be signed on its behalf on the date
    indicated by the undersigned thereunto duly authorized.
      By:
    /s/  MICHAEL
    G. RUBIN     Pursuant to the requirements of the Securities Exchange Act
    of 1934, this Report has been signed below by the following
    persons on behalf of the registrant and in the capacities and on
    the dates indicated.
  Signature

Title(s)

Date/s/  Michael
    G. RubinMichael
    G. Rubin

Chairman, President and Chief Executive Officer (principal
    executive officer)

March 1, 2011/s/  Michael
    R. ConnMichael
    R. Conn

Executive Vice President, Finance and Chief Financial Officer
    (principal financial officer and principal accounting officer)

March 1, 2011/s/  M.
    Jeffrey BranmanM.
    Jeffrey Branman

Director

March 1, 2011/s/  Michael
    DonahueMichael
    Donahue

Director

March 1, 2011/s/  Ronald
    D. FisherRonald
    D. Fisher

Director

March 1, 2011/s/  John
    A. HunterJohn
    A. Hunter

Director

March 1, 2011Joshua
    Kopelman

Director/s/  Mark
    S. MenellMark
    S. Menell

Director

March 1, 2011/s/  Jeffrey
    F. RayportJeffrey
    F. Rayport

Director

March 1, 2011 49




---



##### 



Signature

Title(s)

DateDavid
    S. Rosenblatt

Director/s/  Lawrence
    S. SmithLawrence
    S. Smith

Director

March 1, 2011/s/  Andrea
    M. WeissAndrea
    M. Weiss

Director

March 1, 2011  50




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            Internal Control  Integrated Framework
  
    F-1




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
  January 2,


January 1,2010


2011(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
228,430


$
242,146Accounts receivable, net


70,582



96,382Inventory, net


55,678



62,412Deferred tax assets


12,347



16,439Prepaid expenses and other current assets


13,187



16,984Total current assets


380,224



434,363Property and equipment, net


163,329



188,829Goodwill


373,003



318,179Intangible assets, net


132,875



132,972Long-term deferred tax assets






2,279Other assets, net


12,417



30,540Total assets

$
1,061,848


$
1,107,162LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
126,914


$
144,323Accrued expenses and other


150,173



197,417Deferred revenue


20,645



23,808Convertible notes


55,443



Current portion  long-term debt


5,260



11,136Total current liabilities


358,435



376,684Convertible notes


116,948



123,391Long-term debt


28,142



32,287Deferred acquisition payments


63,763



1,750Deferred tax liabilities


8,534



Deferred revenue and other long-term liabilities


9,686



10,017Total liabilities


585,508



544,129Commitments and contingencies (Note 8)Stockholders equity:Preferred stock, $0.01 par value:Authorized shares  5,000Issued and outstanding shares  none






Common stock, $0.01 par value:Authorized shares  90,000 and 180,000Issued and outstanding shares  60,033 and 66,984


600



670Additional paid in capital


642,852



765,857Accumulated other comprehensive loss


(1,498
)


(1,378
)Accumulated deficit


(165,614
)


(202,116
)Total stockholders equity


476,340



563,033Total liabilities and stockholders equity

$
1,061,848


$
1,107,162    F-2




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011(In thousands, except per share data)Revenues:Net revenues from product sales

$
577,073


$
542,249


$
777,348Service fee revenues


389,853



461,966



580,646Net revenues


966,926



1,004,215



1,357,994Costs and expenses:Cost of revenues from product sales


405,254



398,604



565,402Marketing


70,282



54,831



63,625Account management and operations


260,325



273,070



361,853Product development


104,208



120,176



161,336General and administrative


68,964



82,922



111,978Depreciation and amortization


68,153



63,395



83,763Changes in fair value of deferred acquisition payments






951



(60,963
)Impairment of goodwill and intangible assets










88,318Total costs and expenses


977,186



993,949



1,375,312Income (loss) from operations


(10,260
)


10,266



(17,318
)Other (income) expense:Interest expense


18,841



19,430



17,292Interest income


(1,772
)


(478
)


(338
)Other expense


1,562



(2
)


1,212Loss on equity investments


1,665







736Total other expense


20,296



18,950



18,902Loss before income taxes and equity-methodinvestment earnings


(30,556
)


(8,684
)


(36,220
)(Benefit) provision for income taxes


(7,585
)


2,344



660Equity-method investment earnings










(378
)Net loss

$
(22,971
)

$
(11,028
)

$
(36,502
)Loss per share- basic and diluted

$
(0.49
)

$
(0.21
)

$
(0.57
)Weighted average shares outstanding  basic and diluted


47,347



51,457



64,190    F-3




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  AccumulatedAdditional








OtherCommon Stock


Paid in


Accumulated


Comprehensive


ComprehensiveShares


Dollars


Capital


Deficit


(Loss) Income


Loss


Total(In thousands)Consolidated balance at December 29, 2007


46,848


$
468


$
412,203


$
(131,615
)





$
(156
)

$
280,900Net loss














(22,971
)


(22,971
)






(22,971
)Cumulative translation adjustment, net of tax


















(2,171
)


(2,171
)


(2,171
)Comprehensive loss

















$
(25,142
)Stock-based compensation expense










18,494















18,494Issuance of common stock and warrants upon exercise of options


128



1



1,384















1,385Issuance of stock awards upon vesting


655



7



(7
)














Share-based awards retained for taxes










(222
)














(222
)Tax deficit in connection with exerciseof stock options and awards










(919
)














(919
)Consolidated balance at January 3, 2009


47,631


$
476


$
430,933


$
(154,586
)





$
(2,327
)

$
274,496Net loss














(11,028
)


(11,028
)






(11,028
)Cumulative translation adjustment, net of tax


















829



829



829Comprehensive loss

















$
(10,199
)Stock-based compensation expense










23,749















23,749Issuance of common stock and warrantsupon exercise of options


772



8



5,312















5,320Issuance of stock awards upon vesting


1,368



14



(14
)














Share-based awards retained for taxes










(60
)














(60
)Tax benefit in connection with exercise of stock options and
    awards










1,175















1,175Acquisition consideration


4,798



48



93,897















93,945Common stock issued in public offering, net of costs


5,464



54



87,860















87,914Consolidated balance at January 2, 2010


60,033


$
600


$
642,852


$
(165,614
)





$
(1,498
)

$
476,340Net loss














(36,502
)


(36,502
)






(36,502
)Cumulative translation adjustment, net of tax


















120



120



120Comprehensive loss

















$
(36,382
)Stock-based compensation expense










26,829















26,829Issuance of common stock and warrants upon exercise of options


2,116



22



16,838















16,860Issuance of stock awards upon vesting


1,608



16



(16
)














Tax benefit in connection with exercise of stock options and
    awards










21,918















21,918Conversion of convertible debt


3,227



32



57,436















57,468Consolidated balance at January 1, 2011


66,984


$
670


$
765,857


$
(202,116
)





$
(1,378
)

$
563,033    F-4




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
    FLOWS
 Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011(In thousands)Cash Flows from Operating Activities:Net loss

$
(22,971
)

$
(11,028
)

$
(36,502
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation


54,557



52,633



63,630Amortization


13,596



10,762



20,133Amortization of discount on convertible notes


9,462



10,440



8,469Changes in fair value of deferred acquisition payments






951



(60,963
)Impairment of goodwill and intangible assets










88,318Stock-based compensation


19,403



24,762



27,843Foreign currency transaction losses


1,571



14



1,216Loss on equity investments


1,665







736Gain on disposal of equipment


(354
)


(10
)


Equity-method investment earnings










(378
)Deferred income taxes


(7,722
)


202



(1,950
)Changes in operating assets and liabilities:Accounts receivable, net


(8,130
)


10,010



(22,421
)Inventory, net


4,437



7,677



(6,734
)Prepaid expenses and other current assets


2,142



(544
)


(3,040
)Other assets, net


1,724



2,159



871Accounts payable and accrued expenses and other


23,513



33,967



60,494Deferred revenue


3,076



(1,771
)


407Net cash provided by operating activities


95,969



140,224



140,129Cash Flows from Investing Activities:Payments for acquisitions of businesses, net of cash acquired


(145,001
)


(88,892
)


(47,850
)Cash paid for property and equipment, including internal use
    software


(57,180
)


(43,007
)


(70,913
)Proceeds from disposition of assets


1,500







Release of restricted cash escrow funds






1,052



Cash paid for equity investments










(18,605
)Net cash used in investing activities


(200,681
)


(130,847
)


(137,368
)Cash Flows from Financing Activities:Borrowings on revolving credit loan


70,000







25,000Repayments on revolving credit loan


(70,000
)






(25,000
)Proceeds from sale of common stock






92,596



Proceeds from long term borrowing










1,000Proceeds from capital lease financing


7,901







Equity issuance costs paid






(4,728
)


Debt issuance costs paid


(561
)






(887
)Repayments of capital lease obligations


(3,032
)


(4,503
)


(6,171
)Repayments of mortgage note


(195
)


(184
)


(196
)Excess tax benefit in connection with exercise of stock options
    and awards


14



92



1,599Proceeds from exercise of common stock options and warrants


1,385



5,320



16,823Net cash provided by financing activities


5,512



88,593



12,168Effect of exchange rate changes on cash and cash equivalents


(1,996
)


145



(1,213
)Net increase (decrease) in cash and cash equivalents


(101,196
)


98,115



13,716Cash and cash equivalents, beginning of period


231,511



130,315



228,430Cash and cash equivalents, end of period

$
130,315


$
228,430


$
242,146Supplemental Cash Flow InformationCash paid during the period for interest

$
9,798


$
8,055


$
7,928Cash paid during the period for income taxes


699



3,032



815Noncash Investing and Financing Activities:Accrual for purchases of property and equipment


3,712



2,363



4,257Equipment financed under capital lease


2,497



451



15,249    F-5




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (amounts in thousands, except per share data)
  NOTE 1 
    DESCRIPTION
    OF BUSINESS  e-Commerce e-Commerce e-commerce e-commerce e-commerce
  NOTE 2 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES    Fiscal Year:
  Basis of Consolidation:
  Use of Estimates:
  Cash and Cash Equivalents:
  Accounts Receivable, Net:
  Inventory:
   F-6




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    Property and Equipment:
      Goodwill and Other Intangible Assets:
      Goodwill and Other Intangible Assets
 F-7




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Other Assets, Net:
    January 2,


January 1,2010


2011Equity investments

$
3,420


$
22,644Unamortized debt issuance costs


2,754



2,792Deferred compensation


1,396



1,640Deferred client revenue share charges


2,247



816Other


2,600



2,648Total other assets, net

$
12,417


$
30,540   Acquisitions and Investments
  Accrued Expenses:
    Deferred Acquisition Payments:
  Revenue Recognition:
  Net Revenues from Product Sales:
 F-8




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    Service Fee Revenues:
          Cost of Revenues from Product Sales:
  Marketing: e-commerce
   F-9




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  e-commerce e-commerce
        Account Management and Operations:
    Product Development:
  General and Administrative:
  Foreign Currency Translation and
    Transactions:
 F-10




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Stock-Based Compensation:
  Stock Awards
  Income Taxes:
       F-11




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Recent Accounting Pronouncements:
    Effective Date forSubject

Date Issued

Summary

Effect of Adoption

the CompanyMultiple Element Arrangements

October 2009

Removes the objective-and-reliable-evidence-of-fair-value
    criterion from the separation criteria used to determine whether
    an arrangement involving multiple deliverables contains more
    than one unit of accounting. Replaces references to fair
    value with selling price to distinguish from
    the fair value measurements required under accounting standards
    for Fair Value Measurements. Provides a hierarchy
    that entities must use to estimate the selling price, eliminates
    the use of the residual method for allocation, and expands the
    ongoing disclosure requirements.

No material impact.

January 2, 2011, with early adoption permitted. The Company
    chose to prospectively adopt this standard on January 3, 2010   NOTE 3 
    FAIR
    VALUE OF FINANCIAL AND NONFINANCIAL INSTRUMENTS              Fair Value Measurements on January 2, 2010Quoted Prices in


Significant


SignificantActive Markets for


Other Observable


UnobservableIdentical Assets


Inputs


Inputs(Level 1)


(Level 2)


(Level 3)AssetsCash and cash equivalents:(1)Money market mutual funds

$
13,606


$



$
LiabilitiesDeferred acquisition payments(2)

$



$



$
60,963   F-12




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Fair Value Measurements on January 1, 2011Quoted Prices in

Significant

SignificantActive Markets for

Other Observable

UnobservableIdentical Assets

Inputs

Inputs(Level 1)

(Level 2)

(Level 3)LiabilitiesDeferred acquisition payments(2)

$



$



$
     (1)
    
    Cash and cash equivalents totaled $242,146 as of January 1,
    2011, and were comprised entirely of bank deposits. Cash and
    cash equivalents totaled $228,430 as of January 2, 2010,
    and were comprised of $13,606 of money market mutual funds and
    $214,824 of bank deposits.(2)
    
    Deferred acquisition payments, a Level 3 category
    liability, represent the fair value of estimated acquisition
    payments that are contingent upon RueLaLa, Inc., formerly known
    as Retail Convergence, Inc. (Rue La La)
    achieving specified minimum earnings thresholds. The Company
    utilized a discounted cash flow model that incorporated several
    different assumptions of future performance and a discount rate
    of 13.6% to determine the fair value of its deferred acquisition
    payments.      January 1,2011Balance, beginning of period

$
60,963Changes in fair value of deferred acquisition payments included
    in the Companys Condensed Consolidated Statements of
    Operations


(60,963
)Balance, end of period

$
  F-13




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  NOTE 4 
    PROPERTY
    AND EQUIPMENT    January 2,


January 1,Useful Life

2010


2011Computer hardware and software

up to 4 yrs.

$
231,954


$
300,238Building and building improvements

up to 30 yrs.


44,822



45,011Furniture, warehouse and office equipment, and other

up to 7 yrs.


45,722



49,359Land




7,889



7,889Leasehold improvements

Lesser of 15 years
    or lease term


8,847



11,983Capitalized leases

up to 7 yrs.


29,132



42,054368,366



456,534Less: Accumulated depreciation




(205,037
)


(267,705
)Property and equipment, net



$
163,329


$
188,829     NOTE 5 
    GOODWILL
    AND OTHER INTANGIBLE ASSETS    ConsumerGeC


GMS


Engagement


ConsolidatedJanuary 3, 2009

$
82,758


$
112,238


$



$
194,996Acquisitions






4,787



172,888



177,675Foreign currency translation


332











332January 2, 2010


83,090



117,025



172,888



373,003Acquisitions


2,556



20,708







23,264Goodwill impairment


(6,387
)






(71,307
)


(77,694
)Foreign currency translation


(394
)










(394
)January 1, 2011

$
78,865


$
137,733


$
101,581


$
318,179   e-Commerce
 F-14




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
      e-Commerce
    Weighted-January 2,


January 1,


Average2010


2011


LifeGross carrying value of intangible assets subject to
    amortization:Contract based

$
56,455


$
60,636



2.5Customer related


22,200



22,200



2.6Technology


4,805



13,723



3.4Trade name


840



840



1.5Foreign currency translation


(482
)


83,818



97,399



2.7Accumulated amortization:Contract based


(25,795
)


(36,904
)Customer related


(489
)


(6,649
)Technology


(2,428
)


(4,962
)Trade name


(532
)


(716
)Foreign currency translation


72



(29,172
)


(49,231
)Net carrying value:Contract based


30,660



23,732Customer related


21,711



15,551Technology


2,377



8,761Trade name


308



124Foreign currency translation


(410
)


Total intangible assets subject to amortization, net


54,646



48,168Indefinite life intangible assets:Trade names


78,229



84,804Total intangible assets

$
132,875


$
132,972   e-Commerce
 F-15




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  e-Commerce e-Commerce
    Fiscal 2011

$
18,304Fiscal 2012


13,297Fiscal 2013


9,710Fiscal 2014


5,614Fiscal 2015


1,243$
48,168   NOTE 6 
    ACQUISITIONS
    AND INVESTMENTS    MBS
   F-16




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    Total current assets

$
2,472Property, plant, and equipment


949Goodwill


11,563Identifiable intangible assets:Customer relationships


8,611Technology


2,551Trade name


1,710Total assets acquired


27,856Total current liabilities


(1,476
)Long-term deferred tax liabilities


(4,180
)Total liabilities assumed


(5,656
)Net assets acquired

$
22,200     Rue
    La La
  e-commerce e-commerce e-commerce
  Fair Value of Financial and
    Nonfinancial Instruments
   F-17




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    Total current assets

$
31,129Property, plant and equipment


8,031Goodwill


172,888Identifiable intangible assets:Trade name


59,569Member relationships


22,200Supplier relationships


11,186Non-compete agreements


241Total assets acquired


305,244Total current liabilities


(29,718
)Long-term deferred tax liabilities and other


(29,436
)Total liabilities assumed


(59,154
)Total consideration


246,090Liability arising from contingent consideration


(60,012
)Consideration paid at acquisition date

$
186,078   e-Dialog,
    Inc.
  e-Dialog, (e-Dialog) e-Dialog e-mail e-Dialog e-commerce e-Dialog, e-Dialog
  e-Dialogs
 F-18




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  e-Dialog
  Total current assets

$
17,067Property, plant and equipment


4,530Goodwill


112,238Identifiable intangible assets:Customer contracts


19,470Internal-developed software


4,493Trade name


17,874Total assets acquired


175,672Total current liabilities


(6,564
)Long-term deferred tax liabilities


(19,042
)Total liabilities assumed


(25,606
)Net assets acquired

$
150,066   Other
    Acquisitions
    Unaudited
    Pro Forma Financial Information
  e-Dialog
  Fiscal Year EndedJanuary 3,

January 2,

January 1,2009

2010

2011Net revenues

$
1,069,291


$
1,121,214


$
1,363,657Net loss

$
(40,499
)

$
(25,707
)

$
(36,728
)   Equity
    Method Investment
  e-commerce
 F-19




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  other-than-temporary.
  Other
    Investment
  other-than-temporary
  NOTE 7 
    LONG-TERM
    DEBT AND CREDIT FACILITY    January 2,


January 1,2010


2011Convertible notes

$
172,391


$
123,391Notes payable(1)


12,479



15,989Capital lease obligations


20,923



27,434Total debt


205,793



166,814Less: Current portion of convertible notes


(55,443
)


Less: Current portion of notes payable


(195
)


(1,073
)Less: Current portion of capital lease obligations


(5,065
)


(10,063
)Total long-term debt

$
145,090


$
155,678     (1)
    
    The estimated fair market value of the notes payable
    approximated their carrying value as of January 2, 2010 and
    January 1, 2011.   F-20




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  3%
    Convertible
    Notes due 2025        As of


As ofJanuary 2,


January 1,2010


2011Carrying amount of the equity component

$
18,187


$
Principal amount of the liability component

$
57,500


$
Unamortized discount of liability component

$
2,057


$
Net carrying amount of liability component

$
55,443


$
     Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011Amortization of the discount on the liability component

$
4,021


$
4,517


$
2,053Contract interest coupon


1,725



1,725



719Amortization of the liability component of the issue costs


359



391



173Interest expense

$
6,105


$
6,633


$
2,945   2.5% Convertible
    Notes due 2027
     F-21




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    As of

As ofJanuary 2,

January 1,2010

2011Carrying amount of the equity component

$
26,783


$
26,783Principal amount of the liability component

$
150,000


$
150,000Unamortized discount of liability component

$
33,052


$
26,609Net carrying amount of liability component

$
116,948


$
123,391Remaining amortization period of discount






41 monthsEffective interest rate on liability component






8.60
%     Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011Amortization of the discount on the liability component

$
5,445


$
5,923


$
6,443Contract interest coupon


3,750



3,750



3,750Amortization of the liability component of the issue costs


434



457



482Interest expense

$
9,629


$
10,130


$
10,675     Note
    Payable
    Capital
    Lease Obligations
    January 1,2011Gross capital lease obligations

$
29,855Less: imputed interest


(2,421
)Total present value of future minimum lease payments


27,434Less: current portion


(10,063
)Long-term portion

$
17,371  F-22




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Credit
    Facilities
  Subsequent Events,
  NOTE 8 
    COMMITMENTS
    AND CONTINGENCIES  Legal
    Proceedings
    and/or
 F-23




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Operating
    and Capital Commitments
    Payments due by fiscal year2011


2012


2013


2014


2015


Thereafter


TotalOperating lease obligations(1)

$
22,453


$
21,980


$
18,028


$
14,659


$
11,396


$
14,486


$
103,002Marketing commitments(1)


705



2,570



2,570



2,570











8,415Client revenue share payments(1)


21,931



23,158



24,534



15,991



7,606



25,663



118,883Debt interest(1)


5,465



4,557



4,512



2,288



363







17,185Debt obligations


1,073



1,471



1,471



161,621



353







165,989Capital lease obligations, including interest(2)


11,438



9,940



6,677



1,800











29,855Deferred acquisition payments(3)


1,500



750



1,000















3,250Total(4)

$
64,565


$
64,426


$
58,792


$
198,929


$
19,718


$
40,149


$
446,579     (1)
    
    Not required to be recorded in the Consolidated Balance Sheet as
    of January 1, 2011 in accordance with accounting principles
    generally accepted in the United States of America.(2)
    
    Capital lease obligations, excluding interest, are recorded in
    the Consolidated Balance Sheets.(3)
    
    The $3,250 of deferred acquisition payments in the table above
    represent fixed contractual future payments. The Company is also
    obligated to pay up to an additional $208,400 from fiscal 2011
    through fiscal 2016 based on the achievement of certain
    financial targets by some of our acquired companies, of which
    the Company has the ability to pay up to $45,800 with shares of
    the Companys common stock. The Company is uncertain as to
    if or when such amounts may be settled; as a result, these
    obligations are not included in the table above.(4)
    
    The Company has entered into long-term incentive plans with
    certain of its employees and executive which obligates the
    Company to pay up to $50,000 to certain employees based on the
    performance of the business for which the employee is
    responsible. Amounts due under these incentive plans are payable
    in cash and/or stock from fiscal 2012 through fiscal 2015. As
    payment is not probable for any of these plans the Company is
    uncertain as to if or when such amounts may be settled; as a
    result, these obligations are not reflected in the Consolidated
    Balance Sheet as of January 1, 2011 and not included in the
    table above.     F-24




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  NOTE 9 
    STOCKHOLDERS
    EQUITY  Preferred
    Stock:
    Common
    Stock:
      Stockholders
    Right Plan:
    NOTE 10 
    STOCK
    AWARDS     F-25




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    Stock
    Options and Warrants
    WeightedWeighted


AverageNumber of


Average


Remaining


AggregateShares


Exercise


Contractual


Intrinsic(In thousands)


Price


Life (in years)


ValueOutstanding at January 2, 2010


3,252


$
9.88Granted






Exercised


(2,027
)

$
8.30Forfeited/Cancelled


(3
)

$
9.31Outstanding at January 1, 2011


1,222


$
12.50



3.33


$
13,121Vested and expected to vest at January 1, 2011


1,222


$
12.50



3.33


$
13,121Exercisable at January 1, 2011


1,222


$
12.50



3.33


$
13,121     Restricted
    stock Units and Awards
    WeightedNumber of


AverageShares


Grant Date(In thousands)


Fair ValueNonvested shares at January 2, 2010


4,294


$
16.64Granted


1,499


$
27.03Vested


(1,792
)

$
14.42Forfeited/Cancelled


(496
)

$
16.64Nonvested shares at January 1, 2011


3,505


$
22.22      F-26




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Stock-based
    Compensation Expense
    Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011Includes stock-based compensation as follows:Account management and operations

$
7,505


$
9,028


$
10,314Product development

$
4,118


$
5,740


$
6,825General and administrative

$
7,780


$
9,994


$
10,704   NOTE 11 
    INCOME
    TAXES    Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011Loss before income taxes:Domestic

$
(20,588
)

$
1,541


$
(19,176
)Foreign


(9,968
)


(10,225
)


(17,044
)Total

$
(30,556
)

$
(8,684
)

$
(36,220
)Provision (benefit) for income taxes:Current:Federal

$
488


$
588


$
72State


1,765



1,554



878Foreign










30Total Current

$
2,253


$
2,142


$
980Deferred:Federal

$
(10,252
)

$
4,123


$
(1,006
)State


1,339



(3,921
)


1,029Foreign


(925
)






(343
)Total Deferred

$
(9,838
)

$
202


$
(320
)Total:Federal

$
(9,764
)

$
4,711


$
(934
)State


3,104



(2,367
)


1,907Foreign


(925
)






(313
)Total

$
(7,585
)

$
2,344


$
660  F-27




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    January 2,


January 1,2010


2011Deferred tax assets:Net operating loss carryforwards

$
87,321


$
97,244Deferred revenue


8,008



7,680Stock-based compensation


5,022



6,087Investment impairment and losses


3,479



3,611Allowance for sales returns


3,072



3,971Alternative minimum tax credits


2,250



2,038Amortization


1,127



2,030Research and development tax credits


1,390



1,390Provision for doubtful accounts


1,294



1,522Accrued expenses


384



784Inventory


104



2,187Restructuring


41



Other


3,629



3,954Total deferred tax assets


117,121



132,498Valuation allowance


(49,797
)


(52,208
)Total deferred tax assets, net of valuation allowance


67,324



80,290Deferred tax liabilities:Property and equipment


(3,174
)


(4,538
)Amortization of intangibles


(45,845
)


(45,883
)Interest on convertible notes


(14,492
)


(11,151
)Total deferred tax liabilities


(63,511
)


(61,572
)Net deferred tax asset

$
3,813


$
18,718    F-28




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    2011-2016

$
46,1582017-2022


211,1822023-2030


338,191$
595,531          F-29




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011Statutory federal income tax rate


35.0
%


35.0
%


35.0
%Increase (decrease) in taxes resulting from:Foreign statutory rates differing from U.S. statutory rate


(1.9
)%


(5.7
)%


(1.7
)%Valuation allowance


(6.8
)%


(37.4
)%


(9.7
)%State taxes


(1.0
)%


18.4
%


(3.1
)%Non-deductible goodwill impairment


0.0
%


0.0
%


(75.8
)%Non-deductible change in deferred acquisition payments


0.0
%


0.0
%


54.1
%Non-deductible officers compensation


0.0
%


(7.0
)%


(2.0
)%Non-deductible acquisition-related costs


0.0
%


(8.5
)%


(1.8
)%Non-deductible stock comp expense


0.0
%


(10.7
)%


0.0
%Other non-deductible items


0.0
%


(6.7
)%


(1.5
)%Other


(0.5
)%


(4.4
)%


4.6
%Effective income tax rate


24.8
%


(27.0
)%


(1.9
)%     January 3,


January 2,


January 1,2009


2010


2011Balance at the beginning of the fiscal year

$
1,014


$
1,708


$
2,052Gross increases for tax positions related to current year


290



258



1,918Gross increases for tax positions related to prior years


112



109



71Gross increases acquired in acquisitions


347







Gross decreases for tax positions related to prior years


(55
)






Gross decreases as a result of a lapse of the statute of
    limitations






(23
)


(148
)Balance at the end of the fiscal year

$
1,708


$
2,052


$
3,893      F-30




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
        NOTE 12 
    LOSS PER
    SHARE      As OfJanuary 3,


January 2,


January 1,2009


2010


2011Stock units and awards


3,792



4,294



3,505Stock options and warrants


4,244



3,252



1,222Convertible notes


8,229



8,229



5,00016,265



15,775



9,727   NOTE 13 
    MAJOR
    SUPPLIERS/ECONOMIC DEPENDENCY      NOTE 14 
    SEGMENT
    INFORMATION  e-Commerce e-commerce e-commerce e-commerce e-commerce
 F-31




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Form 8-K
      Fiscal Year Ended January 3, 2009Consumer


IntersegmentGeC


GMS


Engagement


Eliminations


ConsolidatedNet revenues

$
900,040


$
84,508


$



$
(17,622
)

$
966,926Segment costs and expenses


833,174



69,442







(17,622
)


884,994Segment profit


66,866



15,066











81,932Acquisition related integration, transaction, due diligence
    expenses, non-cash inventory valuation adjustments, and the cash
    portion of deferred acquisition payments recorded as
    compensation expense


















4,636Depreciation and amortization


















68,153Stock-based compensation expense


















19,403Loss from operations


















(10,260
)Interest expense


















18,841Interest income


















(1,772
)Other expense, net


















1,562Impairment of equity investments


















1,665Loss before income taxes

















$
(30,556
)   F-32




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Fiscal Year Ended January 2, 2010Consumer


IntersegmentGeC


GMS


Engagement


Eliminations


ConsolidatedNet revenues

$
879,575


$
127,580


$
26,347


$
(29,287
)

$
1,004,215Segment costs and expenses


805,170



96,980



24,971



(29,287
)


897,834Segment profit


74,405



30,600



1,376







106,381Acquisition related integration, transaction, due diligence
    expenses, non-cash inventory valuation adjustments, and the cash
    portion of deferred acquisition payments recorded as
    compensation expense


















7,007Depreciation and amortization


















63,395Changes in fair value of deferred acquisition payments


















951Stock-based compensation expense


















24,762Income from operations


















10,266Interest expense


















19,430Interest income


















(478
)Other expense, net


















(2
)Loss before income taxes

















$
(8,684
)   Fiscal Year Ended January 1, 2011Consumer


IntersegmentGeC


GMS


Engagement


Eliminations


ConsolidatedNet revenues

$
1,024,370


$
189,918


$
216,735


$
(73,029
)

$
1,357,994Segment costs and expenses


928,875



141,550



225,919



(73,029
)


1,223,315Segment profit


95,495



48,368



(9,184
)






134,679Acquisition related integration, transaction, due diligence
    expenses, non-cash inventory valuation adjustments, and the cash
    portion of deferred acquisition payments recorded as
    compensation expense


















13,036Depreciation and amortization


















83,763Changes in fair value of deferred acquisition payments


















(60,963
)Impairment of goodwill and intangible assets


















88,318Stock-based compensation expense


















27,843Income from operations


















(17,318
)Interest expense


















17,292Interest income


















(338
)Other expense, net


















1,212Loss on investments


















736Loss before income taxes and equity-methodinvestment earnings

















$
(36,220
)  F-33




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
    Fiscal Year EndedJanuary 3,


January 2,


January 1,2009


2010


2011Product sale groupings:General merchandise

$
456,886


$
409,198


$
594,963Freight


120,187



133,051



182,385Service fees


389,853



461,966



580,646Total net revenues

$
966,926


$
1,004,215


$
1,357,994     NOTE 15 
    RELATED
    PARTY TRANSACTIONS  e-commerce
  E-Commerce and/or and/or
     F-34




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
      NOTE 16 
    QUARTERLY
    RESULTS  (UNAUDITED)    For the Fiscal Year Ended January 2, 2010First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterNet revenues

$
196,475


$
187,181


$
190,311


$
430,248Income (loss) from operations

$
(14,534
)

$
(12,277
)

$
(9,913
)

$
46,990Net income (loss)

$
(12,110
)

$
(13,113
)

$
(9,406
)

$
23,601Income (loss) per share  basic(1)

$
(0.25
)

$
(0.27
)

$
(0.18
)

$
0.41Income (loss) per share  diluted(1)

$
(0.25
)

$
(0.27
)

$
(0.18
)

$
0.38Weighted average shares outstanding  basic


47,926



48,681



51,910



57,310Weighted average shares outstanding  diluted


47,926



48,681



51,910



68,595   For the Fiscal Year Ended January 1, 2011First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterNet revenues

$
272,591


$
264,229


$
284,138


$
537,036Income (loss) from operations

$
(12,933
)

$
(22,620
)

$
(20,221
)

$
38,456Net income (loss)

$
(8,125
)

$
(25,731
)

$
(18,578
)

$
15,932Income (loss) per share  basic(1)

$
(0.13
)

$
(0.41
)

$
(0.28
)

$
0.24Income (loss) per share  diluted(1)

$
(0.13
)

$
(0.41
)

$
(0.28
)

$
0.23Weighted average shares outstanding  basic


60,446



63,286



66,419



66,608Weighted average shares outstanding  diluted


60,446



63,286



66,419



68,268     (1)
    
    The sum of the quarterly per share amounts may not equal per
    share amounts reported for
    year-to-date
    periods. This is due to changes in the number of weighted
    average shares outstanding and the effects of rounding for each
    period.   NOTE 17 
    SUBSEQUENT
    EVENTS   F-35




---



##### 



GSI
    COMMERCE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (amounts in thousands, except per share data)
  Hart-Scott-Rodino e-commerce e-commerce
  5-year 5-year
  Rule 10(b)5-1
   F-36