GSI Commerce Inc. reported it expects net revenue for fiscal 2007 to increase approximately 23% to a range of $748 million to $750 million from $609.6 million last year. Merchandise sales are expected to be approximately $1.682 billion to $1.687 billion, an increase of approximately 42% from $1.188 billion in fiscal 2006. 


Income from operations is expected to be approximately $5.3 million to $6.3 million, a decrease of approximately 34% to 45% from $9.6 million in fiscal 2006, and below the company's most recent guidance range of $8.0 million to $11.0 million. The results are below the company's most recent guidance primarily due to a higher than forecast amortization of intangibles related to the acquisition of Accretive Commerce resulting from the preliminary allocation of the purchase price between goodwill and intangibles.

Adjusted EBITDA is expected to be approximately $53.0 million to $54.0 million, an increase of approximately 38% to 40% from $38.5 million in fiscal 2006, and essentially in-line with the company's most recent guidance range of $54 million to $57 million.

“We are pleased with the strong growth we delivered in fiscal 2007 across our key revenue and profitability metrics,” said Michael Rubin, chairman and CEO of GSI. “The year's many highlights included significant activity surrounding new business wins in the U.S. and Europe as well as the renewal of existing agreements, the expansion of our fulfillment center network, the acquisitions of Accretive Commerce and Zendor and meaningful growth of our marketing services division.”


The company has not completed its fiscal 2007 year-end tax provision and is therefore not in a position to estimate net income or non-GAAP net income at this time. However, included in net income will be a $5.1 million loss from the sale of marketable securities. The company's investment policy is to conservatively invest excess cash in highly rated liquid securities. Due to the recent disruption in the credit markets, beginning in the third quarter, liquidity became unavailable on several securities in the company's third- party-managed, marketable securities portfolio. The company liquidated its entire portfolio of marketable securities during the third and fourth quarters and incurred the $5.1 million loss, representing approximately 2 percent of the value of its marketable securities portfolio at the time the company began the liquidation. The company's fiscal 2007 year-end cash and cash equivalent position of approximately $231 million was entirely liquid. In addition, the company is involved in discussions related to settlement of a legal matter. If this matter is settled, or if resolution becomes probable, and the amount payable can be reasonably estimated prior to the filing of the company's Form 10-K, the company would record a charge to earnings for fiscal year 2007.


Fiscal Year 2008 Guidance


At this time, the company is providing preliminary guidance for fiscal year 2008 for net revenue, income from operations and adjusted EBITDA. The company's guidance assumes the acquisition of e-Dialog closes during the first quarter of fiscal 2008.


    — Net revenue is expected to be approximately $1.0 billion, or an

       increase of approximately 33 percent to 34 percent from approximately

       $748 million to $750 million for fiscal year 2007.

    — Income from operations is expected to be approximately $3 million to $6

       million, or range from an increase of 13 percent to a decrease of 52

       percent. The expected results are impacted by acquisition integration

       expenses and amortization of acquisition-related intangibles. The

       company anticipates modestly lower acquisition integration expenses

       related to Accretive Commerce in fiscal 2008 than previously indicated.

       At this time, the company has not completed estimates for the following

       primarily non-cash items related to the e-Dialog acquisition: the

       amount of amortization from acquisition related intangibles (non cash),

       the amount of acquisition-related integration expenses (cash), the

       amount of stock-based compensation related to e-Dialog employees (non

       cash), and the amount of incremental depreciation that may result from

       the step-up of the value of fixed assets (non cash). Because these

       items have not been estimated at this time, they have been excluded

       from income from operations. As a result, the company's guidance for

       income from operations could decrease materially.

    — Adjusted EBITDA is expected to be approximately $80 million to

       $83 million, or an increase of approximately 48 percent to 57 percent

       from approximately $53.0 million to $54.0 million in fiscal year 2007.

       While the company does not intend to separately report the results of

       e-Dialog going forward, the company is noting that included in

       estimated fiscal year 2008 adjusted EBITDA is approximately $8 million

       of contribution from e-Dialog (stub year).


“We expect to further accelerate growth in net revenue and adjusted EBITDA in fiscal year 2008, as we anticipate the company's organic trends to remain strong and the acquisitions of Accretive Commerce, Zendor and e-Dialog to make solid contributions,” said Rubin. “Our core business of providing e-commerce services to the U.S. enterprise market is performing well and our growth strategies of international and marketing services are showing positive trends.”