Internet Security Systems Reports Fourth Quarter and Fiscal Year Results Wednesday 23 January 2002 PDF Print ATLANTA, Ga. — January 23, 2002 — Internet Security Systems, Inc. (ISS) (Nasdaq: ISSX), a leading global provider of information protection solutions for the Internet, today announced financial results for the fourth quarter and fiscal year ended December 31, 2001. Additionally, the company is providing its business outlook for 2002 and announcing the appointment of Pete Privateer as vice president, protection services. Fourth Quarter and Fiscal Year 2001 Operating Results: Revenues were $57,960,000 for the fourth quarter of 2001, a 10% sequential increase compared with third quarter revenues of $52,734,000 and a 3% decrease compared with $59,680,000 for the corresponding period of 2000. Pro forma earnings, excluding non-cash acquisition charges, were $4,809,000 or $.10 per diluted share. Non-cash acquisition charges of $12,684,000 consisted of amortization of intangibles and compensation charges for unvested stock options associated with the June 2001 acquisition of Network ICE. Including the after-tax effect of these charges, the reported net loss for the fourth quarter of 2001 was $10,301,000 or $.22 per share. Revenues for the year ended December 31, 2001 were $223,559,000. On a pro forma basis, earnings for the year ended December 31, 2001 were $11,574,000 or $.25 per diluted share. Excluded from pro forma earnings were the non-cash Network ICE acquisition related charges and Japan IPO gain of $13,620,000 from a third quarter initial public offering on the Japan over-the counter market by the company’s subsidiary responsible for Asia and Pacific Rim operations. The reported net loss for 2001 was $15,458,000 or $.34 per share. “Our fourth quarter and year end results confirm the growing demand for our threat protection solutions as well as our continued ability to execute and exceed our business and financial objectives,” said Tom Noonan, president and chief executive officer of Internet Security Systems. “We look forward to continued leadership and innovation in 2002 as we deliver the industry's first pervasive protection solution for detecting, preventing and responding to today's ever changing threat spectrum.” Internet Security Systems also announces the appointment of Pete Privateer to vice president, protection services. In this role, Mr. Privateer will lead Internet Security Systems’ intellectual capital-based operations including X-Force™ security research and response, managed security services, professional services, customer support and education services. Mr. Privateer comes to the company most recently from Pelican Security, Inc., a next-generation, behavioral-based anti-virus software company, where he was president and chief operating officer. Prior to his role at Pelican, Mr. Privateer was co-founder and senior vice president of operations of Axent Technologies, Inc. where he helped to lead the company to its initial public offering. 2001 Fiscal Year Achievements In 2001, Internet Security Systems expanded its leadership position in today’s global security marketplace by building on its number one position in Intrusion Detection and Vulnerability Assessment (IDnA) while continuing to deliver innovative information protection solutions designed to detect and prevent online risks at every potential point of compromise on desktops, servers and networks. Security Convergence: Internet Security Systems’ Protection Platform Debut · New leading-edge technology rolled off the ISS production line resulting in integration and products that are intended to reduce the total cost of ownership and ease the complexity of security management. · Internet Security Systems delivered its new universal protection management console, RealSecure® SiteProtectorÔ. SiteProtector unifies the management and analysis of network, server and desktop protection systems. Customers can control, monitor and analyze their security protection systems from one central site enabling them to simplify their security management and reduce their total cost of ownership. · In addition, during the year, Internet Security Systems made great strides in enhancing its core protection technologies including RealSecure Server Agent and RealSecure Network Sensor. Internet Security Systems delivered new versions of RealSecure Server Sensor combining signature-based attack recognition with BlackICETM technology including advanced protocol analysis, resulting in the industry’s most powerful and effective server intrusion protection system. Network ICE Acquisition In June 2001, Internet Security Systems acquired Network ICE, expanding its RealSecure protection platform with advanced desktop security capabilities as well as enhancing its enterprise solutions with improved performance and highly scalable management. Continued Leadership in IDnA · In December 2001, Internet Security Systems was named the worldwide leader in Intrusion Detection and Vulnerability Assessment by IDC for the second consecutive year. Strides in Managed Security Services, Professional Services and Education · Internet Security Systems continued to extend its industry-leading managed security services offerings with the opening of ISS’ Global Threat Operations Center and additional Security Operations Centers around the world, extending support for its customers and providing them with flexible solutions in how they choose to manage their information protection. Business Outlook for 2002 The following statements are based on current expectations for the first quarter and fiscal 2002 regarding ISS’ revenues and earnings per share. These statements are forward-looking, and actual results may differ materially. These statements do not reflect the potential impact of any mergers, acquisitions or other business combinations that may be completed after the date of this release. ISS will keep its earnings release and published expectations publicly available on its web site (www.iss.net). Prior to the start of ISS’ quiet period, the public can continue to rely on the expectations published in its earnings release and Web site as being its current expectations on matters covered, unless ISS publishes a notice stating otherwise. Towards the end of each fiscal quarter, ISS will have a "quiet period" when ISS and its representatives will not comment concerning previously published financial expectations, and we disclaim any obligation to update during the quiet period. The public should not rely on previously published expectations during the quiet period. ISS’ quiet period at the end of the first quarter is expected to run from March 15, 2002, until the earnings are released in April 2002. In providing this guidance, ISS has taken into account the current spending environment and market conditions. While the current global environment indicates strong long-term interest in security solutions, this guidance assumes the current overall IT spending environment remains tight during the first half of 2002. For the year ending December 31, 2002, ISS currently expects to achieve revenues in the range of $260,000,000 to $270,000,000 and pro forma earnings in the range of $.55 to $.60 per diluted share. For the quarter ending March 31, 2002, ISS currently expects to achieve revenues in the range of $58,000,000 to $60,000,000 and pro forma earnings in the range of $.10 to $.11 per diluted share. The pro forma per share amounts exclude the non-cash Network ICE acquisition related charges, consisting of amortization of intangibles and compensation charges for unvested options. The company’s conference call regarding this press release is being held Wednesday, January 23, 2002, at 8:00 a.m. Eastern and can be accessed as follows: DIAL IN: Domestic 877-918-2308 International 712-271-3965 Passcode ISSX (or 4779) A live Webcast of this conference call will be available at http://www.iss.net and will remain accessible until March 30, 2002. A rebroadcast of the teleconference will be available from 5:00 p.m., January 23 until 5:00 p.m., January 30, 2002. REBROADCAST DIAL IN: Domestic 800-937-4849 International 402-220-3054 Passcode ISSX (or 4779) Full Financial Charts To access the full financial charts for ISS's Q4 2001 results, please view the release online at http://bvlive01.iss.net/issEn/delivery/prdetail.jsp?type=Fin... About Internet Security Systems Founded in 1994, Internet Security Systems (Nasdaq: ISSX) is a pioneer and world leader in software and services that protect networks, servers and desktops from attack and misuse. Internet Security Systems' proactive approach to anticipating threats against valuable online assets has made ISS the trusted security provider for its customers, ensuring safe, uninterrupted business operations for organizations of all sizes and markets, in the Americas and around the world. Internet Security Systems supports more than 9,000 customers, including 21 of the 25 largest U.S. commercial banks, 10 of the largest telecommunications companies and all major branches of the U.S. federal government. Headquartered in Atlanta, GA, Internet Security Systems has offices in 22 countries throughout Asia, Australia, Europe, Latin America and the Middle East. For more information on Internet Security Systems in the United Kingdom and the Republic of Ireland, visit the company's web site at http://www.iss.net/uk, write to mailto:email@example.com or call 0800 085 2976. - ends - For more information on Internet Security Systems, please contact: David Bridson Internet Security Systems Ltd. Tel: +44 (0)20 7653 9191 mailto:firstname.lastname@example.org UK/Ireland press contacts for Internet Security Systems are: Technology: Jane Lee Dexterity Tel: +44 (0)1273 470199 mailto:email@example.com Business: Andrew Smith Object Marketing Ltd. Tel: +44 (0)20 8762 9292 mailto:firstname.lastname@example.org Forward-Looking Statements This release, other than historical information, includes forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Some of these forward-looking statements include our Business Outlook and statements regarding products under development and related plans. The risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following: the level of demand for ISS’ products; customer budgets; the volume and timing of orders; product and price competition; ISS’ ability to develop new and enhanced products; ISS’ ability to assimilate potential future acquisitions or investments; ISS’ ability to attract and retain key personnel; reliance on distribution channels through which ISS’ products are sold; the growth in the acceptance and use of the Internet and of private Internet-based networks or "intranets"; the extent to which unauthorized access to and use of online information is perceived as a threat to network security; the assertion of infringement claims with respect to ISS’ intellectual property; foreign currency exchange rates; risks concerning the rapid change of technology; and general economic factors. These risks and others are discussed in ISS’ periodic filings with the Securities and Exchange Commission, including ISS’ Annual Report on Form10-K filed on March 30, 2001 and Quarterly Report on Form 10-Q filed November 14, 2001. These filings can be obtained either by contacting ISS Investor Relations or through the Securities and Exchange Commission's Web site at "http://www.sec.gov". Internet Security Systems, X-Force and SiteProtector, are trademarks and RealSecure is a registered trademark of Internet Security Systems, Inc. BlackICE is a licensed trademark of Network ICE Corporation, a wholly owned subsidiary of Internet Security Systems, Inc. All other companies and products mentioned are trademarks and property of their respective owners. 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