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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:ukinfo@iss.net 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:dbridson@iss.net





UK/Ireland press contacts for Internet Security Systems are:



Technology:


Jane Lee
Dexterity
Tel: +44 (0)1273 470199
mailto:jane.lee@dexterity.co.uk



Business:


Andrew Smith
Object Marketing Ltd.
Tel: +44 (0)20 8762 9292
mailto:andrews@objectmarketing.com






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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