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EXHIBIT 99.1
CONTACTS: Press Contact Investor Contact
Michele Norwood Heidi Jennison
Internet Security Systems Internet Security Systems
678-443-6142 678-443-6167
[email protected] [email protected]
FOR IMMEDIATE RELEASE
INTERNET SECURITY SYSTEMS REPORTS RECORD THIRD QUARTER
REVENUES AND 21ST CONSECUTIVE QUARTER OF GROWTH
ATLANTA, GA. -- OCTOBER 17, 2000 -- Internet Security Systems, Inc.
(ISS) (NASDAQ: ISSX) today announced record financial results for the third
quarter ended September 30, 2000. Revenues were $51,787,000, a 73% increase over
$30,001,000 for the corresponding period in 1999 and a 17% sequential growth
over the second quarter of 2000. Operating profits grew to a record level of
$5,805,000 as the operating margin grew to 11% of revenues. Net income,
including net interest income, foreign exchange loss and income tax expense, was
$4,855,000 or $.11 per share on a fully diluted basis compared to $.02 per share
for the quarter ended September 30, 1999. These third quarter results continued
the significant growth trends in software and service solutions offerings making
it ISS' 21st consecutive quarter of growth.
Results on a year-to-date basis showed similar results. Revenues for
the nine months ended September 30, 2000 of $135,295,000 were a 69% increase
compared with $80,255,00 for the corresponding period in 1999. Earnings per
share were $.27 on a fully diluted basis, a 200% increase over $.09 per share
for the nine months ended September 30, 1999.
"Internet Security Systems' strong third quarter financial results
demonstrate our continued leadership position, providing the information
protection solutions critical to the availability, integrity and confidentiality
of the e-business infrastructure," said Tom Noonan, president and chief
executive officer of Internet Security Systems. "Our success in growing our
managed security services business was evidenced by the addition of eleven new
partners in the quarter. This progress, coupled with our continued leadership in
providing security management software solutions, demonstrates that we are well
on our way to becoming the world standard for
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protecting and managing the security of Internet networks."
THIRD QUARTER HIGHLIGHTS:
NEW CORPORATE STRUCTURE
- During the quarter, the company continued to enjoy a successful
transition from a market-leading software provider to a provider and
leader in full security management solutions - products, consulting,
managed security services (MSS) and education. To further sharpen its
focus, ISS announced the formation of two business units, Managed
Security Services and Enterprise Solutions. This structure, driven by
ISS' extraordinary growth, streamlines our company and provides the
concerted focus that is necessary to scale our business and better
serve the record number of customers who demand our products and
services.
EXPANSION OF INTERNATIONAL OPERATIONS
- In the latter half of the quarter, ISS acquired Brazil-based, SARIS,
which had been ISS' exclusive distributor in the region, and ISYI, a
leader in advanced network security services in the Italian market
place. Both acquisitions enable ISS to expand its operations in Latin
America and Europe.
FORMATION OF ELEVEN NEW MANAGED SECURITY SERVICE PARTNERSHIPS
- ISS continued to execute on its Managed Security Partner (MSP)
strategy, forming eleven new strategic alliances in the third quarter
with service providers who have committed to providing ISS managed
security services as part of their offering set. The addition of these
partnerships builds on ISS' existing relationships and extends its
immediate market reach to millions of enterprises worldwide, making
ISS the largest global provider of managed security solutions.
- Strategic managed security services relationships formed in the third
quarter bringing the total to 19 partners, include the following
companies in the following five key markets:
AUDITORS/CONSULTANTS: PricewaterhouseCoopers
SYSTEM/NETWORK INTEGRATORS: Dimension Data and iGroup (division of
Computacenter)
CYBERCARRIERS: Lucent NetCare(sm), Log On America, Qwest
Communications
EMERGING SERVICE PROVIDERS (MSPS, ASPS, ISPS): HiFive!.net, NOCpulse
and SevenSpace.
INDUSTRY-FOCUSED SERVICE PROVIDERS: GE Medical
Note: Details on ISS' MSS strategy and partners available in October
16th press releases at http://www.iss.net/company/press_office/
pressrel2000.php.
CONTINUED ENHANCEMENT OF SAFESUITE(R) SECURITY MANAGEMENT PLATFORM
- In July, ISS announced new versions of RealSecure(TM) (v.5.0) and
Internet Scanner(TM) (v. 6.1), extending ISS' market lead in network
intrusion detection and security vulnerability assessment.
- ISS announced tighter integration within the SAFEsuite(R) platform
providing customers with greater scalability, streamlined
administration, and clear and cohesive security
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management decision support.
- ISS and Check Point announced a new version of RealSecure for Check
Point (RealSecure 5.0). This enhanced product represents the next
level in integrated network intrusion detection and firewall
capabilities and includes ISS X- Press Updates, a technology that
enables real-time notification of newly identified attack signatures,
ensuring up-to-the-moment recognition and defense against new and
existing cyber attacks.
- During the quarter, ISS X-Force(TM), the company's leading security
research team, delivered 3 new X-Press Updates for SAFEsuite including
Internet Scanner, System Scanner(TM) and RealSecure adding close to
100 new security definitions for ongoing protection from the latest
attacks.
- In September, ISS shipped RealSecure Server Sensor, a groundbreaking
new hybrid intrusion detection solution enabling better protection of
mission critical servers and the e-business infrastructure. ISS also
shipped a new version of its security management application,
SAFEsuite Decisions.
INDUSTRY LEADERSHIP RECOGNITION
- ISS was named one of America's fastest growing 100 companies by
Individual Investor magazine; recognized as a top 50 Internet company
in InternetWorld magazine; and named the number one information
security company by Computer Reseller News in their e-star awards.
ABOUT INTERNET SECURITY SYSTEMS (ISS)
Internet Security Systems (ISS) is a leading global provider of
security management solutions for the Internet. By providing industry-leading
SAFEsuite(R) security software, remote managed security services, and strategic
consulting and education offerings, ISS is a trusted security provider to its
customers, protecting digital assets and ensuring safe and uninterrupted
e-business. ISS' security management solutions protect more than 6,000 customers
worldwide including 21 of the 25 largest U.S. commercial banks, the top 10
telecommunications companies and more than 35 government agencies. Founded in
1994, ISS is headquartered in Atlanta, GA, with additional offices throughout
North America and international operations in Asia, Australia, Europe, Latin
America and the Middle East. For more information, visit the Internet Security
Systems web site at http://www.iss.net or call 888-901-7477.
# # #
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. 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 the Company's products; the volume and timing of orders;
product and price competition; the Company's ability to expand its domestic and
international sales and marketing organizations; the Company's ability to
develop new and enhanced products; the Company's ability to assimilate recent
and potential future acquisitions or investments ; the Company's ability to
attract and retain key personnel; the growth in the acceptance and use of the
Internet and the World Wide Web, particularly by corporate, institutional and
government users; the extent to which unauthorized access to and use of online
information is perceived as a threat to network security; customer budgets; the
assertion of infringement claims with respect to the Company's intellectual
property; and risks concerning the rapid change of technology; and general
economic factors. These risks and others are
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discussed in the Company's periodic filings with the Securities and Exchange
Commission. 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, Internet Scanner, System Scanner, RealSecure and
X-Force are trademarks and SAFEsuite is a registered trademark of Internet
Security Systems, Inc. and ISS Group, Inc. All other companies and products
mentioned are trademarks and property of their respective owners.
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INTERNET SECURITY SYSTEMS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
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SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
2000 2000 1999
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<S> <C> <C> <C>
Revenues:
Product licenses and sales $ 31,770 $ 26,331 $ 19,200
Subscriptions 10,938 9,537 6,202
Professional services 9,079 8,349 4,599
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51,787 44,217 30,001
Costs and expenses:
Cost of revenues:
Product 6,525 4,442 5,055
Subscriptions and services 9,884 8,597 4,801
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Total cost of revenues 16,409 13,039 9,856
Research and development 8,449 7,566 5,315
Sales and marketing 17,406 15,658 10,991
General and administrative 3,429 3,491 2,105
Merger costs -- -- 2,329
Amortization 289 248 247
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45,982 40,002 30,843
Operating income 5,805 4,215 (842)
Interest income, net 2,253 2,070 1,640
Exchange gain (loss) (463) 95 --
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Income before income taxes 7,595 6,380 798
Provision for income taxes 2,740 2,299 105
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Net income $ 4,855 $ 4,081 $ 693
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Basic net income per share of Common Stock $ 0.12 $ 0.10 $ 0.02
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Diluted net income per share of Common Stock $ 0.11 $ 0.09 $ 0.02
========== ========== =============
Weighted average number of shares:
Basic 41,984 41,882 40,582
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Diluted 45,099 45,326 43,946
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</TABLE>
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INTERNET SECURITY SYSTEMS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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<S> <C> <C>
Revenues:
Product licenses and sales $ 82,879 $51,264
Subscriptions 28,564 16,582
Professional services 23,852 12,409
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135,295 80,255
Costs and expenses:
Cost of revenues:
Product 16,222 12,529
Subscriptions and services 25,214 13,051
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Total cost of revenues 41,436 25,580
Research and development 22,817 14,162
Sales and marketing 47,348 30,589
General and administrative 9,804 6,556
Merger costs -- 2,329
Amortization 785 746
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122,190 79,962
Operating income 13,105 293
Interest income, net 6,191 4,014
Exchange gain (loss) (494) 0
--------- -------
Income before income taxes 18,802 4,307
Provision for income taxes 6,796 311
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Net income $ 12,006 $ 3,996
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Basic net income per share of Common Stock $ 0.29 $ 0.10
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Diluted net income per share of Common Stock $ 0.27 $ 0.09
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Weighted average number of shares:
Basic 41,752 39,710
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Diluted 45,039 43,437
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</TABLE>
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INTERNET SECURITY SYSTEMS
SELECTED CONSOLIDATED BALANCE SHEET DATA
(Amounts in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED)
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<S> <C> <C>
Cash, including cash equivalents and restricted cash $ 151,763 $ 139,283
Accounts Receivable
42,524 26,934
Total Assets
221,534 184,845
Deferred Revenue
25,596 17,155
Stockholders' Equity
Common Stock and Additional Paid-In Capital
167,807 157,508
Retained Earnings
9,884 (2,167)
Total Stockholders' Equity $ 177,608 $ 155,153
</TABLE>
