UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2004
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                 to

Commission file number 0-23655

INTERNET SECURITY SYSTEMS, INC.

(Exact name of Registrant as Specified in Its Charter)

Delaware	58-2362189
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6303 Barfield Road Atlanta, Georgia (Address of principal executive offices)	30328 (Zip code)

Registrant’s telephone number, including area code:  (404) 236-2600

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

Preferred Stock Purchase Rights

(Title of Class)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    x             No    o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes x         No o

     The aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing sale price of Common Stock on June 30, 2004 as reported on the Nasdaq National Market, was approximately $559 million (affiliates being, for these purposes only, directors, executive officers and holders of more than 5% of the Registrant’s Common Stock).

     As of March 3, 2005 the Registrant had 45,699,970 outstanding shares of Common Stock.

TABLE OF CONTENTS

EXPLANATORY NOTE
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
PART IV
	Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO

EXPLANATORY NOTE

      This Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2004 of Internet Security Systems, Inc. (the “Company”) is filed solely to correct the number of shares of common stock of the Company outstanding as of March 3, 2005 set forth on the cover page and in Part II, Item 5. The original filing of this Report, filed on March 16, 2005, stated that the number of shares outstanding on such date was 50,876,113. The correct number was 45,699,970 based on 50,876,113 shares issued less 5,176,143 of treasury shares.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

      Our Common Stock is quoted on the Nasdaq National Market under the symbol “ISSX”. The following table lists the high and low per share sales prices for the Common Stock as reported by the Nasdaq National Market for the periods indicated:

2004:	High		Low
First Quarter	$	21.21	$	15.65
Second Quarter		19.25		12.98
Third Quarter		17.25		12.60
Fourth Quarter		25.76		16.86

2003:	High		Low
First Quarter	$	24.20	$	9.89
Second Quarter		17.23		9.85
Third Quarter		15.69		10.84
Fourth Quarter		19.07		12.41

      As of March 3, 2005, there were 45,699,970 shares of our Common Stock outstanding held by 264 stockholders of record.

      We have never declared nor paid cash dividends on our capital stock. We intend to retain any earnings for use in our business and do not anticipate paying any cash dividends in the foreseeable future. Our Board of Directors will determine future dividends, if any.

      On October 29, 2003, ISS announced a voluntary option exchange program intended to reduce the number of outstanding options. Stock options with exercise prices exceeding $30 per share were eligible. Our directors and five most senior executive officers, including the chief executive officer, were not eligible to participate in the program. Approximately 783,000 of the 1,343,000 eligible option shares with exercise prices between $30 and $83 per share elected to participate in the program and these options were cancelled on November 27, 2003. New options totaling approximately 313,000 shares were issued on June 1, 2004. This transaction is exempt from registration under Section 3(a)(9) of the Securities Act of 1933.

      Information on our securities authorized for issuance under our equity compensation plans is incorporated by reference from our Proxy Statement for our 2005 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission in Item 12 of Part III of this Annual Report on Form 10-K.

Purchases of Equity Securities

      The following table provides information about purchases by ISS of its common stock during the three months ended December 31, 2004. All such purchases were made in open-market transactions pursuant to a repurchase plan publicly announced on July 21, 2004. Under this repurchase plan, ISS has been authorized by

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the Board to repurchase up to $50.0 million of its outstanding common stock over the 12 months ending July 19, 2005.

							Approximate
					Total Number of		Dollar Value of
					Shares Purchased		Shares that May
					as Part of Publicly		Yet Be Purchased
	Total Number of		Average Price		Announced Plans		Under the Plans or
Period	Shares Purchased		Paid Per Share		or Programs		Programs
10/1/04-10/31/04		—		—		—	$	29,489,000
11/1/04-11/30/04		160,000	$	23.65		160,000	$	25,705,000
12/1/04-12/31/04		110,000	$	24.29		110,000	$	23,033,000

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PART IV

Item 15. Exhibits and Financial Statement Schedules

      (a) The following documents are filed as part of this report:

      1. Consolidated Financial Statements. See Index to Financial Statements on page 27 of the original filing of this Report.

      2. Financial Statement Schedules. See Index to Financial Statements on page 27 of the original filing of this Report.

      3. Exhibits. The exhibits to this Annual Report on Form 10-K have been included only with the copy of this Annual Report on Form 10-K filed with the Securities and Exchange Commission. Copies of individual exhibits will be furnished to stockholders upon written request to the Company and payment of a reasonable fee.

Exhibit
Number				Description of Exhibit
	2	.1	—	Agreement and Plan of Merger by and among Internet Security Systems, Inc., ISS Acquisition Corp. II, Network ICE Corporation and certain selling shareholders of Network ICE Corporation (filed as Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q dated May 11, 2001 and incorporated by reference herein).
	3	.1	—	Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, dated November 14, 2000 and incorporated by reference herein).
	3	.2	—	Bylaws (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-1, Registration No. 333-44529 (the “Form S-1”) and incorporated by reference herein).
	3	.3	—	Certificate of Designations of Series A Junior Participating Preferred Stock dated July 24, 2002 facility (filed as Exhibit 3.3 to the Company’s Annual Report on Form 10-K, dated March 28, 2003 and incorporated by reference herein).
	4	.1	—	Specimen Common Stock certificate (filed as Exhibit 4.3 to the Company’s Registration Statement on Form S-8, Registration No. 333-100954, dated November 1, 2002 and incorporated by reference herein).
	4	.2	—	Form of Rights Certificate (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated July 24, 2002 and incorporated by reference herein).
	4	.3	—	See Exhibits 3.1 and 3.2 for provisions of the Certificate of Incorporation and Bylaws of the Company defining the rights of holders of the Company’s Common Stock.
	4	.4+	—	1999 Network ICE Stock Option Plan (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8, Registration No. 333-62658 (the “Form S-8”), filed on June 8, 2001 and incorporated by reference herein).
	4	.5+	—	Restated 1995 Stock Incentive Plan (as amended and restated as of May 23, 2001) (filed as Exhibit 4.2 to the Form S-8 filed June 8, 2001 and incorporated by reference herein). Form of Notice of Grant and Stock Option Agreement and Form of Restricted Stock Issuance Agreement (filed as Exhibits 99.1 and 99.2, respectively, to the Company’s Current Report on Form 8-K, filed January 27, 2005 and incorporated by reference herein).
	4	.6+	—	Netrex, Inc. 1998 Stock Plan (filed as Exhibit 99.15 to the Company’s Registration Statement on Form S-8, Registration Statement No. 333-89563, filed October 22, 1999 and incorporated by reference herein).
	4	.7+	—	vCIS, Inc. 2001 Stock Plan (filed as to Exhibit 4.1 to the Company’s Registration Statement on Form S-8, Registration Statement No. 333-100954, filed November 1, 2002 and incorporated by reference herein).
	10	.1	—	Stock Exchange Agreement dated December 9, 1997 (filed as Exhibit 10.4 to the Form S-1 and incorporated by reference herein).

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Exhibit
Number				Description of Exhibit
	10	.2	—	Forms of Non-Employee Director Compensation Agreement, Notice of Stock Option Grants and Stock Option Agreement (filed as Exhibit 10.6 to the Form S-1 and incorporated by reference herein).
	10	.3	—	Form of Indemnification Agreement for directors and certain officers (filed as Exhibit 10.8 to the Form S-1 and incorporated by reference herein).
	10	.4	—	Lease for Atlanta headquarters and research and development facility (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K, dated March 30, 2000 and incorporated by reference herein).
	10	.5(a)	—	Amendments to Lease for Atlanta headquarters facility (filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K, dated March 28, 2003 and incorporated by reference herein).
	(b)			Third Amendment to Lease Agreement made and entered into as of this February 23, 2004, by and between Wells Operating Partnership, L.P. and the Company (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed May 10, 2004, and incorporated by reference herein).
	10	.6	—	Letter Agreement dated August 18, 2000 with Lawrence Costanza (filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K, dated March 30, 2001 and incorporated by reference herein).
	10	.7	—	Rights Agreement dated July 18, 2002 with SunTrust Bank, as Rights Agent, regarding Preferred Share Purchase Rights (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated July 24, 2002 and incorporated by reference herein).
	10	.8+	—	Form of Retention Agreement (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed November 5, 2003 and incorporated by reference herein).
	10	.10+		Form of Executive Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 3, 2005, and incorporated by reference herein).
	11**		—	Computation of Per Share Earnings.
	21	.1*	—	Subsidiaries of the Company.
	23	.1*	—	Consent of Ernst & Young LLP.
	24	.1*	—	Power of Attorney, pursuant to which amendments to this Annual Report on Form 10-K may be filed, is included on the signature page contained in Part IV of the Form 10-K.
	31	.1#	—	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2#	—	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1#	—	Certification Pursuant to 18 U.S.C. Section 1350. as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2#	—	Certification Pursuant to 18 U.S.C. Section 1350. as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed with the original filing of this Report.
+	Management contract or compensatory plan.
**	Data required by SFAS No. 128, “Earnings Per Share”, is provided in Note 4 to the consolidated financial statements in the original filing of this Report.
#	Filed with this Amendment No. 1.

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SIGNATURES

      Pursuant to the requirements of the 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 by the undersigned, thereunto duly authorized.

INTERNET SECURITY SYSTEMS, INC.

By:  /s/ RICHARD MACCHIA

Richard Macchia

Senior Vice President and Chief Financial Officer

Dated: March 24, 2005

      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.

Name		Title	Date
* Thomas E. Noonan		Chairman, President and Chief Executive (Principal Executive Officer)	March 24, 2005
* Christopher W. Klaus		Secretary, Security Adviser and Director	March 24, 2005
/s/ RICHARD MACCHIA Richard Macchia		Senior Vice President and Chief Financial Officer	March 24, 2005
* Maureen Richards		Vice President, Corporate Controller and (Principal Accounting Officer)	March 24, 2005
* Richard S. Bodman		Director	March 24, 2005
* Robert E. Davoli		Director	March 24, 2005
* Steven J. Heyer		Director	March 24, 2005
* Sam Nunn		Director	March 24, 2005
* Kevin J. O’Connor		Director	March 24, 2005
* David N. Strohm		Director	March 24, 2005
*By:	/s/ RICHARD MACCHIA Richard Macchia, as Attorney-in-Fact

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