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iSoftStone Provides Statements of Cash Flows and Details of Bank Balances Supplementary to its First Quarter 2011 Earnings Release dated May 13, 2011
May 31, 2011 (05:05 PM EDT)


BEIJING, May 31, 2011 /PRNewswire-Asia/ -- iSoftStone Holdings Limited (NYSE: ISS) ("iSoftStone" or the "company"), a leading China-based IT services provider, today provided additional disclosure information to its quarterly earnings results announced on May 13, 2011, including unaudited statements of cash flows for the quarters ended March 31, 2010 and 2011, and unaudited bank account details as of December 31, 2010 and March 31, 2011 in response to the recent increasing concerns about financial integrity and soundness of corporate governance practices of U.S. listed Chinese companies after one China-based IT service company has been alleged to have committed fraudulent acts.

Mr. Xiaosong (Jonathan) Zhang, iSoftStone's Chief Financial Officer, said, "iSoftStone operates a global business portfolio and business base with 19 sales and delivery centers worldwide of which 13 are located in China. Therefore, we have various bank accounts with local Chinese commercial banks to facilitate our operational activities relating to payments for payroll, reimbursements, purchases, and taxes in each city where we conduct our business. We manage almost all treasury related activities centrally at our headquarters through e-banking systems with these commercial banks. In our daily operation, we have clearly defined authorization procedures for payment approvals with limits for each level of approval and segregation of duties in access to these e-banking systems and check books. Senior management monitors the cash positions through detailed cash reports on the weekly basis, and the e-banking systems allow us to validate the account balances and promptly investigate transaction details of any suspicious activities identified.

"To increase investors' sustained visibility of our quarterly changes in cash, we will provide statements of cash flows in our future quarterly earnings news releases, which we also furnish to the Securities and Exchange Commission on Form 6-K."

Mr. Tianwen Liu, Chairman and CEO of iSoftStone, said, "Long before becoming a public company, we adopted the bulk of our corporate governance practices that are in place today, and we will continue to strive to meet the highest standards in corporate governance in the future. We thoroughly understand the meaning of "creditability" in market and will continue to adhere to the principles of financial integrity and transparency. It is unfortunate that an isolated case of alleged fraud and subsequent bad judgment happened in the IT sector, which has affected all IT companies in the past few weeks. Fraud is possible anywhere, in any industry. At iSoftStone, we are taking the very best actions possible to prevent and defeat fraudulent activities. Despite these near-term concerns, we are continuing on our long-term plan by moving ahead to capitalize on the market opportunities available to us, by focusing on our established strategies to grow our business, and by achieving our short-term and long-term goals."


iSoftStone Holdings Limited

Cash and Cash Equivalents List (Unaudited)

(US Dollars in thousands)


December

31, 2010(1)


March

31, 2011(2)

Bank Accounts in the United States




Bank of America, Boston, Massachusetts

473


473

Citizens Bank, Waltham, Massachusetts

518


391

JPMorgan Chase Bank, New York

-


465

Wells Fargo, Kirkland, Washington

2,077


1,099


3,068


2,428

Bank Accounts in China




 Agricultural Bank of China, Tianjin

82


14

 Agricultural Bank of China, Wuxi

379


515

 Bank of East Asia, Tianjin

30


52

 Bank of Beijing, Beijing

17


17

 Bank of China, Beijing

33


34

 Bank of China, Guangzhou

98


62

 Bank of Communications, Qingdao

443


79

 Bank of Communications, Offshore Account

60,930


47,298

 Bank of Communications, Wuxi

72


388

 Bank of Dalian, Beijing

8


8

 China Construction Bank, Shanghai

3


1

 China Guangfa Bank, Wuxi

11,380


11,470

 China Merchants Bank, Beijing

8,046


4,179

 China Merchants Bank, Changsha

19


51

 China Merchants Bank, Chengdu

-


2,006

 China Merchants Bank, Dalian

183


69

 China Merchants Bank, Guangzhou

605


311

 China Merchants Bank, Hangzhou

833


53

 China Merchants Bank, Nanjing

467


572

 China Merchants Bank, Shanghai

112


136

 China Merchants Bank, Offshore Account

60,307


23,274

 China Merchants Bank, Tianjin

7,290


7,070

 China Merchants Bank, Wuhan

154


138

 China Merchants Bank, Wuxi

6,709


323

 China Merchants Bank, Xi'an

43


7,983

 China Construction Bank, Beijing

419


-

 Huaxia Bank, Beijing

299


6

 Huaxia Bank, Guangzhou

888


170

 Industrial and Commercial Bank of China, Shanghai

1,643


26

 Industrial and Commercial Bank of China, Wuxi

3,000


3,208

 Industrial Bank, Chengdu

1,515


-

 Shanghai Pudong Development Bank, Shanghai

403


619

 Shanghai Pudong Development Bank, Tianjin

2,295


2,289

 Shanghai Pudong Development Bank, Wuxi

5,707


776

 Shenzhen Development Bank, Beijing

-


41,617

 Standard Chartered Bank, Beijing

518


241

 Standard Chartered Bank, Offshore Account

517


-


175,447


155,055

Bank Accounts in Taiwan




 The Hong Kong and Shanghai Banking Corporation, Taipei

321


217





Bank Accounts in Hong Kong




 The Hong Kong and Shanghai Banking Corporation, Hong Kong

202


1,118





Bank Accounts in Japan




Bank of Fukuoka, Ltd, Fukuoka

35


239

Bank of Tokyo-Mitsubishi UFJ, Ltd, Hiroshima

133


66

Bank of Tokyo-Mitsubishi UFJ, Ltd, Tokyo

1,051


1,259

Mizuho Bank, Ltd, Tokyo

405


290

Nishi-Nippon City Bank, Ltd, Fukuoka

383


556


2,007


2,410

Bank Accounts in Korea




Shinhan bank, Seoul

13


13





Cash on hand

22


33

Total

181,080


161,274


Notes:

(1). Amounts not held in U.S. dollars have been translated using the relevant exchange rates as of December 31, 2010.

(2). Amounts not held in U.S. dollars have been translated using the relevant exchange rates as of March 31, 2011.



iSoftStone Holdings Limited

Condensed Consolidated Statements of Cash Flows (Unaudited)

(US Dollars in thousands)



Three-month periods ended March 31,


2010


2011

Cash flows from operating activities




Net income

788


5,151

Adjustments to reconcile net income to net cash used in operating activities:




Share-based compensation

689


2,550

Depreciation of property and equipment

1,093


1,420

Amortization of intangible assets

364


638

Provision of allowance for doubtful accounts

968


450

Loss on equity method investments

-


92

Loss on disposal of property and equipment

65


60

Changes in fair value for contingent consideration

(314)


58

Changes in fair value of convertible notes derivatives

317


(2,832)

Imputed interest expense in connection with convertible notes

715


654

Changes in operating assets and liabilities:




Accounts receivable

(18,014)


(13,891)

Other assets

(1,620)


(3,331)

Accounts payable

371


(3,965)

Other liabilities

2,599


(4,678)

Net cash used in operating activities

(11,979)


(17,624)

Cash flows from investing activities




Purchase of property and equipment

(2,422)


(1,791)

      Deferred and contingent consideration paid for business acquisitions

(161)


(76)

Restricted cash

49


1,823

Net cash used in investing activities

(2,534)


(44)

Cash flows from financing activities




Payment of offering cost in connection with the issuance of ordinary

shares

-


(1,360)

Proceeds from exercise of options

-


538

Proceeds from sale of ordinary shares

-


211

Proceeds from short-term borrowings

1,465


-

Deferred and contingent consideration paid for business acquisitions

-


(1,855)

Payment of short-term borrowings

(8,789)


-

Net cash used in financing activities

(7,324)


(2,466)

Effect of exchange rate changes

(3)


328

Net decrease in cash and cash equivalents

(21,840)


(19,806)

Cash at beginning of period

55,138


181,080

Cash at end of period

33,298


161,274




Safe harbor statement

This news release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include our plans to capitalize on market opportunities and our continued focus on existing strategies to grow our business and achieve our targets.

Our forward-looking statements are not historical facts but instead represent only our belief regarding expected results and events, many of which, by their nature, are inherently uncertain and outside of our control. Our actual results and other circumstances may differ, possibly materially, from the anticipated results and events indicated in these forward-looking statements.  Risks and uncertainties that could cause our actual results to differ from what we currently anticipate include: our ability to effectively manage our rapid growth; intense competition from China-based and international IT services companies; our ability to attract and retain sufficiently trained professionals to support our operations; and our ability to anticipate and develop new services and enhance existing services to keep pace with rapid changes in technology and in our selected industries. For additional information on these and other important factors that could adversely affect our business, financial condition, results of operations, and prospects, please see "Risk Factors" that begins on page 15 of Form 424(b) that we filed with the U.S. Securities and Exchange Commission on December 14, 2010, which can be found on our website at www.isoftstone.com and at www.sec.gov.

All projections in this release are based on limited information currently available to us, which is subject to change. Although these projections and the factors influencing them will likely change, we undertake no obligation to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, after the date of this news release, except as required by law. Such information speaks only as of the date of this release.

About iSoftStone Holdings Limited

Founded in 2001, iSoftStone is a leading China-based IT services provider serving both greater China and global clients. iSoftStone provides an integrated suite of IT services and solutions including consulting & solutions, IT services, and business process outsourcing services. The company focuses on industry verticals that include technology, communications, banking, financial services, insurance, energy, transportation, and public sectors.

iSoftStone's American depositary shares began trading on the New York Stock Exchange on December 14, 2010.

For more information, please visit www.isoftstone.com.

iSoftStone Holdings Limited

Mr. Jonathan Zhang

Chief Financial Officer

ir@isoftstone.com


Christensen

Mr. Tom Myers, +86 139 1141 3520

tmyers@christensenir.com


Ms. Kathy Li, +1 480 614 3036

kli@christensenir.com



SOURCE iSoftStone Information Technology (Group) Co., Ltd.