http://seekingalpha.com/article/167599-n...

Louis T. Hsieh

..."By the government, so we had no choice. It has trended -- it was actually not good in September as well and during the national day holiday, October 1 through 8, some of the cities actually prevented their students from leaving the campus. They didn’t want them to travel for fear of spreading the H1N1 flu virus, so it [has] had a significant impact on Q2 which is why we lowered our guidance to 23% to 27%.

Now, we believe that since the vaccine is now available in Beijing, the students, the parents of the students who were most afraid of contracting it will get vaccinated, so they will then sign up for classes. Also, I think as it becomes widely available throughout the cities in China, it will become [less of an effect]. And I think the timing couldn’t be better for New Oriental because the timing for us is Q3 and Q4 for this You Can and the middle and high school and the kids business.

Mark M. Marostica - Piper Jaffray

Okay, so -- so does your guidance for Q1 imply that the cancellation rate, if you want to call it, will sort of subside in November or can you provide a little more clarity on that?

Louis T. Hsieh

If the flu vaccine is rolled out as scheduled, it should subside in November and this is similar to what -- except SARS never had a vaccine. This is similar to what happened to us with Sars in 2003, right? So the two big risks to New Oriental business the last 16 years has always been government policy and pandemics, so this is just the second, the latter of the two. But luckily there is a vaccine for this one and so as it becomes available, like in Beijing tomorrow, primary and secondary students are getting vaccinated starting tomorrow across the city. Once that happens in other cities, we believe this -- logically this issue should subside on its own. And then we believe there’s going to be pent-up demand for New Oriental services because some students have held off for one or two quarters for fear of contracting the virus, so we should see a bounce-back, and that’s what we are hoping for.