Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Catherine Leung from Citigroup.
Catherine Leung - Citigroup
My question is on swine flu -- when you discuss in your press release that the swine flu had a more significant negative impact on the bottom line, is this mainly because of your having a fixed cost business model or were there some other factors? And sorry, I have a follow-up question related to the swine flu -- were there any cities where parents were particularly concerned about the swine flu and has this impacted your expansion plans in the quarter or for the rest of the year? Thank you.
Michael Yu
Actually, Catherine, we didn’t expect swine flu to have so great an influence before but during the summer time, some of our school classes were stopped because students got the swine flu and some of the parents, they cancelled the classes from New Oriental schools, or deferred their students’ registration to the winter time.
We didn’t expect the swine flu to have a great influence in the winter time for two reasons -- one is that the vaccine has been already spread out in China, so everybody can get a vaccine, especially school students. The other is that usually during the winter time, the swine flu is not active.
Louis T. Hsieh
To follow up on Michael’s answer as well, is that we -- the swine flu impact on our business really had to do in the cities where swine flu was detected, we saw very, very noticeable drop-offs in enrolment and in revenues. So for instance, Guangzhou, Shenzhen, other cities like [inaudible], [Harping], [inaudible], all these cities where the health authorities asked schools to shut down whenever there was a case of swine flu, we saw very, very noticeable decreases in revenue for the whole summer quarter. So any city that was heavily impacted, including Shanghai as well, would suffer from this.
We also saw the epidemic really grow over the time, because if you remember, the swine flu started in Mexico and the United States back in March/April. It didn’t really hit Hong Kong and China until May and June, and it’s gotten progressively worse -- as you report, every week, every month, it’s exponentially growing in the number of cases. So as Michael said, we are hopeful that tomorrow the vaccine becomes available in Beijing. In the next week or two, it becomes released in most major cities in China with school-aged kids being vaccinated in most cases for free. So health officials are going around in each of the primary schools and secondary schools and give free vaccinations to those who wish to have it. So we expect, as Michael said, not to have it impact our business in -- starting the winter as much, if all goes well. We do not expect the swine flu, if the vaccinations go through, to have any material impact on our calendar year 2010 numbers. So we would expect -- I think some of the analysts have us about $2.60 to $2.80 in EPS for calendar year 2010. We do not expect at this time that that will be impacted by the swine flu.
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