A generalized functional variation theory of nematics is presented to
take account of the local short range correlations between molecules.
This theory is used to study nematic liquid crystal films. The nematic
-isotropic transition temperature is determined. The orientational ord
er parameter in each molecular layer and the internal energy per molec
ule associated with each layer are calculated. The numerical results a
re compared with those of the Monte Carlo simulation and of the mean f
ield theory.