Exhibit 99.1
NLCI Annual Stockholders’ Meeting FY 04 Year Ending July 3, 2004
October 6, 2004
NLCI Annual Stockholders’ Meeting FY 2004
Welcome
Dr. Terry Crane, Chairman of the Board
Annual Meeting Business
Kathy Herman, Vice President and General Counsel
Chairman’s Comments Dr. Terry Crane
FY 2004 Review and Company Direction
George Bernstein, President and Chief Executive Officer Tom Frank, Chief Financial Officer
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NLCI Annual Stockholders’ Meeting FY 2004
Annual Meeting Business
To elect two Class II directors
To consider and approve the 2005 Omnibus Incentive Equity Plan
To consider and ratify the selection of the Company’s independent public registered accounting firm for the fiscal year ending July 2, 2005
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NLCI Annual Stockholders’ Meeting FY 2004
Chairman’s Comments
Dr. Terry Crane
Non-executive Chairman of the Board
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NLCI Annual Stockholders’ Meeting FY 2004
FY 2004 Financial Review
The following presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, about such things as the Company’s business, projected revenues, expenditures and operating and capital requirements. Statements that are not historical facts are forward-looking statements, and are subject to certain risks, uncertainties and assumptions, such as factors that could cause actual results to vary materially. Forward-looking statements should not be relied upon except as statements of our present intentions and expectations that may or may not occur.
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NLCI Annual Stockholders’ Meeting FY 2004
Company Review
FY 2004 Financial Review
Last Year’s Stockholders’ Meeting Review
Objectives
Progress
Company Direction
Questions and Answers
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NLCI Annual Stockholders’ Meeting FY2004
Financial Review
Substantial Balance Sheet Improvement
Reduced debt by over $10MM.
No borrowings under revolving credit facilities.
Operating Performance Improvement
FY 2004 School Operating Profit improved to 12.8% of revenue from 12.5% of revenue in FY 2003.
Free Cash Flow increased over 70% to $5.3MM.
Impairment and Other Charges
Incurred $11.4MM in asset impairment, goodwill impairment, refinancing charges and senior executive severance.
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NLCI Annual Stockholders’ Meeting FY2004
Financial Review
Dollars in thousands
Total Debt Free Cash Flow
$50,000 $40,000 $30,000 $20,000 $10,000 $0
2002 2003 2004
Fiscal Year
$40,217 $35,465 $25,336
$6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0
2002 2003 2004
Fiscal Year
$1,875 $3,075 $5,344
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NLCI Annual Stockholders’ Meeting FY 2004
Financial Review – Key Income Statement Items
($000’s except per share data)
July 3, 2004 1 June 30, 2003
Revenues $155,158 $146,685
School Operating Profit $19,929 $18,378
% of sales 12.8% 12.5%
Discontinued Operations, Net of Tax $(4,765) $(4,908)
Net Loss $(6,077) $(11,534)
Loss Per Share $(1.01) $(1.83)
1 Contains 53 weeks versus 52 weeks in 2003.
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NLCI Annual Stockholders’ Meeting FY2004
Financial Review – Balance Sheets
($000’s)
July 3, 2004 June 30, 2003
Assets
Cash $2,716 $4,722
A/R and Other Current Assets 11,644 13,871
Held for Sale 4,238 8,503
Property Equipment and Other, net 30,100 30,710
Goodwill and Intangibles, net 37,167 40,162
Total Assets $85,865 $97,968
Liabilities
Accounts Payable and Unearned Income $24,881 $25,331
Current LTD 2,405 24,860
Long-term Debt 12,931 677
Subordinated Debt 10,000 9,928
Other 1,373 97
Stockholders’ Equity 34,275 37,075
Total Liabilities and Stockholders’ Equity $85,865 $97,968
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NLCI Annual Stockholders’ Meeting FY2004
Financial Review – Statements of Cash Flow
($000’s)
July 3, 2004 June 30, 2003
Net Cash Provided By Operations $11,056 $7,807
Investing Activities
Capital expenditures (5,712) (4,732)
Proceeds from sales and other 4,206 (160)
Financing Activities
Revolver - (2,084)
Term Debt and Other (14,994) (3,922)
Issuance of stock 3,438 6,026
Net increase (decrease) in cash (2,006) 2,935
Cash beginning of period 4,722 1,787
Cash end of period $2,716 $4,722
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NLCI Annual Stockholders’ Meeting FY 2004
Company Review
FY 2004 Financial Review
Last Year’s Stockholders’ Meeting Review
Objectives
Progress
Company Direction
Questions and Answers
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NLCI Annual Stockholders’ Meeting FY 2004
Last Year’s Stockholders’ Meeting: Objectives
Recruit a New Senior Management Team
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NLCI Annual Stockholders’ Meeting FY 2004
Executive Team
Team Member Position Tenure with NLCI as of 1/14/04 Still Here? 10/06/04
George Bernstein President & Chief Executive Officer 5 monthsü
Kathy Herman VP, General Counsel 2.5 yearsü
Jeanne Marie Welsko VP, Human Resources 4 monthsü
Dr. Osborne Abbey, Jr. VP, Education 1 monthü
Tom Frank Chief Financial Officer 1 weekü
Patricia Miller Chief Operating Officer 2 daysü
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NLCI Annual Stockholders’ Meeting FY 2004
Director Position/Committee Yr. Elected To Board
Peter Havens Audit Committee – Chairman Compensation Committee FY 91
Steven Fink FY 03
Joseph Harch FY 03
David Warnock Compensation Committee – Chairman Nominating and Corporate Governance FY 03
George Bernstein FY 04
Dr. Terry Crane Non-Executive Chairman of the Board Nominating and Corporate Governance Chair Audit Committee FY 04
Ralph Smith Nominating and Corporate Governance FY 04
Michael Rosenthal Audit Committee FY 05
Richard Pinola Compensation Committee FY 05
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NLCI Annual Stockholders’ Meeting FY 2004
Last Year’s Stockholders’ Meeting: Objectives
Recruit a New Senior Management Team
Stabilize and Strengthen our Capital Structure and Balance Sheet
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NLCI Annual Stockholders’ Meeting FY 2004
Capital Structure
Area FY 03 Year End FY 04 Year End
Banking Relationship In “workout” with Fleet Bank New relationship with Harris Nesbitt Bank
Senior Bank Debt $25,000,000 Due December, 2003 $14,495,000 Amortizes $2 million per year; Balloon in 2009
Sub-Debt $10,000,000 $10,000,000
Capital Structure 4 Preferred Series, Warrants, Senior And Sub-debt 5 Preferred Series, Warrants, Senior and Sub-debt
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NLCI Annual Stockholders’ Meeting FY 2004
Last Year’s Stockholders’ Meeting: Objectives
Recruit a New Senior Management Team
Stabilize and Strengthen our Capital Structure and Balance Sheet
Improve Existing Business Trends
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NLCI Annual Stockholders’ Meeting FY 2004
Improve Existing Business Trends
1.00 0.80 0.60 0.40 0.20 0.00
Index
Systems/Corp.
TES
Charter
TAC
HLA
Paladin Academy
Preschool & Elementary
Controllable Investments FY 99—03 Operating Profit FY 99—03
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NLCI Annual Stockholders’ Meeting FY 2004
Improve Existing Business Trends – Investment Allocation
1.00 0.80 0.60 0.40 0.20 0.00
Index
Controllable Investments FY 99 – 03 Operating Profit FY 99 – 03 Controllable Investments FY 04
Other
Systems/Corp.
TES
Charter
TAC
HLA
Paladin Academy
Preschool & Elementary
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NLCI Annual Stockholders’ Meeting FY 2004
Improve Existing Business Trends – Stabilize Enrollment
Same School Revenue*
Same School Revenue Indexed FY 2001 = 100
120 100 80 60 40 20 0
FY 2001 FY 2002 FY 2003 FY 2004**
102 102 100 100
Fiscal Year
*126 Comparable Schools
** Converted to a 52 week year
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NLCI Annual Stockholders’ Meeting FY 2004
Improve Existing Business Trends – Stabilize Enrollment
Same School Revenue – Constant Tuition Dollars*
120 100 80 60 40 20 0
Same School Revenue Index
FY 2001 FY 2002 FY 2003 FY 2004**
100
97
91
90
* 126 Comparable Schools
**Converted to a 52 week year
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NLCI Annual Stockholders’ Meeting FY 2004
Company Direction
Vision
To be the leading provider of infant to 8th grade private education through learning communities that support the educational, enrichment and wellness needs of students and their of families.
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NLCI Annual Stockholders’ Meeting FY 2004
Company Direction
Drive profitability and cash flow through improved occupancy and utilization of existing assets.
Accelerate revenue growth by filling existing clusters and expanding the cluster concept.
Upgrade curriculum and broaden outcome measurements.
Upgrade our infrastructure and systems to efficiently support a multi-unit service provider.
Simplify our capital structure.
Develop a corporate culture rooted in accountability, talent, and winning attitudes.
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