Danier Leather Reports Fiscal 2011 First Quarter Results


TSX SYMBOL: DL

Oct 20, 2010 - 15:46

TORONTO, ONTARIO--(Marketwire - Oct. 20, 2010) - Danier Leather Inc. (TSX:DL) today announced its unaudited interim consolidated financial results for the 13 week period ended September 25, 2010.

FINANCIAL HIGHLIGHTS ($000s, except earnings per share (EPS), square footage and number of stores):

  For the 13 Weeks Ended  
  Sept. 25, 2010   Sept. 26, 2009  
Sales $ 23,427   $ 19,951  
EBITDA(1)   (3,048 )   (4,279 )
Net Loss   (2,850 )   (3,442 )
EPS – Basic   ($0.62 )   ($0.58 )
EPS – Diluted   ($0.62 )   ($0.58 )
Number of Stores   90     90  
Retail Square Footage   314,233     324,644  

Sales during the first quarter of fiscal 2011 increased by 17% to $23.4 million compared with $20.0 million during the first quarter last year. Comparable store sales increased by 18%. 

Gross profit as a percentage of revenue increased by 400 basis points to 52.4% compared with 48.4% during the first quarter last year and gross profit dollars increased by $2.6 million. Selling, general and administrative expenses during the first quarter of fiscal 2011 increased by 8% to $16.3 million compared with $15.1 million during the first quarter last year. 

The increase in sales and gross margin resulted in a $0.6 million or 17% improvement in the fiscal 2011 first quarter net loss to $2.8 million compared with $3.4 million during the first quarter last year. 

Danier continues to maintain a strong balance sheet with cash of $9.3 million compared with $8.4 million at the end of the first quarter last year, working capital of $34.0 million, no long-term debt and a book value of $11.37 per outstanding share.

Danier is holding its Annual General Meeting of Shareholders today, Wednesday, October 20, 2010 at 4:00 p.m. Eastern Time at Danier's corporate headquarters in Toronto. Shareholders are encouraged to attend. The meeting will also be webcast live at www.danier.com.

(1) EBITDA is defined as net loss before net interest expense, income taxes, amortization and restructuring costs. EBITDA is a financial metric used by management and some investors to compare companies on the basis of ongoing operating results before taxes, net interest expense, amortization and restructuring costs and its ability to incur and service debt. EBITDA is not a recognized measure for financial presentation under Canadian generally accepted accounting principles ("GAAP"). Non-GAAP earnings measures such as EBITDA do not have any standardized meaning prescribed by Canadian GAAP and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with Canadian GAAP. EBITDA is calculated as outlined in the following table:

  For the 13 Weeks Ended  
  Sept 25, 2010   Sept 26, 2009  
  ($000)   ($000)  
Net loss $ (2,850 ) $ (3,442 )
Add (deduct) impact of the following:            
  Income tax   (1,225 )   (1,921 )
  Interest expense - net   28     61  
  Amortization   999     1,123  
  Restructuring costs   -     (100 )
EBITDA $ (3,048 ) $ (4,279 )

Note: This press release may contain forward-looking information and forward-looking statements which reflect the current view of Danier with respect to the Company's objectives, plans, goals, strategies, future growth, results of operations, financial and operating performance and business prospects and opportunities. Wherever used, the words "may", "will", "anticipate", "intend", "expect", "estimate", "plan", "believe" and similar expressions identify forward-looking statements and forward-looking information. Forward-looking statements and forward-looking information should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved. All of the statements in this press release containing forward-looking statements or forward-looking information, if any, are qualified by these cautionary statements. 

Forward-looking statements and forward-looking information are based on information available at the time they are made, underlying estimates, opinions and assumptions made by management and management's good faith belief with respect to future events, performance and results and are subject to inherent risks and uncertainties surrounding future expectations generally. For additional information with respect to Danier's inherent risks and uncertainties, reference should be made to Danier's continuous disclosure materials filed from time to time with the Canadian Securities Regulatory Authorities, including the Company's annual information form, quarterly and annual reports and financial statements and notes thereto, and supplementary information, which are available on SEDAR at www.sedar.com and in the Investor Relations section of the Company's website at www.danier.com. Additional risks and uncertainties not presently known to the Company or that Danier currently believes to be less significant may also adversely affect the Company.

Danier cautions readers that such factors and uncertainties are not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. Potential investors and other readers are urged to consider these factors carefully in evaluating forward-looking information and forward-looking statements and are cautioned not to place undue reliance on any forward-looking information or forward-looking statements. Danier disclaims any intention or obligation to update or revise any forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Danier

Danier Leather Inc. is a leading integrated designer, manufacturer, distributor and retailer of high-quality fashion-oriented leather and suede clothing and accessories. The Company's merchandise is marketed exclusively under the well-known Danier brand name and is available at its 90 shopping mall, street-front and power centre stores. Corporations and other organizations can obtain Danier products for use as incentives and premiums for employees, suppliers and customers through Canada Sportswear Corp. For more information about the Company and our products, see www.danier.com.

DANIER LEATHER INC.  
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS  
(thousands of dollars, except per share amounts and number of shares) - unaudited  
         
  For the 13 Weeks Ended  
  September 25, 2010   September 26, 2009  
Revenue $ 23,427   $ 19,951  
Cost of sales (Note 7)   11,161     10,303  
Gross profit   12,266     9,648  
Selling, general and administrative expenses (Note 7)   16,313     15,050  
Interest expense – net   28     61  
Restructuring costs   -     (100 )
Loss before income taxes   (4,075 )   (5,363 )
Recovery of income taxes            
  Current   (1,219 )   (1,904 )
  Future   (6 )   (17 )
    (1,225 )   (1,921 )
Net loss and comprehensive loss $ ( 2,850 ) $ ( 3,442 )
             
Net loss per share:            
  Basic $ (0.62 ) $ (0.58 )
  Diluted $ (0.62 ) $ (0.58 )
             
Weighted average number of shares outstanding:            
  Basic   4,572,546     5,909,269  
  Diluted   4,805,299     5,933,522  
Number of shares outstanding at period end   4,579,835     5,909,269  

See accompanying notes to the consolidated financial statements

DANIER LEATHER INC.
CONSOLIDATED BALANCE SHEETS
(thousands of dollars) - unaudited
       
  September 25, 2010 September 26, 2009 June 26, 2010
ASSETS            
Current Assets            
  Cash $ 9,330 $ 8,380 $ 26,563
  Accounts receivable   748   868   543
  Income taxes recoverable   1,368   2,432   -
  Inventories (Note 3)   36,413   31,880   26,539
  Prepaid expenses   1,013   951   1,140
  Future income tax asset   51   250   51
    48,923   44,761   54,836
Other Assets            
  Property and equipment (Note 4)   16,481   17,701   16,349
  Intangible assets (Note 5)   1,332   1,573   1,417
  Future income tax asset   1,544   1,608   1,522
  $ 68,280 $ 65,643 $ 74,124
LIABILITIES            
Current Liabilities            
  Accounts payable and accrued liabilities $ 14,844 $ 10,645 $ 14,005
  Income taxes payable   -   -   3,900
  Future income tax liability   69   305   53
    14,913   10,950   17,958
Deferred lease inducements and rent liability   1,299   1,357   1,345
    16,212   12,307   19,303
SHAREHOLDERS' EQUITY            
  Share capital (Note 6)   14,240   19,853   14,176
  Contributed surplus   1,139   905   1,106
  Retained earnings   36,689   32,578   39,539
  Accumulated other comprehensive income   -   -   -
    52,068   53,336   54,821
  $ 68,280 $ 65,643 $ 74,124

See accompanying notes to the consolidated financial statements

DANIER LEATHER INC.  
CONSOLIDATED STATEMENTS OF CASH FLOW  
(thousands of dollars) - unaudited  
         
  For the 13 Weeks Ended  
  September 25, 2010   September 26, 2009  
OPERATING ACTIVITIES            
  Net loss $ (2,850 ) $ (3,442 )
  Items not affecting cash:            
  Amortization of property and equipment   875     956  
  Amortization of intangible assets   124     167  
  Amortization of deferred lease inducements   (53 )   (62 )
  Straight line rent expense   7     30  
  Stock-based compensation   55     82  
  Future income taxes   (6 )   (17 )
  Net change in non-cash working capital items (Note 8)   (14,381 )   (12,904 )
Cash flows used in operating activities   (16,229 )   (15,190 )
             
FINANCING ACTIVITIES            
  Subordinate voting shares issued   42     -  
Cash flows from financing activities   42     -  
             
INVESTING ACTIVITIES            
  Acquisition of property and equipment   (1,007 )   (1,046 )
  Acquisition of intangible asset   (39 )   (12 )
Cash flows used in investing activities   (1,046 )   (1,058 )
             
Decrease in cash   (17,233 )   (16,248 )
Cash, beginning of period   26,563     24,628  
Cash, end of period $ 9,330   $ 8,380  
             
Supplementary cash flow information:            
  Interest paid   100     -  
  Income taxes paid   4,050     -  

See accompanying notes to the consolidated financial statements

DANIER LEATHER INC.  
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY  
(thousands of dollars) - unaudited  
         
         
  For the 13 Weeks Ended  
  September 25, 2010   September 26, 2009  
SHARE CAPITAL            
  Balance, beginning of period $ 14,176   $ 19,853  
  Shares issued on exercise of stock options   64     -  
  Balance, end of period $ 14,240   $ 19,853  
             
CONTRIBUTED SURPLUS            
  Balance, beginning of period $ 1,106   $ 823  
  Stock-based compensation related to stock options   55     82  
  Exercise of stock options   (22 )   -  
  Balance, end of period $ 1,139   $ 905  
             
RETAINED EARNINGS            
  Balance, beginning of period $ 39,539   $ 36,020  
  Net loss   (2,850 )   (3,442 )
  Balance, end of period $ 36,689   $ 32,578  
             
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)        
  Balance, beginning of period $ -   $ -  
  Balance, end of period $ -   $ -  
TOTAL SHAREHOLDERS' EQUITY $ 52,068   $ 53,336  

See accompanying notes to the consolidated financial statements

DANIER LEATHER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the 13 week periods ended September 25, 2010 and September 26, 2009
(Thousands of dollars, except per share amounts and number of shares) - Unaudited
  1. SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of Presentation:

These unaudited interim consolidated financial statements (the "financial statements") have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") for interim financial information and include all normal and recurring entries that are necessary for a fair presentation of the financial statements. Accordingly, they do not include all of the information and footnotes required by Canadian GAAP for annual financial statements. These financial statements should be read in conjunction with the most recently prepared annual audited consolidated financial statements of Danier Leather Inc. (the "Company" or "Danier") for the 52 week period ended June 26, 2010 and the accompanying notes contained in the Company's 2010 Annual Report.

The financial statements follow the same accounting policies and methods of application as the most recent annual audited consolidated financial statements as at June 26, 2010.

The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on management's historical experience, best knowledge of current events and actions that the Company may undertake in the future. Significant areas requiring the use of management estimates relate to the determination of inventory valuation, realizable value of property and equipment and intangible assets, stock based compensation, future tax assets and liabilities, goods and services tax, harmonized sales tax, provincial sales tax, breakage of gift cards and income tax provisions. By their nature, these estimates are subject to measurement uncertainty and the impact on the consolidated financial statements of future periods from changes in estimates could differ materially from those estimated.

(b) Recent Accounting Pronouncements:

The Company monitors new accounting standards to assess the impact, if any, on its consolidated financial statements. During 2011, Canadian GAAP will be replaced by International Financial Reporting Standards ("IFRS") for publicly accountable enterprises. When converting from Canadian GAAP to IFRS, the Company will prepare both current and comparative information using IFRS. The Company expects this transition to have an impact on its accounting policies, financial reporting and internal controls. Further details of the Company's IFRS plan is included in the Company's Management Discussion & Analysis for the 13 week period ended September 25, 2010.

  1. SEASONALITY OF RETAIL OPERATIONS:

Due to the seasonal nature of the retail business and the Company's product lines, the results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. Generally, a significant portion of the Company's sales and earnings are typically generated during the second fiscal quarter, which includes the holiday selling season. Sales are usually lowest and losses are typically experienced during the period from April to September.

  1. INVENTORIES:
  September 25, 2010   September 26, 2009   June 26,2010
Raw materials $ 2,235   $ 2,173   $ 1,451
Work-in-process   151     196     105
Finished goods   34,027     29,511     24,983
  $ 36,413   $ 31,880   $ 26,539

The cost of inventory recognized as an expense is $11,021 (September 26, 2009 - $10,137). The Company recorded write-downs of inventory as a result of net realizable value being lower than cost of $109 (September 26, 2009 - $112) and write-downs recognized in previous years that were reversed was $21 (September 26, 2009 - $25).

  1. PROPERTY AND EQUIPMENT:
  September 25, 2010   September 26, 2009
  Cost Accumulated Amortization Net Book Value   Cost Accumulated Amortization Net Book Value
Land $ 1,000 $ - $ 1,000   $ 1,000 $ - $ 1,000
Building   7,064   2,426   4,638     7,064   2,233   4,831
Leasehold improvements   24,142   17,278   6,864     24,270   16,577   7,693
Furniture and equipment   8,816   5,830   2,986     9,088   6,034   3,054
Computer hardware   3,237   2,244   993     3,375   2,252   1,123
  $ 44,259 $ 27,778 $ 16,481   $ 44,797 $ 27,096 $ 17,701
  June 26, 2010  
  Cost Accumulated Amortization Net Book Value  
Land $ 1,000 $ - $ 1,000  
Building   7,064   2,380   4,684  
Leasehold improvements   23,574   16,700   6,874  
Furniture and equipment   8,504   5,671   2,833  
Computer hardware   3,110   2,152   958  
  $ 43,252 $ 26,903 $ 16,349  
  1. INTANGIBLE ASSETS:

Intangible assets consists of computer software.

  Sept 25, 2010   Sept 26, 2009   June 26, 2010
Cost $ 4,208   $ 3,952   $ 4,169
Accumulated amortization   2,876     2,379     2,752
Net book value $ 1,332   $ 1,573   $ 1,417
  1. SHARE CAPITAL:
  1. Authorized
1,224,329 Multiple Voting Shares
Unlimited Subordinate Voting Shares
Unlimited Class A and B Preference Shares
  1. Issued
  Sept 25, 2010   Sept 26, 2009   June 26, 2010
1,224,329 Multiple Voting Shares (September 26, 2009 and June 26, 2010 – 1,224,329)   *     *     *
3,355,506 Subordinate Voting Shares (September 26, 2009 – 4,684,940 and June 26, 2010 – 3,343,840)   14,240     19,853     14,176
  $ 14,240   $ 19,853   $ 14,176
* Nominal
  1. Earnings per share

Basic and diluted per share amounts are based on the following weighted average number of shares outstanding:

  13 weeks ended
  Sept 25, 2010 Sept 26, 2009
Weighted average number of shares for basic earnings per share calculations 4,572,546 5,909,269
Effect of dilutive options outstanding 232,753 24,253
Weighted average number of shares for diluted earnings per share calculations 4,805,299 5,933,522

The computation of dilutive options outstanding only includes those options having exercise prices below the average market price of Subordinate Voting Shares during the period. The number of options excluded was 58,000 as at September 25, 2010 and 235,000 as at September 26, 2009.

  1. Normal Course Issuer Bid

During the past several years, the Company has received approval from the Toronto Stock Exchange (the "TSX") to commence various normal course issuer bids ("NCIBs"). On May 4, 2010, the Company received approval from the TSX to commence its fourth normal course issuer bid (the "2010 NCIB"). The Company's previous normal course issuer bid expired on May 6, 2010 (the "2009 NCIB"). The 2010 NCIB permits the Company to acquire up to 232,792 Subordinate Voting Shares, representing approximately 10% of the "public float" of the Subordinate Voting Shares at the time of commencement, during the period from May 7, 2010 to May 6, 2011, or such earlier date as the Company may complete its purchases under the 2010 NCIB. For these purposes, the "public float" is the Company's then outstanding Subordinate Voting Shares less any shares held by the Company's senior officers and directors and by shareholders that own 10% or more of the Subordinate Voting Shares. During the fourth quarter of fiscal 2010, the Company repurchased 232,700 Subordinate Voting Shares for cancellation at a weighted average price of $8.49, leaving only 92 Subordinate Voting Shares available for repurchase by the Company under the 2010 NCIB. 

During the 13 week periods ended September 25, 2010 and September 26, 2009, the Company did not repurchase any Subordinate Voting Shares under its NCIBs outstanding during the applicable period.

  1. Stock Option Plan

The Company maintains a Stock Option Plan, as amended, for the benefit of directors, officers, employees and service providers, pursuant to which granted options are exercisable for Subordinate Voting Shares. As at September 25, 2010, the Company has reserved 812,234 Subordinate Voting Shares for issuance under its Stock Option Plan and there were 521,734 options outstanding with exercise prices ranging from $3.15 to $15.85 per option. 

The following transactions occurred during the 13 week periods ended September 25, 2010 and September 26, 2009 with respect to the Stock Option Plan:

  13 weeks ended  
  Sept 25, 2010   Sept 26, 2009  
Outstanding at beginning of period 553,400   577,000  
Granted -   -  
Exercised (11,666 ) -  
Forfeited (20,000 ) (12,000 )
Outstanding at end of period 521,734   565,000  
Options exercisable at end of period 292,975   187,500  

Further details of the Stock Option Plan are contained in Note 7(e) of the annual consolidated financial statements contained in the Company's 2010 Annual Report.

  1. Deferred Share Unit Plan

The Deferred Share Unit ("DSU") Plan, as amended, was established for non-management directors. Under the DSU Plan, non-management directors of the Company may receive an annual grant of DSUs and can also elect to receive their annual retainers and meeting fees in DSUs. A DSU is a notional unit equivalent in value to one Subordinate Voting Share of the Company based on the five-day average trading price of the Company's Subordinate Voting Shares on the TSX immediately prior to the date on which the value of the DSU is determined. 

After retirement from the Board of Directors, a participant in the DSU Plan receives a cash payment equal to the market value of the accumulated DSUs in their account. The value of the DSU liability is adjusted to reflect changes in the market value of the Company's Subordinate Voting Shares.

The following transactions occurred during each of the 13 week periods ended September 25, 2010 and September 26, 2009 with respect to the DSU Plan: 

  13 weeks ended
  Sept 25, 2010 Sept 26, 2009
Outstanding at beginning of period   103,920   78,920
Granted   -   25,000
Redeemed   -   -
Outstanding at end of period   103,920   103,920
Danier stock price at end of period $ 11.88 $ 6.00
Liability at end of period $ 1,235 $ 624
Compensation expense recorded in SG&A $ 314 $ 249
  1. Restricted Share Unit Plan

The Company has established a Restricted Share Unit ("RSU") Plan, as amended, as part of its overall compensation plan. The RSU Plan is administered by the Board of Directors, with the advice of the Governance, Compensation, Human Resources and Nominating Committee (the "Committee"). Under the RSU Plan, certain eligible employees and directors of the Company are eligible to receive a grant of RSUs that generally vest over periods not exceeding three years as determined by the Committee. A RSU is a notional unit equivalent in value to one Subordinate Voting Share of the Company. Upon the exercise of the vested RSUs, a cash payment equal to the market value of the exercised vested RSUs will be paid to the participant. The value of the vested RSU liability is adjusted to reflect changes in the market value of the Company's Subordinate Voting Shares.

The following transactions occurred during each of the 13 week periods ended September 25, 2010 and September 26, 2009 with respect to the RSU Plan:

  13 weeks ended
  Sept 25, 2010 Sept 26, 2009
Outstanding at beginning of period   105,479   133,300
Granted   122,300   -
Outstanding at end of period   227,779   133,300
Liability at end of period $ 1,238 $ 615
Compensation expense recorded in SG&A $ 402 $ 165
  1. AMORTIZATION:

Amortization included in cost of sales and SG&A is summarized as follows:

  13 weeks ended
  Sept 25, 2010 Sept 26, 2009
Cost of sales $ 38 $ 40
SG&A   961   1,083
  $ 999 $ 1,123
  1. CHANGES IN NON-CASH OPERATING WORKING CAPITAL ITEMS:
  13 weeks ended  
  Sept 25, 2010   Sept 26, 2009  
Decrease (increase) in:            
  Accounts receivable $ (205 ) $ (517 )
  Income taxes recoverable   (1,368 )   (1,801 )
  Inventories   (9,874 )   (10,835 )
  Prepaid expenses   127     205  
Increase (decrease) in:            
  Accounts payable and accrued liabilities   839     44  
  Income taxes payable   (3,900 )   -  
  $ (14,381 ) $ (12,904 )
  1. COMMITMENTS & GUARANTEES:
  1. Operating leases

Minimum rentals for the next five 12 month periods and thereafter, excluding rentals based upon revenue, are as follows:

     
2011 $ 10,476  
2012 $ 8,585  
2013 $ 6,603  
2014 $ 5,314  
2015 $ 3,456  
Thereafter $ 8,545  
  1. Letters of credit

The Company had outstanding letters of credit in the amount of $17,765 (September 26, 2009 - $18,764) for imports of finished goods inventories to be received.

  1. Guarantees

The Company sublet one location during the first quarter of fiscal 2011 and provided the landlord with a guarantee in the event the sub-tenant defaults on its obligations under the lease. The guarantee terminates at the time of lease expiry which is March 31, 2013 and the Company's maximum exposure is approximately $328.

  1. FINANCIAL INSTRUMENTS:
  1. Fair value disclosure

The following table presents the carrying amount and the fair value of the Company's financial instruments:

    September 25, 2010   September 26, 2009
  Maturity Carrying
Value
  Fair
Value
  Carrying
Value
Fair
Value
Cash Short-term $ 9,330   $ 9,330   $ 8,380 $ 8,380
Accounts receivable Short-term $ 748   $ 748   $ 864 $ 864
Accounts payable and accrued liabilities Short-term $ 14,842   $ 14,842   $ 10,645 $ 10,645
Derivative financial instruments(1) Short-term $ (2 ) $ (2 ) $ 4 $ 4
  1. Included in accounts payable and accrued liabilities for the 13 weeks ended September 25, 2010 and included in accounts receivable for the 13 weeks ended September 26, 2009.

The fair value of a financial instrument is the estimated amount that the Company would receive or pay to settle the financial assets and financial liabilities as at the reporting date. These estimates are subjective in nature, often involve uncertainties and the exercise of significant judgment and are made at a specific point in time, using available information about the financial instrument and may not reflect fair value in the future. The estimated fair value amounts can be materially affected by the use of different assumptions or methodologies.

The methods and assumptions used in estimating the fair value of the Company's financial instruments are as follows:

  • The derivative financial instruments, which consist of foreign exchange collar and forward contracts, have been marked-to-market and are categorized as Level 2 in the fair value hierarchy. Factors included in the determination of fair value include the spot rate, forward rates, estimates of volatility, present value factor, strike prices and credit risk of counterparties and the Company. As at September 25, 2010, a $2 loss was recorded in selling, general and administrative expenses for the contracts outstanding.
  • The fair value of cash is determined using Level 2 inputs in the fair value hierarchy which include interest rates for similar instruments which are obtained from independent publications and market exchanges.
  • Given their short-term maturity, the fair value of cash, accounts receivable and accounts payable and accrued liabilities approximate their carrying values.
  1. Risk management

Exposure to foreign currency risk, interest rate risk, equity price risk, liquidity risk and credit risk arise in the normal course of the Company's business and disclosures were provided in the annual consolidated financial statements for the fiscal year ended June 26, 2010. With the exception of the Company entering into US$10.5 million notional amount of foreign exchange contracts during the 13 week period ended September 25, 2010, there have been no significant changes in liquidity risk or in the way the Company manages the risks described above for the 13 week period ended September 25, 2010. Risk exposures as at September 25, 2010 are discussed further below: 

Risk   Financial Instrument   Amount   Sensitivity Analysis/Comments
Foreign Currency Risk   Cash ($US)   US$2,628   A 500 basis point change in the U.S. dollar exchange rate would impact the net loss for the 13 week period ended September 25, 2010 by /-$21.
Interest Rate/ Credit Risk   Cash   $9,330   A 100 basis point change in interest rates would impact net loss for the 13 week period ended September 25, 2010 by /-$15. Exposure to credit risk is limited by investing in short-term deposits and bankers acceptances with major Canadian financial institutions.
Credit Risk   Accounts Receivable   $748   Primarily consists of credit card receivables from the last few days of the fiscal period end and are settled within a few days following the fiscal period end.
Equity Price Risk   RSU and DSU Liability   227,779 RSUs 103,920 DSUs   A $1.00 change in Danier's share price would impact net loss for the 13 week period ended September 25, 2010 by /-$213. This assumes that all RSUs and DSUs were fully vested and other variables remained constant.
  1. SEGMENTED INFORMATION:

Management has determined that the Company operates in one dominant industry which involves the design, manufacture, distribution and retail of fashion leather and suede apparel and accessories.





FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations Contact: Danier Leather Inc.
Jeffrey Wortsman
President and Chief Executive Officer
(416) 762-8175 ext. 302
(416) 762-7408 (FAX)
leather@danier.com
or
Danier Leather Inc.
Bryan Tatoff
Senior Vice-President, Chief Financial Officer & Secretary
(416) 762-8175 ext. 328
(416) 762-7408 (FAX)
bryan@danier.com
www.danier.com