NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR:  DANIER LEATHER INC.

TSX SYMBOL:  DL

AUGUST 4, 2004 - 15:53 ET

Danier Leather Reports Fiscal 2004 Fourth Quarter and
Year-End Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 4, 2004) - Danier Leather 
Inc. (TSX:DL) today announced its consolidated financial results 
for the fourth quarter and 52 weeks ended June 26, 2004. 

HIGHLIGHTS ($000s, except earnings per share):  


/T/

---------------------------------------------------------------------
                               13 Weeks Ended       52 Weeks Ended
                           ------------------------------------------
                           June 26,   June 28,   June 26,   June 28,
                               2004       2003       2004       2003
---------------------------------------------------------------------
Sales                       $29,347    $24,763   $178,115   $175,487
---------------------------------------------------------------------
Earnings (loss) before
 undernoted item
 and income tax             $(1,617)   $(3,079)    $7,547    $12,016
---------------------------------------------------------------------
Litigation Provision and
 Related Expenses(1)        $15,450     $2,567    $15,450     $2,773
---------------------------------------------------------------------
Net Earnings (Loss)        $(12,504)   $(3,465)   $(7,097)    $5,394
---------------------------------------------------------------------
Net Earnings (Loss)
 excluding Litigation
 Provision and Related
 Expenses(1)                ($1,128)   ($1,967)    $4,279     $7,012
---------------------------------------------------------------------
EPS Basic (loss)             $(1.81)    $(0.50)    $(1.03)     $0.78
---------------------------------------------------------------------
EPS Diluted                     n/a        n/a        n/a      $0.76
---------------------------------------------------------------------
Number of Stores(a)              98         98         98         98
---------------------------------------------------------------------
Square Footage(a)           377,527    369,162    377,527    369,162
---------------------------------------------------------------------
(a) At fiscal year-end

/T/

HIGHLIGHTS  

- Revenues increase 19% in the fourth quarter and 1% for the full 
year 

- Fourth quarter loss excluding litigation provision declines by 
43% to $1.1 million. 

- Sales of higher-margin accessories rise 15% and represent 18% 
of total sales  

- Chris Noth (Detective Mike Logan on Law and Order, "Mr. Big" on 
Sex and the City) signed to star in Danier's new fall marketing 
campaign 

- Board and management team strengthened with added expertise in 
international sales and fashion 

"While the holiday season and first half of fiscal 2004 were very 
challenging, business improved considerably in the latter half of 
the year," said Jeffrey Wortsman, President and CEO of Danier 
Leather. "The fourth quarter showed continued positive momentum 
with healthy increases in both comparable store and total sales. 
As we close the door on 2004, we remain confident in our proven 
long-term operating strategy and are committed to continue 
building Danier into a major worldwide retailer and brand." 

Revenue for the fourth quarter increased 19% to $29.3 million on 
a comparable store sales increase of 15%. Results for the quarter 
were impacted by a $15.5 million provision for litigation and 
related expenses in connection with the trial court decision from 
the class action lawsuit. Danier is vigorously appealing the 
verdict. Excluding the $15.5 million provision in the current 
year and $2.8 million provision in the fourth quarter of the 
prior year, fourth quarter results showed improvement over last 
year, with a net loss of $1.1 million ($0.16 per share) as 
compared with $2.0 million ($0.28 per share) in 2003. Including 
the provision, net loss was $12.5 million or $1.81 per share, as 
compared with a net loss of $3.5 million or $0.50 per share in 
the fourth quarter of last year.  

Danier maintained a strong financial position at year-end with 
approximately $23.0 million in cash ($3.31 per share), no 
long-term debt and working capital of $44.2 million. Inventory of 
$29.9 million was lower than last year's level of $37.0 million 
due to improved merchandise planning in the last half of the year 
and clearance activity.  

For the full year, revenue rose 1% to $178.1 million from $175.5 
million on a 4% decline in comparable store sales. Net earnings 
excluding the effect of the provision declined to $4.3 million 
($0.62 per share) versus $7.0 million ($1.01 per share) last 
year. Including the provision, net loss was $7.1 million ($1.03 
per share) versus net earnings of $5.4 million ($0.78 per share) 
last year.  

SG&A expenses increased by 8% to $80.5 million in fiscal 2004, 
compared with $74.6 million in 2003. SG&A for the fourth quarter 
of 2004 increased to $16.6 million, compared with $14.6 million 
in the fourth quarter of 2003. The increases were largely due to 
costs associated with new and expanded stores opened during the 
year and the full year effect of prior year new store openings 
and expansions, higher advertising expenses, severance costs and 
the cost of expensing stock options. 

Gross profit rose 29% to $14.8 million (50.5% of revenues) in the 
fourth quarter, compared with $11.5 million (46.4% of revenues) 
for the same period last year. Higher sales and fewer markdowns 
contributed to the increase. For the full year, gross profit 
increased 2% to $88.1 million (49.4% of revenues), compared with 
$86.7 million (49.4% of revenues) last year.  

Danier's leather and suede accessories line continues to grow, 
with sales increasing 29% for the fourth quarter and 15% for the 
year. Accessories sales represented 18% of total company sales in 
fiscal 2004, up from 16% in 2003.  Danier closed four stores in 
the fourth quarter and expects to open two new stores - one mall 
store and one power centre location - in the first half of fiscal 
2005.  

Outlook 

"Strategy and execution will remain our focus in fiscal 2005," 
added Mr. Wortsman. Our fourth quarter results show positive 
momentum and we are very excited about our new marketing campaign 
featuring the popular actor Chris Noth, scheduled to launch in 
September. From an operations standpoint, our financial strength 
and inventory position are solid, and our stores are carrying 
fashionable and colourful merchandise at attractive price points. 
We now look forward to getting back to business and focusing all 
our efforts on achieving our strategic plans." 

About Danier  

Danier Leather Inc. is a leading integrated designer, 
manufacturer, and retailer of high-quality leather and suede 
clothing and accessories. The Company's merchandise is marketed 
exclusively under the well-known Danier brand name and is 
available only at its 98 shopping mall, street-front, and power 
centre stores, or through its corporate sales division and online 
through its website, www.danier.com. 

(1) Litigation provision and related expenses relate to the class 
action litigation. Based solely on the information currently 
available, if the award had been paid at year-end the Company 
estimates the damages, including interest and costs if awarded, 
to approximate $15 million. During the fourth quarter of 2004, 
the Company recorded an expense and set up a provision of $15 
million pursuant to the judgment. The provision for recovery of 
income taxes related to the award is based on the entire $15 
million provision and does not take account of the potential 
results of the appeal, any possible insurance recoveries or 
future tax adjustments. The damages award and income tax recovery 
is based on management's best estimate and is subject to 
adjustment when all facts are known and all issues are resolved. 
The possible adjustment could be significant.  

Net earnings excluding the litigation provision and related 
expenses is calculated as follows: 


/T/

---------------------------------------------------------------------
                               13 Weeks Ended       52 Weeks Ended
                           ------------------------------------------
                           June 26,   June 28,   June 26,   June 28,
                               2004       2003       2004       2003
---------------------------------------------------------------------
Net earnings (loss)        ($12,504)   ($3,465)   ($7,097)    $5,394
---------------------------------------------------------------------
Litigation Provision and
 Related Expenses           $15,450     $2,567    $15,450     $2,773
---------------------------------------------------------------------
Estimated Tax Recovery      ($4,074)   ($1,069)   $(4,074)   ($1,155)
---------------------------------------------------------------------
Net Earnings (Loss) excluding
 Litigation Provision
 and Related Expenses       ($1,128)   ($1,967)    $4,279     $7,012
---------------------------------------------------------------------

/T/

Note: This press release may contain forward-looking statements 
that involve risks, estimates, and uncertainties. Therefore, 
actual results may differ materially. Examples of such risks and 
uncertainties include those associated with product sales, demand 
for Danier's products, availability of raw materials, foreign 
sourcing and manufacturing, estimates of damages, costs and 
interest associated with the class action lawsuit, continued 
growth of the leather apparel industry, and competition and other 
associated risks with Danier's business. For an expanded 
discussion of risks and uncertainties, please see the documents 
filed by Danier Leather Inc. with the Ontario Securities 
Commission and the Toronto Stock Exchange. Danier disclaims any 
responsibility to update or revise such forward-looking 
statements whether as a result of new information, future events 
or otherwise. 

Investors, analysts and the media are invited to participate in a 
conference call today at 5:00 PM Eastern Time to discuss the 
results. Please dial 416-695-9707 in the Toronto area or 
1-800-355-4959 (rest of Canada and the U.S.) and quote the Danier 
Leather Inc. conference call with chairperson Jeffrey Wortsman at 
least five minutes prior to the call. The call will also be 
webcast at www.danier.com or at www.ccnmatthews.com. 


/T/

DANIER LEATHER INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND RETAINED EARNINGS
(thousands of dollars, except per share amounts)
---------------------------------------------------------------------

                                     For the 4th        For the Year
                                    Quarter Ended          Ended
                                  -----------------  ----------------
                                June 26,   June 28, June 26, June 28,
                                    2004       2003     2004     2003
                                  -----------------  ----------------
                              (unaudited)(unaudited)
Revenue                          $29,347    $24,763 $178,115 $175,487
Cost of sales (Note 7)            14,525     13,274   90,060   88,788
                                 ------------------ -----------------
Gross profit                      14,822     11,489   88,055   86,699
Selling general and
 administrative expenses
 (Note 7)                         16,559     14,615   80,526   74,617
Interest expense (income) -
 net                                (120)       (47)     (18)      66
                                 ------------------ -----------------
Earnings (loss) before
 undernoted item and income
 taxes                            (1,617)    (3,079)   7,547   12,016
Litigation provision and
 related expenses (Note 9)        15,450      2,567   15,450    2,773
                                 ------------------ -----------------
Earnings (loss) before income
 taxes                           (17,067)    (5,646)  (7,903)   9,243
Provision for income taxes
 (Note 8)                         (4,563)    (2,181)    (806)   3,849
                                 ------------------ -----------------
Net earnings (loss)             $(12,504)   $(3,465) $(7,097)  $5,394
                                 ------------------ -----------------

Retained earnings, beginning
 of period                       $49,406    $47,464  $43,999  $38,605
                                 ------------------ -----------------
Retained earnings, end of
 period                          $36,902    $43,999  $36,902  $43,999
                                 ------------------ -----------------
                                 ------------------ -----------------
Net earnings (loss) per share
 (Note 6(c))
  Basic                           ($1.81)    ($0.50)  ($1.03)   $0.78
  Diluted                            n/a        n/a      n/a    $0.76


DANIER LEATHER INC.
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
---------------------------------------------------------------------

                                           June 26,2004  June 28,2003
                                           ------------  ------------
ASSETS
Current Assets
  Cash                                          $23,000        $7,254
  Accounts receivable                               634           600
  Income taxes recoverable                            -            83
  Inventories (Note 2)                           29,915        37,029
  Prepaid expenses                                  923           889
  Future income tax asset (Note 8)                  107           368
                                           ------------  ------------
                                                 54,579        46,223

Other Assets
  Capital assets (Note 3)                        30,212        34,246
  Goodwill (Note 4)                                 342           342
  Future income tax asset (Note 8)                4,736           676
                                           ------------  ------------
                                                $89,869       $81,487
                                           ------------  ------------
                                           ------------  ------------
LIABILITIES
Current Liabilities
  Accounts payable and accrued liabilities       $9,425        $9,350
  Income taxes payable                              952             -
                                           ------------  ------------
                                                 10,377         9,350
Accrued litigation provision and related
 expenses (Note 9)                               15,450         1,209
Deferred lease inducements                        2,283         2,238
Future income tax liability (Note 8)                472           696
                                           ------------  ------------
                                                 28,582        13,493
                                           ------------  ------------
SHAREHOLDERS' EQUITY
  Share capital (Note 6)                         24,166        23,995
  Contributed surplus (Note 6)                      219             -
  Retained earnings                              36,902        43,999
                                           ------------  ------------
                                                 61,287        67,994
                                           ------------  ------------
                                                $89,869       $81,487
                                           ------------  ------------
                                           ------------  ------------


DANIER LEATHER INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(thousands of dollars)
---------------------------------------------------------------------
                                    For the 4th        For the Year
                                   Quarter Ended          Ended
                               ------------------- ------------------
                               June 26,   June 28, June 26, June 28,
                                   2004       2003     2004     2003
                               ------------------- ------------------
                             (unaudited)(unaudited)
OPERATING ACTIVITIES
  Net earnings (loss)          $(12,504)   $(3,465) $(7,097)  $5,394
  Items not affecting cash:
  -------------------------
   Amortization                     828        800    6,087    5,996
   Amortization of deferred
    lease inducements              (124)      (140)    (404)    (347)
   Loss on disposal of capital
    assets                          696        633      696      633
   Stock based compensation         219          -      219        -
   Accrued litigation provision
    and related expenses         15,450      1,209   15,450    1,209
   Future income taxes           (3,998)      (468)  (4,023)    (504)
   Net change in non-cash working
    capital items (Note 10)         727      1,953    6,947      (54)
                               ------------------- ------------------
Cash flows from operating
 activities                       1,294        522   17,875   12,327
                               ------------------- ------------------

FINANCING ACTIVITIES
 Subordinate voting shares
  issued                            171          -      171       78
 Proceeds from lease
  inducements                        85        429      449      748
                               ------------------- ------------------
Cash flows from financing
  activities                        256        429      620      826

INVESTING ACTIVITIES
 Acquisition of capital assets     (460)    (2,001)  (2,749)  (9,676)
                               ------------------- ------------------
Cash flows from investing
 activities                        (460)    (2,001)  (2,749)  (9,676)
                               ------------------- ------------------

Increase/(decrease) in cash       1,090     (1,050)  15,746    3,477
Cash, beginning of period        21,910      8,304    7,254    3,777
                               ------------------- ------------------
Cash, end of period             $23,000     $7,254  $23,000   $7,254
                               ------------------- ------------------
                               ------------------- ------------------

Supplementary cash flow
 information:
  Interest paid                       -          -      223      219
  Income taxes paid                 333          -    2,376    5,241


DANIER LEATHER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 26, 2004 and June 28, 2003

/T/

1. Significant Accounting Policies: 

The consolidated financial statements have been prepared in 
accordance with Canadian generally accepted accounting principles 
("GAAP"). 

(a) Basis of consolidation: 

The consolidated financial statements include the accounts of the 
Company and its wholly owned subsidiary companies. On 
consolidation, all intercompany transactions and balances have 
been eliminated. 

(b) Year-end: 

The fiscal year end of the Company consists of a 52 or 53 week 
period ending on the last Saturday in June each year. The fiscal 
year for the financial statements presented is the 52-week period 
ended June 26, 2004, and comparably the 52-week period ended June 
28, 2003. 

(c) Revenue recognition: 

Revenue includes sales to customers through stores operated by 
the Company and sales to corporate customers through the 
Company's direct sales division. Sales to customers through 
stores operated by the Company are recognized at the time the 
transaction is entered into the point-of-sale register net of 
returns. Sales to corporate customers are recognized at the time 
of shipment. 

(d) Cash: 

Cash consists of cash on hand, bank balances, and money market 
investments with original maturities of three months or less. 

(e) Inventories: 

Inventories are valued at the lower of cost or market. Cost is 
determined using the weighted average cost method. For finished 
goods and work-in-process, market is defined as net realizable 
value; for raw materials, market is defined as replacement cost. 

(f) Capital assets: 

Capital assets are recorded at cost and annual amortization is 
provided using the declining balance method as follows: 


/T/

Building 4%
Furniture and equipment 20%
Computer hardware and software 30%

/T/

Leasehold improvements are amortized on a straight-line basis 
over the term of the lease, unless the Company has decided to 
terminate the lease, at which time the unamortized balance is 
written off. 

(g) Goodwill: 

Goodwill represents the excess of the cost of acquisition over 
the fair market value of the identifiable assets acquired. 
Goodwill with an indefinite life is not amortized, but is tested 
for impairment at least annually at year-end. If required, any 
impairment in the value of goodwill would be written off against 
earnings. 

(h) Deferred lease inducements: 

Deferred lease inducements represent cash benefits received from 
landlords pursuant to store lease agreements. These lease 
inducements are amortized against rent expense over the term of 
the lease, not exceeding 10.5 years. 

(i) Store opening costs: 

Expenditures associated with the opening of new stores, other 
than furniture and fixtures, equipment, and leasehold 
improvements are expensed as incurred. 

(j) Income taxes: 

Income taxes are determined using the asset and liability method 
of accounting. This method recognizes future tax assets and 
liabilities that arise from differences between the accounting 
basis of the Company's assets and liabilities and their 
corresponding tax basis. Future taxes are measured using tax 
rates expected to apply when the asset is realized or the 
liability settled. 

(k) Earnings per share: 

Earnings per share are calculated using the weighted average 
number of shares outstanding during the year (see Note 6). The 
treasury stock method is used to calculate diluted earnings per 
share. The treasury stock method computes the number of 
incremental shares by assuming the outstanding stock options 
exercisable at exercise prices below the average monthly market 
price are exercised during the fiscal year and then that number 
of incremental shares is reduced by the number of shares that 
could have been repurchased from the issuance proceeds, using the 
average monthly market price of the Company's shares during the 
fiscal year. 

(l) Translation of foreign currencies: 

Subsidiary accounts and accounts in foreign currencies are 
translated into Canadian dollars. Monetary balance sheet items 
are translated at the rates of exchange in effect at year-end and 
non-monetary items are translated at historical exchange rates. 
Revenues and expenses (other than amortization, which is 
translated at the average rate as the related capital assets) are 
translated at the rates in effect on the transaction dates or at 
the average rates of exchange for the reporting period. The 
resulting net gain or loss is included in the statement of 
earnings. 

(m) Financial instruments: 

From time-to-time the Company utilizes derivative financial 
instruments in the management of its foreign currency exposure. 
Derivative financial instruments are not used for trading 
purposes. Accounting guideline (AcG 13) was implemented June 29, 
2003 on a prospective basis. There was no impact on the current 
year. 

(n) Stock option plan: 

The Company has a stock option plan which is described in Note 6 
where options to purchase subordinate voting shares are issued to 
directors, officers and employees. 

In the year ended June 26, 2004 the Canadian Institute of 
Chartered Accountants (CICA) amended Handbook Section 3870 
"Stock-based Compensation and Other Stock-based Payments", which 
provides guidance on accounting for stock-based compensation, to 
require the use of the fair value-based method to account for 
stock options. In accordance with the transitional provisions 
allowed under the revised accounting standard, the Company has 
prospectively applied the fair value-based method to all stock 
options granted on or after June 29, 2003. Accordingly, 
compensation cost is measured at fair value at the date of grant 
using the Black-Scholes Option Pricing Model and is recognized as 
an expense over the vesting period of the stock option. 

The Company continues to use settlement accounting to account for 
stock options granted prior to June 29, 2003. In accordance with 
the prospective method of adoption of the new standard, no 
compensation expense is recognized for options granted prior to 
fiscal 2004. Pro forma disclosures relating to net earnings per 
share figures, as if the fair value method had been used for 
awards granted during fiscal 2003, are presented in Note 6(e). 

(o) Use of estimates: 

The preparation of financial statements in conformity with 
Canadian generally accepted accounting principles requires 
management to make estimates and assumptions that affect the 
reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses 
during the reporting period. These estimates and assumptions are 
based on management's 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 litigation award reserves, inventory valuation, 
realizable value of capital assets, deferred tax assets, 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 could differ 
materially from those estimated. 

(p) Comparative figures: 

Certain amounts included in the June 28, 2003 comparative figures 
were reclassified to conform with the current year's financial 
statement presentation. Reclassification of these amounts had no 
effect on previously reported shareholders' equity or net 
earnings. 


/T/

2. Inventories (thousands of dollars):

                        June 26, 2004  June 28, 2003
                        -------------  -------------
Raw materials                $ 4,043        $ 4,970
Work-in-process                1,363          1,830
Finished goods                24,509         30,229
                        -------------  -------------
                            $ 29,915       $ 37,029


3. Capital Assets (thousands of dollars):

                    June 26, 2004               June 28, 2003
              -------------------------------------------------------
                                      Net                         Net
                       Accumulated   Book          Accumulated   Book
                Cost  Amortization  Value    Cost Amortization  Value
              -------------------------------------------------------

Land          $ 1,000   $     -    $1,000  $ 1,000   $     -  $ 1,000
Building        7,066     1,080     5,986    6,988       832    6,156
Leasehold
 improvements  27,351    12,779    14,572   26,492     9,899   16,593
Furniture
 and equipment 12,101     7,036     5,065   11,918     6,029    5,889
Computer
 hardware and
 software       8,973     5,384     3,589    9,225     4,617    4,608
              -------------------------------------------------------     
              $56,491   $26,279   $30,212 $ 55,623  $ 21,377 $ 34,246
              -------------------------------------------------------
              -------------------------------------------------------
/T/

4. Goodwill (thousands of dollars): 

Goodwill of $342 (June 28, 2003 - $342) is stated at cost less 
accumulated amortization of $205 (June 28, 2003 - $205). 

5. Bank Overdraft: 

As at June 26, 2004, the Company had credit facilities available 
to a maximum amount of $69.0 million. The credit facilities 
consist of an operating facility for working capital and for 
general corporate purposes to a maximum amount of $65 million, 
bearing interest at prime plus 0.25% and a $4.0 million revolving 
capital expenditure loan facility bearing interest at prime plus 
0.75%. The maximum amount available under the revolving capital 
expenditure loan facility reduces by $1.0 million on each of June 
30, 2005 and June 30, 2006 and by $2.0 million on June 30, 2007. 
The operating facility is committed until July 29, 2005 and the 
revolving capital expenditure loan facility matures on June 30, 
2007. The Company is required to comply with covenants regarding 
financial performance. 

Security provided includes a security interest over all personal 
property of the business and a mortgage over the land and 
building, comprising the Company's head office/distribution 
facility. 

6. Share Capital (thousands of dollars, except per share 
amounts): 


/T/

(a) Authorized

1,224,329 Multiple Voting Shares
Unlimited Subordinate Voting Shares
Unlimited Class A Preference Shares

(b) Issued

Multiple Voting Shares                         Number   Consideration
----------------------                       ------------------------

Balance June 29, 2002                        1,224,329      Nominal
Balance June 28, 2003                        1,224,329      Nominal
Balance June 26, 2004                        1,224,329      Nominal


Subordinate Voting Shares                     Number    Consideration
-------------------------                    ------------------------

Balance June 29, 2002                        5,683,875      $23,917
 Shares issued upon exercising
  of stock options                              11,350           78
                                             ------------------------
Balance, June 28, 2003                       5,695,225      $23,995
 Shares issued upon exercising
  of stock options                              25,000          171
                                             ------------------------
Balance, June 26, 2004                       5,720,225      $24,166
                                             ------------------------
                                             ------------------------

/T/

The Multiple Voting Shares and Subordinate Voting Shares have 
identical attributes except that the Multiple Voting Shares 
entitle the holder to ten votes per share and the Subordinate 
Voting Shares entitle the holder to one vote per share. Each 
Multiple Voting Share is convertible at any time, at the holder's 
option, into one fully paid and non-assessable Subordinate Voting 
Share. The Multiple Voting Shares are subject to provisions 
whereby, if a triggering event occurs then each Multiple Voting 
Share is converted into one fully paid and non-assessable 
Subordinate Voting Share. A triggering event may occur if Mr. 
Jeffrey Wortsman: (i) dies; (ii) ceases to be a senior officer of 
the Company; (iii) ceases to own less than 5% of the aggregate 
number of Multiple Voting Shares and Subordinate Voting Shares 
outstanding; or (iv) owns less than 918,247 Multiple Voting 
Shares and Subordinate Voting Shares combined. 


/T/

(c) Earnings (loss) per share           June 26, 2004   June 28, 2003
                                        -----------------------------

Earnings (loss) per share:
 Basic                                        ($1.03)           $0.78
 Diluted                                         n/a            $0.76


Weighted average number of shares outstanding
 Basic                                     6,920,447        6,913,636
 Diluted                                   6,978,904        7,052,865


Shares outstanding
 Basic                                     6,944,554        6,919,554
 Diluted                                   6,985,068        6,975,677

/T/

(d) Normal course issuer bid 

During the years ended June 26, 2004 and June 28, 2003 no shares 
were repurchased under the Normal Course Issuer Bid. 

(e) Stock option plan 

As at June 26, 2004, the Company has reserved 915,275 Subordinate 
Voting Shares for issuance under its Stock Option Plan. The 
granting of options and the related vesting periods are at the 
discretion of the Board of Directors and have a maximum term of 
10 years. A summary of the status of the Company's Stock Option 
Plan as of June 26, 2004 and June 28, 2003 and changes during the 
years ending on those dates is presented below: 


/T/

                                   June 26, 2004        June 28, 2003
                             -------------------  -------------------
                                        Weighted             Weighted
                                        -average             -average
                                        exercise             exercise
Stock Options                   Shares     price     Shares     price
------------------------------------------------  -------------------
Outstanding at beginning
 of year                       730,400    $11.16    580,750     $9.97
Granted                         44,000    $10.96    186,000    $14.93
Exercised                      (25,000)    $6.85    (11,350)    $6.85
Forfeited                     (100,000)   $11.80    (25,000)   $13.57
                             -------------------  -------------------
Outstanding at end of year     649,400    $11.21    730,400    $11.16
                             -------------------  -------------------
Options exercisable at end
 of year                       523,650    $10.53    501,400     $9.80
                             -------------------  -------------------


The following table summarizes the distribution of these options and
the remaining contractual life as at June 26, 2004:


               Options Outstanding              Options Exercisable
--------------------------------------------  ----------------------
                          Weighted
                           Average  Weighted                Weighted
                         Remaining   Average                 Average
Exercise            #  Contractual  Exercise   # of Shares  Exercise
  Prices  Outstanding         Life     Price   Exercisable     Price
--------------------------------------------  ----------------------
   $6.02       18,500    5.2 years     $6.02        18,500     $6.02
   $6.85      118,400    4.0 years     $6.85       118,400     $6.85
  $10.40       33,250    6.1 years    $10.40        30,500    $10.40
  $10.50       15,000    6.3 years    $10.50        11,250    $10.50
  $10.96       44,000    9.1 years    $10.96             -         -
  $11.20       24,000    7.1 years    $11.20        24,000    $11.20
  $11.25      265,250    3.9 years    $11.25       265,250    $11.25
  $15.85      111,000    8.1 years    $15.85        45,750    $15.85
  $17.94       20,000    7.8 years    $17.94        10,000    $17.94
            --------------------------------  ----------------------
              649,400    5.4 years    $11.21       523,650    $10.53
            --------------------------------  ----------------------
            --------------------------------  ----------------------

/T/

For the year ended June 28, 2003, the Company used settlement 
accounting to account for its Stock Option Plan, in accordance 
with CICA Handbook Section 3870. No compensation cost was 
recorded when stock options were granted. When options were 
exercised, consideration paid by employees and directors were 
recorded in the financial statements as an increase of share 
capital based on the exercise price of the options. 

In September 2003, the CICA amended Handbook Section 3870 to 
require the use of the fair value-based method to account for 
stock options, commencing with fiscal years beginning on or after 
January 1, 2004. Under the fair value-based method, compensation 
cost is measured at fair value at the date of the grant and is 
expensed over the vesting period. In accordance with the 
permitted transitional options, during the fourth quarter of 
2004, the Company has prospectively applied the fair value-based 
method to all stock options granted on or after June 29, 2003. 
Accordingly, options granted prior to that date continue to be 
accounted for using the settlement accounting method, and the 
results for the year ended June 28, 2003 have not been restated. 
The prospective application of the fair value-based method 
increased contributed surplus and the net loss by $0.2 million, 
and increased the basic loss per share by $0.03. 

During the year ended June 28, 2003, the Company granted 111,000 
stock options (net of 25,000 forfeited options during fiscal 2003 
and 50,000 forfeited options during fiscal 2004) with an exercise 
price of $15.85. Had compensation cost been determined using the 
fair value-based method at the grant date of the stock options 
awarded to employees and directors, the net earnings and earnings 
per share for the years ended June 26, 2004 and June 28, 2003 
would have been reduced to the pro forma amounts indicated in the 
following table: 


/T/

                              Year Ended              Year Ended
                            June 26, 2004           June 28, 2003
                      ----------------------  ----------------------
                      As Reported  Pro-forma  As Reported  Pro-forma
                      ----------------------  ----------------------
Net earnings (loss)       ($7,097)   ($7,339)      $5,394     $4,885
Basic earnings (loss)
 per share                 ($1.03)    ($1.06)       $0.78      $0.71
Diluted earnings per
 share                        n/a        n/a        $0.76      $0.69


                          13 Weeks Ended          13 Weeks Ended
                           June 26, 2004           June 28, 2003
                      ----------------------  ----------------------
                      As Reported  Pro-forma  As Reported  Pro-forma
                      ----------------------  ----------------------
                       (unaudited)(unaudited)  (unaudited)(unaudited)
Net (loss)               ($12,504)  ($12,564)     ($3,465)   ($3,592)
Basic (loss) per share     ($1.81)    ($1.82)      ($0.50)    ($0.52)
Diluted loss per share        n/a        n/a          n/a        n/a

/T/

To determine compensation cost, the fair value of stock options 
is recognized on a straight-line basis over the vesting period of 
the options. 

The pro forma effect on net earnings of the period is not 
representative of the pro forma effect on net earnings of future 
periods because it does not take into consideration the pro forma 
compensation cost related to options awarded prior to June 29, 
2002. 

The fair value of options granted was estimated on the grant date 
using the Black-Scholes Option Pricing Model with the following 
assumptions for the stock options granted since the beginning of 
the year: 


/T/

Expected dividend yield                              None
Expected volatility                                   54%
Risk-free interest rate                             5.25%
Expected life                                    10 years

/T/

The weighted average fair value of stock options granted during 
the year ended June 26, 2004 was $7.54. 

The Black-Scholes Option Pricing Model was developed for use in 
estimating the fair value of traded options, which have no 
vesting restrictions and are fully transferable. In addition, the 
Black-Scholes Option Pricing Model requires the use of subjective 
assumptions including the expected stock price volatility. As a 
result, the Company's stock option plan having characteristics 
different from those of traded options, and because changes in 
the subjective assumptions can have a material effect on the fair 
value estimate, the Black-Scholes Option Pricing Model does not 
necessarily provide a reliable single measure of the fair value 
of options granted. 

7. Amortization (thousands of dollars): 

Amortization included in cost of sales and selling, general and 
administrative expenses is summarized as follows: 


/T/

                              13 Weeks Ended        Year Ended
                          --------------------  --------------------
                           June 26,   June 28,   June 26,   June 28,
                               2004       2003       2004       2003
                          --------------------  --------------------
                         (unaudited)(unaudited)

Cost of sales               $   219    $   310    $   773    $   777
Selling, general and
 administrative expenses        609        490      5,314      5,219
                          --------------------  --------------------
                            $   828    $   800    $ 6,087    $ 5,996
                          --------------------  --------------------
                          --------------------  --------------------


8. Income taxes (thousands of dollars):

Future income tax asset (liability) is summarized as follows:

                                        June 26, 2004  June 28, 2003
                                        -------------  -------------
Amortization                                 $   (505)      $   (696)
Deferred lease inducements                        803            676
Litigation provision and related expenses       4,074            342
Other                                              (1)            26
                                        -------------  -------------
                                             $  4,371       $    348
Future income tax asset                         4,843          1,044
                                        -------------  -------------
Future income tax liability                  $   (472)      $   (696)
                                        -------------  -------------
                                        -------------  -------------

/T/

Furthermore, the U.S. subsidiary has unutilized non-capital loss 
carry forwards available to reduce future year's income taxes, 
the potential benefit of which have not been recognized in these 
financial statements. These losses can be utilized in future 
years up to 2020. 

The Company's effective income tax rate consists of the 
following: 


/T/

                                        June 26, 2004  June 28, 2003
                                        -------------  -------------
Combined basic federal and provincial
 average statutory rate                        (36.1%)         37.6%
Litigation provision and related
 expenses, manufacturing and processing
 credit and other                               20.5%           0.1%
Effect of foreign operating losses               5.4%           3.9%
                                        -------------  -------------
                                               (10.2%)         41.6%
                                        -------------  -------------
                                        -------------  -------------


9. Litigation provision and related expenses:

                                        June 26, 2004  June 28, 2003
                                        -------------  -------------
Provision for damages, costs and
 interest                                    $ 15,000       $      -
Legal and professional fees                       450          1,209
                                        -------------  -------------
Accrued litigation provision
 and related expenses                        $ 15,450       $  1,209
                                        -------------  -------------
                                        -------------  -------------

/T/

In fiscal 1999, the Company and certain of its directors and 
officers were served with a Statement of Claim under the Class 
Proceedings Act (Ontario) concerning the accuracy and disclosure 
of certain information contained in a financial forecast issued 
by the Company during its initial public offering ("IPO") in 
1998. The suit sought damages be paid equal to the alleged 
diminution in value of the shares. 

In October 2001, a motion to certify the action as a class action 
was granted. The trial commenced in the Superior Court of Justice 
(Ontario) during May 2003 and was completed in January 2004. On 
May 7, 2004 the Judge issued a judgment in favour of the 
Plaintiffs and awarded damages to Canadian shareholders who 
purchased subordinate voting shares in the IPO. The Judge 
concluded that at the time of pricing of the IPO, which was two 
weeks before the closing, the forecast was reasonable and that 
the Company's CEO and CFO, had an honest belief at the time the 
IPO closed that the forecast could be achieved. The Judge further 
held that the forecast was, in fact, substantially achieved. 
Despite these findings, the Court decided that management's 
judgement that the forecast was still achievable at the time of 
closing was not reasonable. The Company is contesting this 
decision and has filed a Notice of Appeal as discussed below. 

For those shareholders who sold their shares between June 4 and 
9, 1998, the Court awarded them the difference between the IPO 
price and the price at which they sold their shares. For those 
shareholders who sold or still hold those shares after June 9, 
1998, the Court awarded $2.35 per share. 

Based solely on the information currently available, if the award 
had been paid at year-end the Company estimates the damages to be 
about $10 million. Interest and costs have not been dealt with by 
the Court but if awarded, the Company estimates the total award 
could increase by approximately $5 million. During the fourth 
quarter of 2004, the Company recorded an expense and set up a 
provision of $15 million pursuant to this judgment. The judgment 
is a joint and several responsibility of the Company and two of 
its Senior Officers. The Company carries directors and officers 
insurance and it expects that the insurance will cover the two 
Senior Officers' portion of the total award but the amount of 
insurance is not reasonably determinable at this time and its 
recovery has therefore not been accrued. The provision for 
recovery of income taxes related to the award is based on the 
entire $15 million provision and does not take account of the 
potential results of the appeal discussed in the next paragraph, 
any possible insurance recoveries or future tax adjustments. The 
damages award and income tax recovery is based on management's 
best estimate and is subject to adjustment when all facts are 
known and all issues are resolved. The possible adjustment could 
be significant. 

In June 2004, a Notice of Appeal was filed by the Company and two 
of its Senior Officers. Payment of any damages will be deferred 
as the award and the judgment are stayed by the filing of the 
appeal. 

During fiscal 2003, the Company expensed legal and professional 
fees of approximately $2.8 million of which approximately $1.6 
million related to legal and professional fees actually incurred 
during fiscal 2003 and approximately $1.2 million was set up as a 
provision for future legal and professional fees. As at June 26, 
2004, $0.5 million was set up as a provision for future legal 
fees in connection with the appeal. 

10. Changes in non-cash operating working capital items 
(thousands of dollars): 


/T/

                                 13 Weeks Ended        Year Ended
                             --------------------- -----------------
                              June 26,   June 28,  June 26, June 28,
                                  2004       2003      2004     2003
                             --------------------- -----------------
                            (unaudited)(unaudited)
Accounts receivable            $   643    $   784   $   (34) $  (116)
Inventories                      3,332      4,208     7,114    1,633
Prepaid expenses                  (328)      (108)      (34)    (286)
Accounts payable and accrued
 liabilities                    (2,216)    (1,525)   (1,134)  (1,122)
Income taxes payable              (704)    (1,406)    1,035     (163)
                             --------------------- -----------------
                               $   727    $  1,953  $ 6,947  $   (54)
                             --------------------- -----------------
                             --------------------- -----------------

/T/

11. Contingencies & Guarantees - (thousands of dollars): 

(a) Legal proceedings 

In addition to the class action matter discussed in Note 9, in 
the course of its business, the Company from time to time becomes 
involved in various claims and legal proceedings. In the opinion 
of management, all such claims and suits are adequately covered 
by insurance, or if not so covered, the results are not expected 
to materially affect the Company's financial position. 

(b) Guarantees 

Effective June 29, 2003, the Company implemented the CICA's 
Accounting Guideline (AcG-14) "Disclosure of Guarantees", which 
expands previously issued accounting guidance and requires 
additional disclosure, by a guarantor, in its interim and annual 
financial statements, for certain guarantees. 

In the normal course of business, the Company enters into 
numerous agreements that may contain features that meet the 
AcG-14 definition of a guarantee. AcG-14 defines a guarantee to 
be a contract (including an indemnity) that contingently requires 
the Company to make payments to the guaranteed party based upon 
certain criteria including failure of another party to perform 
under an obligating agreement or failure of a third party to pay 
its indebtedness when due. 

The Company has provided the following guarantees to third 
parties and no amounts have been accrued in the financial 
statements for these guarantees: 

(i) In the ordinary course of business, the Company has agreed to 
indemnify its lenders under its credit facility against certain 
costs or losses resulting from changes in laws and regulations or 
from a default in repaying a borrowing. These indemnifications 
extend for the term of the credit facility and do not provide any 
limit on the maximum potential liability. Historically, the 
Company has not made any indemnification payments under such 
agreements. 

(ii) In the ordinary course of business, the Company has provided 
indemnification commitments to certain counterparties in matters 
such as real estate leasing transactions, director and officer 
indemnification agreements and certain purchases of fixed assets 
such as computer software. These indemnification agreements 
generally require the Company to compensate the counterparties 
for costs or losses resulting from legal action brought against 
the counterparties related to the actions of the Company. The 
terms of these indemnification agreements will vary based on the 
contract and generally do not provide any limit on the maximum 
potential liability. 

(iii) The Company sublet one location during fiscal 2004 and has 
provided the landlord with a guarantee in the event the subtenant 
defaults on its obligation to pay rent. The term of the guarantee 
is approximately 4.5 years and the Company's maximum exposure is 
$176. 

12. Commitments - (thousands of dollars): 

(a) Operating leases 

Minimum rentals for the next five fiscal years and thereafter, 
excluding rentals based upon revenue are as follows: 


/T/

2005                                                 $ 11,653
2006                                                 $ 10,958
2007                                                 $ 10,305
2008                                                  $ 8,857
2009                                                  $ 7,089
Thereafter                                           $ 13,227

/T/

(b) Letters of credit 

The Company had outstanding letters of credit in the amount of 
$6,804 (June 28, 2003 - $7,237) for imports of finished goods 
inventories to be received. 

13. Financial Instruments (thousands of dollars): 

The carrying value of the Company's accounts receivable and 
accounts payable and accrued liabilities approximates their fair 
value. 

The Company is exposed to credit risk on its accounts receivable 
from corporate customers through sales made by the direct sales 
division. Accounts receivable are net of applicable allowance for 
doubtful accounts, which is established based on the specific 
credit risks associated with each corporate customer and other 
relevant information. 

The Company purchases a significant portion of its leather and 
finished goods inventory from foreign vendors with payment terms 
in U.S. dollars. From time-to-time the Company may enter into 
foreign exchange forward contracts to manage foreign exchange 
risk associated with these purchases. As at June 26, 2004, the 
Company did not have any outstanding foreign exchange forward 
contracts to purchase U.S. dollars (June 28, 2003 - US$7,500). 

The Company's is exposed to interest rate risk based on the use 
of the credit facilities which bears interest at floating rates. 
For fiscal 2004, a +/-1% change in interest rates would change 
interest expense by +/- $52 (2003 +/- $49). 

14. Segmented information: 

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

FOR FURTHER INFORMATION PLEASE CONTACT:
Danier Leather Inc. (Investor Relations)
Jeffrey Wortsman
President and Chief Executive Officer
(416) 762-8175 ext. 302
(416) 762-7408 (FAX)
Email: leather@danier.com

or

Danier Leather Inc. (Investor Relations)
Bryan Tatoff
Senior Vice-President and Chief Financial Officer
(416) 762-8175 ext. 328
(416) 762-6072 (FAX)
Email: bryan@danier.com