AUGUST 7, 2003 - 06:30 ET

Danier Leather Reports Fourth Quarter And Year-End
Results For Fiscal 2003

TORONTO, ONTARIO--Danier Leather Inc. (TSX: DL) today announced 
its consolidated financial results for the fourth quarter and 52 
weeks ended June 28, 2003. 


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

                             13 Weeks Ended          52 Weeks Ended   
                          June 28,  June 29,     June 28,     June 29,
                             2003      2002         2003         2002
Sales                     $24,763   $25,832     $175,487     $179,977
EBITDA (loss)            ($4,893)    ($373)      $15,305      $23,684
Net Earnings (loss)      ($3,465)    ($840)       $5,394      $10,725
EPS - Basic (loss)        ($0.50)   ($0.12)        $0.78        $1.57
EPS Diluted                   n/a       n/a        $0.76        $1.53



- Completed 29th consecutive year of profitability in a very 
challenging market 

- Opened three new mall stores and six new power centre 
locations, including a third U.S. mall store in the Garden State 
Plaza in Paramus, New Jersey 

- Increased sales of higher-margin accessories by 22% to $28 
million or 16% of total sales 

- Showcased products at the Oscars, Grammy, Juno and MTV Video 
Music awards 

- Launched corporate sales division to capitalize on large 
business-to-business market 

"Fiscal 2003 produced one of the most difficult retail 
environments in decades," said Jeffrey Wortsman, President and 
CEO of Danier Leather. "The sluggish economy impacted the retail 
apparel industry. As the year progressed, we faced further 
business challenges including the war in Iraq, an outbreak of 
SARS and its related Canadian travel advisory, as well as supply 
chain interruptions caused by the West Coast lockout and rail 
disruptions. While difficult to quantify each in absolute 
dollars, these events no doubt worsened an already difficult 
business situation, leading to higher than expected costs and 
lower store traffic and sales."  

Danier maintained a strong financial position at year-end with 
approximately $7.3 million of cash, no long-term debt and working 
capital of $36.3 million.  Inventory of $37.0 million was lower 
than last year's level of $38.7 million despite nine additional 
stores in operation versus last year.  Book value per share 
increased to $9.83 from $9.05 in the prior year. 

Revenue for fiscal 2003 fell 2% to $175.5 million compared with 
$180.0 million in the prior year.  Comparable store sales 
decreased 7% compared to a 1% increase in the prior year, marking 
Danier's first annual comparable store sales decrease in 5 years. 
The comparable sales decrease was offset to some degree by 
additional revenues from nine new stores and three expanded 
shopping mall stores. EBITDA(1) decreased to $15.3 million from 
$23.7 million in fiscal 2002. Net earnings decreased to $5.4 
million, or $0.78 per share ($0.76 diluted), as compared with 
$10.7 million, or $1.57 per share ($1.53 diluted).  

Revenue for the fourth quarter decreased 4% to $24.8 million on a 
comparable store sales decline of 12%. EBITDA(1) loss for the 
fourth quarter was $4.9 million versus a loss of $373,000 in the 
same period last year. Net loss for the quarter was $3.5 million 
or $0.50 per share, as compared with $840,000, or $0.12 per share 
for the same period last year.  

The decrease in net earnings for the fourth quarter and full year 
is mainly attributable to a decline in overall sales as well as 
significantly higher selling, general and administrative (SG&A) 
expenses. SG&A increased by 12% to $77.4 million in fiscal 2003. 
The increase is due to strategic investments and expenses 
associated with Danier's expansion, the operation of nine 
additional stores, as well as head office staff additions, higher 
amortization costs and legal fees. SG&A for the fourth quarter of 
2003 increased to $17.2 million from $14.2 million in the fourth 
quarter of fiscal 2002.  

Danier's innovative line of leather and suede accessories 
continued to perform strongly in fiscal 2003, with sales 
increasing 22% to $28 million and representing 16% of total sales 
compared with 13% of total sales in fiscal 2002. Sales of 
accessories have expanded at a compounded annual growth rate of 
51% over the last five years.   

Gross profit in fiscal 2003 fell 1% to $86.7 million, however 
gross profit margins rose to 49.4% from 48.8% last year.  Gross 
margin in the first half of the year benefited from advantageous 
purchases of finished goods while deeper discounting was 
undertaken in the second half of the year in response to weak 
consumer confidence and economic uncertainty. Fourth quarter 
gross margins decreased to 46.4% compared with 49.2% for the same 
period last year, reflecting higher product costs and deeper 

During the fourth quarter, a new mall store was opened at the 
Garden State Plaza in Paramus, New Jersey, bringing Danier's 
total store count to 98. With the recent opening of one shopping 
mall store and one power centre location during the first quarter 
of 2004, Danier has reached the 100-store milestone. Plans for 
the remainder of fiscal 2004 include the addition of one new 
shopping mall store and one new power centre location, all in 

Danier's brand and profile continue to grow in popularity as the 
company's products were again present at several key industry and 
fashion events throughout the year, including the 75th Annual 
Academy Awards, as well as the Grammy, Juno and MTV Video Music 


"Our key priority for fiscal 2004 will be a heightened focus on 
execution," added Mr. Wortsman. This means developing stronger 
and closer relationships with our customers, making the shopping 
experience more enjoyable, delivering increasingly exciting 
fashions, and maximizing the productivity of our existing stores 
while improving processes across the company. We will also 
continue to exploit our vertical integration and financial 
strength, which provide us with a high degree of operational 
flexibility and a competitive advantage in the marketplace."  

"While there remain factors outside our control, we believe that 
tighter execution and a gradual improvement in the operating 
environment will bring about improved performance for Danier and 
its shareholders in 2004."  

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 100 shopping mall, street-front, and power 
centre stores, or through its corporate sales division and online 
through its website, 

(1)EBITDA refers to earnings before interest expense, income tax, 
depreciation and amortization, and is a measure used by 
management to assess operating performance. EBITDA is a non-GAAP 
earnings measure and does not have a standardized meaning.  It is 
therefore unlikely to be comparable to similar measures presented 
by other issuers. 

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, continued growth of the leather 
apparel industry, and competition and other associated risks with 
Danier's business.  For an expanded discussion of such 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 9:00 AM Eastern Time to discuss the 
results. Please dial 416-695-9720 in the Toronto area or 
1-888-280-8349 (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 or at  


DANIER LEATHER INC.                                         
(thousands of dollars, except per share amounts)                        

                               For the 4th Quarter    For the Year Ended
                               June 28,    June 29,   June 28,  June 29,
                                 2003        2002       2003      2002
                              (unaudited)  (unaudited)                  

Revenue                         $ 24,763   $ 25,832 $ 175,487  $ 179,977
Cost of sales (Note 7)            13,274     13,128    88,788     92,098

Gross profit                      11,489     12,704    86,699     87,879

Selling general and
 administrative expenses (Note 7) 17,182     14,155    77,390     69,264

Earnings (loss) before interest 
 and income taxes                (5,693)    (1,451)     9,309     18,615
Interest expense (income) -
 net                                (47)        (5)        66        461

Earnings (loss) before income
 taxes                           (5,646)    (1,446)     9,243     18,154
Provision for income taxes
 (Note 8)                        (2,181)      (606)     3,849      7,429
Net earnings (loss)            $ (3,465)    $ (840)   $ 5,394   $ 10,725
Retained earnings, beginning
 of period                      $ 47,464   $ 39,445  $ 38,605   $ 27,880
Retained earnings, end of
 period                         $ 43,999   $ 38,605  $ 43,999   $ 38,605

Net earnings (loss) per share
 (Notes 1(k) & 6(c))                                                    
  Basic                          ($0.50)    ($0.12)     $0.78      $1.57
  Diluted                            n/a        n/a     $0.76      $1.53

DANIER LEATHER INC.                                         
CONSOLIDATED BALANCE SHEETS                                         
(thousands of dollars)                                         
                                           June 28,            June 29,
                                            2003                2002
Current Assets                                                         
 Cash                                       $ 7,254             $ 3,777
 Accounts receivable                            600                 484
 Income taxes recoverable                        83                   -
 Inventories (Note 2)                        37,029              38,662
 Prepaid expenses                               889                 603
 Future income tax asset (Note 8)             1,044                 628
                                             46,899              44,154
Other Assets                                                           
 Capital assets (Note 3)                     34,246              31,199
 Goodwill (Note 4)                              342                 342
                                           $ 81,487            $ 75,695
Current Liabilities                                                    
 Accounts payable and accrued liabilities  $ 10,559            $ 10,472
 Income taxes payable                             -                  80
                                             10,559              10,552
Deferred lease inducements                    2,238               1,837
Future income tax liability (Note 8)            696                 784
                                             13,493              13,173
SHAREHOLDERS' EQUITY                                                   
 Share capital (Note 6)                      23,995              23,917
 Retained earnings                           43,999              38,605
                                             67,994              62,522
                                           $ 81,487            $ 75,695

DANIER LEATHER INC.                                         
CONSOLIDATED STATEMENTS OF CASH FLOW                                   
(thousands of dollars)                                         
                                   For the 4th        For the Year   
                                  Quarter Ended           Ended
                                June 28,   June 29,  June 28,  June 29,
                                 2003        2002      2003     2002
                             (unaudited)  (unaudited)                  
OPERATING ACTIVITIES                                                   
 Net earnings (loss)           $ (3,465)   $ (840)   $ 5,394   $ 10,725
 Items not affecting cash:                                             
 Amortization                        800     1,078     5,996      5,069
 Amortization of deferred lease
  inducements                      (140)     (157)     (347)      (273)
 Loss on disposal of capital
  assets                             633       260       633        260
 Future income taxes               (468)       220     (504)        115
                                 (2,640)       561    11,172     15,896
 Net change in non-cash working
  capital items (Note 9)           3,162   (2,996)     1,155      (613)
Cash flows from operating
 activities                          522   (2,435)    12,327     15,283
FINANCING ACTIVITIES                                                   
 Subordinate voting shares issued      -       463        78        505
 Proceeds from lease inducements     429       294       748        747
 Future income taxes related to
  the IPO                              -       442         -        442
Cash flows from financing
 activities                          429     1,199       826      1,694
INVESTING ACTIVITIES                                                   
 Acquisition of capital assets   (2,001)   (2,755)   (9,676)   (11,377)
Cash flows from investing
 activities                      (2,001)   (2,755)   (9,676)   (11,377)
Increase/(decrease) in cash      (1,050)   (3,991)     3,477      5,600
Cash and bank overdraft,
 beginning of period               8,304     7,768     3,777    (1,823)
Cash, end of period              $ 7,254   $ 3,777   $ 7,254    $ 3,777
Supplementary cash flow
  Interest paid                        -         -       219        472
  Income taxes paid                    -     1,663     5,241      8,147

                        DANIER LEATHER INC.
           For the years ended June 28, 2003 and June 29, 2002


1. Significant Accounting Policies: 

The consolidated financial statements have been prepared in 
accordance with Canadian generally accepted accounting principles 

(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 28, 2003, and comparably the 52-week period ended June 
29, 2002.  

(c) Revenue recognition: 

Revenue includes sales to customers through stores operated by 
the Company and sales to corporate customers through the 
Company's direct sale 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 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: 


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


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 related leasehold 
improvements are amortized to the date of lease termination.   

(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 

(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.  The amendments to Foreign Currency Translation, of the 
Canadian Institute of Chartered Accountants, "CICA", Handbook 
Section 1650, applicable June 30, 2002, did not have an impact on 
the Company's operations. 

(m) Financial instruments: 

The Company utilizes derivative financial instruments in the 
management of its foreign currency exposure.  In April 2003, 
foreign exchange contracts in U.S. dollars were entered into with 
large Canadian chartered banks to hedge a portion of future 
inventory purchases that are denominated in U.S. dollars. Gains 
and losses on these contracts will be recognized as an adjustment 
of cost when the inventory purchase is recorded.  Derivative 
financial instruments are not used for trading purposes. 

(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.   

On June 30, 2002, the Company adopted prospectively the Canadian 
Institute of Chartered Accountants (CICA) Handbook section 3870 
"Stock-based Compensation and Other Stock-based Payments".  The 
new standard establishes standards for the recognition, 
measurement and disclosure of stock-based compensation to 
employees.  Under the new standard, as in prior periods, the 
Company uses settlement accounting to account for its stock 
option plan.  Consideration paid by employees and directors, 
which represents the exercise price on the exercise of stock 
options, is recorded as share capital.  For options granted to 
employees, full disclosure is provided for pro forma net earnings 
and pro forma earnings per share, using the fair value based 
accounting method (see 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.  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. 


2. Inventories (thousands of dollars):

                             June 28, 2003     June 29, 2002
Raw materials                     $  4,970          $  5,210
Work-in-process                      2,228             2,430
Finished goods                      29,831            31,022
                                  $ 37,029          $ 38,662

3. Capital Assets  (thousands of dollars):

                      June 28, 2003                 June 29, 2002     
                                     Net                             Net
                     Accumulated     Book            Accumulated    Book
               Cost  Amortization    Value    Cost   Amortization  Value
Land          $ 1,000   $     -    $ 1,000   $ 1,000   $     -   $ 1,000
Building        6,988       832      6,156     6,768       580     6,188
 improvements  26,492     9,899     16,593    21,608     8,073    13,535
Furniture and
 equipment     11,918     6,029      5,889    10,953     5,529     5,424
 and software   9,225     4,617      4,608     8,623     3,571     5,052
              $55,623   $21,377    $34,246  $ 48,952  $ 17,753  $ 31,199


4. Goodwill (thousands of dollars): 

Goodwill of $342 (June 29, 2002 - $342) is stated at cost less 
accumulated amortization of $205 (June 29, 2002 - $205). 

5. Bank Overdraft: 

As at June 28, 2003, the Company had credit facilities available 
to a maximum amount of $75.0 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 $10.0 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, 2003 and June 30, 2004 and by $2.0 
million on each of June 30, 2005 and June 30, 2006 and by $4.0 
million on June 30, 2007.  The operating facility is committed 
until October 31, 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 

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


(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 30, 2001                      1,224,329         Nominal
Balance June 29, 2002                      1,224,329         Nominal
Balance June 28, 2003                      1,224,329         Nominal

Subordinate Voting Shares                                         
                                           Number         Consideration
Balance June 30, 2001                      5,611,000         $23,412
 Shares issued upon exercising
  of stock options                            72,875             505
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


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.  


(c) Earnings per share

                                        June 28, 2003     June 29, 2002
Earnings per share:                                         
  Basic                                        $0.78           $1.57
  Diluted                                      $0.76           $1.53
Weighted average number of
 shares outstanding                                                    
  Basic                                    6,913,636       6,849,788
  Diluted                                  7,052,865       7,025,292
Shares outstanding                                                  
  Basic                                    6,919,554       6,908,204
  Diluted                                  6,975,677       7,163,435


(d) Normal course issuer bid 

During the years ended June 28, 2003 and June 29, 2002 no shares 
were repurchased under the Normal Course Issuer Bid. 

(e) Stock option plan 

The Company has reserved 1,025,000 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 28, 2003 and June 29, 2002 and changes during the years 
ending on those dates is presented below: 


                         June 28, 2003            June 29, 2002   
                                     Weighted-               Weighted-
                                     average                 average
Stock Options            Shares   exercise price  Shares  exercise price
Outstanding at beginning
 of year                580,750          $9.97    561,000         $9.22
Granted                 186,000         $14.93     94,000        $12.01
Exercised              (11,350)          $6.85   (72,875)         $6.92
Forfeited              (25,000)         $13.57    (1,375)         $6.85
Outstanding at end
 of year                730,400         $11.16    580,750         $9.97
Options exercisable
 at end of year         501,400         $9.80     462,250         $9.57

The following table summarizes information about stock options
outstanding as at June 28, 2003:

                     Options Outstanding        Options Exercisable     
                        Average       Weighted                  Weighted
                       Remaining       Average                  Average
Exercise      #        Contractual    Exercise    # of Shares   Exercise
Prices    Outstanding  Life            Price      Exercisable    Price
 $6.02       18,500      6.2 years      $6.02       17,250       $6.02
 $6.85      143,400      5.0 years      $6.85      142,150       $6.85
$10.03       50,000      8.4 years     $10.03       12,500      $10.03
$10.40       33,250      7.1 years     $10.40       27,750      $10.40
$10.50       15,000      7.3 years     $10.50        7,500      $10.50
$11.20       24,000      8.1 years     $11.20       24,000      $11.20
$11.25      265,250      4.9 years     $11.25      265,250      $11.25
$13.57       50,000      9.4 years     $13.57            -           -
$15.85      111,000      9.1 years     $15.85            -           -
$17.94       20,000      8.8 years     $17.94        5,000      $17.94
            730,400      6.5 years     $11.16      501,400       $9.80


Effective June 30, 2002, the Company adopted prospectively the 
new CICA standard for Stock-based Compensation.  Under the new 
standard, as in prior periods, the Company uses settlement 
accounting to account for its stock option plan.  Consideration 
paid by employees and directors, which represents the exercise 
price on the exercise of stock options, is recorded as share 

During the year ended June 28, 2003, the Company granted 161,000 
stock options (net of 25,000 forfeited options) with exercise 
prices of $13.57 and $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 would have been reduced to the 
pro forma amounts indicated in the following table:   


                          Fourth Quarter Ended        Year Ended
                            June 28, 2003            June 28, 2003    
                       As Reported   Pro forma   As Reported   Pro forma
Net earnings (loss)      ($3,465)    ($3,622)        $5,394      $4,796
Basic earnings (loss)
 per share                ($0.50)     ($0.52)         $0.78       $0.69
Diluted earnings per share    n/a         n/a         $0.76       $0.68


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

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: 


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


The weighted average fair value of stock options granted during 
the year ended June 28, 2003 was $10.62. 

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 model requires the use of subjective 
assumptions including the expected stock price volatility.  
Because the Company's stock option plan has 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 of $5,996 (June 29, 2002 - $5,069) is included in 
cost of sales and selling, general and administrative expenses. 

8. Income taxes (thousands of dollars): 


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

                                       June 28, 2003      June 29, 2002
Amortization                                $ (696)             $ (810)
Deferred lease inducements                      676                 600
Other                                           368                  54
                                            $   348             $ (156)
Future income tax asset                       1,044                 628
Future income tax liability                 $ (696)             $ (784)


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: 

                                      June 28, 2003       June 29, 2002
Combined basic federal and provincial
 average statutory rate                       37.6%               40.4%
Manufacturing and processing credit          (0.9%)              (1.5%)
Effect of foreign operating losses             3.9%                2.0%
Other                                          1.0%                0.1%
                                              41.6%               41.0%

9. Changes in non-cash operating working capital items (thousands of

                                                 For the Year Ended   
                                         June 28, 2003    June 29, 2002
Accounts receivable                            $ (116)         $    180
Inventories                                      1,633              565
Prepaid expenses                                 (286)            (144)
Accounts payable and accrued liabilities            87            (110)
Income taxes payable                             (163)          (1,104)
                                               $ 1,155          $ (613)

                                            For the 4th Quarter Ended  
                                         June 28, 2003    June 29, 2002
                                          (unaudited)      (unaudited) 
Accounts receivable                         $   784           $   1,543
Inventories                                   4,208               (850)
Prepaid expenses                              (108)               (193)
Accounts payable and accrued liabilities      (316)               (691)
Income taxes payable                        (1,406)             (2,805)
                                            $ 3,162           $ (2,996)


10. Commitments & Contingencies (thousands of dollars): 

(a) Legal proceedings  

In the course of its business, the Company from time to time 
becomes involved in various claims and legal proceedings.  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).  The Claim relates to subordinate 
voting shares purchased at the time of the Company's initial 
public offering in May 1998.  Essentially, the suit seeks damages 
be paid equal to the alleged diminution in value of the shares.  
The plaintiff also brought a motion to certify the action as a 
class action on behalf of investors who purchased shares pursuant 
to the initial public offering.  A motion to certify the action 
as a class action was heard in July, 2001, and in October, 2001, 
the motion for certification was granted.  The trial commenced in 
May 2003 and is currently underway.  No amounts have been 
provided in the accounts of the Company in respect of any of the 
amounts being claimed in this matter.  The Company strongly 
believes the suit is wholly without merit and continues to 
vigorously defend it. In that regard, the Company has expensed 
and accrued legal and professional fees of approximately $2,700 
during the fourth quarter of 2003 of which approximately $1,500 
relates to legal and professional fees actually incurred during 
fiscal 2003 and approximately $1,200 relates to future legal and 
professional fees in defence of this action. 

(b) Operating leases 

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


2004                                                        $11,509
2005                                                        $10,739
2006                                                        $ 9,892
2007                                                        $ 9,318
2008                                                        $ 7,838
Thereafter                                                  $16,960


(c) Letters of credit  

The Company had outstanding letters of credit in the amount of 
$7,237 (June 29, 2002 - $7,640) for imports of finished goods 
inventories to be received. 

11. Financial Instruments (thousands of dollars): 

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

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

The Company purchases a significant portion of its finished goods 
inventory from foreign vendors with payment terms in U.S. 
dollars.  To manage foreign exchange risk and fix exchange rates 
associated with these purchases, in April 2003, the Company 
hedged approximately 33% of the anticipated finished goods 
purchases for the months from May 2003 to December 2003.  As at 
June 28, 2003, the Company had foreign exchange forward contracts 
to purchase U.S. $7,500 ($10,973) at an average rate of US$1.00 = 
$1.4631 maturing up to December 2003.  Based on the closing rate 
of the U.S. dollar as at June 27, 2003, the fair value of the 
Company's foreign exchange forward contracts as disclosed above 
is $10,097 resulting in an unrealized loss of $876. 

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 2003, a +/-1% change in interest rates would change 
interest expense by +/- $49 (2002 +/- $89). 

12. 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 

Danier Leather Inc.
Investor Relations Contact: Jeffrey Wortsman
President and Chief Executive Officer
(416) 762-8175 ext. 302
(416) 762-7408 (FAX)


Danier Leather Inc.
Bryan Tatoff
Senior Vice-President and Chief Financial Officer
(416) 762-8175 ext. 328
(416) 762-7408 (FAX)