AUGUST 7, 2002 - 13:53 EDT

Danier Leather Reports Fourth Quarter And Year End
Results For Fiscal 2002-Annual Sales Increase 9%;
Strategic Investments Position Company For Long-Term


Danier Leather Inc. (TSX: DL) today announced its consolidated 
financial results for the fourth quarter and year ended June 29, 

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


                            Quarter Ended            Year Ended     
                       Jun. 29,     Jun. 30,    Jun. 29,    Jun. 30,
                           2002         2001        2002        2001
                     (13 weeks)   (14 weeks)  (52 weeks)  (53 weeks)
Sales                   $25,832      $25,407    $179,977    $165,418
EBITDA (Loss)            ($373)       ($102)     $23,684     $25,530
Net Earnings (Loss)      ($840)       ($312)     $10,725     $12,078
EPS Basic               ($0.12)      ($0.05)       $1.57       $1.75
EPS Diluted                 N/A          N/A       $1.53       $1.73



* Increased revenue 9% to a record $180 million despite 
challenging retail environment  

* Increased accessories sales by 20% during the year and 
accessories now represent 13% of total business.  Over the last 4 
years, accessories have grown at a compound annual rate of 59%. 

* Opened 6 new power centre stores, 1 new mall store, and a 
flagship street-front store in the heart of Toronto's shopping and
tourism district 

* Expanded 5 mall stores to accommodate growth in high-margin 

* Showcased products at the Oscars(, Juno, Screen Actors Guild and
MTV Video Music awards and the Sundance Film Festival 

* Strengthened management team with the addition of talented 
retail industry leaders 

* Grew the Danier brand and profile among consumers and in the 
fashion press  

* Completed 28th consecutive year of profitability 

"Last year we increased revenues, expanded our retail network, 
strengthened our management team and otherwise positioned the 
company for growth in the coming years. Fiscal 2002 was, above 
all, a year of strategic investments that we believe have already 
begun to return shareholder value," said Jeffrey Wortsman, 
President and CEO of Danier Leather.   

For the 52 weeks ended June 29, 2002, revenues rose 9% to $180 
million as compared with the 53-week period ended June 30, 2001. 
Net earnings were $10.7 million, or $1.57 per share ($1.53 
diluted), compared with net earnings of $12.1 million, or $1.75 
per share ($1.73 diluted) for the 53-week period ended June 30, 
2001. EBITDA (earnings before interest expense, income tax, 
depreciation and amortization), a measure used by management to 
assess operating performance, was $23.7 million or 13.2% of sales 
as compared with $25.5 million or 15.4% of sales in the prior 

The decrease in EBITDA and net earnings results primarily from a 
3.1% gross margin decline during the first half of the year as a 
more aggressive promotional strategy was adopted to drive sales 
amid weakness in the economy and the retail apparel sector. Gross 
margins have since returned to or exceeded traditional levels, 
reaching 49.2% in the fourth quarter of fiscal 2002 as compared 
with 44.4% for the fourth quarter last year. Full year gross 
margin was 48.8% as compared with 49.9% in fiscal 2001.  

Fourth quarter sales increased 1.7% to $25.8 million, despite one 
less week of sales as compared with the same quarter in fiscal 
2001. Net loss for the fourth quarter of fiscal 2002 was $840,000 
or $0.12 per share as compared with a loss of $312,000 or $0.05 
per share in the fourth quarter last year. As expected, the net 
loss increased due primarily to the higher overhead associated 
with operating 6 more stores than at the same time last year. 
Progressively larger fourth quarter losses are to be expected as 
the company grows and expands its store base.  

Comparable store sales for the fourth quarter decreased 5%. 
However, on a comparable week basis (13 weeks ended June 29, 2002 
versus 13 weeks ended June 30, 2001), comparable store sales rose 
5%. Comparable store sales rose 1% for the year.  

"While the year was down from a financial perspective, it was 
highly positive from an operational and strategic one. Our brand 
has attained new levels of awareness, store initiatives are 
showing strong results, and our accessories business continued to 
grow, accounting for 13% of total sales at year end. We expect our
fall marketing campaign, 'Feel the Difference', to really resonate
with our customers and are excited about the potential for our 
corporate sales division. I credit our management team and 
employees worldwide who did a superb job under very difficult 
market circumstances."  

Danier opened one mall store in the fourth quarter. In fiscal 
2003, the company plans to open one new mall store, five new power
centres, and expand two to five existing mall stores. A major 
milestone was reached in fiscal 2002 as annual sales from power 
centres accounted for more than half of total company sales (52%),
surpassing those of mall stores for the first time.    

"Our two U.S. mall stores in the New York area were 
disproportionately impacted by the events of late 2001. However, 
we continue to work hard on a program to develop this market with 
a strengthened management team."  

Looking ahead to fiscal 2003, sales are expected to increase from 
new and expanded stores while gross margins are expected to 
benefit from the high-quality inventory acquired at advantageous 
prices during the past year. However, these factors will be 
partially offset by the long-term, strategic investments in 
people, marketing, operations and real estate, which began last 
year and will continue into fiscal 2003.  Therefore, assuming 
consumer spending continues to recover, Danier's current 
expectation for fiscal 2003 is to approximate the level of 
earnings experienced in 2001. 

"We believe the worst is behind us. Our business is healthy and 
our strategy is sound. As consumer spending returns to normal, we 
expect to return to our traditional levels of productivity and 
profitability, and to provide shareholders with the strong results
they have come to expect from Danier," concluded Mr. Wortsman.  

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 89 shopping mall, street front, and power 
centre stores and online through its website, 

Certain statements in this press release contain forward-looking 
statements that deal with potential future circumstances and 
developments. Forward-looking statements involve risks and 
uncertainties, including, but not limited to, the weather and 
performance of the economies in the markets in which the Company 
operates, continued acceptance of the Company's products, 
competitive factors, the Company's ability to identify and 
interpret fashion trends, factors affecting its sourcing of skins 
in Europe, New Zealand and Asia, and other such risks as we may 
identify in this release or in other published documents.  
Accordingly, there is no certainty that the Company's plans will 
be achieved.   


DANIER LEATHER INC.                                                
(thousands of dollars, except per share amounts)                   
               For the 4th Quarter Ended     For the Year Ended  
                     June 29,   June 30,    June 29,    June 30, 
                         2002       2001        2002        2001 
                  (unaudited) (unaudited)                        
                    (13 weeks)  (14 weeks)  (52 weeks)   (53 weeks)
Revenue               $ 25,832    $ 25,407   $ 179,977    $ 165,418
Cost of sales
 (Note 7)               13,128      14,133      92,098       82,818
Gross profit            12,704      11,274      87,879       82,600
Selling general
 and administrative
 expenses (Note 7)      14,155      11,902      69,264       60,902
Earnings (loss)
 before interest
 and income taxes      (1,451)       (628)      18,615       21,698
Interest expense
 (income) - net            (5)         (2)         461          583
Earnings (loss)
 before income
 taxes                 (1,446)       (626)      18,154       21,115
Provision for
 income taxes
 (Note 8)                (606)       (314)       7,429        9,037
Net earnings
 (loss)                $ (840)     $ (312)    $ 10,725     $ 12,078
 beginning of
 period               $ 39,445    $ 28,192    $ 27,880     $ 17,209
Share purchases              -           -           -      (1,407)
 earnings, end of
 period                 38,605      27,880      38,605       27,880
Net earnings
 (loss) per share                                                  
     Basic             ($0.12)     ($0.05)       $1.57        $1.75
     Diluted               n/a         n/a       $1.53        $1.73

DANIER LEATHER INC.                                                 
CONSOLIDATED BALANCE SHEETS                                         
(thousands of dollars)                                              
                           June 29, 2002              June 30, 2001
Current Assets                                                      
 Cash                            $ 3,777                    $ 1,663
 Accounts receivable                 484                        664
 Inventories (Note 2)             38,662                     39,227
 Prepaid expenses                    603                        459
 Future income tax asset (Note 8)    628                        932
                               ---------                   --------
                                  44,154                     42,945
Other Assets                                                        
 Capital assets (Note 3)          31,199                     25,151
 Goodwill (Note 4)                   342                        342
                               ---------                  ---------
                                $ 75,695                   $ 68,438
                               ---------                  ---------
                               ---------                  ---------

Current Liabilities                                                 
 Bank overdraft (Note 5)             $ -                    $ 3,486
 Accounts payable and
  accrued liabilities             10,472                     10,582
 Income taxes payable                 80                      1,184
                                --------                   --------
                                  10,552                     15,252
Deferred lease inducements         1,837                      1,363
Future income tax 
 liability (Note 8)                  784                        531
                                --------                   --------
                                  13,173                     17,146
                                --------                   --------
SHAREHOLDERS' EQUITY                                               
Share capital (Note 6)            23,917                     23,412
Retained earnings                 38,605                     27,880
                                --------                  ---------
                                  62,522                     51,292
                                --------                  ---------
                                $ 75,695                   $ 68,438
                                --------                  ---------
                                --------                  ---------

DANIER LEATHER INC.                                                   
CONSOLIDATED STATEMENTS OF CASH FLOW                                   
(thousands of dollars)                                                
                 For the 4th Quarter Ended       For the Year Ended   
                    June 29,      June 30,     June 29,      June 30,
                        2002          2001         2002          2001
                 (unaudited)   (unaudited) 
                  (13 weeks)    (14 weeks)   (52 weeks)    (53 weeks)  
OPERATING ACTIVITIES                                                   
Net earnings (loss)  $ (840)       $ (312)     $ 10,725      $ 12,078
Items not
 affecting cash:                                                        
Amortization           1,078           526        5,069         3,832
Amortization of 
 deferred lease
 inducements           (157)          (38)        (273)         (153)
Loss on
 disposal of
 assets                  260           113          260           113
Future income
 taxes                   220         (169)          115          (53)
                         561           120       15,896        15,817
Net change in
 capital items
 (Note 9)            (2,996)       (3,274)        (613)       (7,728)
Cash flows
 activities          (2,435)       (3,154)       15,283         8,089
 voting shares
 issued                  463             -          505             -
Proceeds from
 inducements             294           238          747           284
 voting shares
 purchased                 -             -            -       (2,231)
Future income
 taxes related
 to the IPO              442           452          442           452
 under capital
 leases                    -             -            -         (740)
Cash flows
 from financing
 activities            1,199           690        1,694       (2,235)
 of capital
 assets              (2,755)       (2,625)     (11,377)       (8,452)
Cash flows
 activities          (2,755)       (2,625)     (11,377)       (8,452)

 in cash             (3,991)       (5,089)        5,600       (2,598)
 beginning of
 period                7,768         3,266      (1,823)           775
 end of period       $ 3,777     $ (1,823)      $ 3,777     $ (1,823)
Comprised of:                                                       
 Cash                  3,777         1,663        3,777         1,663
 Bank overdraft            -       (3,486)            -       (3,486)
                     $ 3,777     $ (1,823)      $ 3,777     $ (1,823)
 cash flow
Interest paid              -             9          472           639
Income taxes
 paid                  1,663         2,174        8,147        10,954




For the years ended June 29,2002 and June 30, 2001 

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 29, 2002, and comparably the 53-week period ended June 
30, 2001.  

(c) Cash: 

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

(d) Inventories: 

Inventories are valued at the lower of cost or market. Effective 
July 1, 2001, the Company changed its method of determining cost 
from the first-in, first-out basis to the weighted average cost 
method. This change, applied retroactively, resulted in no 
material changes to the consolidated balance sheets, statements of
income or cash flows in the current or preceding periods. For 
finished goods and work-in-process, market is defined as net 
realizable value; for raw materials, market is defined as 
replacement cost. 

(e) 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.  

(f) Goodwill: 

Goodwill represents the excess of the cost of acquisition over the
fair value of the net assets acquired. Effective July 1, 2001, the
Company adopted the CICA standard "Goodwill and Other Intangible 
Assets". Under the new standard, which can only be applied 
prospectively, goodwill is not amortized but is tested for 
impairment at least annually as well as on adoption of the new 
standard. Any impairment in the value of goodwill would be written
off against earnings. 

(g) 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.  

(h) Store opening costs: 

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

(i) Income taxes (thousands of dollars):  

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 

(j) 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.  

(k) 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 

(l) Financial instruments: 

The carrying value of the Company's financial assets and 
liabilities approximate their fair value. 

(m) 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. No compensation expense is 
recognized for this plan when stock or stock options are issued. 
Any consideration on the exercise of options is credited to share 

The Canadian Institute of Chartered Accountants issued CICA 
Handbook section 3870, "Stock-based Compensation and Other 
Stock-based Payments effective for fiscal years beginning after 
January 1, 2002. The new standard establishes standards for the 
recognition, measurement and disclosure of stock-based 
compensation to employees and non-employees. Options granted to 
employees will require disclosure of pro forma net earnings and 
pro forma earnings per share, as if the fair value based 
accounting method was used. Danier will adopt the new accounting 
standard for awards granted on or after June 30, 2002 and the 
effect on the financial results of the Company will depend on the 
number of options granted during the year. 

(n) 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. 

(o) Comparative figures: 

Certain of the June 30, 2001 comparative figures were reclassified
to conform with the current year's presentation. 

2. Inventories (thousands of dollars): 


                                         June 29, 2002   June 30, 2001
Raw materials                                  $ 5,210         $ 6,012
Work-in-process                                  2,430           3,065
Finished goods                                  31,022          30,150
                                              $ 38,662        $ 39,227

3. Capital Assets (thousands of dollars):

                                  June 29, 2002          June 30, 2001 
                               Accumulated  Net        Accumulated  Net
                          Cost  Amortiza-  Book    Cost Amortiza-  Book 
                                   tion   Value            tion   Value
Net Book Value        
Land                    $ 1,000     $ -  $1,000 $ 1,000     $ - $ 1,000
Building                  6,768     580   6,188   5,897     340   5,557
Furniture and
 equipment               10,953   5,529   5,424   9,043   4,423   4,620
 improvements            21,608   8,073  13,535  17,110   6,631  10,479
Computer hardware and
 software                 8,623   3,571   5,052   6,245   2,750   3,495
                        $48,952 $17,753 $31,199 $39,295 $14,144 $25,151


4. Goodwill (thousands of dollars): 

Goodwill of $342 (June 30, 2001 - $342) is stated at cost less 
accumulated amortization of $205 (June 30, 2001 - $205). 

5. Bank Overdraft: 

As at June 29, 2002, the Company had credit facilities available 
to a maximum amount of $53.0 million. The credit facilities 
consist of an operating facility for working capital and for 
general corporate purposes to a maximum amount of $50 million, 
bearing interest at prime plus 0.25% and a $3.0 million revolving 
capital expenditure loan facility bearing interest at prime plus 
0.75% which declines by $0.5 million per year beginning on June 
30, 2003. The operating facility is committed until October 31, 
2003 and the revolving capital expenditure loan facility expires 
on October 31, 2005. 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 amounts):

(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 24, 2000                  1,224,329                Nominal
Balance June 30, 2001                  1,224,329                Nominal
Balance June 29, 2002                  1,224,329                Nominal

Subordinate Voting Shares                                              
                                          Number          Consideration
Balance June 24, 2000                  5,808,000                $24,233
Shares purchased
 pursuant to normal
 course issuer bid                     (197,500)                  (824)
Shares issued upon
 exercising of stock
 options                                     500                      3
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


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 29, 2002           June 30, 2001
Earnings per share:                                                  
 Basic                                    $1.57                   $1.75
 Diluted                                  $1.53                   $1.73
Weighted average
 number of shares
 Basic                                6,849,788               6,899,216
 Diluted                              7,025,292               6,992,616
Shares outstanding                                                     
 Basic                                6,908,204               6,835,329
 Diluted                              7,163,435               6,957,603


(d) Normal course issuer bid 

In the year ended June 30, 2001, the Company purchased for 
cancellation 197,500 Subordinate Voting Shares at prevailing 
market prices for aggregate cash consideration of $2,231. The 
excess of the cash paid over the average paid-in value of the 
shares was charged to retained earnings. In the current fiscal 
year, there were no shares repurchased. 

(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 29, 2002 and 
June 30, 2001 and changes during the years ending on those dates 
is presented below: 


                                 June 29, 2002            June 30, 2001
Stock Options                Shares   Weighted-      Shares   Weighted-
                                       average                  average
                                      exercise                 exercise
                                         price                    price
Outstanding at
 beginning of year          561,000       $9.22      511,500      $9.10
Granted                      94,000      $12.01       51,000     $10.43
Exercised                  (72,875)       $6.92        (500)      $6.85
Forfeited                   (1,375)       $6.85      (1,000)     $10.40
Outstanding at end of
 year                       580,750       $9.97      561,000      $9.22
Options exercisable
 at end of year             462,250       $9.57      390,125      $9.12

The following table summarizes information about stock options 
outstanding as at June 29, 2002:

                       Options Outstanding        Options Exercisable 
                #     Weighted Average   Weighted    # of    Weighted 
Exercise   Outstanding  Remaining        Average     Shares   Average
Prices                  Contractual      Exercise Exercisable Exercise
                        Life             Price                  Price
$6.02          18,500   7.2 years         $6.02        16,000    $6.02
$6.85         154,750   6.0 years         $6.85       152,250    $6.85
$10.03         50,000   9.4 years        $10.03             -        -
$10.40         33,250   8.1 years        $10.40        25,000   $10.40
$10.50         15,000   8.3 years        $10.50         3,750   $10.50
$11.20         24,000   9.1 years        $11.20             -        -
$11.25        265,250   5.9 years        $11.25       265,250   $11.25
$17.94         20,000   9.8 years        $17.94             -        -
              580,750   6.7 years         $9.97       462,250    $9.57


7. Amortization (thousands of dollars): 

Amortization of $5,069 (June 30, 2001 - $3,832) 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 29, 2002          June 30, 2001
Amortization                              $ (810)               $ (589)
Share issuance costs                           -                    442
Deferred lease
 inducements                                 600                    459
Other                                         54                     89
                                          $ (156)                 $ 401
Future income tax asset                      628                    932
Future income tax
 liability                               $ (784)                $ (531)


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 29, 2002         June 30, 2001
Combined basic federal and 
 provincial average
 statutory rate                            40.4%                 43.0%
Manufacturing and
 processing credit                        (1.5%)                (2.0%)
Effect of foreign
 operating losses                          2.0%                   0.9%
Other                                      0.1%                   0.9%
                                          41.0%                  42.8%

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

                                                   For the Year Ended
                                 June 29, 2002           June 30, 2001
Accounts receivable                      $ 180                   $ 98
Inventories                                565                 (4,103)
Prepaid expenses                         (144)                   (262)
Accounts payable and
 accrued liabilities                     (110)                 (1,394)
Income taxes payable                   (1,104)                 (2,067)
                                       $ (613)               $ (7,728)

                                            For the 4th Quarter Ended
                                   June 29, 2002        June 30, 2001 
                                     (unaudited)           (unaudited)
Accounts receivable                      $ 1,543                 $ 502
Inventories                                (850)                   548
Prepaid expenses                           (193)                 (376)
Accounts payable and
 accrued liabilities                       (691)               (1,415)
Income taxes payable                     (2,805)               (2,533)
                                       $ (2,996)             $ (3,274)


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 Ontario Class 
Proceedings Act. 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 rescission of the 
plaintiff's purchase of shares made in May, 1998, or 
alternatively, that damages be paid equal to the diminution in 
value of the shares. In March, 2001, the Court dismissed the 
plaintiff's claim for rescission. 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 is expected to occur in mid 
2003. No amounts have been provided in the accounts of the Company
in respect of this matter. The Company strongly believes the suit 
is wholly without merit and will vigorously defend it. 

(b) Operating leases 

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


2003                $  9,949
2004                $  9,203
2005                $  8,480
2006                $  7,595
2007                $  6,995
Thereafter          $ 15,085


(c) Letters of credit  

The Company had outstanding letters of credit in the amount of 
$7,640 (June 30, 2001 - $11,230) for imports of raw materials and 
finished goods inventories to be received. 

11. 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.
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)