Foremost Income Fund
TSX : FMO.UN

Foremost Income Fund

May 11, 2006 13:04 ET

Foremost Income Fund Reports Record First Quarter Revenues and Earnings

CALGARY, ALBERTA--(CCNMatthews - May 11, 2006) - Foremost Income Fund (TSX:FMO.UN)announces the financial results for the three months ended March 31, 2006.



For the THREE months
ended March 31,
2006 2005
------------------------------------------------------------------------
Revenue $ 63,257,000 $ 41,959,000
Cost of sales 46,663,000 33,391,000
---------------------------
16,594,000 8,568,000
---------------------------
Selling, general and administrative 5,296,000 3,275,000
Interest 221,000 307,000
Amortization 784,000 559,000
Foreign exchange gain (67,000) (51,000)
---------------------------
6,234,000 4,090,000
---------------------------
Income from operations 10,360,000 4,478,000
Gain on disposal of property,
plant and equipment 19,000 29,000
Net income $ 10,379,000 $ 4,507,000
---------------------------
---------------------------
Earnings per trust unit
Basic $ 0.54 $ 0.24
---------------------------
Diluted $ 0.54 $ 0.23
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DISTRIBUTABLE CASH (Unaudited)

For the THREE months
ended March 31,
2006 2005
------------------------------------------------------------------------
Net income $ 10,379,000 $ 4,507,000
Amortization 784,000 559,000
----------------------------
11,163,000 5,066,000
Less: sustaining capital expenditures 400,000 350,000
----------------------------
Distributable cash 10,763,000 4,716,000
----------------------------
----------------------------
Cash distributions paid 4,807,000 2,332,000
----------------------------
Distributable cash flow per trust unit $ 0.55 $ 0.25
----------------------------


Distributable cash is not a defined term under Canadian generally
accepted accounting principles. This amount is determined as net income
for the period with amortization, which is a non-cash expense, added
back. An estimate of normalized sustaining capital expenditures is then
deducted.

Management believes that distributable cash is a useful supplemental
measure of performance as it is used by other income funds. It provides
investors with an indication of the amount of cash the business has
generated during that period which could be available for distribution
to unitholders. Investors are cautioned, however, that distributable
cash should not be construed as an alternative to using net earnings
as a measure of profitability or the statement of cash flows. Further,
the Fund's method of calculating distributable cash may not be
comparable to similarly titled amounts reported by other issuers.

In the case of the Fund, the level of distributions is set periodically
with no direct relationship to the distributable cash during the period.


The Fund's continued growth strategy has produced record first quarter financial results.

Revenues for the quarter were $63.2 million, an increase of $21.2 million or 50.5% from the prior year's $42.0 million. Gross margin for the quarter ended was $16.6 million (26.2%) compared to $8.6 million (20.4%) last year. Net income for the quarter was $10.4 million compared to $4.5 million last year, an increase of 131%. Earnings per unit for the quarter increased to $0.54 from $0.24 last year. Cash flows from operations amounted to $11.3 million compared to $5.0 million last year. Distributable cash amounted to $10.6 million or $0.55 per unit, in comparison to $4.7 million and $0.25 per unit for the 2005 first quarter.

All business units are experiencing sizeable growth from the previous year and have backlogs into late 2006 with certain business units contracted through to the spring of 2007. Expansion efforts at Universal Industries and Peace Land will increase productive capacity with the mid-2006 addition of 40,000 and 30,000 square feet, respectively, of manufacturing space. Foremost Industries is adding approximately 30,000 square feet to its existing 65,000 square feet of manufacturing space, to improve capacity and production efficiencies of its coiled tubing rig product line. This additional space, expected to be completed by the third quarter of 2006, will also significantly reduce the outsourcing of sandblasting, painting and welding.

The Fund is experiencing unprecedented demand for its various product lines. This demand should be reflected in the forthcoming reporting periods by way of improved margins and net income. Furthermore, it is anticipated that the recent Maloney Industries acquisition will begin to contribute meaningful financial results. Given the strength of the oil and gas economy, the consistent growth of the Universal group of businesses, the return to improved margins by Foremost Industries, the expansion of manufacturing facilities and the accretive acquisitions made over the last several months, expectations for the 2006 fiscal year are very high.

The Fund is an unincorporated open end mutual fund trust conducting its business through Foremost Universal LP ("Universal") and Foremost Industries LP ("Foremost"). The Fund derives its operational income from both Universal and Foremost. Universal's overall business is focused on the oil and gas industry and contains the business units of: Universal Industries, a manufacturer of oil treating systems, shop and field storage tanks; Maloney Industries, a manufacturer of oil and gas treating equipment; Stettler Oil and Gas Equipment, a gas separator manufacturer; Wilco Industries; Corlac Industries; Peace Land Fabricating and Supply Ltd. and De-In Industries Ltd., all shop tank manufacturers. Foremost is comprised of the business units of Foremost Industries, a manufacturer of custom equipment used for the oil and gas, construction, water-well and mining industries; and Mobile Drilling, a U.S. based business which manufactures and sells rigs and parts for the geotechnical industry.



On behalf of the Trustees
Foremost Income Fund

(signed: J.T. Grenon)

James T. Grenon, Trustee


FORWARD-LOOKING STATEMENT

"Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward-looking statements involve a number of risks and uncertainties, including: the impact of general economic conditions, industry conditions, changes in laws and regulations, increased competition, fluctuations in commodity prices and foreign exchange and interest rates and stock market volatility. The Fund is not undertaking to update any forward-looking statements."


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