Foremost Income Fund
TSX : FMO.UN

Foremost Income Fund

May 13, 2005 09:30 ET

Foremost Reports Record First Quarter Revenue and Earnings Results Providing for a Strong Start to 2005

CALGARY, ALBERTA--(CCNMatthews - May 13, 2005) - Foremost Industries Income Fund (TSX:FMO.UN) (the "Fund") of Calgary today announces the financial results for the three months ended March 31, 2005 with comparative figures for the preceding period as follows:



For the three months ended March 31, 2005 2004

Revenue $ 41,959,000 $ 30,723,000
Cost of sales 33,391,000 24,147,000
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8,568,000 6,576,000
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Selling, general and administrative 3,275,000 2,237,000
Interest 307,000 95,000
Amortization 559,000 393,000
Foreign exchange loss (gain) (51,000) 20,000
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4,090,000 2,745,000
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Income from operations 4,478,000 3,831,000
Gain (loss) on disposal of property,
plant and equipment 29,000 (15,000)
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Net income $ 4,507,000 $ 3,816,000
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Earnings per trust unit
Basic $ 0.72 $ 0.62
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Diluted $ 0.70 $ 0.60
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Distributable Cash
Net income $ 4,507,000 $ 3,816,000
Amortization 559,000 393,000
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5,066,000 4,209,000
Less: sustaining capital expenditures 350,000 250,000
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Distributable cash $ 4,716,000 $ 3,959,000
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Cash distributions paid $ 2,332,000 $ 1,858,000
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Distributable cash flow per trust unit $ 0.76 $ 0.64
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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 recorded strong results for another consecutive quarter. Revenues for the period were $42.0 million compared to $30.7 million for the same period last year. Net income before cash distributions amounted to $4.5 million an increase from $3.8 million last year. Earnings per unit increased to $0.72 from $0.62 per trust unit. Cash flows from operations were $5.0 million compared to $4.2 million last year. In addition, distributable cash amounted to $4.7 million or $0.76 per trust unit as compared to $4.0 million and $0.64 per trust unit for the 2004 first quarter. All of these results are indicators of the continued strength of the oil and gas sector. As mentioned in the annual report issued in March 2005, all business units are experiencing growth from the previous year. The single largest issue being faced by the Fund and its business units is the ability to meet our customers' demands. Shop capacity is in short supply as well as skilled labour.

Certain business units are currently adding production facilities and other units are reviewing their strategic needs for the same to offset this demand and to take advantage of these market opportunities.

The forecast for the remainder of the year looks extremely promising. Generally, the first quarter results for the majority of the Fund's business units are traditionally slower than the remainder of the year. First quarter results are usually hindered by inclement weather conditions, including spring break-up, and newly initiated capital budgets of our customer base. As mentioned in previous reports, all business units of the Fund have substantial order backlogs. During the first quarter of 2005, order backlogs experienced a net growth from the year end. Quarterly revenues, margins and earnings should improve over the course of the year.

The Fund is an unincorporated open end mutual fund trust conducting its business through Foremost Industries Limited Partnership ("Foremost"), and Foremost Universal Limited Partnership ("Universal"). The Fund derives its operational income from both Foremost and Universal. Foremost is comprised of the business units of Foremost Industries Inc., a manufacturer of custom equipment used for the oil and gas, construction and waterwell industries; and Mobile Drilling Company Inc. ("Mobile"), a U.S. based entity which manufactures and sells parts for the geotechnical industry. Universal's overall business is focused on the oil and gas industry and contains the business units of: Universal Industries ("Universal Industries"), a manufacturer of oil treating systems, shop and field storage tanks; Stettler Oil and Gas Equipment ("Stettler"), a gas separator manufacturer; Wilco Industries Ltd. ("Wilco"), a shop tank manufacturer; and Corlac Industries ("Corlac") a shop and field tank manufacturer.



On behalf of the Trustees
Foremost Industries Income Fund

(signed: James T. Grenon)

James T. Grenon, Trustee


Forward Looking Statement

"Certain statements in this press 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 press release, such statements use words such as "estimate", "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 press 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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