Foremost Income Fund
TSX : FMO.UN

Foremost Income Fund

May 14, 2009 13:15 ET

Foremost Income Fund Reports First Quarter Revenues and Earnings

CALGARY, ALBERTA--(Marketwire - May 14, 2009) - Foremost Income Fund (TSX:FMO.UN) announces the financial results for the three months ended
March 31, 2009.



CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME AND ACCUMULATED EARNINGS for the THREE months
(000's, except per trust unit amounts) (Unaudited) ended March 31,
2009 2008
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Revenue $ 38,922 $ 49,857
Cost of sales 29,417 37,560
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9,505 12,297
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Selling, general and administrative 4,606 5,522
Interest 5 152
Amortization 1,125 1,252
Foreign exchange gain (80) (287)
Unrealized loss on forward exchange contracts 204 -
Gain on disposal of property, plant and equipment (57) (2,329)
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5,803 4,310
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Income from continuing operations before
income taxes 3,702 7,987
Future income tax provision - -
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Income from continuing operations 3,702 7,987
Discontinued operations - 277
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Net income and comprehensive income 3,702 8,264
Accumulated earnings, beginning of period 90,422 80,908
Premium on repurchase of trust units - (2,019)
Distributions to unitholders (2,141) (5,287)
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Accumulated earnings, end of period $ 91,983 $ 81,866
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Earnings per trust unit from
continuing operations
Basic $ 0.17 $ 0.38
Diluted $ 0.17 $ 0.37
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Earnings per trust unit
Basic $ 0.17 $ 0.39
Diluted $ 0.17 $ 0.39
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CONSOLIDATED BALANCE SHEETS
(000's) (Unaudited)

As at: March 31, December 31, March 31,
2009 2008 2008
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Assets
Current assets
Cash $ 9,198 $ 497 $ -
Accounts receivable 30,738 42,118 38,142
Inventories 51,884 56,448 62,474
Prepaid expenses 1,235 1,186 943
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93,055 100,249 101,559
Property, plant and equipment 52,571 53,687 55,750
Future income taxes 19,485 19,485 19,485
Goodwill and intangibles 15,125 15,176 15,090
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$ 180,236 $ 188,597 $ 191,884
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Liabilities and Unitholders' Equity
Current liabilities
Bank indebtedness $ - $ - $ 13,430
Accounts payable and accrued
liabilities 14,862 22,484 21,068
Deferred revenue 10,070 12,449 13,100
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24,932 34,933 47,598
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Unitholders' equity
Unitholders' capital 62,115 62,115 61,027
Contributed surplus 1,206 1,127 1,393
Accumulated earnings 91,983 90,422 81,866
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155,304 153,664 144,286
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$ 180,236 $ 188,597 $ 191,884
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Compared with Q1-2008, reduced levels of oilsands activity, uncertain commodity markets and continued weakness in North American natural gas drilling activity resulted in lower Q1-2009 revenues. The Q1-2009 product mix resulted in a similar gross profit percentage to Q1-2008. Selling, general and administrative expenses decreased reflecting late 2008 cost cutting initiatives and reduced amounts of accrued bonuses. Interest expense decreased as the Fund generated $10.7 million in cash from operating activities during Q1-2009 and used $0.3 million to repay all bank borrowings. There were no significant disposals of property, plant and equipment in Q1-2009 unlike Q1-2008 where the sale of property, plant and equipment resulted in proceeds of $3.9 million and a gain on disposal of $2.3 million. Q1-2008 results have also been adjusted to report Mobile's net income of $0.3 million as discontinued operations. Q1-2009 income from continuing operations and net income decreased as a result of lower revenues and no significant gains from Q1-2009 disposals of property, plant and equipment.

Q1-2009 consolidated revenues were $38.9 million compared with $49.9 million in Q1-2008. Consolidated Q1-2009 gross profit was $9.5 million (24.4%) versus $12.3 million (24.7%) for Q1-2008. Q1-2009 income from continuing operations was $3.7 million compared with $8.0 million in Q1-2008. Net income for Q1-2009 was $3.7 million versus $8.3 million in Q1-2008. Q1-2009 basic earnings per trust unit were $0.17 compared with $0.39 for Q1-2008. Funds flow from operations decreased $1.9 million to $5.1 million for Q1-2009 as a result of lower earnings. Cash generated from Q1-2009 changes in non-cash working capital items amounted to $5.7 million versus $1.3 million in Q1-2008. Q1-2009 capital expenditures to maintain productive capacity were $0.1 million compared to $0.7 million in Q1-2008. No trust units were repurchased or issued during Q1-2009 whereas in Q1-2008 there were no trust units issued but $3.0 million was used to repurchase trust units. All paid in cash, Q1-2009 trust unit distributions were $2.1 million or $0.10 per trust unit and Q1-2008 trust unit distributions were $5.3 million or $0.25 per trust unit. The combination of operating, investing and financing activities resulted in a Q1-2009 increase in cash of $8.4 million versus $0.5 million for Q1-2008.

As discussed in the 2008 annual report, Q1-2009 financial results reflect the Fund's expectations for continued weakness in its core markets and its response to these market conditions. The Fund continues to believe that this weakness will persist throughout 2009. Accordingly, the Fund will maintain its focus on cost control, operational efficiency, critical capital expenditures and trust unit distributions to maintain its balance sheet strength and cash position. As part of this focus, the Fund has temporarily shut down its Wilco manufacturing facility, reduced discretionary operating costs and further realigned manpower. These efforts are necessary to ensure the Fund can respond to any improvement in its core markets and continue the pursuit of accretive acquisitions.

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 medium- to large-scale oil and gas process treating equipment; Stettler Universal Limited Partnership, 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 unit of Foremost Industries, a manufacturer of custom equipment used for the oil and gas, construction, water-well and mining industries.

On behalf of the Trustees

Foremost Income Fund

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.

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