Foremost Income Fund
TSX : FMO.UN

Foremost Income Fund

March 30, 2009 13:00 ET

Foremost Income Fund Reports Revenues and Earnings for Fourth Quarter and Fiscal 2008

CALGARY, ALBERTA--(Marketwire - March 30, 2009) - Foremost Income Fund (TSX:FMO.UN) announces financial results for the fourth quarter and year ended December 31, 2008.



Quarter ended December 31,
(000's, except per trust unit and trust unit amounts) 2008 2007
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Revenue $ 57,161 $ 53,654
Cost of sales 44,924 37,876
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12,237 15,778
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Selling, general and administrative 5,099 5,410
Interest 98 285
Amortization 1,268 1,298
Foreign exchange gain (676) (63)
Gain on disposal of property, plant and equipment (3) (322)
Unrealized gain on forward exchange contracts (264) -
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5,522 6,608
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Income from continuing operations before income taxes 6,715 9,170
Future income tax recovery - -
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Income from continuing operations 6,715 9,170
Discontinued operations 1,861 460
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Net income and comprehensive income $ 8,576 $ 9,630
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Earnings per trust unit from continuing operations,
basic $ 0.31 $ 0.44
Earnings per trust unit from continuing operations,
diluted $ 0.31 $ 0.43
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Earnings per trust unit, basic $ 0.40 $ 0.46
Earnings per trust unit, diluted $ 0.40 $ 0.45
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Years ended December 31,
(000's, except for per trust unit amounts) 2008 2007
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Revenue $ 217,279 $ 223,674
Cost of sales 162,221 160,972
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55,058 62,702
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Selling, general and administrative 22,795 21,881
Interest 357 1,366
Amortization 5,008 5,174
Foreign exchange (gain) loss (870) 753
Unrealized gain on forward exchange contracts (264) -
Gain on disposal of property, plant and equipment (2,366) (619)
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24,660 28,555
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Income from continuing operations before income taxes 30,398 34,147
Future income tax recovery - 19,843
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Income from continuing operations 30,398 53,990
Discontinued operations 2,442 1,497
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Net income and comprehensive income $ 32,840 $ 55,487
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Earnings per trust unit from continuing operations
Basic $ 1.43 $ 2.64
Diluted $ 1.42 $ 2.61
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Earnings per trust unit
Basic $ 1.54 $ 2.71
Diluted $ 1.53 $ 2.68
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The Fund currently expects that the uncertain business conditions experienced in late 2008 will continue through 2009. Specifically, soft demand and prices for oil and gas products, difficult business credit conditions, low investor confidence and generally weak worldwide economic conditions will limit revenue opportunities. Accordingly, the Fund will maintain its focus on the objectives of balance sheet strength, operational efficiency, cost control, profitability and cash preservation. The Fund will aggressively search for and pursue revenue opportunities worldwide while maintaining tight control over operations and manpower. Capital expenditures will be limited to those essential to current operations and trust unit distributions will be adjusted to match quarterly business performance. These steps will enable the Fund to respond quickly should there be a rapid improvement in business conditions. The Fund will continue to assess accretive business acquisition opportunities.

Fiscal 2008 consolidated annual revenue was $217.3 million, down 2.9% from the $223.7 million reported for 2007. Consolidated income from continuing operations before income taxes was $30.4 million for 2008 down 11.0% from the $34.1 million in 2007 due to lower revenues, lower gross profit percentages and higher selling, general and administrative expenses. Fiscal 2008 income from continuing operations amounted to $30.4 million versus $54.0 million for 2007, which included a $19.8 million future income taxes recovery arising from the initial recognition of the related asset. Net income and comprehensive income, which includes income from discontinued operations was $32.8 million for 2008 versus $55.5 million in 2007. Basic earnings per trust unit from continuing operations were $1.43 for 2008 and $2.64 for 2007. Basic earnings per trust unit were $1.54 per trust unit in 2008 and $2.71 for 2007. Fiscal 2008 quarterly trust unit distributions were $0.25 per trust unit versus $0.40 per trust unit in 2007. Trust unit distributions declared and paid in 2008 amounted to $1.00 per trust unit, or $21.3 million in aggregate, as compared with $1.60 per trust unit, or $32.7 million in aggregate, for 2007. Reflecting lower net income, funds flow from operations amounted to $33.1 million in 2008 versus $39.1 million in 2007. Year-over-year changes in net income adjusted for non-cash items and non-cash working capital resulted in a $2.4 million increase in cash flow from operating activities. Cash flow from operating activities amounted to $33.1 million for 2008 as compared with $30.7 million in 2007.

Consolidated revenue for the fourth quarter was $57.2 million versus $53.7 million last year. The gross profit was $12.2 million, a $3.6 million decrease from $15.8 million in 2007. Fourth quarter income from continuing operations decreased $2.5 million to $6.7 million versus $9.2 million for 2007. The challenging business conditions were the main cause of the lower revenues, gross profit dollars and gross profit percentages. Partially offsetting the lower earnings were a $0.4 million decrease in selling, general and administrative expenses and $0.2 million decrease in interest expense. The Fund also recorded an unrealized gain on outstanding forward exchange contracts of $0.3 million for Q4-2008. The fourth quarter sale of the operations and certain assets and liabilities from the geotechnical drill manufacturer, Mobile, contributed $1.8 million of income from discontinued operations versus $0.5 million for 2007. Fourth quarter 2008 net income was $8.6 million, a $1.0 million decrease from $9.6 million for 2007. Fourth quarter property, plant and equipment expenditures were $0.5 million as compared with $0.1 million last year. Trust unit distributions amounted to $0.25 per unit and totaled $5.4 million versus $8.4 million last year.

The Fund is an unincorporated open-ended 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, waterwell and mining industries.

On behalf of the Trustees, Foremost Income Fund

James T. Grenon, Trustee

Note: A complete financial breakdown can be found on www.sedar.com on or before March 31, 2009.

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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