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Foremost Income Fund Reports Q3 Results and Increase in Redemption Price

CALGARY, ALBERTA -- (Marketwire) -- 11/09/12 -- Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the three and nine months ended September 30, 2012.

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; 
--  Universal Bonnyville, Corlac Industries and Peace Land Fabricating and
    Supply Ltd., all shop tank manufacturers 
--  Maloney Industries, a manufacturer of medium- to large-scale oil and gas
    process treating equipment; 
--  Stettler Universal Limited Partnership, a gas separator and hydrovac
    truck manufacturer and  
--  Brahma, a sub-200 horsepower compressor manufacturer.  

Foremost includes the operations of Foremost Industries, a manufacturer of custom equipment used for the oil and gas, construction, water-well and mining industries.

FINANCIAL RESULTS                                                           
Condensed Consolidated Interim Statements of Comprehensive Income           
Unaudited                                                                   
                                   Three months ended     Nine months ended 
(000's), except per Trust Unit          September 30,         September 30, 
 amounts                              2012       2011       2012       2011 
----------------------------------------------------------------------------
Revenue                          $  64,746  $  65,632  $ 198,067  $ 187,885 
Cost of sales                       50,510     51,141    155,357    149,528 
----------------------------------------------------------------------------
Gross profit                        14,236     14,491     42,710     38,357 
Administrative expenses              5,825      4,753     17,880     14,900 
Depreciation and amortization        1,027      1,220      3,022      3,217 
Other income                            (2)       (98)      (632)      (653)
----------------------------------------------------------------------------
Income from operating activities     7,386      8,616     22,440     20,893 
----------------------------------------------------------------------------
 Interest (income) expense               3        (92)        16        (53)
 Foreign exchange (gain) loss          273        (34)       264         43 
----------------------------------------------------------------------------
Net finance (income) expense           276       (126)       280        (10)
----------------------------------------------------------------------------
Income before income tax             7,110      8,742     22,160     20,903 
Income tax expense                   1,485                 3,804            
----------------------------------------------------------------------------
Net income and comprehensive                                                
 income for the period           $   5,625  $   8,742  $  18,356  $  20,903 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Basic and diluted earnings per                                              
 Trust Unit                      $    0.30  $    0.42  $    0.98  $    1.00 

The key elements from Q3 2012 are:

--  Q3 revenues have decreased slightly by 1.3%. Q3 consolidated revenues
    were $64.7 million versus $65.6 million for 2011. 
    
--  Q3 revenues generated outside of Canada have increased to 20.5% compared
    with 13.0% in 2011 of total revenues. 
    
--  Q3 operating activities generated a gross profit percentage of 22.0% as
    compared with 22.1% in 2011. Gross profits were $14.2 million as
    compared with $14.5 million for 2011. 
    
--  Q3 administrative expenses increased to 9.0% of revenue versus 7.2% of
    revenue in 2011 due to increased business activities and additional
    employee count. Administrative expenses were $5.8 million in 2012 and
    $4.7 million for 2011. 
    
--  Fluctuations in the exchange rates between the Canadian dollar and the
    U.S. dollar, along with a U.S. cash balance of $8.4, resulted in a
    $273,000 exchange loss in Q3 compared to a $34,000 gain in 2011. 
    
--  Q3 income from operations decreased 14.3% to $7.4 million versus $8.6
    million for 2011. 
    
--  Q3 comprehensive income was $5.6 million compared to $8.7 million in
    2011. 2012 comprehensive income includes a charge to deferred tax assets
    of $1.4 million. 
    
--  Quarterly Trust Unit distributions remain suspended during the quarter,
    consistent with 2011. The Fund's intention is to utilize an annual
    distribution process as per prior years. 
    
--  The Fund redeemed 2,500 Trust Units during the quarter resulting in
    payments of $19,747. 16,000 Trust Unit options were exercised in the
    quarter at $8.75 for a cash value of $140,000.  
    
--  Q3 basic and diluted earnings per Trust Unit were $0.30 per Trust Unit
    as compared with $0.42 per Trust Unit in 2011. 

The key financial elements for the year to date are:

--  Year to date revenue has increased 5.4% as a result of improved domestic
    heavy oil markets and increased activity in oil sands development. Year
    to date consolidated revenues were $198.0 million versus $187.9 million
    in 2011. 
    
--  Year to date revenues generated outside of Canada have increased to
    18.0% from 12.9% of total revenues. 
    
--  Year to date gross margin percentage is 21.6% as compared with 20.4% in
    2011. Year to date gross profits were $42.7 million as compared with
    $38.3 million for 2011. 
    
--  Year to date administrative expenses increased to 9.0% of revenue versus
    7.9% of revenue in 2011. Administrative expenses were $17.8 million in
    2012 and $14.9 million for 2011. 
    
--  Fluctuations in the exchange rates between the Canadian dollar against
    the U.S. dollar resulted in a year to date loss of $264,000 compared to
    a loss of $43,000 in 2011. 
    
--  Year to date income from operations increased 7.4% to $22.4 million
    versus $20.9 million for 2011. 
    
--  Year to date comprehensive and net income was $18.3 million compared to
    $20.9 million in 2011. 2012 year to date comprehensive and net income
    includes a $3.8 million utilization of deferred tax assets. 
    
--  Year to date basic and diluted earnings per Trust Unit were $0.98 per
    Trust Unit as compared with $1.00 per Trust Unit in 2011. 
    
--  During the first quarter the Fund acquired the current and long-term
    debt facilities of Steelhead Welding Ltd., pursuant to a separate
    agreement the Fund also acquired and subsequently leased back the
    operating assets of Steelhead Welding Ltd. To date the Fund has advanced
    a total of $3.0 million in connection with its agreements with Steelhead
    Welding Ltd.  
    
--  Cash has increased $4.5 million since December 31, 2011. This increase
    was the result of $9.8 million of funds generated from operations, less
    net capital expenditures of $5.3 million, less $137,000 of Trust Unit
    redemptions and $140,000 received upon exercise of options. Working
    capital, defined as current assets less current liabilities, increased
    $19.1 million to $86.0 million due to strong earnings, strong
    collections and customer deposits outpacing billings. 
    
--  Property, plant and equipment at September 30, 2012 amounted to $58.4
    million. The $2.7 million increase relative to 2011 reflects $5.7
    million in acquisitions and $3.0 million decrease from amortization and
    disposals. 
    
--  Short-term indebtedness decreased to nil at September 30, 2012 compared
    with $3.5 million at December 31, 2011.  
    
--  Unitholders' equity increased from $156.7 million at December 31, 2011
    to $175.0 million at June 30, 2012. The increase relates primarily to
    strong earnings and minimal Trust Unit redemptions. 

TRUST UNIT REDEMPTIONS:

For the nine month period ending September 30, 2012 the Fund redeemed 18,695 Trust Units through its normal redemption program resulting in payments of $140,926. The Trustees have determined that, as of November 8, 2012 the Fund will increase the redemption price for tendered Trust Units from $8.26 to $8.40.

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.

Contacts:
Foremost Income Fund
Jackie Schenn, CA
(780) 875-6161
(780) 875-6169 (FAX)
[email protected]
www.foremost.ca

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