Foremost Income Fund Reports 2011 Results

CALGARY, ALBERTA--(Marketwire - March 26, 2012) - Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the 12 months ended December 31, 2011.

ANNUAL FINANCIAL RESULTS:

The key elements from 2011 are:

• Revenues have increased 51.4% as a result of improvement in the domestic heavy oil markets and increased activity in the oil sands development. Consolidated revenues were $259.4 million versus $171.3 million for 2010.
• Revenues generated outside of Canada have decreased to 12.72% in 2011 from 17.5% of total revenues in 2010.
• Operating activities generated a gross profit percentage of 21.1% as compared with 19.7% in 2010; the higher margins are a result of increased operational efficiency and higher volumes. Gross profits were $54.7 million as compared with $33.8 million for 2010.
• Administrative expenses decreased to 8.0% of revenue versus 9.7% of revenue in 2010 due to increased revenue levels and continued cost control efforts. Administrative expenses were $20.7 million in 2011 and $16.6 million for 2010. The increase in the gross dollar value is a result of increased revenue levels and the addition of the Brahma and Bonnyville business units.
• Fluctuations in the exchange rates between the Canadian dollar and the U.S. dollar resulted in a $6,000 exchange loss compared to a $363,000 loss in 2010.
• Income from operations increased 130.3% to $30.9 million versus $13.4 million for 2010.
• Comprehensive income was $30.2 million compared to a $13.0 million in 2010; comprehensive income includes a $1.3 million gain on sale of property and equipment.

QUARTERLY FINANCIAL RESULTS:

SUMMARY OF QUARTERLY INFORMATION (unaudited)

(000's, except per trust unit amounts)

2011	Q1		Q2		Q3		Q4		Total
Revenue	$	56,398	$	65,856	$	65,631	$	71,496	$	259,381
Income from operations	$	4,742	$	7,535	$	8,616	$	10,001	$	30,894
Comprehensive Income	$	4,717	$	7,445	$	8,741	$	9,268	$	30,171
Net income
Per trust unit, basic & diluted	$	0.23	$	0.35	$	0.42	$	0.45	$	1.45
2010		Q1		Q2		Q3		Q4		Total
Revenue	$	42,884	$	39,258	$	42,242	$	46,939	$	171,323
Income from operations	$	3,326	$	4,939	$	4,142	$	1,005	$	13,412
Comprehensive Income	$	3,189	$	5,112	$	4,090	$	642	$	13,033
Net income
Per trust unit, basic and diluted	$	0.15	$	0.24	$	0.19	$	0.03	$	0.61

FINANCIAL POSITION:

• Quarterly Trust Unit distributions, for the year amounted to $2.1 million compared to $8.6 million in 2010.
• Basic and diluted earnings per Trust Unit were $1.45 per trust unit as compared with $0.61 per trust unit in 2010.
• During the year the Fund acquired two manufacturing facilities, one in Stettler, Alberta and one in Bonnyville, Alberta. The 85,000 square foot Stettler facility will be used to expand the Fund's separator manufacturing capacity and to facilitate the Fund's initiative to develop and build hydrovac equipment. The 60,000 square foot Bonnyville facility will be used to expand the Fund's shop tank manufacturing capacity and to facilitate prefabrication for it field construction division.
• Year to date cash flow generated from operations for 2011, calculated as comprehensive income adjusted for items not involving cash such as amortization, gains on disposals of property, plant and equipment, trust units based compensation and changes in non-cash working capital totaled $16.2 million versus $1.0 million in 2010.
• Non-cash working capital accounts consist of trade and other receivables, inventories, prepaid expenses, trade and other payables, warranty provisions, and deferred revenue. All of these account balances have increased relative to December 31, 2010, reflecting the impact of increased business activity.
• Cash has decreased $25.3 million since December 31, 2010. This decrease was the result of $16.2 million of funds generated from operations, $14.3 million of net capital expenditures, $27.3 million of Trust Unit redemptions and distributions to Trust Unit holders. Working capital, defined as current assets less current liabilities decreased $7.2 million to $66.9 million due mainly to capital spending, redemption of units and distributions for year.
• Short-term indebtedness increased to $3.5 million at December 31, 2011, there was no short term indebtedness at December 31, 2010. The increase is due mainly to the $20.3 million special redemption/distribution that occurred on December 21, 2011.
• Property, plant and equipment at December 31, 2011 amounted to $55.8 million. The $11.0 million increase relative to 2010 reflects $16.2 million in acquisitions, $4.4 million decrease from amortization, and $0.8 million in disposals.
• Unitholders' equity increased from $153.8 million at December 31, 2010 to $156.7 million at December 31, 2011. The increase relates primarily to strong earnings out pacing capital expenditures, Trust Unit redemptions and distributions.

Special Redemption and Trust Unit Redemptions:

The Fund redeemed 2,602,173 Trust Units during the year. The Fund redeemed 758,098 through its normal redemption program resulting in cash payments of $4.9 million. The Fund also redeemed 1,844,075 units through a special redemption on December 21, 2011 resulting in the distribution of $20.3 million of income and redemption proceeds of $18,441. Due to the continued strong financial performance of the Fund, the Trustees have determined that, as of the date of March 26, 2012 the Fund will redeem tendered Trust Units at tangible book value + 10% or $7.25 per unit.

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, shop tank manufacturer
• Maloney Industries, a manufacturer of medium- to large-scale oil and gas process treating equipment;
• Stettler Universal Limited Partnership, a gas separator and hydrovac manufacturer;
• Corlac Industries; Peace Land Fabricating and Supply Ltd. and De-In Industries Ltd., all shop tank manufacturers and
• Brahma, a sub-200 horsepower compressor manufacturer.
• 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 include statements the Fund's intention to proceed with a Unitholders' meeting and information regarding the Trustees' views of the future prospects and tax treatment of the Fund and tax treatment of the Special Redemption, the Fund's expectations regarding the future availability of cash to meet redemption requests and the Trustee's expectations for redemption prices in December 2011 and January 2012. 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.