<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-15383
CEM CORPORATION SALARY REDUCTION PROFIT SHARING PLAN
- --------------------------------------------------------------------------------
(Full title of the plan)
CEM CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Issuer as specified in its charter)
North Carolina 56-1019741
- --------------------------------------------------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
3100 Smith Farm Road, Matthews, NC 28105
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Post Office Box 200, Matthews, North Carolina 28106
- --------------------------------------------------------------------------------
(Mailing address of principal executive offices)
<PAGE> 2
REQUIRED INFORMATION
ITEMS 1-3 are not being submitted pursuant to ITEM 4.
ITEM 4 - This plan is subject to ERISA and is filing plan financial statements
and schedules prepared accordingly.
EXHIBIT 23.1 - Consent of Independent Accountants
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this Annual Report to be signed on its behalf by the undersigned hereunto
duly authorized.
CEM CORPORATION SALARY REDUCTION PROFIT SHARING PLAN
By: /s/ Richard N. Decker
----------------------------------------------
Richard N. Decker
Secretary of the Administrative Committee
Dated: December 22, 1998
<PAGE> 4
CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
for the years ended June 30, 1998 and 1997
<PAGE> 5
C O N T E N T S
----------
Pages
-----
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan
Benefits with Fund Information 3-4
Statements of Changes in Net Assets Available
for Plan Benefits with Fund Information 5-6
Notes to Financial Statements 7-12
Supplemental Schedules:
Item 27a- Schedule of Assets Held for Investment
Purposes as of June 30, 1998 14
Item 27d- Schedule of Reportable Transactions
for the year ended June 30, 1998 15
<PAGE> 6
REPORT OF INDEPENDENT ACCOUNTANTS
December 16, 1998
To the Plan Administrative Committee
CEM Corporation Salary Reduction Profit-Sharing Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the CEM Corporation Salary Reduction Profit-Sharing Plan (the
"Plan") as of June 30, 1998 and 1997 and the changes in its net assets available
for plan benefits for the years then ended, and the related statements of
changes in net assets available for plan benefits for the years ended June 30,
1998 and 1997, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by the Plan's
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 and is not a required part of the basic financial statements. The
supplemental schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
2
<PAGE> 7
CEM CORPORATION SALARY REDUCTION PROFIT-SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
as of June 30, 1998
----------
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------------------------------------------
Participant-Directed
---------------------------------------------------------------------------------------------------
Janus Strong Fidelity
Bankers Barron Asset Invesco Value Worldwide Schwab S&P Opportunity Balanced
Fund Fund Fund Fund 500 Fund Fund Fund
---- ---- ---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments:
Pooled funds $446,102 $ 241,503 $ 223,605 $ 270,115 $ 385,735 $ 251,266 $ 2,999,827
Loans to participants - -
---------------------------------------------------------------------------------------------------
Total 446,102 241,503 223,605 270,115 385,735 251,266 2,999,827
Contributions receivable:
Employer - - - - - - -
Participants - - - - - - -
Accrued interest and dividends 2,601 -
Cash - 1,317
---------------------------------------------------------------------------------------------------
Total assets 448,703 241,503 223,605 270,115 385,735 251,266 3,001,144
---------------------------------------------------------------------------------------------------
Accrued expenses 130 98 81 114 116 63 2,086
---------------------------------------------------------------------------------------------------
Net assets available for
Plan benefits $448,573 $ 241,405 $ 223,524 $ 270,001 $ 385,619 $ 251,203 $ 2,999,058
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------------------------------------------
Participant-Directed
---------------------------------------------------------------------------------------------------
Fidelity T. Rowe Price
Janus Magellan International CEM Corp. Loan Contribution
Fund Fund Fund Stock Fund Fund Receivable Total
---- ---- ---- ---------- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments:
Pooled funds $ 3,243,472 $ 1,452,905 $ 475,694 $ - $ - $ - $ 9,990,224
Loans to participants - - - - 103,497 - 103,497
---------------------------------------------------------------------------------------------------
Total 3,243,472 1,452,905 475,694 - 103,497 - 10,093,721
Contributions receivable:
Employer - - - - - 417,580 417,580
Participants - - - - - 16,203 16,203
Accrued interest and dividends - - - - - - 2,601
Cash - - - - - 1,317
---------------------------------------------------------------------------------------------------
Total assets 3,243,472 1,452,905 475,694 - 103,497 433,783 10,531,422
---------------------------------------------------------------------------------------------------
Accrued expenses 952 289 117 - - - 4,046
---------------------------------------------------------------------------------------------------
Net assets available for
Plan benefits $ 3,242,520 $ 1,452,616 $ 475,577 $ - $103,497 $ 433,783 $ 10,527,376
===================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE> 8
CEM CORPORATION SALARY REDUCTION PROFIT-SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
as of June 30, 1997
----------
<TABLE>
<CAPTION>
1997
------------------------------------------------------------------------------------------------------
Participant-Directed
------------------------------------------------------------------------------------------------------
Fidelity Fidelity T.Rowe Price CEM
Bankers Balanced Janus Magellan International Corporation Loan Contribution
Fund Fund Fund Fund Fund Stock Fund Receivable Total
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments:
Shares of registered
investment companies $575,949 $3,093,070 $2,370,223 $1,244,121 $748,440 $ - $ - $ - $8,031,803
Loans to participants - - - - - - 115,601 - 115,601
------------------------------------------------------------------------------------------------------
Total 575,949 3,093,070 2,370,223 1,244,121 748,440 - 115,601 - 8,147,404
Contributions receivable:
Employer - - - - - - - 424,828 424,828
Participants - - - - - - - 15,151 15,151
Accrued interest and
dividends 2,565 - - - - - - - 2,565
Cash - 150 - - - - - - 150
------------------------------------------------------------------------------------------------------
Total assets 578,514 3,093,220 2,370,223 1,244,121 748,440 - 115,601 439,979 8,590,098
Accrued expenses 189 1,235 885 474 260 - - - 3,043
------------------------------------------------------------------------------------------------------
Net assets available
for plan benefits $578,325 $3,091,985 $2,369,338 $1,243,647 $748,180 $ - $115,601 $439,979 $8,587,055
======================================================================================================
</TABLE>
The accompanying notes are an integral
part of the financial statements
4
<PAGE> 9
CEM CORPORATION SALARY REDUCTION PROFIT-SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS WITH FUND INFORMATION
for the year ended June 30, 1998
----------
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------------------------------------
Participant-Directed
---------------------------------------------------------------------------------------------
Strong Fidelity
Bankers Barron Asset Invesco Value Janus Worldwide Schwab S&P Opportunity Balanced
Fund Fund Fund Fund 500 Fund Fund Fund
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 30,415 $ - $ 1,379 $ 59 $ - $ - $ 398,000
Net appreciation (depreciation)
in fair value of investments - (3,663) (1,057) 11,519 9,569 (4,105) 263,514
Loan interest 340 4 78 320 165 - 822
---------------------------------------------------------------------------------------------
30,755 (3,659) 400 11,898 9,734 (4,105) 662,336
Investment expenses 1,495 189 161 209 267 162 7,997
---------------------------------------------------------------------------------------------
Net investment income 29,260 (3,848) 239 11,689 9,467 (4,267) 654,339
Contributions:
Employer 7,940 1,096 4,071 3,530 1,673 751 17,301
Participants 20,918 3,296 9,861 9,261 4,652 2,149 37,708
---------------------------------------------------------------------------------------------
Total additions 58,118 544 14,171 24,480 15,792 (1,367) 709,348
---------------------------------------------------------------------------------------------
Deductions from net assets
attributed to benefits paid to
participants 51,006 295,919
---------------------------------------------------------------------------------------------
Net increase (decrease) prior to
interfund transfers 7,112 544 14,171 24,480 15,792 (1,367) 413,429
Interfund transfers (136,864) 240,861 209,353 245,521 369,827 252,570 (506,356)
---------------------------------------------------------------------------------------------
Net increase (decrease) (129,752) 241,405 223,524 270,001 385,619 251,203 (92,927)
Net assets available for
Plan benefits:
Beginning of year 578,325 - - - - - 3,091,985
---------------------------------------------------------------------------------------------
End of year $448,573 $ 241,405 $ 223,524 $ 270,001 $ 385,619 $ 251,203 $ 2,999,058
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------------------------------------
Participant-Directed
----------------------------------------------------------------------------------------------
Fidelity T. Rowe Price
Janus Magellan International CEM Corp. Loan Contributions
Fund Fund Fund Stock Fund Receivable Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 463,125 $ 104,205 $ 30,770 $ - $ - $ - $ 1,027,953
Net appreciation (depreciation)
in fair value of investments 337,572 280,922 (16,578) - - 877,693
Loan interest 4,326 2,289 1,408 - - - 9,752
----------------------------------------------------------------------------------------------
805,023 387,416 15,600 - - - 1,915,398
Investment expenses 7,315 3,670 1,523 - - - 22,988
----------------------------------------------------------------------------------------------
Net investment income 797,708 383,746 14,077 - - - 1,892,410
-
Contributions:
Employer 68,428 27,831 12,370 417,580 562,571
Participants 166,046 64,841 34,835 16,203 369,770
----------------------------------------------------------------------------------------------
Total additions 1,032,182 476,418 61,282 - - 433,783 2,824,751
----------------------------------------------------------------------------------------------
-
Deductions from net assets
attributed to benefits paid to
participants 260,704 179,595 75,249 - 21,957 - 884,430
----------------------------------------------------------------------------------------------
Net increase (decrease) prior to
interfund transfers 771,478 296,823 (13,967) - (21,957) 433,783 1,940,321
Interfund transfers 101,704 (87,854) (258,636) - 9,853 (439,979) -
----------------------------------------------------------------------------------------------
Net increase (decrease) 873,182 208,969 (272,603) - (12,104) (6,196) 1,940,321
Net assets available for
Plan benefits:
Beginning of year 2,369,338 1,243,647 748,180 - 115,601 439,979 8,587,055
----------------------------------------------------------------------------------------------
End of year $ 3,242,520 $1,452,616 $ 475,577 $ - $103,497 $ 433,783 $ 10,527,376
==============================================================================================
</TABLE>
The accompanying notes are an integral
part of the financial statements
5
<PAGE> 10
CEM CORPORATION SALARY REDUCTION PROFIT-SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS WITH FUND INFORMATION
for the year ended June 30, 1997
----------
<TABLE>
<CAPTION>
1997
------------------------------------------------------------------------
Participant-Directed
------------------------------------------------------------------------
Fidelity Fidelity T.Rowe Price CEM
Bankers Balanced Janus Magellan International Corporation
Fund Fund Fund Fund Fund Stock
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 35,775 $ 138,991 $ 193,412 $ 46,824 $ 18,323 $ -
Net appreciation (depreciation)
in fair value of investments - 503,169 193,540 265,962 108,092 (3,915)
Loan interest 1,055 1,355 3,893 2,636 1,657 -
------------------------------------------------------------------------
36,830 643,515 390,845 315,422 128,072 (3,915)
Investment expenses 2,447 10,728 6,583 4,716 2,628 -
------------------------------------------------------------------------
Net investment income (loss) 34,383 632,787 384,262 310,706 125,444 (3,915)
Contributions:
Employer 8,544 21,484 59,770 38,078 20,448 -
Participants 41,163 47,528 168,999 115,215 65,147 -
------------------------------------------------------------------------
Total additions (deductions) 84,090 701,799 613,031 463,999 211,039 (3,915)
Deductions from net assets attributed to
benefits paid to participants 145,725 343,122 334,569 342,641 162,591 -
------------------------------------------------------------------------
Net increase (decrease) prior to
interfund transfers (61,635) 358,677 278,462 121,358 48,448 (3,915)
Interfund transfers 31,957 (253,420) 532,829 (219,247) (51,614) (5,890)
------------------------------------------------------------------------
Net increase (decrease) (29,678) 105,257 811,291 (97,889) (3,166) (9,805)
Net assets available for plan benefits:
Beginning of year 608,003 2,986,728 1,558,047 1,341,536 751,346 9,805
------------------------------------------------------------------------
End of year $578,325 $3,091,985 $2,369,338 $1,243,647 $748,180 $ -
========================================================================
</TABLE>
<TABLE>
<CAPTION>
1997
--------------------------------------
Participant-Directed
--------------------------------------
Loan Contribution
Fund Receivable Total
--------------------------------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Interest and dividends $ - $ - $ 433,325
Net appreciation (depreciation)
in fair value of investments - - 1,066,848
Loan interest - - 10,596
--------------------------------------
- - 1,510,769
Investment expenses - - 27,102
--------------------------------------
Net investment income (loss) - - 1,483,667
Contributions:
Employer - 424,828 573,152
Participants - 15,151 453,203
--------------------------------------
Total additions (deductions) - 439,979 2,510,022
Deductions from net assets attributed to
benefits paid to participants 6,055 - 1,334,703
--------------------------------------
Net increase (decrease) prior to
interfund transfers (6,055) 439,979 1,175,319
Interfund transfers 35,580 (70,195) -
--------------------------------------
Net increase (decrease) 29,525 369,784 1,175,319
Net assets available for plan benefits:
Beginning of year 86,076 70,195 7,411,736
--------------------------------------
End of year $115,601 $439,979 $8,587,055
======================================
</TABLE>
The accompanying notes are an integral
part of the financial statements
6
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
----------
1. Description of the Plan:
The following brief description of the CEM Corporation Salary Reduction
Profit-Sharing Plan (the "Plan") provides only general information. Participants
should refer to the Plan Agreement for a comprehensive description of the Plan's
provisions.
GENERAL - The Plan is a defined contribution plan covering substantially all
employees of CEM Corporation (the "Company") with 1,000 hours of qualified
service. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
ADMINISTRATIVE COSTS - Administrative costs of the Plan are paid by the Plan.
CONTRIBUTIONS - The Plan provides for participant contributions on a pretax
compensation reduction basis. Under this arrangement, participants may elect to
contribute to the Plan by deferring one to ten percent of annual compensation up
to specified maximums. Employee contributions are fully vested at all times. AS
stipulated by the Internal Revenue Service, employees could not contribute more
than $10,000 and $9,500 during 1998 and 1997, respectively.
The Company matches specified percentages of employee contributions as defined
in the Plan Agreement. Additional employer contributions are determined annually
by the board of directors. Employer contributions are fully vested after three
years of service.
PARTICIPANT ACCOUNTS - Additional employer contributions and forfeitures are
allocated to individual participant accounts based on the ratio that each
participant's annual compensation, as defined by the Plan, bears to the total
annual compensation, as defined by the Plan, of all participants. Forfeitures
totaled $8,929 and $8,642 in 1998 and 1997, respectively. Investment income is
allocated to the individual participant accounts in the ratio which the account
of each participant bears to the total of the accounts of all participants.
LOANS - Effective January 1, 1996 participants were permitted to obtain loans
against their vested account balance. Participants may borrow from their
accounts a minimum amount of $1,000 not to exceed the lesser of 50% of their
vested amount or $50,000. The loans bear interest at rates of prime plus two
percent and are collected via payroll deductions.
DISTRIBUTION OF BENEFITS - Benefits provided by the Plan are paid by the
administrator from net assets available for benefits. The benefits to which a
plan participant is entitled depend on the participant's vested share of
contributions, forfeitures and investment income (including net realized and
unrealized gains and losses) allocated to the participant's account.
7
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Description of the Plan (continued):
INVESTMENT RISKS - The Plan provides for various investment options in mutual
funds and the Company's stock. Investment securities are exposed to various
risks, such as interest rate, market and credit risk. Due to the level of risk
associated with certain investment securities and the level of uncertainty
related to changes in the value of investment securities, it is at least
reasonably possible that changes in risks in the near term would materially
affect participants' account balances and the amounts reported in the statement
of net assets available for plan benefits and the statement of changes in net
assets available for plan benefits.
2. Summary of Accounting Policies:
The following are significant accounting policies followed by the Plan:
BASIS OF PRESENTATION - The financial statements of the Plan have been prepared
on the accrual basis of accounting except for benefits, which are recorded when
paid.
INVESTMENTS - Investments are recorded at their fair market value as determined
by quoted prices in an active market. Participant loans are stated at the
outstanding principal balance.
NET APPRECIATION (DEPRECIATION) - The Plan presents in the statement of changes
in net assets the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
BENEFITS PAYABLE - The Plan records benefit payments when paid. The Plan had no
benefits payable at June 30, 1998 and 1997.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
8
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS, Continued
----------
3. Investments:
The following is a summary of investments held at June 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------------------
Number of Units
on Principle Market
Amounts Cost Value
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bankers Trust Pyramid Open
End GIC Fund II 446,102 $ 446,102 $ 446,102
Baron Asset Fund 4,626 245,126 241,503
Invesco Value Fund 7,135 224,661 223,605
Janus Worldwide Fund 5,731 258,604 270,115
Schwab Capital S & P Fund 21,967 375,748 385,735
Strong Opportunity Fund 6,037 255,372 251,266
Fidelity Balanced Fund 178,987 2,404,059 2,999,827
Janus Fund 107,507 2,724,083 3,243,472
Fidelity Magellan Fund 13,253 1,136,542 1,452,905
T.Rowe Price International
Stock Fund 31,173 407,641 475,694
CEM Corporation Stock - -
Loans to participants
(interest rate of 10.25 - 11%) 24 103,497 103,497
------------------------------------------------------------
$ 8,581,445 $ 10,093,721
============================================================
<CAPTION>
1997
--------------------------------------------------------------------------------------
Number of Units
on Principle Market
Amounts Cost Value
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bankers Trust Pyramid Open
End GIC Fund II 575,949 $ 575,949 $ 575,949
Fidelity Balanced Fund 198,911 2,555,013 3,093,070
Janus Fund 85,815 2,067,181 2,370,223
Fidelity Magellan Fund 13,664 1,077,631 1,244,121
T.Rowe Price International
Stock Fund 48,474 616,143 748,440
CEM Corporation Stock - - -
Loans to participants
(interest rate of 8.75 - 11%) 18 115,601 115,601
------------------------------------------------------------
$ 7,007,518 $ 8,147,404
============================================================
</TABLE>
9
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS, Continued
----------
3. Investments (continued):
The Plan's investments realized the following gains and losses for the years
ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------
Net Gain
Proceeds Cost (Loss)
--------------------------------------------------------------------
<S> <C> <C> <C>
Participant-Directed Funds:
Bankers Trust Pyramid Open
End GIC Fund II $ 370,861 $ 370,861, $ -
Baron Asset Fund - - -
Invesco Value Fund - - -
Janus Worldwide Fund - - -
Schwab Capital S & P Fund 16,809 17,226 (417)
Strong Opportunity Fund - - -
Fidelity Balanced Fund 1,120,883 915,080 205,803
Janus Fund 846,508 725,278 121,230
Fidelity Magellan Fund 699,992 568,943 131,049
T.Rowe Price International
Stock Fund 417,252 369,585 47,667
CEM Corporation Stock - - -
--------------------------------------------------------------------
$ 3,472,305 $ 2,966,973 $ 505,332
====================================================================
<CAPTION>
1997
--------------------------------------------------------------------
Net Gain
Proceeds Cost (Loss)
--------------------------------------------------------------------
<S> <C> <C> <C>
Participant-Directed Funds:
Bankers Trust Pyramid Open
End GIC Fund II $ 315,374 $ 315,374 $ -
Fidelity Balanced Fund 644,028 572,249 71,779
Janus Fund 495,252 433,026 62,226
Fidelity Magellan Fund 859,402 834,474 24,928
T.Rowe Price International
Stock Fund 300,706 266,212 34,494
CEM Corporation Stock 5,890 9,835 (3,945)
--------------------------------------------------------------------
$ 2,620,652 $ 2,431,170 $ 189,482
====================================================================
</TABLE>
The cost of securities sold was determined based on the average cost method.
The total amount of unrealized appreciation was $1,512,286 and $1,139,886 for
the years ended June 30, 1998 and 1997, respectively. The change in unrealized
appreciation was an increase of $372,361 and an increase of $877,366 for the
years June 30, 1998 and 1997, respectively.
10
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS, Continued
----------
3. Investments (continued):
Each participant has the option of investing in any or all of the available
funds, including CEM Corporation Common Stock. The Fidelity Balanced Fund is
designed to provide as much income as possible while being consistent with the
preservation of capital by investing in stocks and bonds. The Fidelity Magellan
Fund is designed to increase the value of the fund's shares over a long term by
investing in stocks with growth potential. The Janus Fund is also designed
towards long term growth by investment in growth stocks. The T. Rowe Price
International Stock Fund is designed for growth by investing in common and
preferred stocks of international companies in Europe, Japan, the Far East,
Latin America and other countries. The Strong Opportunity Fund invests in stock
of small, medium, and large lesser known companies with attractive prices. The
Bankers Trust Pyramid Open End GIC Fund II is designed to provide a maximum
yield with the preservation of capital by investing in GIC alternatives, GIC
separate accounts, and other GIC investments. The Baron Asset Fund is designed
to invest in stocks of small and medium companies with strong balance sheets and
undervalued assets. The Invesco Total Return Fund is designed as a balanced fund
by investing in stocks of large established companies and high quality bonds.
The Janus Worldwide Fund is designed to invest in global stocks with growth
potential. The Schwab S & P 500 Fund invests in stocks which are included in the
Standard & Poors 500 Index.
The number of participants investing in each fund at June 30, 1998 and 1997 is
as follows:
1998 1997
------------- -------------
Bankers Trust Fund 52 70
Baron Asset Fund 19 -
Invesco Value Fund 68 -
Janus Worldwide Fund 51 -
Schwab Capital S & P Fund 25 -
Strong Opportunity Fund 16 -
Fidelity Balanced 87 105
Janus Fund 129 120
Fidelity Magellan 71 97
T.Rowe Price International Stock Fund 46 76
CEM Corporation Common Stock - -
4. Tax Status:
The Plan has received a letter of determination from the Internal Revenue
Service dated February 22, 1996, advising that the Plan constitutes a qualified
trust under Section
11
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS, Continued
----------
401(a) of the Internal Revenue Code and, accordingly, is exempt from federal
income taxes.
5. Plan Termination:
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become one hundred percent vested in their accounts.
6 Subsequent Events
Subsequent to June 30, 1998 the Plan changed administers from AON Consulting to
Charles Schwab. Also, subsequent to June 30, 1998 the Plan eliminated the
following investment options: Fidelity Balanced, Fidelity Magellan, T. Rowe
Price International, and Bankers Trust. Participants had the option to either
transfer funds from existing to new investments or their proceeds were
automatically invested in funds with similar investment objectives.
12
<PAGE> 17
SUPPLEMENTAL SCHEDULES
<PAGE> 18
CEM CORPORATION SALARY REDUCTION PROFIT-SHARING PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of June 30, 1998
----------
<TABLE>
<CAPTION>
1998
-----------------------------------------------------------------------------
Number of Units
on Principle Market
Amounts Cost Value
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Bankers Trust Pyramid Open
End GIC Fund II 446,102$ 446,102 $ 446,102
Baron Asset Fund 4,626 245,126 241,503
Invesco Value Fund 7,135 224,661 223,605
Janus Worldwide Fund 5,731 258,604 270,115
Schwab Capital S & P Fund* 21,967 375,748 385,735
Strong Opportunity Fund 6,037 255,372 251,266
Fidelity Balanced Fund 178,987 2,404,059 2,999,827
Janus Fund 107,507 2,724,083 3,243,472
Fidelity Magellan Fund 13,253 1,136,542 1,452,905
T.Rowe Price International
Stock Fund 31,173 407,641 475,694
CEM Corporation Stock - -
Loans to participants
(interest rate of 10.25 - 11%) 24 103,497 103,497
------------------------------------------------------------
$ 8,581,445 $ 10,093,721
============================================================
</TABLE>
* Party in Interest
14
<PAGE> 19
CEM CORPORATION SALARY REDUCTION PROFIT-SHARING PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended June 30, 1998
----------
<TABLE>
<CAPTION>
Number of Amount of Number of Maturity or Cost of Expenses Gain (Loss)
Description of Assets Or Transaction Purchases Purchases Sales Selling Price Assets Incurred on Sale
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Category (I)-Single transactions in excess of
5% of Plan Assets
- ----------------------------------------------
Janus Fund 1 $454,088
Category (III)- Series of transactions
in a security issue aggregating
5% of Plan Assets
- ----------------------------------------------
Bankers Trust Pyramid GIC Fund
- ----------------------------------------------
Bankers Trust Pyramid GIC Fund 52 $ 370,861 $370,861 $ $ -
75 241,014
Fidelity Balanced Fund
- ----------------------------------------------
Fidelity Balanced Fund 49 1,120,883 915,080 205,803
62 764,123
Fidelity Magellan
- ----------------------------------------------
Fidelity Magellan 49 699,992 568,943 131,049
61 627,854
Janus Fund
- ----------------------------------------------
Janus Fund 67 846,508 725,278 121,230
95 1,382,187
T. Rowe Price International Stock Fund
- ----------------------------------------------
T. Rowe Price International Stock Fund 50 417,252 369,585 47,667
49 161,083
Schwab Capital S & P 500 E. Shares*
- ----------------------------------------------
Schwab Capital S & P 500 E. Shares 5 16,809 17,226 (417)
29 392,975
</TABLE>
* Party in Interest
15
<PAGE> 1
Exhibit 23.1
CONSENT OF PricewaterhouseCoopers LLP
We consent to the incorporation by reference in the Registration Statement of
CEM Corporation on Form S-8 (File No. 33-87676) pertaining to CEM Corporation
Salary Reduction Profit-Sharing Plan, as amended, of our report dated December
16, 1998, on our audits of the financial statements of the CEM Corporation
Salary Reduction Profit-Sharing Plan as of June 30, 1998 and 1997, and for the
years then ended, which report is included in the Annual Report on Form 11-K.
December 23, 1998
