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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, 1999
[ ] 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
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(Full title of the plan)
CEM CORPORATION
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(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
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(Address of principal executive offices)
Post Office Box 200, Matthews, North Carolina 28106
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(Mailing address of principal executive offices)
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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 1 - Consent of Independent Accountants
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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
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Richard N. Decker
Secretary of the Administrative Committee
Dated: December 22, 1999
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Exhibit 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-87676) of CEM Corporation of our report dated
December 10, 1999 relating to the financial statements of the CEM Corporation
Salary Reduction Profit-Sharing Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Charlotte, North Carolina
December 22, 1999
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
JUNE 30, 1999 AND 1998
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
JUNE 30, 1999 AND 1998
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Page(s)
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of June 30, 1999 and 1998 3
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended June 30, 1999 and 1998 4
Notes to Financial Statements 5 - 7
Supplemental Schedules:
Line 27a- Schedule of Assets Held for Investment Purposes
as of June 30, 1999 8
Line 27d- Schedule of Reportable Transactions
for the year ended June 30, 1999 9
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REPORT OF INDEPENDENT ACCOUNTANTS
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 and the related statements of changes in 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") at June 30, 1999 and 1998, and the changes in net assets available for
plan benefits for the years then ended 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 of these
statements 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 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 additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
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.
Charlotte, North Carolina
December 10, 1999
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF JUNE 30, 1999 AND 1998
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1999 1998
Investments $ 12,839,833 $ 10,093,721
Contribution receivable:
Employer 302,222 417,580
Participants 17,260 16,203
Accrued interest and dividends 938 2,601
Cash -- 1,317
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Total assets 13,160,253 10,531,422
Accrued expenses 3,205 4,046
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Net assets available for plan benefits $ 13,157,048 $ 10,527,376
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The accompanying notes are an integral part of these financial statements.
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
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1999 1998
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 550,743 $ 1,027,053
Net appreciation in fair value of
investments 1,776,572 877,693
Loan interest 10,837 9,752
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2,338,152 1,915,398
Investment expenses 20,783 22,988
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Net investment income 2,317,369 1,892,410
Contributions:
Employer 479,715 562,571
Participant 453,214 369,770
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Total additions 3,250,298 2,824,751
Deductions from net assets attributed
to benefits paid to participants 620,626 884,430
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Net increase 2,629,672 1,940,321
Net assets available for Plan benefits:
Beginning of year 10,527,376 8,587,055
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End of year $ 13,157,048 $ 10,527,376
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The accompanying notes are an integral part of these financial statements.
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
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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. Participants may elect to contribute to the Plan by
deferring 1 to 10% of annual compensation up to specified maximums.
Participant contributions are fully vested at all times. As stipulated by
the Internal Revenue Service, employees could not contribute more than
$10,000 during 1999 and 1998.
The Company matches specified percentages of participant contributions as
defined in the Plan Agreement. Additional employer contributions are
determined annually by the board of directors. Participants fully vest in
employer contributions 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 $1,302 and $8,929 in 1999 and 1998, respectively. Investment income
is allocated to the individual participant accounts in the ratio to which
the value of each participant's account bears to the total value of all
participant accounts.
LOANS
Effective January 1, 1996 participants were permitted to obtain loans
against their vested account balance. Participants may borrow a minimum 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 2% 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. Participants are entitled to the vested share of
contributions, forfeitures and investment income (including net realized
and unrealized gains and losses) allocated to their accounts.
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.
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
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INVESTMENTS
Investments are recorded at their fair market value as determined by quoted
prices in an active market, except for participant loans which are stated
at the outstanding principal balance.
NET APPRECIATION (DEPRECIATION)
The Plan presents in the statements 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.
PAYMENT OF BENEFITS
The Plan records benefit payments when paid. The Plan had no benefits
payable at June 30, 1999 and 1998.
USE OF 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.
3. INVESTMENTS
The Plan's investments are held in a broker-administered trust fund.
Investments that represent 5% or more of the Plan's net assets are
separately identified.
Participant-Directed Funds at Fair Value
June 30, June 30,
1999 1998
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Money market funds $ 493,295 $ --
Guaranteed investment contract -- 446,102
Participant loans 107,738 103,497
Mutual funds:
Fidelity Balanced Fund -- 2,999,827
Fidelity Magellan Fund -- 1,452,905
Invesco Total Return Fund 2,888,134 --
Janus Fund 5,911,652 3,243,472
Janus Worldwide Fund 1,080,587 270,115
Schwab S&P 500 - Investor Shares 1,236,664 --
Other 898,975 1,102,109
Stock fund -- 475,694
Self directed brokerage accounts 222,788 --
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Total Investments $ 12,839,833 $ 10,093,721
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
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During 1999 the Plan's investments (including investments bought, sold and
held during the year) appreciated in value by $1,776,572 as follows:
Year Ended
June 30, 1999
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Money market funds $ 82
Mutual funds 1,827,154
Stock fund (50,534)
Self directed brokerage accounts (130)
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Net change in fair value $ 1,776,572
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Each participant has the option of investing in any or all of the available
funds, which include: the Invesco Total Return Fund, the Janus Fund, the
Schwab S&P 500 Investors Shares Fund, the Strong Opportunity Fund, the
Baron Asset Fund, the Janus Worldwide Fund, the Schwab Institutional
Advantage Fund, the Personal Choice Retirement Fund, and CEM Corporation
Common Stock. The Invesco Total Return Fund is a balanced fund consisting
of equity, fixed income, and cash equivalents. The primary goals of the
Invesco Total Return Fund is to provide growth and income for the investor.
The Janus Fund is a large capitalization growth-oriented equity fund. The
primary goal of the Janus Fund is to provide long-term growth of the
investor's assets. The goal of the Schwab S&P 500 Investors Shares Fund is
to track the total return of the S&P 500 Index. The Strong Opportunity Fund
is a mid-cap fund that seeks capital appreciation. The Baron Asset Fund is
a small capitalization equity fund whose primary goal is to provide
long-term capital appreciation. The primarily goal of the Janus Worldwide
Fund is to seek long-term growth of capital consistent with preservation of
capital. Investments are made in foreign and domestic common stocks,
usually spread across at least five different countries. The Fund may also
invest in preferred stocks, warrants, government securities, and corporate
debt, and may use derivatives for hedging purposes or as a means of
enhancing returns. The Schwab Institutional Advantage Fund is a short-term
money market fund. The Personal Choice Retirement Fund is a fund whose
assets are selected and managed by the employee. The employee may build
their fund using any investment options available through Schwab.
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 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 100 percent vested in their accounts.
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SUPPLEMENTAL SCHEDULES
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF JUNE 30, 1999
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NUMBER MARKET
OF UNITS COST VALUE
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Money market fund:
Schwab Institutional Advantage* 492,911 $ 492,911 $ 492,911
Stock Liquidity 384 384 384
Participant loans:
Loan fund -- 107,738 107,738
Mutual funds:
Baron Asset Fund 7,202 371,420 436,676
Invesco Total Return Fund 87,466 2,360,043 2,888,134
Janus Fund 147,056 4,019,915 5,911,652
Janus Worldwide Fund 20,224 895,283 1,080,587
Schwab S&P 500 - Investor Shares* 58,141 1,009,740 1,236,664
Strong Opportunity Fund 10,384 432,422 462,299
Self directed brokerage accounts:
Personal Choice Retirement 222,788 222,917 222,788
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$9,912,773 $12,839,833
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* Party in interest
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CEM CORPORATION
SALARY REDUCTION PROFIT-SHARING PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JUNE 30, 1999
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<TABLE>
<CAPTION>
NUMBER AMOUNT NUMBER MATURITY COST GAIN
OF OF OF OR SELLING OF EXPENSES (LOSS)
DESCRIPTION OF ASSETS OR TRANSACTIONS PURCHASES PURCHASES SALES 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 $ 970,217 $ -- $ -- $ -- $ --
Fidelity Balanced Fund 2,401,927 2,296,183 -- 105,744
Fidelity Magellan Fund 970,217 886,568 -- 83,649
Invesco Total Return Fund 2,401,927
Category (II) - Series of transactions, with the same person, in a security issue aggregating 5% of Plan assets:
None
Category (III) - Series of transactions in a security issue aggregating 5% of Plan assets:
Bankers Trust Pyramid GIC Fund 20 61,195 8 507,297 507,297 -- --
Fidelity Balanced Fund 1 222,242 9 2,772,373 2,626,302 -- 146,071
Fidelity Magellan Fund -- -- 12 1,298,444 1,136,542 -- 161,902
Janus Fund 120 2,351,348 53 1,246,862 1,012,025 -- 234,837
T. Rowe Price International Stock Fund -- -- 4 425,277 407,641 -- 17,636
Schwab Capital S & P 500 Fund* 16 115,180 3 434,707 490,929 -- (56,222)
Baron Asset Fund 96 374,983 25 245,845 249,027 -- (3,182)
Invesco Value Trust Total Return Fund 97 3,002,088 49 676,777 632,084 -- 44,693
Janus Worldwide 107 856,287 32 240,978 220,292 -- 20,686
Schwab Government Money Fund* 9 19 2 55 55 -- --
Schwab Institutional Advantage Money Fund* 98 959,110 31 466,199 466,199 -- --
Schwab S&P 500 - Investor Shares* 97 1,239,199 21 271,429 230,153 -- 41,276
Strong Opportunity Fund 43 287,487 17 107,077 110,765 -- (3,688)
Schwab US Treasury Money Fund* 24 440 6 56 56 -- --
Category (IV) - Single transactions, with the same person, in excess of 5% of Plan assets:
None
* Party in interest
</TABLE>
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