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UNITED STATES
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 December 31, 2005.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the transition period from ___________ to ___________.
Commission File Number: 0-16284
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
TECHTEAM GLOBAL RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
TechTeam Global, Inc.
27335 W. 11 Mile Road
Southfield, MI 48034
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TechTeam Global Retirement Savings Plan
Audited Financial Statements and Supplemental Schedule
CONTENTS
Report of Independent Registered Public Accounting Firm............ 3
Audited Financial Statements
Statements of Net Assets Available for Benefits.................... 4
Statement of Changes in Net Assets Available for Benefits.......... 5
Notes to Financial Statements...................................... 6
Supplemental Schedule
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)...... 11
2
Report of Independent Registered Public Accounting Firm
Plan Administrator
TechTeam Global Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the TechTeam Global Retirement Savings Plan as of December 31, 2005 and 2004,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2005. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also 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 our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2005 and 2004, and the changes in its net assets available for
benefits for the year ended December 31, 2005, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2005 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is 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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Detroit, MI
June 26, 2006
3
TechTeam Global Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
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2005 2004
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ASSETS
Investments, at fair value:
Pooled separate accounts $10,878,411 $ 9,691,845
TechTeam Global, Inc. common stock 4,950,807 5,155,148
Participant loans 463,592 389,823
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Total investments 16,292,810 15,236,816
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Contributions receivable:
Participants 96,366 86,991
Employer 45,086 18,514
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Total contributions receivable 141,452 105,505
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Total assets 16,434,262 15,342,321
LIABILITY
Employer contributions to be
distributed 50,530 --
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Net assets available for benefits $16,383,732 $15,342,321
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See accompanying notes.
4
TechTeam Global Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2005
ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 813,810
Dividend and interest 25,918
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Total investment income 839,728
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Contributions:
Participants 1,640,100
Employer 255,351
Rollover 8,023
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Total contributions 1,903,474
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Total additions 2,743,202
DEDUCTIONS
Benefits paid to participants 1,667,593
Administrative fees 34,198
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Total deductions 1,701,791
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Net increase in net assets available for benefits 1,041,411
Net assets available for benefits at beginning of year 15,342,321
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Net assets available for benefits at end of year $16,383,732
===========
See accompanying notes.
5
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements
December 31, 2005
1. DESCRIPTION OF THE PLAN
The following description of the TechTeam Global Retirement Savings Plan (the
"Plan") provides only general information. Participants should refer to the Plan
agreement for a complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering eligible, full-time employees
of TechTeam Global, Inc. (the "Company") and TechTeam Cyntergy, LLC, a domestic
subsidiary of the Company. Employees of other domestic subsidiaries of the
Company are covered under separate plans. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA"). Employees
become eligible to participate in the Plan on the first day of the month
following three months from their date of hire.
CONTRIBUTIONS
Participants may contribute up to 75% of pretax annual compensation, as defined
in the Plan document, subject to the legislated limitations. Participants may
also contribute amounts representing distributions from other qualified plans. A
participant may direct their contributions to any of the Plan's fund options.
The Company may make discretionary matching contributions to the Plan, which are
contributed into the TechTeam Global Stock Fund. Participants cannot redirect
Company contributions to other fund options. During 2005, the Company elected to
make matching contributions up to 35% of the first 4% of a participant's base
compensation.
The Plan is required to distribute Company contributions made during 2005 to
certain participants in order to remain in compliance with certain
nondiscrimination requirements under the Internal Revenue Code (the "Code"). At
December 31, 2005, the Plan has recorded a liability of $50,530 for these
distributions.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of the Company's contributions, investment earnings, and Plan
expenses. Allocations are based on participant earnings or account balances, as
defined.
6
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING
Participants are immediately vested in their contributions. Participants become
fully vested in Company contributions upon completion of one year of service.
Participants also become fully vested upon death, disability, or retirement at
designated ages.
FORFEITURES
The Company is permitted to use forfeited balances to reduce future employer
contributions. During 2005, the Company used forfeitures totaling $81,879 to
reduce the Company's cash contribution to the Plan in 2005. At December 31, 2005
and 2004, forfeited account balances totaled $25,077 and $102,591, respectively.
LOANS TO PARTICIPANTS
Participants may borrow from their fund accounts a minimum of $1,000 and up to a
maximum of the lesser of $50,000 or 50% of their vested account balance. Loan
terms range from 1-5 years or up to 25 years for the purchase of a primary
residence. The loans are secured by the participant's account balance and bear
interest at a rate commensurate with local prevailing rates as determined
quarterly by the Plan administrator. Principal and interest are paid ratably
through monthly payroll deductions.
PAYMENT OF BENEFITS
A participant will receive a lump-sum distribution equal to the value of his or
her account upon termination of service, death, disability, or retirement. The
benefit to which a participant is entitled is the benefit that can be provided
from the vested value of the participant's account.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to terminate the Plan subject to the provisions of ERISA. In the
event of termination, the amount in each participant's account would become 100%
vested and would be distributed to each participant in accordance with
distribution policies set forth in the Plan.
FEES AND EXPENSES
All expenses incurred by the Plan, consisting primarily of administrative costs,
are paid by the Plan. The cost of the annual audit of the Plan's financial
statements is paid by the Company.
7
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
that affect the amounts reported and disclosed in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INVESTMENTS
Investments consist of pooled separate accounts and TechTeam Global, Inc. common
stock and are stated at fair value. The fair value of participation units owned
by the Plan in pooled separate accounts is based on quoted redemption values on
the last business day of the Plan year. Participant loans are stated at the
amount of their outstanding balance, which approximates fair value. The TechTeam
Global Stock Fund is administered as a pooled separate account.
Purchases and sales of securities are recorded on a trade-date basis. Interest
and dividend income are recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
3. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the significant components of changes in assets relating to
the TechTeam Global Stock Fund (a nonparticipant-directed investment) is as
follows:
Balance at December 31, 2004 $5,155,148
Employer contributions 278,695
Participant contributions 149,066
Depreciation in fair value of investment (16,454)
Benefits paid to participants (627,047)
Transfers in 26,390
Administrative fees (14,991)
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Balance at December 31, 2005 $4,950,807
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8
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements (continued)
4. INVESTMENTS
Investments that represent 5% or more of fair value of the Plan's net assets
available for benefits are as follows:
DECEMBER 31
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2005 2004
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TechTeam Global Stock Fund * $4,950,807 $5,155,148
Lord Abbett MidCap Value Fund 1,429,102 1,524,973
SEI Stable Asset Fund 1,403,844 1,471,978
Growth Fund of America 1,162,535 1,000,711
Investment Company of America 1,088,138 1,083,864
Hartford MidCap HLS Fund 1,083,718 844,163
Hartford Index HLS Fund 950,496 892,363
Janus Advisor Capital Appreciation Fund 837,965 723,984
* Denotes nonparticipant-directed investment
During 2005, the Plan's investments appreciated (depreciated) in fair value, as
determined by quoted market prices, as follows:
TechTeam Global Stock Fund $(16,454)
Pooled separate accounts 830,264
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$813,810
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5. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are
exposed to various risks such as interest rate, market, and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statements of net
assets available for benefits.
9
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements (continued)
6. TAX STATUS
The Plan has received a tax determination letter from the Internal Revenue
Service dated September 6, 2005, stating that the Plan is qualified under
Section 401(a) of the Code and, therefore, the related trust is exempt from
taxation. Once qualified, the Plan is required to operate in conformity with the
Code to maintain its qualification. The plan administrator believes the Plan is
being operated in compliance with the applicable requirements of the Code and,
therefore, believes the Plan is qualified and the related trust is tax exempt.
10
Supplemental Schedule
TechTeam Global Retirement Savings Plan
EIN: 38-2774613 Plan: 001
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2005
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER RATE OF INTEREST, COLLATERAL, CURRENT
OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
--------------------------- ----------------------------------------------- ---------- ------------
The Hartford Group Lord Abbett MidCap Value Fund *** $ 1,429,102
The Hartford Group SEI Stable Asset Fund *** 1,403,844
The Hartford Group Growth Fund of America *** 1,162,535
The Hartford Group Investment Company of America *** 1,088,138
The Hartford Group Hartford MidCap HLS Fund *** 1,083,718
The Hartford Group Hartford Index HLS Fund *** 950,496
The Hartford Group Janus Advisor Capital Appreciation Fund *** 837,965
The Hartford Group American Europacific Growth Fund *** 783,797
The Hartford Group PIMCO Total Return Fund *** 517,075
The Hartford Group Goldman Sachs Small Cap Value Fund *** 375,529
The Hartford Group American Balanced Fund *** 344,121
The Hartford Group Washington Mutual Investment Fund *** 310,429
The Hartford Group AIM Small Cap Growth Fund *** 242,952
The Hartford Group Franklin Templeton Foreign Fund *** 119,840
The Hartford Group Franklin Templeton Moderate Target Fund *** 96,985
The Hartford Group Franklin Templeton Growth Target Fund *** 81,098
The Hartford Group Franklin Templeton Cons Target Fund *** 50,787
* Participants Loans to participants at interest rates ranging
from 6% to 10.5%, with various maturity dates n/a 463,592
** TechTeam Global, Inc. TechTeam Global Stock Fund $3,555,987 4,950,807
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$16,292,810
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* Party-in-interest
** Party-in-interest, nonparticipant-directed fund
*** Cost is not required for participant-directed investments
11
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trustee of the TechTeam Global Retirement Savings Plan has duly
caused this Annual Report to be signed on its behalf by the
undersigned hereunto duly authorized.
June 29, 2006 TechTeam Global Retirement Savings Plan
By: /s/ Heidi K. Hagle
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Heidi K. Hagle
Vice President, Human Resources
EXHIBIT INDEX
Exhibit No. Description
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23.1 Consent of Independent Registered Public Accounting Firm