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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, 2006.
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 48033
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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 the Financial Statements.......................................... 6
Supplemental Schedules
Schedule H, Line 4i--Schedule of Assets (Held at End of Year).............. 11
Schedule H, Line 4j--Schedule Of Reportable 5% Transactions................ 12
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, 2006 and 2005,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2006. 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, 2006 and 2005, and the changes in its net assets available for
benefits for the year then ended December 31, 2006, 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 schedules of assets
(held at end of year) as of December 31, 2006, and reportable transactions for
the year then ended are presented for purposes of additional analysis and are
not a required part of the 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 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.
As discussed in Note 2 to the financial statements, in 2006 the Plan adopted FSP
AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment
Contracts Held by Certain Investment Companies Subject to the AICPA Investment
Company Guide and Defined-Contribution Health and Welfare and Pension Plans.
/s/ Ernst & Young LLP
Detroit, MI
June 25, 2007
3
TechTeam Global Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
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2006 2005
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ASSETS
Investments, at fair value:
Pooled separate accounts $12,238,393 $10,878,411
TechTeam Global, Inc. common stock 5,810,464 4,950,807
Participant loans 562,909 463,592
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Total investments 18,611,766 16,292,810
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Contributions receivable:
Participants 102,645 96,366
Employer 51,239 45,086
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Total contributions receivable 153,884 141,452
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Total assets 18,765,650 16,434,262
LIABILITY
Contributions to be distributed 56,437 50,530
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Net assets available for benefits $18,709,213 $16,383,732
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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, 2006
ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 1,906,269
Dividend and interest 39,129
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Total investment income 1,945,398
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Contributions:
Participants 1,719,760
Employer 841,150
Rollover 37,153
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Total contributions 2,598,063
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Total additions 4,543,461
DEDUCTIONS
Benefits paid to participants 2,189,279
Administrative fees 28,701
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Total deductions 2,217,980
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Net increase in net assets available for benefits 2,325,481
Net assets available for benefits at beginning of year 16,383,732
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Net assets available for benefits at end of year $18,709,213
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See accompanying notes.
5
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements
December 31, 2006
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 2006, the Company elected to
make matching contributions on a dollar-for-dollar basis up to 3% of a
participant's base compensation. 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 employer and participant contributions made
during 2006 and 2005 to certain participants in order to remain in compliance
with certain nondiscrimination requirements under the Internal Revenue Code (the
"Code"). At December 31, 2006 and 2005, the Plan has recorded a liability of
$56,437 and $50,530, respectively, 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, 2006
and 2005, forfeited account balances totaled $25,335 and $25,077, 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.
On December 29, 2005 the Financial Accounting Standards Board ("FASB") issued
FASB Staff Position ("FSP") Nos. AAG INV-1 and SOP 94-4-1, "Reporting of Fully
Benefit-Responsive Investment Contracts Held by Certain Investment Companies
Subject to the AICPA Investment Company Guide and Defined-Contribution Health
and Welfare and Pension Plans." The FSP describes the limited circumstances in
which the net assets in defined contribution health and welfare and pension
plans shall reflect the contract value of certain investments (primarily
Guaranteed Investment Contracts ("GIC's") and similar investments). The FSP also
provides guidance with respect to the financial statement presentation and
disclosure of fully benefit-responsive investment contracts. The Company
evaluated the impact of this FSP and determined that the difference between the
contract value and the fair value of any GIC's or similar investments is not
significant; therefore, no additional disclosure is required for the plan year
ended December 31, 2006.
8
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements (continued)
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, 2005 $4,950,807
Employer contributions 833,379
Participant contributions 210,899
Appreciation in fair value of investment 634,778
Benefits paid to participants (635,114)
Transfers out (171,718)
Administrative fees (12,567)
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Balance at December 31, 2006 $5,810,464
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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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2006 2005
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TechTeam Global Stock Fund * $5,810,464 $4,950,807
SEI Stable Asset Fund 1,403,345 1,403,844
Growth Fund of America 1,351,156 1,162,535
Lord Abbett MidCap Value Fund 1,266,846 1,429,102
Hartford MidCap HLS Fund 1,224,493 1,083,718
Investment Company of America 1,205,083 1,088,138
Europacific Growth Fund 1,132,677 783,797
Hartford Index HLS Fund 1,044,700 950,496
* Denotes nonparticipant-directed investment
During 2006, the Plan's investments appreciated in fair value, as determined by
quoted market prices, as follows:
TechTeam Global Stock Fund $ 634,778
Pooled separate accounts 1,271,491
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$1,906,269
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9
TechTeam Global Retirement Savings Plan
Notes to the Financial Statements (continued)
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.
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.
7. SUBSEQUENT EVENT
The Company implemented rules relating to the Pension Protection Act of 2006,
which require plans to allow participants the option to diversify from employer
stock. As a result, participants age 55 and older had 100% of their employer
match transferred to a diversifiable fund, whereby each participant has an
option to transfer employer matched funds into investments other than TechTeam
Global, Inc. common stock. Participants with more than 3 years of service had
33% of their employer match transferred to the diversifiable fund. During March
2007, a total of $1.7 million was transferred to the diversifiable fund.
10
Supplemental Schedules
TechTeam Global Retirement Savings Plan
EIN: 38-2774613 Plan: 001
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2006
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 SEI Stable Asset Fund *** $ 1,403,345
The Hartford Group Growth Fund of America *** 1,351,156
The Hartford Group Lord Abbett MidCap Value Fund *** 1,266,846
The Hartford Group Hartford MidCap HLS Fund *** 1,224,493
The Hartford Group Investment Company of America *** 1,205,083
The Hartford Group American Europacific Growth Fund *** 1,132,677
The Hartford Group Hartford Index HLS Fund *** 1,044,700
The Hartford Group Janus Advisor Capital Appreciation Fund *** 896,046
The Hartford Group Goldman Sachs Small Cap Value Fund *** 543,328
The Hartford Group PIMCO Total Return Fund *** 500,429
The Hartford Group American Balanced Fund *** 407,012
The Hartford Group Washington Mutual Investment Fund *** 393,141
The Hartford Group AIM Small Cap Growth Fund *** 338,370
The Hartford Group Franklin Templeton Foreign Fund *** 189,319
The Hartford Group Franklin Templeton Moderate Target Fund *** 141,772
The Hartford Group Franklin Templeton Growth Target Fund *** 130,940
The Hartford Group Franklin Templeton Cons Target Fund *** 69,736
* Participants Loans to participants at interest rates ranging
from 6% to 10.5%, with various maturity dates n/a 562,909
** TechTeam Global, Inc. TechTeam Global Stock Fund $3,950,448 5,810,464
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$18,611,766
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* Party-in-interest
** Party-in-interest, nonparticipant-directed fund
*** Cost is not required for participant-directed investments
11
TechTeam Global Retirement Savings Plan
EIN: 38-2774613 Plan:001
Schedule H, Line 4j--Schedule of Reportable 5% Transactions
December 31, 2006
(A) IDENTITY OF PARTY INVOLVED
(B) DESCRIPTION OF ASSET (C) PURCHASE PRICE (G) COST OF ASSET (D) SELLING PRICE (I) NET GAIN
TechTeam Global, Inc.
Common Stock $894,073 $484,994 $638,456 $153,462
There were no category (i), (ii) or (iv) reportable transactions during 2006.
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 25, 2007 TechTeam Global Retirement Savings Plan
By: /s/ Heidi K. Hagle
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Heidi K. Hagle
Vice President, Human Resources