SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________
Commission file number 1-08604
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Team, Inc. Salary Deferral Plan and Trust
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Team, Inc.
2000 Herman Dr.
Alvin, Texas 77511
(281) 331-6154
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2002 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES
Schedule G, Part III - Schedule of Nonexempt Transactions
Year ended December 31, 2002 9
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002 10
All other schedules required by the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974 are omitted, as they are not applicable or required.
INDEPENDENT AUDITORS' REPORT
The Administrative Committee of the
Team, Inc. Salary Deferral Plan and Trust:
We have audited the accompanying statements of net assets available for plan
benefits of Team, Inc. Salary Deferral Plan and Trust (the Plan) as of December
31, 2002 and 2001 and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 2002. 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 auditing standards generally
accepted in the United States of America. Those standards require the 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
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 plan benefits of the Plan
as of December 31, 2002 and 2001 and the changes in net assets available for
plan benefits for the year ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule G, part III -
schedule of nonexempt transactions for the year ended December 31, 2002 and the
supplemental schedule H, Line 4i - schedule of assets (held at end of year) as
of December 31, 2002 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. The 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.
/s/ KPMG LLP
Houston, Texas
June 27, 2003
1
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Statements of Net Assets Available for Plan Benefits
December 31, 2002 and 2001
2002 2001
------------ -----------
Assets:
Investments, at fair value $ 13,166,107 13,461,908
Receivables:
Participant contributions 44,380 76,287
Company contributions 11,707 22,832
Loan repayments receivable 26,397 --
Accrued interest/dividends 83 3,868
Due from broker for securities sold 4,530 --
------------ -----------
Total receivables 87,097 102,987
Cash, noninterest bearing 11,301 --
------------ -----------
Total assets 13,264,505 13,564,895
Liabilities:
Due to broker for securities purchased (2,373) (6,000)
------------ -----------
Net assets available for plan benefits $ 13,262,132 13,558,895
============ ===========
See accompanying notes to financial statements.
2
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2002
Additions to net assets available for plan benefits attributed to:
Interest $ 124,553
Dividends 50,668
Net appreciation in fair value of Team, Inc. common stock 390,034
Participant contributions 1,271,804
Company contributions 328,138
Participant rollover contributions 6,682
------------
Total additions 2,171,879
------------
Deductions from net assets available for plan benefits attributed to:
Net depreciation in fair value of mutual funds 1,743,497
Distributions and benefits paid to participants 713,970
Administrative fees 11,175
------------
Total deductions 2,468,642
------------
Net decrease in net assets available for plan benefits (296,763)
Net assets available for plan benefits:
Beginning of year 13,558,895
------------
End of year $ 13,262,132
============
See accompanying notes to financial statements.
3
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Notes to Financial Statements
December 31, 2002 and 2001
(1) DESCRIPTION OF THE PLAN
The following description of the Team, Inc. Salary Deferral Plan and Trust
(the Plan) provides only general information. Participants should refer to
the plan agreement for a more complete description of the Plan's
provisions.
(a) GENERAL
The Plan is a defined contribution plan established October 1, 1984 to
cover all eligible employees of Team, Inc. (the Company). Employees
become eligible to participate in the Plan upon completion of three
months of service. The Plan is administered by the administrative
committee appointed by the board of directors of the Company (the
Committee). Wells Fargo NA, (the Trustee) is the trustee of the Plan
and Wells Fargo Retirement Plan Services is the recordkeeper. The Plan
is subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended (ERISA).
(b) CONTRIBUTIONS
Each year, participants may contribute from 1% to 25% of their pre-tax
annual eligible pay, as defined in the Plan. The Company makes a
matching contribution of 50% of the participant's contribution, up to a
limit of 4% of eligible pay. Additional amounts may be contributed at
the discretion of the Company's board of directors. For the year ended
December 31, 2002, no additional discretionary contributions were made.
Participants may also contribute amounts representing distributions
from other qualified defined benefit or defined contribution plans.
Beginning January 1, 2002, participants age 50 and older as of December
31, 2002 are permitted to make elective catch-up deferrals in
accordance with Section 414(v) of the Internal Revenue Code of 1986, as
amended (IRC). Contributions are subject to certain IRC limitations.
(c) PARTICIPANT ACCOUNTS
Individual accounts are maintained for each plan participant. Each
participant's account is credited with the participant's contribution
and company matching contribution, and an allocation of the Company's
discretionary contribution, if elected, and the Plan's earnings or
losses net of administrative expenses. Allocations are based on
participant earnings or account balances, as defined. The benefit to
which a participant is entitled is the benefit that can be provided
from the participant's vested account.
(d) INVESTMENTS
Participants may direct the investment of their contributions into
sixteen mutual funds and/or Company common stock. Contributions can be
invested on a percentage allocation basis in any increment of 1%.
Company contributions are allocated on the same basis as the
participant has elected to allocate their contributions.
4
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Notes to Financial Statements
December 31, 2002 and 2001
(e) VESTING AND FORFEITED ACCOUNTS
Participants are vested immediately in their contributions plus actual
earnings thereon. Vesting in the Company's contributions plus actual
earnings thereon is based on continuous years of service as follows:
PERCENTAGE OF
COMPANY EMPLOYER
CONTRIBUTION THAT
YEARS OF SERVICE BECOMES VESTED
----------------------- ------------------
Less than one year 0%
One year 20%
Two years 40%
Three years 60%
Four years 80%
Five years or more 100%
Forfeited balances of terminated participants are used to reduce future
Company contributions. At December 31, 2002 and 2001, forfeited
non-vested accounts totaled approximately $63,000 and $44,000,
respectively.
(f) PARTICIPANT LOANS
Participants may borrow from their fund accounts up to a maximum of
$50,000, less the participant's highest outstanding loan balance during
the preceding 12 months, or 50% of their vested account balance,
whichever is less. The minimum loan amount is $1,000. The loans are
secured by the balance in the participant's account and bear interest
at rates commensurate with local prevailing rates as determined
quarterly by the Trustee. All loans must generally be repaid within
five years, except where a loan is used to purchase a principal
residence. The maximum number of outstanding loans allowed per
participant is three.
(g) PAYMENT OF BENEFITS
On termination of service due to death, total disability or retirement,
a participant may elect to receive the balance in his or her account.
For termination of service for other reasons, a participant may receive
the value of the vested interest in his or her account. Benefits are
payable either in a lump-sum amount or in monthly, quarterly,
semiannual, or annual installments.
(h) TERMINATION OF THE PLAN
Although it has not expressed any intent to do so, the Company may
discontinue contributions at any time or terminate the Plan subject to
the provisions of ERISA. In the event of termination of the Plan,
participants will become 100% vested in their accounts and the assets
will be valued and each participant will be entitled to distributions
for the balance of his or her account.
5
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Notes to Financial Statements
December 31, 2002 and 2001
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with accounting principles generally
accepted in the United States of America.
(b) USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for plan benefits and changes therein.
Actual results could differ from those estimates.
(c) RISKS AND UNCERTAINTIES
The Plan provides for investment in mutual funds and Company common
stock. Investment securities, in general, are exposed to various risks,
such as interest rate, credit, and overall market volatility. Due to
the level of risk associated with certain investment securities, it is
reasonably possible that changes in the value of investment securities
will occur in the near term.
(d) INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Quoted market prices
are used to value the mutual funds and Company common stock.
Participant loans are valued at cost which approximates fair value.
Realized gains (losses) on the sale of investments and unrealized
appreciation (depreciation) in fair value of investments are shown as
net appreciation (depreciation) in fair value of common stock and
mutual funds in the statement of changes in net assets available for
plan benefits.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
(e) EXPENSES
Loan processing fees are charged to the accounts of the participants
who have elected to take loans from their accounts. All other
administrative expenses of the Plan are paid by the Company, as
provided in the plan document.
(f) PAYMENT OF BENEFITS
Benefit payments to participants are recorded upon distribution. At
December 31, 2002 and 2001, all amounts allocated to accounts of
persons who have elected to withdraw from the Plan have been paid.
6
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Notes to Financial Statements
December 31, 2002 and 2001
(3) INVESTMENTS
The Plan's investments that represented 5% or more of the Plan's net assets
available for Plan benefits as of December 31, 2002 and 2001 are as
follows:
2002
---------------------------------------------------------
Team, Inc. common stock $2,780,467
Janus Balanced Fund 1,243,302
Wells Fargo Index Fund 1,472,728
MFS Massachusetts Investors Growth Stock Fund 1,934,156
Wells Fargo Treasury Plus Institutional Money Market Fund 1,479,824
PIMCO Low Duration Fund 750,264
Participant loans 1,584,214
2001
---------------------------------------------------------
Team, Inc. common stock $2,812,070
Janus Balanced Fund 1,284,598
Wells Fargo Index Fund 1,630,836
MFS Massachusetts Investors Growth Stock Fund 2,506,873
Janus Worldwide Fund 692,449
Wells Fargo Treasury Plus Institutional Money Market Fund 1,174,678
Participant loans 1,392,219
(4) TEAM, INC. COMMON STOCK AND VOTING RIGHTS
The Team, Inc. stock fund consists of shares of Team, Inc. common stock
and shares of Wells Fargo Treasury Plus Institutional Money Market Fund.
Each participant is entitled to exercise voting rights attributable to the
shares allocated to his or her account and is notified by the trustee prior
to the time that such rights are to be exercised. If the participant does
not exercise these rights, the shares are voted by the Trustee as directed
by the Committee.
(5) CONCENTRATION OF INVESTMENTS
The Plan's investment in shares of Team, Inc. common stock represents
20.96% and 20.89% of total assets as of December 31, 2002 and 2001,
respectively. Team, Inc. is a full service provider of industrial repair
services, including leak repair, hot topping, field machining, emissions
control monitoring, concrete repair, energy management, and technical
bolting.
7
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Notes to Financial Statements
December 31, 2002 and 2001
(6) FEDERAL INCOME TAX STATUS
The Plan obtained its latest determination letter on March 26, 2002, in
which the Internal Revenue Service stated that the Plan qualifies under
Section 401(a) of the IRC and that the trust created thereunder is exempt
from Federal income taxes under Section 501(a) of the IRC. The Plan has
been amended since receiving the determination letter; however, the plan
administrator believes that the Plan is designed and being operated in
compliance with the applicable requirements of the IRC. Therefore, the plan
administrator believes that the Plan is qualified, and the related trust is
tax exempt.
(7) NONEXEMPT TRANSACTION
As reported on Schedule I, during the year ended December 31, 2002, certain
Plan contributions and loan repayments were not remitted to the trust
within the time frame specified by the Department of Labor Regulation 29
CFR 2510.3-102, thus constituting a nonexempt transaction between the Plan
and the Company. The Company provided to the Plan additional contributions
of earnings to participants of $650 to correct these oversights.
(8) PARTY-IN-INTEREST TRANSACTIONS
The Plan engages in investment transactions with funds managed by the
Trustee, a party-in-interest with respect to the Plan. These transactions
are covered by an exemption from the "prohibited transaction" provisions of
ERISA and IRC. The Plan also has investments in the Company's common stock.
8
SCHEDULE I
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Schedule G, Part III - Schedule of Nonexempt Transactions
December 31, 2002
(a) (b) (c) (d) (e)
RELATIONSHIP TO PLAN, INTEREST
IDENTITY OF PARTY EMPLOYER, OR OTHER DESCRIPTION OF INVESTMENT, INCLUDING MATURITY DATE, AMOUNT INCURRED
INVOLVED PARTY-IN-INTEREST RATE OF INTEREST, COLLATERAL, AND MATURITY VALUE LOANED ON LOAN
--------------------------------------------- -------------------------------------------------------- ---------- ----------
Team, Inc. Employer Lending of monies from the Plan to the employer
(contributions not timely remitted to the Plan)
as follows:
Deemed loan dated January 23, 2002, maturity
February 15, 2002, with interest at 14% $ 59,279 650
See accompanying independent auditors' report.
9
SCHEDULE II
TEAM, INC. SALARY DEFERRAL PLAN AND TRUST
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
(a) (b) (c) (e)
IDENTITY OF ISSUE,
BORROWER, LESSOR, DESCRIPTION OF INVESTMENT, INCLUDING
OR SIMILAR PARTY MATURITY DATE AND RATE OF INTEREST CURRENT VALUE
--- ----------------------- ---------------------------------------------- --------------
* Team, Inc. Team, Inc. Common Stock $ 2,780,467
* Wells Fargo Funds Wells Fargo Outlook Opportunity Fund 10,744
PIMCO Funds PIMCO Low Duration Fund 750,264
* Wells Fargo Funds Wells Fargo Lifepath 2010 Fund 7,767
* Wells Fargo Funds Wells Fargo Lifepath 2020 Fund 13,300
* Wells Fargo Funds Wells Fargo Lifepath 2030 Fund 20,336
Janus Funds Janus Balanced Fund 1,243,302
* Wells Fargo Funds Wells Fargo Lifepath 2040 18,339
* Wells Fargo Funds Wells Fargo Index Fund 1,472,728
* Wells Fargo Funds Wells Fargo Large Company Growth Fund 140,737
MFS Funds MFS Massachusetts Investors Growth Stock Fund 1,934,156
Invesco Funds Invesco Dynamics Fund 262,968
Dreyfus Funds Dreyfus Emerging Leaders Fund 444,974
Janus Funds Janus Worldwide Fund 602,186
* Wells Fargo Funds Wells Fargo Treasury Plus Institutional Money
Market Fund 1,479,824
MFS Funds MFS Value 254,747
Dreyfus Funds Dreyfus Intermediate Bond 145,054
* Participants loans Interest rates ranging from 5.75% to 10% 1,584,214
--------------
Total $ 13,166,107
==============
* Party in interest.
See accompanying independent auditors' report.
10
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
Team, Inc. Salary Deferral Plan and Trust
(name of plan)
By: /s/ Ted W. Owen
---------------------------------------
Ted W. Owen
Senior Vice President - Finance and
Administration of Team, Inc.
Date: June 27, 2003
11
EXHIBIT INDEX
Exhibit 23.1 -- Independent Auditors' Consent.