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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
Defined Contribution 401(k) Plans
We sponsor a 401(k) defined contribution plan for all our employees. The plan allows the employees to make annual voluntary contributions not to exceed the lesser of an amount equal to 25% of their compensation or limits established by the Internal Revenue Code. Under this plan, we generally provide a match equal to 50% of the employee’s contributions up to the first 6% of compensation, except for union employees who are not eligible to receive the match. Our provision for matching and profit sharing contributions for the three years ended December 31, 2024, 2023, and 2022 was $3.2 million, $3.1 million, and $2.9 million, respectively.
Pension Plan and LaBarge Retirement Plan
We have a defined benefit pension plan covering certain hourly employees of a subsidiary (the “Pension Plan”). Pension Plan benefits are generally determined on the basis of the retiree’s age and length of service. Assets of the Pension Plan are composed primarily of fixed income and equity securities. We also have a retirement plan covering certain current and retired employees (the “LaBarge Retirement Plan”).
The consolidation of one of our performance centers as part of the 2022 Restructuring Plan as discussed in Note 3 resulted in the curtailment of the Pension Plan during the fourth quarter of 2022, but it had an immaterial impact on our consolidated financial statements.
The components of net periodic pension cost for the Pension Plan and LaBarge Retirement Plan in aggregate are as follows:
(In thousands)
Years Ended December 31,
202420232022
Service cost$407 $406 $625 
Interest cost1,501 1,503 1,089 
Expected return on plan assets(865)(1,790)(2,081)
Amortization of actuarial losses233 220 585 
Net periodic pension cost$1,276 $339 $218 
The components of the reclassifications of net actuarial losses from accumulated other comprehensive loss to net income for 2024 were as follows:
(In thousands)
Year Ended December 31,
2024
Amortization of actuarial loss - total before tax (1)
$233 
Tax benefit(55)
Net of tax$178 
(1)The amortization expense is included in the computation of periodic pension cost and is a decrease to net income upon reclassification from accumulated other comprehensive loss.
The estimated net actuarial loss for both plans that will be amortized from accumulated other comprehensive loss into net periodic cost during 2025 is $0.1 million.
The obligations, fair value of plan assets, and funded status of both plans are as follows:
(In thousands)
December 31,
20242023
Change in benefit obligation(1)
Beginning benefit obligation (January 1)$31,550 $30,337 
Service cost407 406 
Interest cost1,501 1,503 
Actuarial gain (loss)(2,115)859 
Benefits paid(1,736)(1,555)
Ending benefit obligation (December 31)$29,607 $31,550 
Change in plan assets
Beginning fair value of plan assets (January 1)$29,487 $29,280 
Return on assets1,029 987 
Employer contribution439 775 
Benefits paid(1,736)(1,555)
Ending fair value of plan assets (December 31)$29,219 $29,487 
Funded status underfunded$(388)$(2,063)
Amounts recognized in the consolidated balance sheet
Non-current assets$2,938 $1,464 
Current liabilities$440 $428 
Non-current liabilities$2,886 $3,099 
Unrecognized loss included in accumulated other comprehensive loss
Beginning unrecognized loss, before tax (January 1)$5,449 $4,011 
Amortization(226)(216)
Liability (gain) loss(2,122)851 
Asset (gain) loss(165)803 
Ending unrecognized loss, before tax (December 31)2,936 5,449 
Tax impact(696)(1,296)
Unrecognized loss included in accumulated other comprehensive loss, net of tax$2,240 $4,153 

(1)Projected benefit obligation equals the accumulated benefit obligation for the plans.
On December 31, 2024, our annual measurement date, the accumulated benefit obligation exceeded the fair value of the plans assets by $0.4 million. Such excess is referred to as an unfunded accumulated benefit obligation. We recorded an unrecognized loss included in accumulated other comprehensive income, net of tax at December 31, 2024 and 2023 of $2.2 million and $4.2 million, respectively, which decreased shareholders’ equity. This charge to shareholders’ equity represents a net loss not yet recognized as pension expense. This charge did not affect reported earnings, and would be decreased or be eliminated if either interest rates increase or market performance and plan returns improve which will cause the Pension Plan to return to fully funded status.
Our Pension Plan asset allocations at December 31, 2024 and 2023, by asset category, were as follows:
December 31,
20242023
Equity securities—%—%
Cash and equivalents40%41%
Debt securities60%59%
Total(1)
100%100%
(1)Our overall investment strategy is typically to achieve an asset allocation within the following ranges to achieve an appropriate rate of return relative to risk.
Cash
0-10%
Fixed income securities
15-75%
Equities
30-80%
The Pension Plan is associated with the union employees at one of the performance centers that ceased operations in 2024 as a result of the 2022 Restructure Plan. Therefore, during 2023, we changed the overall investment strategy to achieve an asset allocation that de-risked the investment portfolio to preserve capital as the Pension Plan was fully funded. As of December 31, 2024, the Pension Plan assets consists primarily of bonds and cash and cash equivalents. The return on assets assumption reflects the average rate of return expected on the bonds and cash and cash equivalents invested to provide for the benefits included in the projected benefit obligation. We consider information from various external investment managers, forward-looking information regarding expected returns by asset class and our own judgment when determining the expected returns.
(In thousands)
Year Ended December 31, 2024
Level 1Level 2Level 3Total
Cash and cash equivalents$11,773 $— $— $11,773 
Fixed income securities17,446 — — 17,446 
Total plan assets at fair value$29,219 $— $— 29,219 
Pooled funds— 
Total fair value of plan assets$29,219 
(In thousands)
Year Ended December 31, 2023
Level 1Level 2Level 3Total
Cash and cash equivalents$12,016 $— $— $12,016 
Fixed income securities17,471 — — 17,471 
Total plan assets at fair value$29,487 $— $— 29,487 
Pooled funds— 
Total fair value of plan assets$29,487 

The assumptions used to determine the benefit obligations and expense for our two plans are presented in the tables below. The expected long-term return on assets, noted below, represents an estimate of long-term returns on investment portfolios consisting of a mixture of fixed income and cash and cash equivalents. The estimated cash flows from the plans for all future years are determined based on the plans’ population at the measurement date. We used the expected benefit payouts from the plans for each year into the future and discounted them back to the present using the USI Consulting Group (“USICG”) yield curve rate for that duration.
The weighted-average assumptions used to determine the net periodic benefit costs under the two plans were as follows:
Years Ended December 31,
202420232022
Discount rate used to determine pension expense
Pension Plan4.91%5.11%2.85%
LaBarge Retirement Plan4.75%5.00%2.35%
The weighted-average assumptions used to determine the benefit obligations under the two plans were as follows:
December 31,
202420232022
Discount rate used to determine value of obligations
Pension Plan5.68%4.91%5.11%
LaBarge Retirement Plan5.35%4.75%5.00%
Long-term rate of return - Pension Plan only3.00%3.00%6.25%
The following benefit payments under both plans, which reflect expected future service, as appropriate, are expected to be paid:
(In thousands)
Pension PlanLaBarge
Retirement
Plan
2025$1,639 $440 
2026$1,751 $412 
2027$1,836 $386 
2028$1,891 $363 
2029$1,946 $339 
2030 - 2034$9,666 $1,366 
Our funding policy is to contribute cash to our plans so that the minimum contribution requirements established by government funding and taxing authorities are met. We expect to make contributions of $0.4 million to the plans in 2025.
Supplemental Retirement Plans
We have three unfunded supplemental retirement plans. The first plan (“First Plan”) was suspended in 1986, but continues to cover certain former executives. The second plan (“Second Plan”) was suspended in 1997, but continues to cover certain current and retired directors. The third plan (“Third Plan”) covers certain current and retired employees and further employee contributions to this plan were suspended on August 5, 2011. The liability for the First and Third Plans and interest thereon was zero at December 31, 2024 and December 31, 2023. The accumulated benefit obligations of the Second Plan at December 31, 2024 and December 31, 2023 were both $0.3 million, and are included in accrued liabilities.
Non-Qualified Deferred Compensation Plan
In 2019, we adopted a nonqualified deferred compensation plan (“NQDC Plan”) that allows certain management employees or independent contractors to elect deferral of receipt of compensation from Ducommun in order to provide retirement and other benefits on behalf of such management employees or independent contractors (“Certain Participants”). The NQDC Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code (the “Code”). The NQDC Plan is also intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Section 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”) and independent contractors. Notwithstanding any other provision of this NQDC Plan, this NQDC Plan will be interpreted, operated and administered in a manner consistent with these intentions. The Certain Participants’ assets will not be dispensed until the occurrence of a qualified distribution event. The total liabilities at December 31, 2024 and December 31, 2023 were $2.3 million and $1.9 million, respectively, and are included in other long term liabilities.