15. Employee Benefit Plans

Retirement Plans

The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. In addition, the Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its subsidiaries. The plans’ benefits are generally based on years of service and employee compensation. The Company also provides to certain management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law.

Upon separation from Dover, Apergy participants in the Dover U.S. pension plan (other than Norris USW participants) fully vested in their benefits and ceased accruing future benefits. Dover retained the obligation and participants will be able to elect lump-sum payments from plan assets post-separation. Such payments could result in a non-cash settlement charge to the Company's fourth quarter 2018 earnings when lump sum payments are expected to be paid out; the amount of which is not currently determinable. Assets and obligations related to the Norris USW participants were moved to a new plan sponsored by Apergy. The separation of Apergy triggered a pension plan curtailment which required a re-measurement of the Plan's benefit obligation in the second quarter, assuming a discount rate of 4.2% and an expected return on assets of 6.8%. The re-measurement resulted in one-time charges of $0.2 million in the second quarter of 2018.

The following tables set forth the components of the Company’s net periodic expense relating to retirement benefit plans:

Qualified Defined Benefits



	Three Months Ended June 30,												Six Months Ended June 30,
	U.S. Plan						Non-U.S. Plans						U.S. Plan						Non-U.S. Plans
	2018			2017			2018			2017			2018			2017			2018			2017
Service cost	$	2,303		$	3,021		$	1,534		$	1,343		$	5,287		$	6,042		$	3,111		$	2,660
Interest cost	5,153			5,430			1,343			1,285			10,255			10,859			2,721			2,549
Expected return on plan assets	(9,745		)	(9,953		)	(2,037		)	(1,833		)	(19,956		)	(19,906		)	(4,128		)	(3,637		)
Amortization:
Prior service cost (credit)	339			106			(111		)	(112		)	426			213			(226		)	(222		)
Recognized actuarial loss	870			1,395			782			864			2,801			2,791			1,585			1,705
Transition obligation	—			—			1			1			—			—			2			2
Net periodic (income) expense	$	(1,080	)	$	(1	)	$	1,512		$	1,548		$	(1,187	)	$	(1	)	$	3,065		$	3,057
Less: Discontinued operations	$	273		$	846		$	73		$	203		$	950		$	1,692		$	247		$	405
Net periodic (income) expense - Continuing operations	$	(1,353	)	$	(847	)	$	1,439		$	1,345		$	(2,137	)	$	(1,693	)	$	2,818		$	2,652

Non-Qualified Supplemental Benefits



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Service cost	$	660		$	618		$	1,355		$	1,236
Interest cost	808			1,019			1,701			2,038
Amortization:
Prior service cost	1,351			1,103			2,314			2,205
Recognized actuarial gain	(281		)	(298		)	(536		)	(596		)
Net periodic expense	$	2,538		$	2,442		$	4,834		$	4,883
Less: Discontinued operations	97			306			351			613
Net periodic expense - Continuing operations	$	2,441		$	2,136		$	4,483		$	4,270

Post-Retirement Benefit Plans

The Company also maintains post-retirement benefit plans, although these plans are closed to new entrants. The supplemental and post-retirement benefit plans are supported by the general assets of the Company. The following table sets forth the components of the Company’s net periodic expense relating to its post-retirement benefit plans:



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Service cost	$	7		$	8		$	15		$	17
Interest cost	72			73			145			146
Amortization:
Prior service cost	4			2			7			4
Recognized actuarial gain	(7		)	(40		)	(15		)	(80		)
Net periodic expense	$	76		$	43		$	152		$	87

The total amount amortized out of accumulated other comprehensive earnings into net periodic pension and post-retirement expense totaled $2,948 and $3,021 for the three months ended June 30, 2018 and 2017, respectively, and $6,358 and $6,022 for the six months ended June 30, 2018 and 2017, respectively.

On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The service cost component is recognized within selling, general and administrative expenses and cost of goods and services, depending on the functional area of the underlying employees included in the plans, and the non-operating components of pension costs are included within other expense (income), net in the Condensed Consolidated Statements of Earnings. See Note 20 — Recent Accounting Pronouncements for additional information.

Defined Contribution Retirement Plans

The Company also offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans was $8,563, and $8,794 for the three months ended June 30, 2018 and 2017, respectively, and $18,852 and $18,110 for the six months ended June 30, 2018 and 2017.