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 were able to elect lump-sum payments from plan assets to be paid in the fourth quarter. Such payments are expected to result in a non-cash settlement charge to the Company's fourth quarter 2018 earnings when lump sum payments are paid out, the amount of which will be finalized in the fourth quarter. 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 September 30,												Nine Months Ended September 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	$	1,861		$	3,021		$	1,054		$	1,399		$	7,148		$	9,063		$	4,165		$	4,059
Interest cost	5,236			5,429			1,098			1,332			15,491			16,288			3,819			3,881
Expected return on plan assets	(9,518		)	(9,953		)	(1,710		)	(1,885		)	(29,474		)	(29,859		)	(5,838		)	(5,522		)
Amortization:
Prior service cost (credit)	69			107			(112		)	(115		)	495			320			(338		)	(337		)
Recognized actuarial loss	150			1,396			673			894			2,951			4,187			2,258			2,599
Transition obligation	—			—			—			1			—			—			2			3
Net periodic (income) expense	$	(2,202	)	$	—		$	1,003		$	1,626		$	(3,389	)	$	(1	)	$	4,068		$	4,683
Less: Discontinued operations	$	—		$	846		$	—		$	203		$	950		$	2,537		$	247		$	608
Net periodic (income) expense - Continuing operations	$	(2,202	)	$	(846	)	$	1,003		$	1,423		$	(4,339	)	$	(2,538	)	$	3,821		$	4,075

Non-Qualified Supplemental Benefits



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Service cost	$	635		$	619		$	1,990		$	1,855
Interest cost	751			1,019			2,452			3,057
Amortization:
Prior service cost	931			1,103			3,245			3,308
Recognized actuarial gain	(298		)	(298		)	(834		)	(894		)
Net periodic expense	$	2,019		$	2,443		$	6,853		$	7,326
Less: Discontinued operations	—			307			351			920
Net periodic expense - Continuing operations	$	2,019		$	2,136		$	6,502		$	6,406

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 September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Service cost	$	8		$	8		$	23		$	25
Interest cost	73			74			218			220
Amortization:
Prior service cost	3			2			10			6
Recognized actuarial gain	(8		)	(41		)	(23		)	(121		)
Net periodic expense	$	76		$	43		$	228		$	130

The total amount amortized out of accumulated other comprehensive earnings into net periodic pension and post-retirement expense totaled $1,407 and $3,049 for the three months ended September 30, 2018 and 2017, respectively, and $7,765 and $9,071 for the nine months ended September 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 (income) expense, 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 $8,649, and $7,521 for the three months ended September 30, 2018 and 2017, respectively, and $27,500 and $25,632 for the nine months ended September 30, 2018 and 2017.