Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Contingencies

We are a party to various legal proceedings, including those noted in this section. Livent records reserves for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. As additional information becomes available, management adjusts its assessments and estimates. Legal costs are expensed as incurred.

In addition to the legal proceedings noted below, we have certain contingent liabilities arising in the ordinary course of business. Some of these contingencies are known but are so preliminary that the merits cannot be determined, or if more advanced, are not deemed material based on current knowledge; and some are unknown - for example, claims with respect to which we have no notice or claims which may arise in the future from products sold, guarantees or warranties made, or indemnities provided. Therefore, we are unable to develop a reasonable estimate of our potential exposure of loss for these contingencies, either individually or in the aggregate, at this time. There can be no assurance that the outcome of these contingencies will be favorable, and adverse results in certain of these contingencies could have a material adverse effect on the consolidated financial position, results of operations in any one reporting period, or liquidity.

IPO Securities Litigation

Beginning on May 13, 2019, purported stockholders of the Company filed putative class action complaints in the Pennsylvania Court of Common Pleas, Philadelphia County, and in the U.S. District Court for the Eastern District of Pennsylvania, in connection with the Company’s October 2018 IPO. On August 20, 2019, the actions then pending in federal court were consolidated under the caption, Nikolov v. Livent Corp., et al., No. 19-cv-02218. In an order entered on September 23, 2019, the actions then pending in state court were consolidated under the caption, In re Livent Corporation Securities Litigation, No. 2019-0501229. The operative complaints in both the state and federal actions assert claims against the Company and certain of its current and former executives and directors in connection with the Company’s October 2018 IPO. The actions also name as defendants the underwriters in the IPO and FMC Corporation, whom the Company is generally obligated to indemnify. The complaints allege generally that the offering documents for the IPO failed to adequately disclose certain information related to the Company’s business and prospects, in purported violation of Sections 11, 12(a)(2), and/or 15 of the Securities Act. The complaints seek unspecified damages and other relief on behalf of all persons and entities who purchased or otherwise acquired Livent common stock pursuant and/or traceable to the IPO offering documents. On October 11, 2019, defendants moved to dismiss the state action in its entirety, and on November 18, 2019, defendants moved to dismiss the federal action in its entirety. Briefing on the motions is complete, but the courts have not yet ruled. Pursuant to an order of the state court dated October 22, 2019, discovery in the state action is stayed pending further order of the Court. By operation of the Private Securities Litigation Reform Act, discovery in the federal action is stayed pending a ruling on defendants’ motion to dismiss that action. At this point, a range of reasonably possible losses, if any, cannot be estimated by the Company.

Nemaska arrangement

In October 2016, we entered into a long-term supply agreement (the “Agreement”) with Nemaska Lithium Shawinigan Transformation Inc. (“Nemaska”), a subsidiary of Nemaska Lithium Inc. based in Quebec, Canada. Pursuant to the Agreement, Nemaska is to provide lithium carbonate to us. Due to significant delays, Nemaska had reported that it was not in a position to start delivering lithium carbonate according to the schedule in the Agreement.

To enforce our right to supply under the Agreement, in July 2018, we filed for arbitration before the International Chamber of Commerce (in accordance with the Agreement’s terms). In an attempt to resolve the dispute, the parties actively negotiated a revised schedule as well as arrangements to see that (in spec) lithium carbonate be supplied to us from alternative sources under the responsibility of Nemaska, with a view to providing us with product while minimizing Nemaska’s exposure until its electrochemical plant is in operation.

On September 25, 2018, the parties agreed to suspend the arbitration process under the expectation that the parties would agree on arrangements regarding alternative supply sources and an amended and restated supply agreement to reflect such alternative arrangements. On February 15, 2019 we received written notice from Nemaska that it was terminating the Agreement. Livent disagrees that Nemaska had the right to terminate the Agreement. After receiving Nemaska’s termination notice, we resumed our previously suspended arbitration to pursue our claims. On December 22, 2019, Nemaska and certain affiliates filed for creditor protection under the Companies’ Creditors Arrangement Act in the Superior Court of Québec. By order of the Superior Court of Québec, the arbitration has been stayed until further order of the court. If and when the arbitration resumes, there can be no assurance that we will prevail in the arbitration or that Livent will ever receive supply from Nemaska.

Leases

All of our leases are operating leases as of March 31, 2020 and 2019. We have operating leases for corporate offices, manufacturing facilities, and land. Our leases have remaining lease terms of 2 years to 15 years. Quantitative disclosures about our leases are summarized in the table below.



	Three Months Ended March 31,
(in Millions, except for weighted-average amounts)	2020		2019
Lease Cost
Operating lease cost ⁽¹⁾	$	0.6	$	0.5
Short-term lease cost ⁽²⁾	0.2		—
Total lease cost ⁽¹⁾	$	0.8	$	0.5
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases	$	0.6	$	0.4

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(1)	Variable lease cost and sublease income for the three months ended March 31, 2020 and March 31, 2019 were each less than $0.1 million. Lease expense is classified as "Selling, general and administrative expenses" in our condensed consolidated statements of operations.


(2)	Short-term lease cost for the three months ended March 31, 2019 was less than $0.1 million.

As of March 31, 2020 and December 31, 2019, our operating leases had a weighted average remaining lease term of 11.7 years and 11.4 years, respectively. As of March 31, 2020 and December 31, 2019, our operating leases had a weighted average discount rate of 4.4%.

The table below presents a maturity analysis of our operating lease liabilities for each of the next five years and a total of the amounts for the remaining years.



(in Millions)	Undiscounted cash flows
2020 (excluding the three months ended March 31, 2020)	$	1.4
2021	1.9
2022	1.8
2023	1.7
2024	1.6
Thereafter	11.7
Total future minimum lease payments	20.1
Less: Imputed interest	(4.4		)
Total	$	15.7