CAPITAL CONSTRUCTION FUND

3 Months Ended

Mar. 31, 2024

CAPITAL CONSTRUCTION FUND

CAPITAL CONSTRUCTION FUND

7.          CAPITAL CONSTRUCTION FUND

The CCF is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. A summary of the activities within the CCF cash and cash equivalents, and investments account for the three months ended March 31, 2024 and 2023 consisted of the following:

	Three Months Ended
	March 31,
(In millions)	2024		2023
CCF Cash and Cash Equivalents:
CCF cash and cash equivalents balance at beginning of period	$	599.4	$	518.2
Cash deposits into the CCF		—		100.0
Cash paid for purchase of U.S. Treasury debt securities and accrued interest		(449.8)		—
Interest earned on deposits and investments, net		5.1		5.5
Total CCF cash and cash equivalents balance at end of period		154.7		623.7
CCF Investments:
CCF investments balance at beginning of period		—		—
Purchase of U.S. Treasury debt securities		448.1		—
Accretion of investments		1.9		—
Total CCF investments balance at end of period		450.0		—
Accrued interest earned on Cash and Cash Equivalents, and Investments at end of period:		2.1		—
Total CCF cash and cash equivalents, and investments balance at end of period	$	606.8	$	623.7

CCF Cash and Cash Equivalents: Cash on deposit in the CCF cash and cash equivalents account is invested in a short-term U.S. Treasury obligations fund with daily liquidity. At March 31, 2024, short-term securities held within this account had a weighted average life of 77 days. The Company had $154.7 million and $599.4 million on deposit in the CCF cash and cash equivalents account as of March 31, 2024 and December 31, 2023, respectively.

CCF Investments: In February 2024, the Company purchased approximately $448.1 million of fixed-rate U.S. Treasuries with accrued interest of $1.7 million using CCF cash. The fixed-rate debt securities were purchased at a discount and have various maturity dates of up to 3 years. The cost of investments is adjusted for accretion of the discount until the securities mature. Such accretion is included in interest income in the Condensed Consolidated Statements of Income and Comprehensive Income. As of March 31, 2024, the Company had $450.0 million in held-to-maturity debt securities in the CCF investments account.

As of March 31, 2024, CCF investments maturities are as follows:

	As of
	March 31, 2024
Year (in millions)	Cost		Fair Value
Remainder of 2024	$	47.0	$	46.9
2025		186.3		185.7
2026		164.5		163.6
2027		52.2		51.9
Total CCF investments	$	450.0	$	448.1

CCF cash and cash equivalents, and investments are classified as a long-term asset on the Company’s Condensed Consolidated Balance Sheets as the Company intends to use withdrawals to fund qualified milestone progress payments for the construction of three new Jones Act vessels.

CCF Assigned Accounts Receivable: Activities within the CCF assigned accounts receivable account for the three months ended March 31, 2024 and 2023 consisted of the following:

	Three Months Ended
	March 31,
(In millions)	2024		2023
CCF assigned accounts receivable balance at beginning of period	$	218.1	$	9.9
Assigned accounts receivable		—		200.0
Interest earned on assigned accounts receivable		3.2		—
CCF assigned accounts receivable balance at end of period	$	221.3	$	209.9

During the three months ended March 31, 2023, the Company pledged $200.0 million of accounts receivable into the CCF. The Company did not pledge any accounts receivable into the CCF during the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, eligible accounts receivable of $221.3 million and $218.1 million were assigned to the CCF, respectively. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets.