CAPITAL CONSTRUCTION FUND

9 Months Ended

Sep. 30, 2024

CAPITAL CONSTRUCTION FUND

CAPITAL CONSTRUCTION FUND

7.          CAPITAL CONSTRUCTION FUND

The Capital Construction Fund (“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 nine months ended September 30, 2024 and 2023 consisted of the following:

	Nine Months Ended
	September 30,
(In millions)	2024		2023
CCF Cash and Cash Equivalents:
CCF cash balance at beginning of period	$	596.7	$	518.2
Cash deposits into the CCF		50.0		100.0
Cash paid for purchase of U.S. Treasury debt securities and accrued interest		(449.8)		—
Interest income deposited into the CCF		15.4		20.8
Qualifying withdrawal payments out of the CCF		(35.8)		(49.9)
Total CCF cash balance at end of period		176.5		589.1
Accrued interest earned on CCF Cash and Investments at end of period		2.2		2.5
Total CCF cash and cash equivalents balance at end of period		178.7		591.6
CCF Investments:
CCF investments balance at beginning of period		—		—
Purchase of U.S. Treasury debt securities		448.1		—
Accretion of investments		8.6		—
Total CCF investments balance at end of period		456.7		—
Total CCF cash and cash equivalents, and investments balance at end of period	$	635.4	$	591.6

CCF Cash and Cash Equivalents: Cash on deposit in the CCF account is invested in a short-term U.S. Treasury obligations fund with daily liquidity. At September 30, 2024, these short-term securities held within this CCF cash

account had a weighted average life of 68 days. Total CCF cash and cash equivalents was $178.7 million including accrued interest of $2.2 million as of September 30, 2024, and $599.4 million including accrued interest of $2.7 million as of December 31, 2023.

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 these investments accretes to face value on a straight-line basis until maturity. Such accretion is included in interest income in the Condensed Consolidated Statements of Income and Comprehensive Income. As of September 30, 2024, the Company had $456.7 million in held-to-maturity debt securities in the CCF investments account.

As of September 30, 2024, CCF investments maturities are as follows:

	As of
	September 30, 2024
Year (in millions)	Cost		Fair Value
Remainder of 2024	$	47.8	$	47.8
2025		189.8		190.5
2026		166.9		168.6
2027		52.2		53.0
Total CCF investments	$	456.7	$	459.9

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 nine months ended September 30, 2024 and 2023 consisted of the following:

	Nine Months Ended
	September 30,
(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		10.2		3.3
CCF assigned accounts receivable balance at end of period	$	228.3	$	213.2

As of September 30, 2024 and December 31, 2023, eligible accounts receivable of $228.3 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.