Q1 2012 -- Could this have something to do with wanting to see a unit run on the shipping dock?
"The significant difference in our GAAP and cash-based gross margin centers around a $1.4 million non-cash warranty accrual. Capstone's warranty expense continues to run higher than anticipated on the new C200 and C1000 Series product lines. In certain instances, we've elected to take strategic reasons in play and upgrade even early ventured C200s to today's more robust design. Because we are selling a premium product and because every C200 and every C1000 seated in the market is a potential customer testimonial, it's imperative that all of our products meet or exceed customers' expectations. With that being said, management has taken several steps to more cost effectively and efficiently upgrade these older units and lower the warranty rates to targeted levels as quickly as possible."
Q2 2012 -- Seems to me that most units are shipped to the "End User Customer per the CC. Seems to be a reasonable model. Several days delay isn't going to cause Capstone heartburn (except at the end of this last Q1) as stated in a prior post. I don't recall ever hearing anything about "Dock Trials" except in the ship building industry and even there the GE Turbines or Low Speed Diesels get their first chance to spin up after installation.
"Well, 2 issues on the backlog. Number 1, we try to go just in time with our customers so we make sure that we ship the product directly to their end-use customer, to the job site. Air bearings are a fantastic invention, but they're not wine and they don't sit very well over time, so we do not want the product to sit in the field or sit in somebody's shop. So we're trying to match our product manufacturing to the requirements of the customer, which makes us a little susceptible to construction schedules and construction delays,"
The above quote gives some good insight into the reason for backlog and "just in time" shipping. As far as to the issue of responsibility you might be amazed at what good management can do if they have to meet a certain schedule or ship date. Of course, we'll never know the reason for the dock trial and it really isn't important except hopefully the AR will be reflected this quarter.
