When fellow Fool Dave Marino-Nachison last looked in on engine- and generator-maker Briggs & Stratton (NYSE:BGG) seven months ago, the company seemed to be chugging along just fine.

But five months later, one of its customers, Murray Inc., hurled a monkey wrench at the company -- going bankrupt and leaving Briggs with $40 million worth of unpaid bills.

In its earnings report for the first half (1H) of 2005, released Friday, Briggs described how its customer's bankruptcy affected Briggs' own financial results. After selling $943 million worth of goods and services in 1H, Briggs recorded just $5.6 million in profits, down considerably from last year's $24.6 million. On a per-diluted-share basis, that translated into a 79.6% decrease in profits, which fell from $0.54 to $0.11 per diluted share. Share dilution of 3.4% over the course of the past year contributed only modestly to the fall in per-share earnings, with the vast bulk of the decline due to write-offs of bad debts owed by Murray.

While that loss was unavoidable, Briggs is attempting to make some lemonade out of this lemon of a debt, by turning around and buying Murray out of bankruptcy for a bargain price. Briggs has bid $125 million to acquire all of Murray's assets, excluding real estate. If its bid is successful, Briggs expects to record a gain of $20 to $30 million on the purchase, neutralizing at least half of the loss from the bad debt. Briggs will then run Murray as a subsidiary, manufacturing lawn and garden equipment in hopes of making further profits to help repair this period's losses.

It will need them, too. In marked contrast to the company's condition six months ago, Briggs looks to be struggling today, and the numbers contained in Friday's report are anything but pretty. Free cash flow is nowhere to be seen. On the contrary, the company has had a net cash outflow of $285 million over the past six months -- although it's worth noting that the second half of the year is seasonally weak for a company in Briggs' line of work.

The 67.4% increase in inventories over the past year, on the other hand, is harder to explain. Sales increased just 26.1% year on year, and so with inventory piling up much faster than sales, either the company is gearing up to meet amazing demand next quarter -- or there's a problem with moving product.

See how fast things can change for a business: Compare the above with Dave's review of the company and its acquisition of Simplicity Manufacturing, just seven short months ago.

Fool contributor Rich Smith holds no position, short or long, in Briggs & Stratton.