In fact, I continue to hold weekly 2-hour state of the company calls with over 40 of my key managers during which I solicit input on operational challenges, sales opportunities and regional developments to ensure that we are all moving in the same direction.
Specifically, even while quarterly net sales declined by 8%, net income increased by 25% over the period.
At the same time, and I hate to steal David's thunder here, as of June 30, we have strengthened our balance sheet by reducing inventory even with expanded product offerings, reducing debt and improving cash from operations by $38 million so far this year.
With regard to our financial performance for the three months ended June 30, 2020, the company's net sales decreased by 8% to $105 million as compared to sales of $113 million this time last year.
Within that overall decline, our U.S. sales were down about $6 million and our international sales were down about $2 million.
International sales accounted for 44% of net sales as compared to 43% of net sales this time last year.
Without the adverse currency translation effect on our Brazilian and Mexican sales, our second quarter consolidated sales would have been $3 million higher.
As a result of these various dynamics, we improved our gross margin performance when expressed as a percentage of sales to 39% of sales in the second quarter of 2020 as compared to 37% in the same period of 2019.
For the three months ended June 30, 2020, our operating expenses decreased by $1.9 million or 5% as compared to the expenses incurred in the same period of the prior year.
In the prior year, however, we had a benefit of approximately $1.8 million, primarily associated with adjustments to deferred liabilities on a past acquisition.
Making adjustments for that item, our underlying reduction in recurring operating expenses is greater and amounted to approximately $3.7 million or about 10%.
In summary, for the second quarter, though our sales were down, selling prices and overall mix of sales remain good, factory performance was improved compared to 2019 and gross margins as a percentage of sales increased from 37% to 39%.
And as a result, net income increased by 25% in comparison to 2019.
Sales were down about $12 million or 6% as compared to the prior year.
Within that performance, net sales of both our domestic and international businesses were down about $6 million each.
The devaluation in key currencies resulted in about $4 million lower sales when sales originally recorded in the Brazilian real and the Mexican peso were translated to dollars for inclusion in our consolidated financial statements.
Our factory performance for the six-month period was excellent, with costs up only 0.006% and factory output up about 13%.
Overall, gross margin when expressed as a percentage of net sales was flat period-over-period at 39% of sales.
In the prior year, however, we had a benefit of approximately $3.3 million, primarily associated with adjustments to deferred liabilities on a past acquisition.
Making adjustments for that item, our underlying reduction in recurring operating expenses amount to about $3.3 million or about 5%.
Our net income for the first six months of 2020 ended at $4.4 million or $0.15.
This compared with $7 million or $0.24 in the same period of 2019.
At the end of June 2020, our inventories were at $180 million.
This includes about $5 million of inventory related to acquisitions completed since June 30, 2019.
An adjusted or underlying inventory of $175 million represents an $18 million reduction as compared to $193 million this time last year.
The estimate of $145 million that we previously indicated remains a good estimate, excluding any acquisitions.
Year-to-date, in 2020, working capital has increased by only $8 million as compared to $45 million in the same period of 2019.
In the first six months of 2020, we have generated $6 million from operations as compared to using $32 million in the first half of 2019.
Comparatively, that amounts to a positive change of $38 million period-over-period.
With regard to liquidity, at the end of the second quarter, availability under our credit line was $49 million, which compares to $31 million at the same point in 2019.
Indebtedness ended at $159 million at June 30, 2020, as compared to $165 million this time last year.
During the last year, in addition to paying down $6 million in debt, we have funded more than $35 million in investments, including fixed assets, product acquisitions and technology investments from the cash generated from operations.
We expect that these core growth products will generate over $100 million in high-margin revenues per annum within the next five years.
For over 20 years, our current SmartBox users have recognized the benefit of using our granular insecticide products, primarily to address corn rootworm pressures which tends to be greatest in the I-70, I-80 corridor, where most farmers also grow soybeans.

Summary:
With regard to our financial performance for the three months ended June 30, 2020, the company's net sales decreased by 8% to $105 million as compared to sales of $113 million this time last year.