Good morning, ladies and gentlemen. My name is Josh, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Kimball Electronics Second Quarter Fiscal 2020 Financial Results Conference Call. All lines have been placed on listen only mode to prevent any background noise. After Kimbell speakers' opening remarks, there will be a question and answer period.
Questions. 2020 will be recorded and may contain forward looking statements as defined under the Private Securities Litigation Reform Act of 1995. Risk Factors that may influence the outcome of forward looking statements can be seen in Kimbell's annual report on Form 10 K for the year ended June 30, 2019 and in today's release. The panel for today's call is Don Sharon, Chairman of the Board and Chief Executive Officer and Mike Surgessketter, Vice President and Chief Financial Officer of Kimball Electronics. I would now like to turn today's call over to Don Sharon.
Mr. Sharon, you may begin.
Thank you, Josh. Welcome everyone to our second quarter conference call. Our earnings release was issued yesterday afternoon on results of our second quarter ended December 31, 2019. We have posted a financial summary presentation to accompany this conference call. Presentation can be found on our Investor Relations website within the Events and Presentations tab.
Or if you are listening via the webcast, you can follow along by advancing the slides or download them from the downloads tab on the webcast portal. I will begin by making a few After that, we will answer any questions that you may have. We delivered solid growth results in the second quarter of fiscal year 2020, despite the impact from the strike at General Motors and the continued softness in the overall market. We expect softness and fluctuation fluctuations in the overall market to continue We remain cautiously optimistic that we will achieve our goal of We continue to monitor the uncertainties facing our customers and that they ultimately place on us as their supply partner. The signing of the phase 1 China trade agreement and USMCA provide us with renewed optimism as we further develop our long term business plans for those geographies.
We also continue to monitor an unfortunate coronavirus outbreak in China and its negative impacts on our operations in our 2 China facilities. Including the effect on shipments in and out of China, the availability of critical components and the health and availability of our workforce. The close relationships that we have with our customers, our suppliers and our employees will help us manage through the difficult issues. Resulting from the coronavirus. Regaining stability in our base business and the ramp up of new business wins will be essential to helping us achieve We are pleased with It is worth mentioning that the impact of the strike at GM would have been far greater without the progress that we've made in our diversification strategy over the past decade or so.
The lost production and sales caused by the strike were offset by sales related to certain contracts with customers beginning to meet the criteria for 2 recognized revenue over time during the period and the ramp up of new programs. Including programs for fully electric vehicles. We continue to gain some traction in the new business opportunities We are encouraged by Our integration work with GES continues as we have now identified a dozen or so value creating automation, optical inspection, and artificial intelligence projects that will eventually improve the productivity of our own existing manufacturing facilities. We are also excited about the role GES is playing in our digital and industry 4.0 strategy as we work to roll out EM tab a GES developed software solution in all our global facilities in 2020. We are working diligently suit to achieve our operating margin and return on invested capital goals.
We are doubling down on execution across all of our units as we continue to drive Lean Six Sigma Projects and global supply initiatives to improve yield and throughput and drive improvement in our margins. Margin expansion and capital efficiency will continue to be priorities of focus for us. Our cash conversion days for the quarter ended December 31, 2019 were 76 days, flat to the quarter ended December 31, 2018, and up from 73 days in first quarter of fiscal year 2020. While the volatility in demand has made it difficult for us to achieve our inventory objectives, and thus our cash conversion days objectives, we remain committed to our inventory reduction goals and actions. We invested 10,400,000 capacity expansion and to support the launch and ramp up of new programs.
During second quarter of fiscal year 2020, We also returned $2,600,000 to our share owners by purchasing 180,000 shares of our common stock which brings our total to 70 under our board authorized share repurchase program. And finally, as I stated earlier, we are making good progress on the integration The acquisition of GES brings us new technologies and capabilities in automation, test and measurement in industrial applications and is in a significant step in our strategy as a multifaceted manufacturing solutions provider. We are excited about the opportunities to present in our own manufacturing facilities as part of our overall digital and industry 4.0 strategy. Now I'll turn it over to Mike to discuss our second quarter results in more detail. We will then open the call to your questions.
Mike?
Thanks, Don. During my comments, I will be referring to the slide deck Don mentioned, excuse me, which can be found on our Investor Relations website within the Events and Presentations tab. After listening via the webcast, you can follow along by advancing the slides on the webcast portal. As shown on Slide 3, 8% increase compared to net sales of $284,100,000 in the prior year second quarter. Favorably impacting our consolidated net sales by 2% for the quarter was the acceleration of revenue for certain contract with customers, which began to meet Partially offsetting the impact of the transition in revenue treatment for these certain contracts were foreign exchange rates, which reduced our consolidated net sales by Slide 4 represents our net sales mix by vertical market, comparing our net sales by vertical to the same quarter in the prior year.
Our automotive vertical was up 20% compared to the same quarter a year ago, largely driven by improved demand in China, compared to the second quarter of 2019. Negative impacts of the GM strike were largely offset by an increase in revenue from certain contract which with customers beginning to meet the criteria to recognize revenue over time during the current quarter. Our medical vertical was from a year ago as a result of increased demand and new product introductions and smart metering programs. Which 18% from the prior year second quarter as a result of the phase out of certain programs. Our gross margin in the second quarter reflected on Slide 5 was 6.7%, which declined 50 basis points from 7.2 percent in the second quarter of last fiscal year.
Our decrease in gross margin in the current year quarter compared to a year ago was a result of unfavorable product mix and the unfavorable impact from the decline in sales to our customers at Support GM due to the UAW labor strike, which more than offset any leverage gain on higher revenue. Selling and administrative expenses, slide 6 in the deck were $11,800,000 in the 2nd quarter. Which was up quarter. The increase in selling and administrative absolute dollars was largely due to changes in the fair value of the supplemental employee retirement plan, or SERB liability, which accounted for a 40 basis point increase compared to the prior year second quarter. The revaluation of the SERP liability is exactly offset by gains or losses recorded in the SERP investments during the quarter, which is recorded in Operating income for the 2nd quarter on Slide 7 in the deck came in at $8,700,000 or 2.8 percent of net sales.
This compares to operating income of $10,200,000 or 3.6 percent of sales in the same period a year ago. As I previously mentioned, the impact of the comparison to the prior year quarter relating to changes in the fair value of the SERP liability was 40 basis points. Other income expense net was income of $100,000 in this 2nd quarter, which compares to expense of $1,600,000 in the second quarter of fiscal year 2019. Other income net in the current year second quarter includes $800,000 from favorable exchange rate fluctuations and $500,000 in gains on the SERF investments. Which were largely offset $1,100,000 of interest expense and $600,000 in losses on SERP investments.
Excuse me. The effective tax rate for the current year second quarter was 25.1 percent, which compares to 17.4 percent in the prior year second quarter. The difference in the effective tax rate compared to the prior year was primarily related to changes in the valuation allowance Slide 8 reflects our adjusted net income trend. Our net income in the second quarter of fiscal 2020 came in at $6,600,000, This compares to GAAP net income of $7,100,000 and non GAAP adjusted net income of $6,900,000 in the second quarter of fiscal 2019. The non GAAP adjusted net income in the prior year excludes adjustments to the provision for income tax reform.
Diluted earnings per share was $0.26 for the second quarter of this fiscal year, which compares to a GAAP diluted EPS $2.7 and non GAAP adjusted diluted EPS of $0.26 reported for the same quarter last year. Cash and cash equivalents at December 31, 2019, were $52,200,000. Operating cash flows are shown $300,000, which was driven by changes in operating assets and liabilities, largely from increases in accounts receivable and contract assets. Which more than offset dollars of cash. Our cash conversion days or CCD was flat for the 3 months ended December 31, 2019, when compared to the same 20, our CCD increased 3 days, driven by an increase in our DSO, our days sales outstanding.
Slide 12 reflects our capital and depreciation trend. As Don mentioned, our capital investments in the 2nd quarter totaled $10,400,000, largely related to manufacturing equipment to support new production awards and to increase capacity. Borrowings on our credit facilities at December 31, 2019 were $119,000,000, which were down 7,000,000 6 months ended December 31, 2019, was utilized to partially pay down our current debt. Our short term liquidity available representative cash and cash equivalents plus the unused amount of our credit facilities totaled $120,000,000, at December 31, 2019. In conclusion, our financial condition is strong, and we are in excellent position to continue this solid growth trend while focusing on improvements in operating margin and our return on invested capital.
With that, I would like to open up today's call to questions from the analysts Josh, do we have any analysts
And I'm not showing any questions at this time. I would now like to turn the call back over to Don Churn for any further remarks.
Thank you, Josh. And that brings us to the end of today's call. We appreciate your interest and look forward to speaking with you on our next call. Thank you and have a great day.
At this time, listeners may simply hang up to disconnect from the call. Thank you and have a nice day.