Gross margin as a percent of revenue decreased from 31.7 in the prior year quarter to 29.3 for the current year quarter. The Company experienced challenges particularly in its label operations due in part to the unexpected reduction in the Industrial business customer demand during the quarter. This reduction of label sales coupled with material cost increases of pressure sensitive materials accounted for about $2 million of the margin decline. In addition, the investment in digital color equipment impacted expense with no immediate offset of revenue in the quarter. Year-to-date, gross margin as a percent of revenue reduced to 31.0 percent in the current year from 31.7 percent during the prior year, which is due to $2.1 million of more favorable LIFO adjustments recognized last year. Selling, general and administrative expenses excluding pension loss amortization and postretirement termination benefits was up $0.4 million relative to the prior year quarter and down $2.7 million on a year-to-date basis.
Adjusting for pension loss amortization, restructuring charges and postretirement termination benefits, non-GAAP net income was a break-even for the current quarter, compared with non-GAAP net income of $4.2 million, or $0.15 per diluted share for the prior year quarter. Adjusting for pension loss amortization and settlement, restructuring charges and postretirement termination benefits, non-GAAP net income was $7.1 million, or $0.25 per diluted share for the first nine months compared with non-GAAP net income of $9.8 million, or $0.34 per diluted share for the prior year first nine months.
For the first nine months, capital expenditures were $12.0 million and are expected to be in the range of $18-21 million for the year, the majority of which will support the advancement of core growth solutions. In addition, the Company acquired 100% of the ownership interest in iMedConsent, LLC (dba Dialog Medical) for $4.9 million in cash. Additionally, a $0.7 million note payable will be paid over two years and, up to an additional $2.0 million in contingent payments based upon the performance of the business through the two-year anniversary of the transaction. Pension funding contributions were $20.0 million through the first nine months and are expected to be approximately $24-30 million for the year. Non-GAAP cash on a net debt basis was negative $5.8 million for the first nine months.
Postretirement Healthcare Plan Termination
Standard Register terminated its postretirement healthcare plan effective December 31, 2011. While there is no successor plan to replace coverage for the retired employees currently covered by the plan, the Company is facilitating their purchase of individual plans in the marketplace.
The elimination of these benefits triggered a one-time favorable $20.2 million pre-tax impact to earnings due to elimination of $5.1 million of accumulated postretirement benefit obligations recorded as a long-term liability on the balance sheet plus, a net credit of $15.1 million for the immediate recognition of previously unrecognized prior service credits and actuarial losses that resided in accumulated other comprehensive income and deferred tax liabilities. Going forward, the Company will no longer amortize the unrecognized prior service credits and actuarial losses that have been favorably impacting pre-tax earnings by approximately $1.0 million per quarter or $4.0 million annually.
On Thursday, October 27, 2011, Standard Register's board of directors declared a quarterly dividend of $0.05 per diluted share to be paid on December 9, 2011, to shareholders of record as of November 25, 2011. The board will consider future dividend payments on a quarter-by-quarter basis in accordance with its normal practice.