Sales of $10.1 billion were up 5% on a reported and organic basis, and the growth was pervasive throughout the portfolio. We’ll dive into some of the business specifics in a moment but we’re encouraged by the improvement in organic sales growth as we’ve progressed throughout the year. Remember, it was 1% in the first quarter, 3% in the second quarter and now 5% in third quarter.
On a regional basis organic sales were up 5% in the US, 1% in Europe, 4% in China and double digits in a number of our other high-growth regions. In Europe we have experienced stable growth rates in the first three quarters of the year, modest growth rates which are very consistent with what we saw in 2012 and 2013. We are planning more of the same for Europe in the fourth quarter and into 2015.
As for China, the growth was impacted by our deliberate shift of resins and chemicals exports to other parts of Southeast Asia. So excluding that, our China sales would have been up 7% in the quarter. On a similar basis, we expect China to grow sales faster than GDP for the full year.
Segment profit growth and margin expansion were both strong in the quarter. Segment profit increased 9% while segment margins expanded 70 basis points to 17.4%, which by the way is 20 basis points more than our guidance. We had profit growth and margin expansion in each of our three SBGs, so again, a balanced contribution across the portfolio.
The businesses benefited from higher volume in the quarter, and productivity continued to be a key driver of margin expansion. These elements more than offset inflation and our continued investments for growth in sales, marketing, and product development.
Items below segment profit were mostly as anticipated and so our net income increased 14% normalized for tax – not bad paired with a 5% sales increase. Also we funded $21 million of restructuring projects in the quarter, bringing the year-to-date total to approximately $120 million.
The third quarter tax rate came in at 24.6% versus 27.2% in 2013 and versus the 26.5% we planned. There are a number of moving parts that sometimes make the tax rates vary quarter by quarter. However we continue to expect a tax rate of 26.5% for the full year consistent with our initial planning.
So reported earnings per share of $1.47 in the quarter, up 19% versus the prior year. Normalizing for tax, EPS would have been $1.43, up 14% which is $0.01 above the high end of the guidance we provided in July. Even with essentially flat share count we once again achieved double-digit EPS driven primarily by stronger sales and segment margins.
Finally, free cash flow of $1 billion in the quarter was 12% higher than 2013 despite an approximate 28% increase in CapEx investments. Overall another strong quarter, giving us confidence heading into the last three months of the year.
Moving to Slide 5, we’re looking at Aerospace results which as you will recall include Transportation Systems in both years.
Aerospace sales were flat in the quarter on a reported basis, reflecting the friction materials divestiture, but were up 3% organically which was at the high end of our guidance range. Organic sales growth accelerated in both commercial aero and defense and space while Transportation Systems saw continued strong top line organic growth.
Aerospace margins expanded by 150 basis points driven by productivity net of inflation, where material productivity continues to be a significant driver, also commercial excellence and the favorable impact of the friction materials divestiture.
Starting with commercial OE, sales increased 5% with good growth in both air transport and regional as well as business and general aviation. In ATR we saw the continued benefit of higher OE build rates while business aviation saw increased engine shipments coming with certifications on the Bombardier Challenger 350 and Embraer Legacy 500.
Commercial aircraft sales were up 2% in the quarter with strong spares growth in ATR. ATR had double-digit spares growth with increased mechanical and electrical demand across the major regions. We’re expecting the ATR aftermarket growth to be in line with flight hours in Q4 and would characterize current airline buying activity as stable to modestly better.
The ATR spares growth was offset by anticipated lower repair and overall activity and a decline in BGA RMUs – that is retrofit modifications and upgrades. You will recall that RMU sales growth has been on a tear for the last couple of years, making comparisons to prior periods challenging. We’re still excited by this business and continue to invest to develop new offerings.
Defense and space sales returned to growth in the quarter, increasing 3% and continued the improvement we’ve seen throughout 2014. You might recall we were down 8% in Q1 and 1% in Q2 so the trend as we predicted is improving. International programs continued to drive growth with double-digit sales increases, while our US DOD sales grew modestly. And government services declines continued to moderate on a year-over-year basis.
Transportations Systems sales declined 10% on a reported basis, again reflecting the friction materials divestiture, but were up 4% organically. Once again we saw strong turbo volume growth across our three largest regions – Europe, North America, and China. And in each of these regions our volume growth outpaced auto production.
Two-thirds of the volume growth was attributable to light vehicle gas applications where we continued to see increased global penetration. We also saw our European commercial vehicle volume more than double in the quarter as we continued to benefit from new programs following the implementation of Euro-6 emission regulations in the region.
On Slide 6 we are looking at ACS results for the quarter. Sales were up 9% on a reported basis and 4% on an organic basis – again at the high end of our guidance. The difference in the two rates principally reflects the contributions of Intermec.
ESS sales, so the products businesses, were up 6% organically, continuing the trend of progressively stronger growth we have seen in each quarter in 2014. It’s hard to single out one business in the ESS portfolio because the growth was very broad, but scanning mobility and industrial safety celebrated the most.
ESS benefited from new product introductions, higher US residential sales which benefited both ECC and Security, US non-residential improvement in ECC, fire and industrial safety, and further penetration in high-growth regions particularly in China where ESS once again had double-digit sales growth in the quarter.
Building Solutions and Distribution or BSD sales were up 2% with continued strength in the Americas fire and security distribution businesses offset by flat sales in building solutions.