Second quarter sales increased to $3.5 billion from $3.4 billion a year ago. Operating cash flow for the quarter was $374 million and free cash flow was $308 million.
Commenting on the quarterly results, David N. Farr, Emerson's chief executive officer, said, "I am pleased that despite lower underlying sales our restructuring efforts allowed us to achieve solid earnings growth in four of our five business segments, with total segment earnings increasing to $416 million from $392 million in the second quarter of 2002. Although persistent weakness remains in many of our end markets, we continue to strengthen our technology and leadership positions in major market segments around the world and drive capital efficiency improvements across our entire company. The progress we made toward these objectives during the quarter is shown in our margin improvement, new customer and project wins, and continued capital efficiency gains."
Sales in the heating, ventilating, and air-conditioning business increased 8 percent to $693 million; driven by continued penetration gains, market growth and a 3 percent favorable currency impact. The sales increase reflected strong growth in Asia, solid growth in the European commercial market and modest growth in the U.S. Earnings increased 9 percent to $104 million, a margin increase of 20 basis points, driven primarily by higher sales.
Sales in industrial automation were $646 million, up nearly 8 percent from the second quarter of 2002, the result of an 8 percentage point favorable impact from currency. Underlying sales were flat with a moderate decline in industrial activity in the United States offset by an increase in international sales led by strength in Asia. Earnings for the segment were up 19 percent, a margin increase of 1.2 percentage points, demonstrating the benefits of the restructuring activities despite a flat underlying sales environment.
Quarterly sales in process control declined 2 percent to $819 million reflecting a 5-percent increase from currency less a 3 percent impact from divestitures. Underlying sales were down 4 percent. U.S. sales were down 9 percent, while investments for new projects in Asia and Eastern Europe showed strength. Customer maintenance and repairs orders were down, continuing to put pressure on margins across the business.
Appliance and tools segment sales increased 3 percent to $870 million, with a modest decline in underlying sales, favorable currency adding 2 percentage points, and the impact from acquisitions adding 1 percentage point. The tools and storage businesses were flat to slightly up driven by continued strong performance at ClosetMaid. Motors and appliance solutions sales were down slightly. Earnings for the segment increased 5 percent to $121 million, a 30 basis point margin improvement, driven by higher sales and restructuring.
Emerson has made the strategic business decision to discontinue the manufacture of bench top and stationary woodworking power tools and to work with The Home Depot on options to secure supply for Home Depot. Emerson has developed a program to license the RIDGID brand to top manufacturers to fulfill Home Depot's future requirements. Emerson remains fully committed to its RIDGID brand. RIDGID's reputation for quality and the distribution of RIDGID woodworking power tools through Home Depot is important to both Home Depot and Emerson. Emerson will continue supporting the full RIDGID line and will remain a significant manufacturer of RIDGID wet/dry vacuums, hand tools, and other products for Home Depot.
In the electronics and telecommunications business, sales decreased 6 percent to $554 million for the quarter, including a 3-percentage point favorable impact from currency. Most major geographic markets experienced significant declines, except for Asia, which declined only modestly. The traditional environmental and power systems businesses were flat to slightly down, and the OEM power electronics business experienced a decline in sales versus the prior year.
The company is evaluating strategies to maximize the value of its Emerson Telecommunication Products (Jordan) business, which is part of the electronics and telecommunications segment. The Board of Directors has approved a plan to divest a portion of this business. Due to current challenging market conditions, a loss is reasonably possible on the sale of Dura-Line, the company's fiber-optic conduit unit, and an appraisal is being completed to determine possible impairment of the remaining business. The Company expects to realize tax benefits in excess of any loss resulting from the sale and impairment review as the tax basis significantly exceeds the carrying value of this business.