spirent plc annual report 2002 cautionary statement regarding forwardlooking statements
certain statements provided in this annual report may be forwardlooking statements as that term
is deﬁned in the united states private securities litigation reform act 1995 based on current
expectations or beliefs as well as assumptions about future events you can sometimes but 
not always identify these statements by the use of a date in the future or such words as ‘will’
‘anticipate’ ‘estimate’ ‘expect’ ‘project’ ‘intend’ ‘plan’ ‘should’ ‘may’ ‘assume’ and other similar
words by their nature forwardlooking statements are inherently predictive and speculative and
involve risk and uncertainty because they relate to events and depend on circumstances that will
occur in the future you should not place undue reliance on these forwardlooking statements which
are not a guarantee of future performance and are subject to factors that could cause our actual
results to differ materially from those expressed or implied by these statements such factors
include but are not limited to the effects of competition on our business our ability to develop 
and commercialise new products and services and realise product synergies our ability to conclude
the divestment of our interests in the wago joint venture our ability to effect certain amendments
to the terms of our loan notes and bank facility risks relating to the acquisition or sale of businesses 
and our subsequent ability to integrate businesses our ability to meet and achieve the beneﬁts of
our cost reduction goals and otherwise successfully adopt cost structures to respond to changes in
business conditions risks that our cost cutting initiatives will impair our ability to develop products
and remain competitive our ability to improve efﬁciency and adapt to the current economic
slowdown and other changes in demand changes in the business ﬁnancial condition or prospects 
of one or more of our major customers our reliance on third party manufacturers and suppliers
risks of not retaining or increasing market share our exposure to liabilities for product defects
our reliance on proprietary technology our ability to attract and retain qualiﬁed personnel risks of
doing business internationally changes in market conditions in the markets in which we participate
or in general economic or political conditions and other risks described from time to time in spirent
plc’s securities and exchange commission periodic reports and ﬁlings the company undertakes no
obligation to update any forwardlooking statements contained in the annual report whether as 
a result of new information future events or otherwise
spirent plc is an international network technology company providing stateoftheart systems 
and solutions for a broad range of customers worldwide our communications group is a worldwide
provider of integrated performance analysis and service assurance systems for nextgeneration 
network technologies spirent’s solutions accelerate the development and deployment of network
equipment and services by emulating realworld conditions and assuring endtoend performance 
of largescale networks our network products group provides innovative solutions for fastening
identifying insulating organising routing and connectivity that add value to electrical and 
communication networks in a wide range of applications our systems group offers integrated 
product solutions for the aerospace and power controls markets
contents 
1 financial summary
2 our business at a glance
3 chairman’s letter
4 chief executive’s review
7 operating review
11 financial review
15 board of directors and
operations management team
16 directors’ statement on 
corporate governance
18 social responsibility statement
20 report of the directors
22 report on directors’ remuneration
30 statement of directors’ responsibilities
in respect of the accounts
31 independent auditors’ report
to the members of spirent plc
32 consolidated proﬁt and loss account
33 consolidated statement of
total recognised gains and losses
reconciliation of movements in
shareholders’ funds
34 consolidated balance sheet 
35 consolidated cash flow statement
reconciliation of net cash flow 
to movement in net borrowings
36 company balance sheet
37 notes to the accounts
77 principal divisions subsidiaries
joint v enture and associates
79 financial history
82 shareholder information
84 financial calendar
contact details financial summary
£ million 2002 2001
turnover 5589 8018
operating proﬁt 505 1129
proﬁt before taxation 464 1009
headline earnings per share pence 340 776
spirent plc is a public limited company registered in england its ordinary shares 
are listed on the london stock exchange and in the form of american depositary
shares on the new york stock exchange
this report is the annual report of spirent plc for the year to 31 december 2002
and complies with uk regulations
the annual report is available on spirent’s website at wwwspirentcom
a separate annual report on form 20f is being prepared to meet us regulations
and will be ﬁled with the us securities and exchange commission by 30 june 2003
notes
 before goodwill amortisation and operating exceptional items being £561 million
2001 £866 million and £9649 million 2001 £7595 million respectively for
the group
 before goodwill amortisation and operating exceptional items as above and
nonoperating exceptional items of £785 million 2001 proﬁt £145 million
1 spirent plc annual report 2002
turnover £ million
02
01
00
99
98
559
802
697
545
470
operating profit £ million
02
01
00
99
98
51
113
138
90
71
product development £ million
02
01
00
99
98
78
96
60
39
27
headline eps pence
02
01
00
99
98
340
776
1261
918
847 our communications group is a worldwide provider of integrated
performance analysis and service assurance systems for nextgeneration
network technologies spirent’s solutions accelerate the development and
deployment of network equipment and services by emulating realworld
conditions and assuring endtoend performance of largescale networks
the performance analysis division develops testing solutions for a broad
range of communications technologies critical to the deployment of
nextgeneration networks our systems test a full range of wireless 
and wireline networks and equipment including core terabit routers
broadband access devices nextgeneration wireless handsets internet
infrastructure and storage area networks our systems enable customers
to emulate largescale networks introduce impairments and stress test
equipment to ensure maximum performance and conformance to
industry standards
the service assurance division provides network monitoring and
management systems for service providers to assure the quality of their
high bandwidth voice and data services our systems enable efﬁcient
delivery and maintenance of leased line voice and data digital subscriber
line wireless optical and converged packet networks the division
provides operations support systems remote test probes network test
access systems and the expertise to implement solutions over a national
or global scale
our network products group provides innovative solutions for fastening
identifying insulating organising routing and connectivity that add value
to electrical and communication networks in a wide range of applications
marketed under the hellermanntyton name worldwide
network products designs and manufactures a broad range of highgrade
nylon ties clips channels and ﬁxings for fastening cables and wires in
electrical communications automotive industrial equipment aerospace
and construction applications we also produce products with value
added identiﬁcation and security features such as standard cable markers
application tailored labels printed customised markers and tags tamper
evident ﬁxings security seals and printed ties for clinical waste our
heatshrink insulation convoluted tubing and cable covering products
provide insulation and physical protection for wires and cables
we also produce a range of products used in the installation of local area
and wide area communications networks such as raceways ducting
racks patch panels and modular jacks our ‘network sciences’ structured
cabling system includes gigaband category 6 and megaband category 5e
systems with performance which far exceeds the required standards
we are a market leader in systems for the automated application 
of cable ﬁxings and identiﬁcation printing and application systems
our systems group offers integrated product solutions for the aerospace
and power controls markets
we are a leading developer and supplier of groundbased maintenance
repair and overhaul mro software systems brand named gold™ and
aura™ that manage aerospace customers’ mro processes by providing
maintenance workﬂow management inventory control repair order
management recording and forecasting capabilities aviation information
solutions ais designs manufactures and integrates hardware and
software solutions that enable customers to operate their aircraft more
efﬁciently safely and effectively and assist in pilot training the ais
product range includes airborne ﬁle servers the avvantage™ electronic
ﬂight bag and ﬂight deck and cabin instruments and displays as well as
software applications for use by ﬂight crew and groundbased personnel
the power controls business is a leading supplier of sophisticated
electronic control systems for use in specialised electrically powered
vehicles these include medical vehicles such as powered wheelchairs 
and mobility scooters as well as small industrial vehicles such as ﬂoor
cleaning vehicles and aerial access platforms these systems allow 
the user to control the direction and speed of the vehicle as well as
controlling other aspects of the vehicles’ functions including seating 
or platform position lights turn indicators and vehicle diagnostics
2 spirent plc annual report 2002
our business at a glance
communications
network products
systems dear shareholder
i am pleased to be writing to you for the ﬁrst time
having been appointed nonexecutive chairman 
of spirent in november 2002
2002 was a challenging year but we adapted to 
the volatile conditions and maintained our leading
positions in the markets in which we operate our
focus on innovation customer care and increasing
global presence has enabled all our businesses to
make progress during this difﬁcult year we were
cash generative and continued to deliver operating
proﬁt following a tough third quarter management
moved quickly to cut costs we also agreed to 
sell our interests in the wago joint venture and
renegotiated our borrowing covenants to give us
increased headroom we remain committed to
investing in the future through focused product
development spending
we have written off substantial goodwill this year
giving us a balance sheet with which to look
forward i am conﬁdent that the group has strong
technological leadership in its key markets and it
will be well positioned as the telecommunications
market recovers
the reduction in operating costs unfortunately
involved cutting our workforce we have also
imposed tight controls on spending to this end you
will notice that we have not produced an annual
review this year rather just this annual report
i hope you will ﬁnd it interesting reading and 
hope it will help you to understand the underlying
strengths of the business as well as the challenges
that we face
we fully recognise our responsibilities in relation to
our employees the communities in which they live
the environment and other stakeholders and have
made progress in the management monitoring and
reporting of corporate social responsibility issues
during the year
i would like to take this opportunity to thank james
wyness for his willingness to take on the role of
acting nonexecutive chairman after the death of
dr george sarney james was an able steward and
remains the senior independent nonexecutive
director on the board the board and management
have worked hard to steer the company through
these difﬁcult times and these results reﬂect the
efforts of every one of spirent’s employees to
deliver their very best
with ﬁnancing terms now agreed our task is 
to manage the business to drive organic growth 
and generate cash going forwards
yours faithfully
3 spirent plc annual report 2002
chairman’s letter
john p weston cbe
chairman
notes
operating proﬁt ebita and return on sales as referred to in the text are stated
before goodwill amortisation and exceptional items
free cash ﬂow as referred to in the text is cash ﬂow before acquisitions and disposals
equity dividends and ﬁnancing overview 
turnover of £5589 million and operating proﬁt
before goodwill amortisation and exceptional items
of £505 million were 30 per cent and 55 per cent
below our results for 2001 respectively but all 
our operating groups generated operating proﬁt 
and cash in 2002 in the ﬁrst half of the year we
delivered a resilient performance despite generally
depressed market conditions and continuing
declines in spending by our major telecoms
customers however a drop in capital expenditure
by us network service providers nsps in the 
third quarter reduced the performance of our
communications group for the second half of 
the year as a result group operating proﬁt was
signiﬁcantly lower in the second half of 2002
compared with the ﬁrst half
we are pleased to announce the divestment of our interests in wago 
to our joint venture partners for net cash proceeds of approximately
£582 million the divestment is subject to shareholder approval which 
is being sought at an extraordinary general meeting to be convened for 
31 march 2003 wago is not considered to be a core business of the
group and does not materially contribute to the group’s cash ﬂow
we continue to be in compliance with our existing borrowing covenants
however in order to increase the level of headroom available under certain
of our ﬁnancial covenants we have renegotiated our borrowing terms the
new borrowing terms are conditional on the completion of the divestment
of wago and the use of the net proceeds to pay down debt further
details of the new borrowing terms are set out in the financial review
the fall in revenues in our communications group led us to realign 
our cost base this involved an 11 per cent reduction in workforce
reorganisation of our operations and reductions in discretionary spending
within the communications group these actions are expected to result 
in annualised cost savings of £335 million in accordance with accounting
standards and due to the fall in trading we were required to take a non
cash goodwill impairment charge of £9233 million in the year operating
exceptional items totalling £416 million have also been charged in 2002
primarily relating to the reorganisation of our operations
in difﬁcult conditions our communications group was able to maintain its
position as a market leader due to our portfolio of leadingedge products
technologies and services our expertise in network operations and our
ability to provide integrated performance analysis and service assurance
solutions the performance analysis division achieved a stable order intake
rate of some £50 million per quarter in the ﬁrst half of 2002 but this
dropped to £42 million in the third quarter order intake recovered in the
fourth quarter to £50 million the service assurance division’s order book
closed the year at £37 million compared with £31 million at the end of the
third quarter and £73 million at the end of last year reﬂecting customers’
changing order patterns and reduction in capital expenditure over the year
our network products and systems groups delivered sound performances
in the year these businesses supply a broad range of industries and
therefore have provided some protection from the current volatile
conditions in the telecoms market
during the year we expanded the technological capabilities of the group
through organic development and strategic investments the performance
analysis division expanded its internet infrastructure testing capabilities
through the acquisition of caw networks inc caw the purchase of a
wideband cdma wcdma product line has brought us expertise in this
important third generation 3g wireless technology and the purchase of
a remote special services test product line further strengthened our
service assurance product portfolio
we made progress in the divestment of noncore businesses during 
the year with the sale of our aerospace component businesses and the
divestments of switching systems international inc ssi and monitor
labs incorporated mli from our systems group
financial summary
reported turnover was £5589 million and operating proﬁt was £505
million in 2002 turnover from ongoing businesses was £5339 million
and operating proﬁt was £492 million down 18 per cent and 50 per
cent respectively compared with 2001 as a result of the drop in
turnover and with the costsaving actions only becoming effective in the
fourth quarter return on sales for ongoing businesses declined to 92 per
cent 2001 153 per cent the reduced trading levels in the third quarter
led to a weak second half down 16 per cent on turnover and 57 per cent
on operating proﬁt from ongoing businesses compared with the ﬁrst half
of 2002 our communications group reported a small operating loss for
the third quarter but returned to proﬁtability in the fourth quarter as the
cost savings started to take effect
in accordance with accounting standards and due to the deterioration 
in trading we were required to reassess the carrying value of certain of
our businesses at the year end this has resulted in a noncash goodwill
impairment charge of £9233 million of which £3307 million relates to
4 spirent plc annual report 2002
chief executive’s review the performance analysis division and £5304 million is in respect of the
service assurance division
reported loss before taxation was £10531 million 2001 loss 
£7307 million before charging goodwill amortisation of £561 million
and exceptional items of £10434 million proﬁt before taxation was
£464 million for the year
headline earnings per share were 340 pence 2001 776 pence
operating cash generation for the year was £769 million compared with
£1412 million in 2001 despite the lower levels of trading we were able
to generate £364 million of free cash ﬂow compared with £404 million
in 2001 this was achieved after investing £777 million 2001 £959
million in product development representing 14 per cent of turnover
up from 12 per cent in 2001 free cash ﬂow was down by only £40 million
despite a fall of £643 million in cash ﬂow from operating activities
net borrowings reduced to £1618 million 2001 £1791 million at 
the year end the net proceeds from the divestment of wago will reduce
net borrowings in 2003
operating summary
communications 
spirent’s communications group achieved operational successes in a
number of key strategic areas including wireless metro and broadband
access networks and internet infrastructure testing together with
geographic expansion during the year
our performance analysis division competes in the research and
development segment of the test and measurement market and so was
directly affected by the reduction in capital spending by its main chipset and
network equipment manufacturer nem customers however due to our
broad spread of technologies and the cost efﬁciencies our products deliver
the division was able to increase its share of customers’ capital budgets
we continue to focus our product development efforts in those areas
where we believe there are near term opportunities as well as longer
term potential our drive for innovation delivered several new product
launches and ‘industry ﬁrsts’ during the year the quality of our products
continued to be recognised worldwide with the webavalanche™ 42
internet testing solution winning ‘best of show’ awards at networld™ 
interop® in atlanta and tokyo and our abacus2 voiceoverip voip
product winning internet telephony® magazine’s 2002 product of 
the year award spirent communications was also proud to be named 
by industry analyst frost  sullivan as the 2002 market engineering
company of the year in the category of communications test
spirent is a market leader in the us broadband service assurance market
where our systems are deployed to assure some of the largest residential
digital subscriber line dsl and highcapacity business leased line
networks in the country however customers of our service assurance
division came under ﬁnancial pressure during the year and as a result the
rollouts of monitoring systems for dsl and leased line services were
slowed such that our order book dropped substantially over the year
nevertheless progress was made by the division with initial deployment
of its centerop™ platforms for fault and performance management 
and the introduction of new systems for the assurance of optical and
packet networks
a key strategy for our communications group is to expand its geographic
reach and we made progress in increasing our global presence during the
year customers outside north america accounted for 25 per cent of
communications group sales in 2002 2001 20 per cent
network products 
the results of our network products group for 2002 remained in line 
with 2001 despite a depressed result in south america due to the severe
recession in the region overall performance from our activities in the us
europe and japan were broadly ﬂat during the year
due to the falloff in the telecoms market total sales of our local area
network lan and broadband wide area network connectivity products
declined in the year and now represent only 13 per cent of network
products group turnover 2001 17 per cent this decline was largely
offset by sales to the automotive sector where our products were
accepted onto a number of new car and heavy vehicle platforms at
manufacturers in the us and europe sales of our automated cable
bundling and tying labelling and printing systems continued to be 
strong during the year
against a competitive background characterised by downward pricing
pressure our ability and commitment to working closely with customers
to deliver products that meet their needs enabled us to penetrate new
markets and increase market share during the year
systems 
the ongoing businesses within our systems group delivered growth 
in both turnover and operating proﬁt due to improved performance 
in the aerospace business and continuing growth in the power controls
business through increased penetration of the mobility and small industrial
vehicle markets
5 spirent plc annual report 2002
notes
operating proﬁt ebita and return on sales as referred to in the text are stated
before goodwill amortisation and exceptional items
free cash ﬂow as referred to in the text is cash ﬂow before acquisitions and disposals
equity dividends and ﬁnancing dividend
an interim dividend of 135 pence per share was paid to shareholders in
november 2002 a ﬁnal dividend will not be paid in respect of the year 
to 31 december 2002 nor will a dividend be paid in respect of the year
ending 31 december 2003 the board intends to keep future dividend
policy under review but any future dividend payments will be dependent
on trading outlook and the availability of cash and distributable reserves
board and senior management
we were saddened to report the deaths of dr george sarney non
executive chairman and mr ray parsons cbe life president during 
the year they each made signiﬁcant contributions to the group and 
will be missed
we would like to thank mr james wyness the senior independent
nonexecutive director who took on the role of acting nonexecutive
chairman on 31 october 2002 the board announced the appointment
of john weston cbe as nonexecutive chairman he brings substantial
public company experience strategic insight and a strong understanding
of international business and technology to the group
jim schleckser president service assurance – broadband spirent
communications has been appointed to the operations management
team with effect from 1 january 2003
our people 
we appreciate that the uncertainties in the marketplace during the year
have been unsettling for our employees our results for the full year are
testament to their ability to respond positively to the demands made of
them to ensure we continue to deliver the cuttingedge technological
innovations and dedicated support and services that our customers have
come to expect we would like to take this opportunity to acknowledge
the contributions made by our employees in this challenging year and
thank them for their continued dedication and commitment
corporate social responsibility
we recognise our corporate social environmental and ethical impact and
responsibilities and are committed to advancing our policies and systems
across the group to ensure we address control and monitor all aspects of
corporate responsibility we strive to maintain an open dialogue with our
stakeholders and welcome contact from all our interested groups
outlook
we have planned our business assuming the challenging conditions in 
the telecoms market will continue throughout 2003 and trading so far
this year has been in line with our expectations as growth in data trafﬁc
creates opportunities for spirent we remain committed to investing 
in our leadingedge products technologies and services to enhance our
market positions and grow market share
6 spirent plc annual report 2002
chief executive’s review continued
nicholas k brookes
chief executive communications 
£ million 2002 2001 change 
turnover
performance analysis 1871 2455 24
service assurance 1283 1851 31
communications group 3154 4306 27
operating proﬁt
performance analysis 94 387 76
service assurance 214 447 52
communications group 308 834 63
return on sales per cent
performance analysis 50 158
service assurance 167 241
communications group 98 194
despite the decline in the global telecoms market in 2002 the
communications group remained focused on its strategy of enabling
customers to move communications technologies out of the laboratory
and into live networks more rapidly costeffectively and with less risk
by staying strategically wellaligned with the needs of our customers we
were able to maintain our technological leadership improve our market
position and capture an increased proportion of our customers’ reduced
capital budgets
throughout 2002 our major customers the nems and nsps continued
to restructure their operations in response to the signiﬁcantly reduced
overall market this coupled with certain regulatory issues for our
customers in the us resulted in a reduction in spending on our products
particularly in the third quarter however we were encouraged to 
see order intake recover somewhat in the fourth quarter in both the
performance analysis and service assurance divisions by taking
immediate costsaving actions in october we were also able to return 
to proﬁtability in the fourth quarter after delivering a small operating 
loss in the third quarter overall the communications group’s turnover 
in 2002 was £3154 million down 27 per cent from 2001 with operating
proﬁt down 63 per cent at £308 million given the drop in performance
and with the cost savings only partially realised by the year end return
on sales for 2002 was signiﬁcantly below that for 2001 at 98 per cent
2001 194 per cent
during the year we maintained investment in the development of our
products to ensure we continue to meet our customers’ needs to be both
costefﬁcient and cuttingedge product development of £662 million
2001 £730 million represented 21 per cent of communications group
turnover and was invested in key areas such as gigabit and 10gigabit
ethernet in the access and metro networks voip internet protocol 
version 6 ipv6 internet infrastructure and security testing storage 
area networks and 3g wireless technologies this investment resulted 
in numerous new products and enhancements to existing product lines
being launched during the year including the ﬁrst endtoend performance
analysis and radio frequency emulation system for the wireless lan
market a fully automated system for testing wcdma mobile handsets
a system for the analysis of internet infrastructures simultaneously from
the physical layer to the application layer and a test system for storage
area networks spirent is especially active in the 10gigabit ethernet and
ipv6 segments which respectively aim to ease bottlenecks in broadband
metro and access networks and provide higher levels of security and
broader address space for the next phase of the internet new service
assurance products included a series of interfaces for optical and packet
services devices and systems for the performance management of gigabit
ethernet and highspeed optical networks
the communications group took a number of signiﬁcant steps in 2002 
to strengthen spirent’s brand recognition within the communications
industry and improve integration among the group’s business units and
product lines an extensive branding effort in the ﬁrst half of the year 
has resulted in improved name recognition all of the businesses in 
the communications group now operate under the spirent name and
realignment of the business units within the performance analysis
division has clariﬁed product lines and responsibilities spearheaded by
our ‘advanced test programs’ team spirent participated in over 100 high
proﬁle public tests of leadingedge networking equipment and services
helping make ‘tested with spirent’ one of the industry’s best known
programmes in testing
performance analysis 
spirent’s performance analysis solutions play a critical role in helping
leadingedge equipment manufacturers service providers and enterprises
emulate communications trafﬁc and simulate realworld conditions for
conformance functional and performance testing of their equipment 
and networks our products cover a broad range of communications
technologies including ethernet wireless internet infrastructure storage
area networks position location and voip providing customers with a
‘onestop shop’ for their test and measurement needs
turnover from this division fell in 2002 due to decreased spending by 
our major customers in the us and europe return on sales declined to
50 per cent from 158 per cent in 2001 due to a combination of the drop
in trading levels and the timing of the associated cost reductions in this
business despite the overall reduction in sales there were areas of
growth in particular our wireless test products which increased strongly
7 spirent plc annual report 2002
operating review
notes
operating proﬁt ebita and return on sales as referred to in the text are stated
before goodwill amortisation and exceptional items
free cash ﬂow as referred to in the text is cash ﬂow before acquisitions and disposals
equity dividends and ﬁnancing with turnover up 57 per cent over 2001 and our position location test
products which also had a good year largely driven by sales of our
industry leading position location test system launched in 2001
during the year we strengthened our position as a leader in wireless
testing particularly for nextgeneration wireless technologies including
cdma2000 the 3g wireless technology being adopted by the us and
wcdma being adopted by gsmcentric countries such as those in
europe and asia we successfully introduced new systems that provide
automated conformance network emulation and position location
testing for cdma2000 mobile handsets spirent’s automated test
systems now play an important role in the conformance and acceptance
test laboratories of major cdma2000 service providers including verizon
wireless sprint pcs group and sk telecom in korea spirent’s automated
systems are also in wide use in the laboratories of major wireless mobile
handset and component providers including qualcomm incorporated
motorola inc and nokia corporation we expanded our 3g wireless
portfolio through the acquisition of a wcdma base station emulator
product line during the year which has brought us important capabilities
in wcdma technology
we further addressed the testing and performance analysis needs of
users and providers of internet and security applications in 2002 since
the integration of caw into the performance analysis division during the
year progress has been made on the development of its avalanche and
reﬂector™ products with these systems customers are able to generate
large amounts of internet trafﬁc in the laboratory to stress network
equipment and actual website or security applications to ensure their
robustness customers using these systems include the nems nsps high
volume website customers enterprises and government departments
an important part of our strategy is to increase our international
presence and during the year we opened sales and support services
ofﬁces in beijing shanghai and guangzhou to better serve customers 
in the important asian region
service assurance 
our service assurance division provides network monitoring operations
support systems oss remote test probes consulting and technical
services for some of the world’s largest providers of communications
services including leased line dsl wireless optical and managed ip
services our systems assist service providers in cutting their operational
costs by automating their network management monitoring and service
assurance processes and are therefore important to our customers in the
current difﬁcult market conditions
turnover in the service assurance division fell in the third quarter as our
major customers the incumbent local exchange carriers ilecs in the us
reduced investment in their networks in response to ﬁnancial constraints
and regulatory pressures as a result of lower volume return on sales was
affected falling to 167 per cent from 241 per cent in 2001 return on
sales was also affected by the product mix which included a higher
hardware content in the second half of the year as compared with the
ﬁrst half which had a higher software element additionally sales of
monitoring systems for leased line broadband services represented 
a higher proportion of turnover in 2002 compared with 2001 which 
had a predominance of dsl business
during the year we maintained our position as a leading provider 
of service monitoring systems to the us ilecs with participation 
in their continuing business and residential broadband service rollout
programmes the year also saw the initial largescale deployment of 
the centerop platforms sentry and perform for fault and performance
management in the wireless space our service assurance systems provide
centralised remote test and performance monitoring for the core or 
land side of mobile networks and with the addition of verizon wireless
and nextel communications inc as customers during the year spirent
systems are now used by seven of the top ten mobile service providers 
in the us the purchase of a remote special services test product line
during the year brought us a large installed base and ongoing business 
at bellsouth corporation and korea telecom the integration of this
operation into the service assurance division is largely completed and
while revenues were affected by the market downturn the business has
performed in line with our expectations an important driver for the
acceptance of our systems is their ability to measure the performance of
or interoperate with a wide range of network devices and elements and
other oss in 2002 we advanced our certiﬁcation programme and now
have full interoperability with network elements and oss from a broad
range of leading suppliers worldwide
an important opportunity for growth in the service assurance division 
is the expansion of the customer base internationally although the sales
cycle for our service assurance division’s large ticket systems is long we
are encouraged by the progress we have made in pursuing opportunities
outside the us we have begun formatting our products to enable local
language support and were pleased to secure our ﬁrst order in japan
our efforts in asia were reinforced by the opening in beijing in early 
2003 of a sales and support services ofﬁce for the asian region and 
the formation of spirent dm a partnership with two local companies
to facilitate the development of service assurance products for the
chinese market
8 spirent plc annual report 2002
operating review continued network products
£ million 2002 2001 change 
turnover 1647 1704 3
operating proﬁt 150 153 2
return on sales per cent 91 90
turnover in our network products group was down marginally by 3 per
cent in the us improved sales to the heavy vehicles market and growth
of our recently introduced lan ‘network sciences’ product line were
offset by reduced sales to telecoms service providers our european
sales showed a small increase overall and in japan sales were broadly ﬂat
in south america the recession led by the severe economic collapse in
argentina affected the group the restructuring actions taken in 2001 to
consolidate and extend customerfacing activities and reduce administrative
and back ofﬁce activities became fully effective in the ﬁrst half of 2002
and margins for the year improved to 91 per cent compared with 73 per
cent in the second half of 2001
sales to the automotive sector contributed 30 per cent to turnover in
2002 compared with 27 per cent in 2001while global vehicle production
was broadly ﬂat the trend towards increasing electronicelectrical
systems content and lighter vehicles requiring increased use of plastics
has provided underlying market growth as a result we have been able 
to increase our penetration with vehicle manufacturers their ﬁrst tier
suppliers and major vehicle cable harness manufacturers worldwide
our sales in the us heavy vehicles market recovered showing 23 per cent
growth after the signiﬁcant market downturn in 2001 due to our
product quality and innovation we have ‘preferred supplier’ status with
important automotive manufacturers and tier one suppliers worldwide
the market for our broadband products used in wide area networks 
to route and organise ﬁbre optic cables in large telephone exchanges 
and outside plant and structured cabling products used in local area
networks to provide network connectivity remained very weak in the 
us and uk throughout the year due to the depressed conditions in 
the telecoms market and reductions in enterprise it spending we have
developed and extended our lan products for the european market
which we expect will beneﬁt sales in 2003
despite a generally weak global economy we increased our penetration
with distributors wholesalers and catalogue houses that sell a broad
range of our products worldwide the major contract we signed with the
royal mail during the year to provide ties for mail sacks has commenced
well with 60 per cent of all orders now being placed via the xml 
eprocurement system
our range of electrically operated automatic application systems was
expanded in the year with the introduction of two major new models
the at2060 for ﬁxings and the ala for identiﬁcation we now have a
large installed base of autotool and printing systems at customer sites
worldwide and our contracts to supply the associated cable ties and
identiﬁcation labels and markers represent a valuable source of
continuing business for the group
we successfully completed the move into our new production and
distribution facility in jundaí brazil without any interruption to customer
service and expect to beneﬁt from cost and operational efﬁciencies
we also increased the range of products being manufactured at the wuxi
china facility after increasing the production space last year
systems
£ million 2002 2001 growth 
turnover 538 486 11
operating proﬁt 34 05 100
return on sales per cent 63 10
figures in the above table relate to ongoing businesses only
on an ongoing business basis the systems group saw an increase in
revenues and operating proﬁt due to increased customer penetration
product launches including the new airborne ﬁle server and the
successful entrance into new markets the impact of cost reductions
taken in the ﬁrst half of the year in the aerospace business coupled with
increased sales resulted in improved trading in the systems group for 
the second half of 2002
within the aerospace business sales of our maintenance repair and
overhaul software systems aura™ and gold™ increased as we
continued to win new business from both the civil and military sectors
our aviation information solutions ais business received us federal
aviation administration certiﬁcation for its airborne ﬁle server product
which commenced shipping at the end of the year ais’s reputation as 
a leading supplier of integrated hardware and software solutions to the
aerospace industry enabled it to secure new contracts during the year 
for its avvantage™ electronic ﬂight bag and vision and revision pilot
training software systems
the power controls business saw growth in turnover over 2001 mainly
due to increased penetration of the mobility vehicles market sales to the
industrial market a new market for the business also contributed to the
improvement
9 spirent plc annual report 2002
notes
operating proﬁt ebita and return on sales as referred to in the text are stated
before goodwill amortisation and exceptional items
free cash ﬂow as referred to in the text is cash ﬂow before acquisitions and disposals
equity dividends and ﬁnancing the market for power controls for wheelchairs and mobility scooters
remains competitive and is experiencing pricing pressures we responded
to this during the year through a number of initiatives including the
introduction of the vsi power control system for wheelchairs which is a
lower cost higher speciﬁcation replacement for its predecessor product
the pilot and the launch of a competitively priced mobility scooter
controller the sdrive our ability to respond quickly and work closely
with customers to meet their demands for increasing functionality at
lower prices enables us to maintain our leading position in this sector
while the us remains the largest enduser market for powered
wheelchairs and mobility scooters many of our customers have
manufacturing facilities worldwide and we are shipping an increasing
number of units to asia
we have made good progress in our efforts to penetrate the small industrial
vehicle market during 2002we have had particular success with our
multifunctional trio™ controllers for ﬂoor cleaning vehicles while our
access platform system has been deployed by one of the world’s largest
manufacturers of such vehicleswe continue to invest in this market and
its associated technologies to enhance our future opportunities
interconnection joint venture 
in 2002 our share of turnover from the wago joint venture decreased 
by 3 per cent to £756 million 2001 £783 million and our share of 
the operating proﬁt decreased by 23 per cent to £74 million 2001 
£96 million the decline was due to the continuing depressed conditions
wago experienced in most of its geographic markets during the year
our share of interest payable and of taxation from wago were 
£07 million and £27 million respectively giving a proﬁt after taxation 
of £40 million
we announced on 12 march 2003 the divestment of our interests in wago
to our joint venture partners this transaction is subject to shareholder
approval which will be sought at an extraordinary general meeting to be
convened on 31 march 2003
10 spirent plc annual report 2002
operating review continued results
six months to six months to year to year to
30 june 31 december 31 december 31 december
£ million 2002 2002 2002 2001
turnover
ongoing businesses 2901 2438 5339 6496
divestments and 
discontinued 
operations 209 41 250 1522
group 3110 2479 5589 8018
operating proﬁt
ongoing businesses 345 147 492 992
divestments and 
discontinued 
operations 07 06 13 137
group 352 153 505 1129
return on sales per cent
group 113 62 90 141
turnover for 2002 of £5589 million was 30 per cent lower than 2001
with the second half of 2002 being 20 per cent below the ﬁrst half
organically excluding the effects of currency exchange and disposals
turnover was 16 per cent down from 2001 with the impact of currency
translation primarily due to the weakening of the us dollar reducing
reported turnover for 2002 by some £184 million divested companies
contributed £250 million to turnover in 2002 2001 £1522 million
levels of activity in the communications group in the ﬁrst half of 2002
were in line with those seen in the second half of 2001 during the 
third quarter of 2002 however we saw a marked reduction in activity
particularly in the service assurance division following announcements
by many of our major customers that they were further cutting their
capital expenditure budgets
in 2002 north america accounted for 66 per cent of turnover by source
from ongoing businesses 2001 73 per cent at £3502 million compared
with £4720 million in 2001 europe accounted for 28 per cent of turnover
by source from ongoing businesses 2001 23 per cent and in absolute
terms was little changed on the prior year at £1514 million
by market turnover was reduced in absolute terms in europe and north
america but there was marginal growth in asia where turnover increased
from 13 per cent to 16 per cent of the total
operating proﬁt before goodwill amortisation and exceptional items of
£505 million was 55 per cent below the previous year with the second
half of 2002 56 per cent below the ﬁrst half organically operating proﬁt
was 50 per cent below 2001 with the effects of exchange further
reducing proﬁts by £16 million
return on sales was consequently much reduced at 90 per cent
51 percentage points below 2001 due to depressed returns in our
communications group however network products maintained a return
of 91 per cent and returns in the systems group improved over 2001
beneﬁting from the restructuring in the aerospace business and growth 
in power controls
earnings before interest taxation depreciation amortisation and
exceptional items ebitda before exceptional items was £841 million
2001 £1501 million
net interest payable reduced from £228 million in 2001 to £123 million
due to the reduction in net debt and lower interest rates in the us and
uk an interest rate swap was entered into in november 2002 replacing 
a previous swap arrangement this swap has the effect of moving the
interest on 1634 million of the loan notes from a ﬁxed to ﬂoating rate
currently saving 3 percentage points
the group’s effective tax rate for 2002 was 181 per cent this rate is
lower than the expected rate of 29 per cent due to a credit relating to
prior years of £62 million at current levels of proﬁtability it is expected
that the effective tax rate will revert to a level of 31 per cent going
forward an exceptional tax charge of £185 million arises principally
through the reevaluation of the recovery of deferred tax assets under
financial reporting standard frs 19
headline earnings per share were 340 pence compared with 776 pence 
in 2001
reported loss before taxation was £10531 million after charging
exceptional items of £10434 million compared with a loss of £7307
million in 2001 after charging exceptional items of £7450 million giving
a reported loss per share of 11712 pence 2001 loss 8343 pence
at 31 december 2002 spirent was in compliance with its existing
borrowing covenants net interest cover was 44 times 2001 51 times
and net debt to ebitda was 19 times 2001 12 times
on 12 march 2003 spirent announced the divestment of its 51 per cent
interests in wago its interconnection joint venture for net proceeds 
of approximately £582 million wago is not considered to be a core
business of the group the only contribution to group cash ﬂow from 
the wago companies for the year to 31 december 2002 was a dividend
of £02 million 2001 £16 million accordingly apart from the net
proceeds the divestment will not have a material effect on the group’s
cash ﬂow on an ongoing basis the divestment is subject to shareholder
11 spirent plc annual report 2002
financial review
notes
operating proﬁt ebita and return on sales as referred to in the text are stated
before goodwill amortisation and exceptional items
free cash ﬂow as referred to in the text is cash ﬂow before acquisitions and disposals
equity dividends and ﬁnancing approval and requires the consent of our noteholders and parties to the
syndicated bank facility
new borrowing terms 
to provide the group with an increase in the level of headroom available
in relation to certain of the ﬁnancial covenants amendments to the
terms of the loan notes and syndicated bank facility have been agreed
these amendments are conditional on the completion of the divestment
of wago and the use of the net proceeds to prepay approximately
£458 million of the loan notes and pay an associated contractual make
whole amount of approximately £124 million this amount and any
professional fees in relation to the renegotiation of the borrowing terms
will be charged as exceptional costs in 2003
under the revised terms relating to the syndicated bank facility spirent
will have a committed line of £75 million available which will reduce to
£60 million by 31 december 2003 the bank facility remains repayable 
in july 2004 the interest rate will be increased to an initial margin over
libor of 175 per cent which may decrease in certain circumstances
following the application of the net proceeds from the divestment 
of wago it is expected that 1445 million of loan notes will remain
outstanding with unchanged maturities principally in 2009 the applicable
interest rate will be increased to a weighted average of 945 per cent
which will decrease if certain ﬁnancial requirements are satisﬁed
certain of the ﬁnancial covenants attaching to both the syndicated bank
facility and the loan notes which will be tested on a quarterly basis have
been amended as set out in the table below
the new borrowing terms also contain a covenant that consolidated net
worth must not be less than £100 million at any time
other signiﬁcant terms include restrictions on dividend payments and
restrictions on acquisitions and disposals some of these restrictions fall
away on certain ﬁnancial requirements being satisﬁed which in any
event cannot occur before 30 june 2004 the ﬁnancial requirements 
to be satisﬁed are
1 that at the end of three consecutive quarters ebita to net interest
must equal or exceed 45 times and net debt to ebitda must be
equal to or less than 15 times for the rolling 12 month period ending
on the quarter end date and
2 that the group has in place a bank facility of £50 million
on satisfaction of these ﬁnancial requirements the quarterly covenant
tests will be replaced by semiannual covenant tests with covenants of
ebita to net interest of 30 times and net debt to ebitda of 30 times
if completion of the divestment of wago does not occur the existing
borrowing terms will continue to apply in such circumstances and if
current levels of trading are not maintained the directors would need 
to consider taking appropriate actions with a view to maintaining
compliance with the existing terms
goodwill impairment
following the deterioration in trading goodwill impairment has been
charged at the year end as required by accounting standards goodwill
impairment is a noncash charge that has no impact on our business
going forward
the total charge reported is £9233 million and is principally in relation to
the communications group in line with best practice this charge includes
£870 million in respect of goodwill previously charged to reserves
the remaining goodwill carrying value is £1136 million and it is expected
that the goodwill amortisation charge will be approximately £100
million in 2003 the impairment has resulted in a £5759 million deﬁcit 
in the distributable reserves of the company at the appropriate time 
and with court approval it may be possible to utilise the share premium
account which at 31 december 2002 stood at £6961 million in order 
to offset the deﬁcit on reserves
exceptional items
exceptional items excluding taxation of £10434 million have been
charged in the period and include the goodwill impairment charge of
£9233 million discussed above
other operating exceptional items
other operating exceptional items are shown in the table below
restructuring costs of £86 million have been charged in respect of
redundancy payments and other costs incurred in the restructuring 
of the business
after the reduction in workforce in the fourth quarter we relocated
certain employees to make more efﬁcient use of our facilities and this
has resulted in certain leased properties being vacated provisions of
£202 million have been recognised in the period in relation to our
continuing obligations under these leases
the deterioration in the technology industry has led us to make
provisions amounting to £44 million 2001 £142 million for stocks 
in excess of 12 months’ usage and to write down the value of certain
tangible ﬁxed assets by £36 million
acquisition retention bonuses arising from acquisitions made in 2000 
of £48 million have been charged in the year
12 spirent plc annual report 2002
financial review continued
financial covenants
existing as amended
30 june 30 september 31 december
2003 2003 2003
ebita net interest 

Summary:
 dear shareholder
i am pleased to be writing to you for the ﬁrst time
having been appointed nonexecutive chairman 
of spirent in november 2002
2002 was a challenging year but we adapted to 
the volatile conditions and maintained our leading
positions in the markets in which we operate our
focus on innovation customer care and increasing
global presence has enabled all our businesses to
make progress during this difﬁcult year we were
cash generative and continued to deliver operating
proﬁt following a tough third quarter management
moved quickly to cut costs we also agreed to 
sell our interests in the wago joint venture and
renegotiated our borrowing covenants to give us
increased headroom we remain committed to
investing in the future through focused product
development spending
we have written off substantial goodwill this year
giving us a balance sheet with which to look
forward i am conﬁdent that the group has strong
technological leadership in its key markets and it
will be well positioned as the telecommunications
market recovers
the reduction in operating costs unfortunately
involved cutting our workforce we have also
imposed tight controls on spending to this end you
will notice that we have not produced an annual
review this year rather just this annual report
i hope you will ﬁnd it interesting reading and 
hope it will help you to understand the underlying
strengths of the business as well as the challenges
that we face
we fully recognise our responsibilities in relation to
our employees the communities in which they live
the environment and other stakeholders and have
made progress in the management monitoring and
reporting of corporate social responsibility issues
during the year
i would like to take this opportunity to thank james
wyness for his willingness to take on the role of
acting nonexecutive chairman after the death of
dr george sarney james was an able steward and
remains the senior independent nonexecutive
director on the board the board and management
have worked hard to steer the company through
these difﬁcult times and these results reﬂect the
efforts of every one of spirent’s employees to
deliver their very best
with ﬁnancing terms now agreed our task is 
to manage the business to drive organic growth 
and generate cash going forwards
yours faithfully
3 spirent plc annual report 2002
chairman’s letter
john p weston cbe
chairman
notes
operating proﬁt ebita and return on sales as referred to in the text are stated
before goodwill amortisation and exceptional items
free cash ﬂow as referred to in the text is cash ﬂow before acquisitions and disposals
equity dividends and ﬁnancing