EX-99.3 4 dex993.txt ANALYST PRESENTATION Exhibit 99.4 This presentation is neither an offer to purchase nor a solicitation of an offer to sell shares of ORATEC. At the time a subsidiary of Smith & Nephew commences its offer, it will file a Tender Offer Statement with the Securities and Exchange Commission and ORATEC will file a Solicitation/Recommendation Statement with respect to the offer. THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. The offer to purchase, the related Letter of Transmittal and certain other offer documents, as well as the Solicitation/Recommendation Statement will be made available to all stockholders of ORATEC, at no expense to them. The Tender Offer Statement (including the Offer to Purchase, the related Letter of Transmittal and all other offer documents filed with the Commission) and the Solicitation/Recommendation Statement will also be available for free at the Commission's Web site at www.sec.gov Smith & Nephew First Choice in Medical Devices Chris O'Donnell Chief Executive 2 Smith & Nephew - maintaining momentum . Well positioned in sustainable markets . Three main businesses performing strongly . Orthopaedics . Endoscopy . Wound Management . Accelerating sales & profit growth . underlying sales growth up to 13% . ongoing profit growth 19% . 15% EPS growth before 4% restructuring dilution . 15% sales team expansion contributing to performance . Continued investment in new products 3
Trading results 2000 2001 (pound)m (pound)m Group Sales - ongoing 835 1013 +21% - divested/discontinued 300 69 ----------- ----------- (pound)1135 (pound)1082 ----------- ----------- Operating profit - ongoing 144 171 +19% - divested/discontinued 35 4 ----------- ----------- (pound)179 (pound)175 - Joint Venture - 13 Interest (7) (17) ----------- ----------- Profit before taxation (pound)172 (pound)171 ----------- ----------- Ordinary taxation (FRS 19 basis) 31% 31% EPS before exceptionals 11.52p 12.83p +11% Dividend 4.5p 4.65p Exceptional gains (net) (pound)93m (pound)23m
4 Sales growth
Underlying Acquisitions Currency Reported % % % % Orthopaedics 18 - 3 21 Endoscopy 11 3 3 17 Advanced Wound Management 11 18 - 29 Rehabilitation 6 - 4 10 -- -- -- -- Ongoing 13 6 2 21 == == == ==
5 Smith & Nephew - maintaining momentum . Market growth increasing particularly orthopaedics and advanced wound management . Strong product/technology platform for growth . Key businesses performing strongly . Future growth secured by investment in sales forces and new products . Successful acquisitions strategy to continue . ORATEC brings technology and market leadership in RF 6 Larry Papasan President Smith & Nephew Orthopaedics 7 Highlights of 2001 Performance . Fastest-growing orthopaedic implant company - third straight year . Grew sales at nearly twice the rate of an accelerated market . Gained market share in all core segments . Revitalized core Trauma business . Continued margin improvement [Graphic] 8 2001 Global Orthopaedic Market Competitor Analysis S&N Served Markets [Pie Chart] Stryker 19% DePuy 19% Zimmer 14% Biomet 11% Synthes 9% Smith & Nephew 8% Sulzer 7% Other 13% 9 Served Market Growth Compared to Competition (Excluding Spine) Overall Market Growth 10% [Bar Chart] Sulzer 0.5% Depuy 11.3% Stryker 12.5% Biomet 14.6% Synthes 15.6% Zimmer 17.5% S&N 18% Full-year adjusted for spine. 10 Growth Market Drivers . Demographics and aging population . Quality of life expectations . New, longer-lasting materials and technologies . Less-invasive procedures . Better informed patients [Graphic] 11 Maintaining momentum . Drive core hips, knees and trauma . Develop high-growth segments . Introduce less-invasive, more efficient procedures . Pursue transformational technologies (CAS, Oxinium) . Leverage growth to enhance margins . Continue operational excellence [Graphic] 12 2002 Product Rollout Plans 13 Knees . New Products . PS Gen II Oxinium . Macrotextured Profix Oxinium . Accuris unicompartmental knee system Market Growth: +12% S&N 2001 Growth: +26% Market Share Gain: [Graphic] 14 Hips . New Products . Synergy HA/Porous . CPCS . Continued XLPE . Reflection Roughcoat . Image Porous Market Growth: +8% S&N 2001 Growth: +20% Market Share Gain: +1/2% [Graphic] 15 Trauma . New Products . JAX bone graft substitute . Trigen TAN . JetX External Fixator . OrthoGuard AB Market Growth: + 9% S&N Sales Growth: +12% Market Share Gain: +1/2% [Graphic] 16 Clinical Therapies . Supartz joint fluid therapy J-code reimbursement approval . New Products: . Exogen 2000+ non-invasive ultrasound therapy . Exogen 3000 . Dedicated clinical sales team [Graphic] 17 Strong Future Prospects . Within an accelerating market, Smith & Nephew continues to expand sales team by 10%+ per year . Strong product portfolio in core hip, knee and trauma segments . Strong performance in high margin clinical therapies segments such as HA and bone stimulation . New technology acceptance 18 Ron Sparks President Smith & Nephew Endoscopy 19 2001 Review . 14% sales growth . Increased arthroscopic repair business by 30% - new market leader . New products contributed 15% of total sales - twice as much as 2000 . Continued acceptance of TriVex - $8 million current run-rate . Double-digit share in arthroscopic shoulder repair . Endoscopic sales, excluding arthroscopy, tripled between 1998-2001 [Graphic] 20 Future Paradigm of Technologies [Graphic] Integration - Miniaturization - Repair - Wireless - Radiofrequency 21 Focus 2002 . Improving Endoscopy Market Position . ORATEC acquisition . Increased revenue from new techniques . Digital OR - breaking new ground . Expanding leadership in resection . Innovation leadership in repair 22 ORATEC . RF focus arthroscopic and spine segments . Sales of $48 million in 2001 . Products leverage unique advantage in temperature control and feedback . Strong IP . Innovator in tissue shrinkage applications [Pie Chart] 2001 Global Arthroscopy RF Market $122M Arthrocare 52% $63M ORATEC 22% $27M Mitek 25% $30M Other 2% $2M [Graphic] 23 Minimally Invasive Spine . One of the fastest growing specialties in the endoscopic market . SpineCATH/TM/IntraDiscal ElectroThermal Therapy (IDET/TM/) . Controlled heat to modify tissue in the disc wall . Direct spine sales force . Clinical studies to drive reimbursement ORA-50 ElectroThermal Spine Generator SpineCATH/R/ Catheter ORAflex/TM/ probe with deflectable tip [Graphic] 24 Acquisition Synergies Technology - One of the broadest RF technology portfolios in the world Sales - Global endoscopy market coverage and capabilities Operations - Industry leading cost, quality and service New Techniques - Expanded offering in rapidly growing procedure segments [graphic] 25 Technology Synergy Broader Technology Portfolio ---------------------------- [graphic} Monopolar Bipolar Electromechanical RF Coagulation Shrinkage Ablation Temperature Control Generators Probes &Tips Design RF Catheters for Spine Suction Foot Control Hand Control Voice Control Central Control Competitive Position -------------------- . Only company to offer RF cutting, ablation, shrinkage and mechanical resection combined in bipolar format . Only company providing temperature control with feedback . Broad generator knowledge base . #1 position in minimally invasive spine procedures . Complete line of arthroscopic tips . Able to transfer Catheter capability to new techniques / specialties . Opportunity to be 1st to market with RF Central & Voice Control 26 Contribution of New Products to Total Revenue [Bar Chart] % of total revenue ------------------ 2000 8% 2001 15% 2002 20% Note: New products launched within last three years 27 Digital OR . An integrated and fully functional operating room suite that will enable hospitals and surgical centers to maximize performance through innovative medical technologies . Centralized and voice control - alliance with Computer Motion . Information and Image Management Solutions . Digital Video (DV) and multi-media network applications . Mounting solutions . Endoscopic equipment. [Graphic] 28 Image Management Solutions Dyonics(R) Vision 635 Digital OR capture system . First to market with broadcast quality mpeg2 video and DICOM compatible images . Key element of electronic patient records . Launched 4th quarter 2001 . $50 million market by 2004 . Project $2.5 million for 2002 [Graphic] 29 Digital Video Output Camera Dyonics(R) Vision 325Z DV Camera System with Digital Output . First high-performance endoscopic camera with digital output for the global market . Provides for direct downloading of endoscopic images to most computer and network systems . Launched 2001 . Superior image quality . Real-time video output . Nearly $2 million in sales in 2001. Projected $4 million in 2002 . PAL version to launch Q1 2002 [graphic] 30 Autoclavable Camera System Dyonics(R) Vision 337 Autoclavable Camera System . Designed to be the most reliable 3-chip autoclavable camera in the market . Launch Q1 2002 . Target market size >$150 million . Project $10 million in revenue by end 2002 [Graphic] 31 ElectroMechanical Resection Dyonics(R) Series 9000 Resector . Combines bipolar RF with traditional blade technology to provide simultaneous mechanical resection with coagulation . Resects smooth tissue . Direct connect to standard electrosurgical generators . Creates new market - $50 million by 2005 . Launch Q1, 2002 . Project $2.6 million in sales by end 2002 [Graphic] 32 Innovation Leadership in Repair TwinFix/TM/ for the Shoulder . TwinFix/TM/ AB 5.0 . Quick T 5.0 . TwinFix AB - bioabsorbables have become the preferred choice of physicians . Quick T provides world's first knotless anchoring for the shoulder . Q2 2002 launch dates for both . Collective target markets of $50 million . Project collective $2 million in revenue by end 2002. [Graphic] 33 2002 Objectives . Continue sales growth momentum . Integrate ORATEC arthroscopy sales - Vulcan(TM) . Enter minimally invasive spine - IDET(TM) . Combine R&D skill base Endoscopy/ORATEC . Global roll-out of ORATEC RF products . Roll-out Digital OR technology 34 Smith & Nephew First Choice in Medical Devices