	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	SCHEDULE 13G

Under the Securities Exchange Act of 1934
(Amendment No. 2)*

KYPHON INC.

(Name of Issuer)

Common Stock

(Title of Class of Securities)

501577100

(CUSIP Number)

December 31, 2003

(Date of Event Which Requires Filing of this Statement)

Check the appropriate box to designate the rule pursuant to which this Schedule is filed:

o	Rule 13d-1(b)
ý	Rule 13d-1(c)
o	Rule 13d-1(d)

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 501577100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Vertical Fund I, L.P.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)		o
		(b)		ý

	3.	SEC Use Only

	4.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			5.		Sole Voting Power 1,759,006

			6.		Shared Voting Power 0

			7.		Sole Dispositive Power 1,759,006

			8.		Shared Dispositive Power 0

	9.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,759,006

	10.	Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) o

	11.	Percent of Class Represented by Amount in Row (9) 45%

	12.	Type of Reporting Person (See Instructions) PN

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Vertical Fund II, L.P.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)		o
		(b)		ý

	3.	SEC Use Only

	4.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			5.		Sole Voting Power 770,234

			6.		Shared Voting Power 0

			7.		Sole Dispositive Power 770,234

			8.		Shared Dispositive Power 0

	9.	Aggregate Amount Beneficially Owned by Each Reporting Person 770,234

	10.	Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) o

	11.	Percent of Class Represented by Amount in Row (9) 2.0%

	12.	Type of Reporting Person (See Instructions) PN

Item 1.
	(a)	Name of Issuer: Kyphon Inc.
	(b)	Address of Issuer’s Principal Executive Offices: 1350 Bordeaux Drive Sunnyvale, California 94089

Item 2.
	(a)	Name of Person Filing: Vertical Fund I, L.P. (“VF-I”) and Vertical Fund II, L.P. (“VF-II”) (together, the “Partnerships”)
	(b)	Address of Principal Business Office or, if none, Residence: Each of the Partnerships has a principal business address at 25 DeForest Avenue, Summit, New Jersey 07901.
	(c)	Citizenship: Each of the Partnerships is a Delaware limited partnership.
	(d)	Title of Class of Securities: Common Stock
	(e)	CUSIP Number: 501577100

Item 3.	If this statement is filed pursuant to §§240.13d-1(b) or 240.13d-2(b) or (c), check whether the person filing is a:
	(a)	o	Broker or dealer registered under section 15 of the Act (15 U.S.C. 78o).
	(b)	o	Bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c).
	(c)	o	Insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c).
	(d)	o	Investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C 80a-8).
	(e)	o	An investment adviser in accordance with §240.13d-1(b)(1)(ii)(E);
	(f)	o	An employee benefit plan or endowment fund in accordance with §240.13d-1(b)(1)(ii)(F);
	(g)	o	A parent holding company or control person in accordance with § 240.13d-1(b)(1)(ii)(G);
	(h)	o	A savings associations as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);
	(i)	o	A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3);
	(j)	o	Group, in accordance with §240.13d-1(b)(1)(ii)(J).
	None of the above. The statement is filed pursuant to Rule 13d-1(c).

Item 4.	Ownership
Provide the following information regarding the aggregate number and percentage of the class of securities of the issuer identified in Item 1.
	(a)	Amount beneficially owned: 2,529,240 shares of Common Stock
	(b)	Percent of class: 6.4%
	(c)	Number of shares as to which the person has:
		(i)	Sole power to vote or to direct the vote 2,529,240
		(ii)	Shared power to vote or to direct the vote 0
		(iii)	Sole power to dispose or to direct the disposition of 2,529,240
		(iv)	Shared power to dispose or to direct the disposition of 0
The foregoing amounts of shares and percentage represent the combined holdings of the two Partnerships as of December 31, 2003. Of such amounts, 1,759,006 shares (approximately 4.5% of the total outstanding) are beneficially owned by VFI and 770,234 shares (approximately 2.0% of the total outstanding) are beneficially owned by VFII. The Partnerships are filing this statement jointly to reflect their combined ownership because the sole general partner of each Partnership is The Vertical Group, L.P., a Delaware limited partnership, and the Partnerships may be deemed to constitute a “group” as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended

Item 5.	Ownership of Five Percent or Less of a Class
If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than five percent of the class of securities, check the following o.
	Not applicable.

Item 6.	Ownership of More than Five Percent on Behalf of Another Person
	Not applicable.

Item 7.	Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on By the Parent Holding Company or Control Person
	Not applicable.

Item 8.	Identification and Classification of Members of the Group
	Not applicable.

Item 9.	Notice of Dissolution of Group
	Not applicable.

Item 10.	Certification
By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated:	January 29, 2004


		VERTICAL FUND I, L.P.

		By: THE VERTICAL GROUP, L.P.
		General Partner


		By:	/s/ John E. Runnells
			John E. Runnells
			General Partner.


		VERTICAL FUND II, L.P.

		By: THE VERTICAL GROUP, L.P.
		General Partner


		By:	/s/ John E. Runnells
			John E. Runnells
			General Partner.