8-K

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

FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): December 12, 2007

VITAL SIGNS, INC.

(Exact Name of Registrant as Specified in its Charter)

New Jersey	0-18793	11-2279807
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)
20 Campus Road, Totowa, New Jersey		07512
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (973) 790-1330

      Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Item 2.02 Results of Operations and Financial Condition.

     On December 12, 2007, Vital Signs, Inc. (the “Company”) issued a press release regarding results for the three month period and fiscal year ended September 30, 2007 and a press release regarding the Company’s projected earnings for fiscal 2008. Copies of these press releases are being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     This Current Report on Form 8-K and the press releases attached hereto are being furnished to the Commission inasmuch as they disclose historical information regarding the Company’s results of operations for the three month period and fiscal year ended September 30, 2007 and earnings projections for its fiscal year ended September 30, 2008.

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Item 9.01 Financial Statements and Exhibits.

(c)   Exhibits.

      As described in Item 2.02 of this Report, the following Exhibit is furnished as part of this Current Report on Form 8-K:

Exhibit 99.1: Press release, dated December 12, 2007.

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SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VITAL SIGNS, INC.
	By:	/s/ Jay Sturm
		Name: Jay Sturm
		Title: Vice President / General Counsel
Dated: December 12, 2007

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release, dated December 12, 2007

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EX-99.1

NEWS RELEASE
FOR IMMEDIATE RELEASE

VITAL SIGNS, INC. ANNOUNCES YEAR-END AND FOURTH
QUARTER RESULTS FOR FISCAL 2007

     TOTOWA, N.J., December 12, 2007 -- VITAL SIGNS, INC. (NASDAQ: VITL) today announced sales and earnings for the year ended September 30, 2007 as well as for the fourth quarter ended September 30, 2007.

     For the twelve month period ended September 30, 2007, income from continuing operations decreased 37% to $19.2 million compared with $30.3 million for the comparable fiscal 2006 period. Diluted earnings per share from continuing operations decreased 38% to $1.45 for the twelve month period ended September 30, 2007 compared with $2.32 for the twelve month period ended September 30, 2006.

     The decreases principally resulted from four non-cash charges aggregating to $21.0 million recognized during the Company’s fourth quarter. These charges consisted of the following:

• Operating expenses included a goodwill impairment charge of $13.2 million for the pharmaceutical technology services segment that was previously classified as discontinued operations. As previously announced, the Company sought to sell its Stelex subsidiary during fiscal 2007. The Company received no acceptable offers and ultimately re-classified the segment to continuing operations during the fourth quarter of fiscal 2007. The offers that were received served as the basis to estimate the segment’s fair value for the impairment write-off.

• The Company increased its distributor rebate allowance by $4.7 million after obtaining new information from its two largest distributors on their inventory levels. The increase in allowance is reflected as a reduction in sales and gross profit. While increasing the allowance, the Company confirmed that the procedures it has utilized for tracking rebates since fiscal 2005 continues to accurately reflect rebates taken by distributors.

• Operating expenses included a long-lived asset impairment of $1.9 million reflecting a business decline at a sleep disorder company acquired in April 2007. The Company is pursuing legal action against the seller asserting fraudulent misrepresentations, breach of non-competition agreement, and other substantial claims.

• Operating expenses included a $1.2 million increase in an allowance for unauthorized customer cash payment discounts. The Company is currently engaged in a dispute with one of its distributors. The Company may commence legal proceedings to resolve this dispute.

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These four items resulted in after-tax charges of $13.6 million, or $1.02 per diluted share.

The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measured used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. See the Table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the years ended September 30, 2007 and 2006. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

Following is a comparison of the Company’s results in accordance with GAAP excluding the last three non-cash charges mentioned above. Inasmuch as the Company classified Pharmaceutical Technology Services segment as a discontinued operation for the first three quarters of fiscal 2007, the adjustments in the table below also present the segment as discontinued operations for all of fiscal 2007 and fiscal 2006.

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Year ended September 30, 2007	2007		Non-GAAP Adjustments							2007		2006		Non-GAAP		2006		Non-
														Adjustments				GAAP
				Pharm Tech										Pharm Tech
	As		One-time Rebate	Presented as		Reserve for				After		As		Presented as		After
(Dollars in thousands, except per share	Reported		Allowance	Discontinued		Unauthorized		SSA Acquisition		Adjustments		Reported		Discontinued		Adjustments		Percent
amounts)	(GAAP)		Increase(1)	Operation(2)		Discounts(3)		Impairment(4)		(Non-GAAP)		(GAAP)		Operation(2)		(Non-GAAP)		Change
Consolidated statement of
income data:
Net revenue	205,257		4,733	(11,487	)					198,503		202,124		(15,372	)	186,752		6.3	%
Cost of goods sold and services performed	101,438			(8,457	)					92,981		100,027		(10,127	)	89,900		3.4	%
Gross profit	103,819									105,522		102,097				96,852		9.0	%
Gross Margin	50.6	%								53.2	%	50.5	%			51.9	%
Operating expenses:
Selling, general and administrative	57,134			(3,712	)	(1,176	)			52,246		52,182		(3,977	)	48,205		8.4	%
Research and development	7,511			(50	)					7,461		7,034		--		7,034		6.1	%
Restructuring charge	—									0		—				0
Impairment and other charges	15,122			(13,180	)			(1,942	)	0		—				0
Other (income) expense - net	527			1						528		880		(149	)	731		-27.8	%
Total operating expenses	80,294									60,235		60,096				55,970		7.6	%
Operating income	23,525									45,287		42,001				40,882		10.8	%
Interest income	(4,909	)								(4,909	)	(3,294	)			(3,294	)	49.0	%
Interest expense	56									56		—				0
Income unconsolidated investment	( 1,498	)								( 1,498	)	( 1,728	)			( 1,728	)	-13.3	%
Total other (income) expense	( 6,351	)								( 6,351	)	( 5,022	)			( 5,022	)	26.5	%
Income from continuing operations before
provision for income taxes and non-
controlling interest	29,876									51,638		47,023				45,904		12.5	%
Provision for income taxes	9 ,985		1,609	4,735		400		660		1 7,389		15,828		(414	)	15,414		12.8	%
Income from continuing operations before
non-controlling interest	19,891									34,249		31,195				30,490		12.3	%
Non-controlling interest in net income of
subsidiary	683							486		1,169		911				911		28.3	%
Income from continuing operations	19,208									33,080		30,284				29,579		11.8	%
(Loss)/Income from discontinued
operations, net	(49	)		(521	)					(570	)			705		705
Net Income	19,159									32,510		30,284				30,284
Earnings (loss) per common share:
Basic:
Continuing Operations:	1.45									2.50		2.34				2.28
Discontinued Operations:	(0.00	)								(0.04	)	0.00				0.05
Net Earnings:	1.45									2.46		2.34				2.34
Diluted:
Continuing Operations:	1.45									2.49		2.32				2.27
Discontinued Operations:	(0.01	)								(0.04	)	0.00				0.05
Net Earnings:	1.44									2.45		2.32				2.32
Basic weighted - average number of shares
outstanding	13,238									13,238		12,966				12,966
Diluted weighted - average number of
shares outstanding	13,277									13,277		13,040				13,040

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(1)	The Company increased its distributor rebate allowance by an additional $4.7 million after obtaining new information from our two largest
	distributors on their inventory levels. The increase in allowance is reflected as a reduction in sales and gross profit. While increasing the
	allowance the Company confirmed that the procedures it has utilized for tracking rebates since fiscal 2005 continues to accurately reflect rebates
	taken by distributors.
(2)	For the first 3 quarters of fiscal 2007 the company reported its Pharmaceutical Technology Services segment as a discontinued operation.
	Earnings guidance was provided under the assumption that the segment will not contribute to earnings from continuing operations. This pro
	forma adjustment shows the effect of the segment as a discontinued operation for all of fiscal 2007 and fiscal 2006.
(3)	Operating expenses included a $1.2 million increase in an allowance for unauthorized customer cash payment discounts. The Company is
	currently engaged in a dispute with one of its distributors. The Company may commence legal proceedings to resolve this dispute.
(4)	Operating expenses included a long-lived asset impairment of $1.9 million reflecting a business decline at a sleep disorder segment acquisition
	made in April 2007. The Company is pursuing legal action against the seller asserting fraudulent misrepresentations, breach of non-competition
	agreement, and other substantial claims.

4

     GAAP net revenues for the twelve months of fiscal 2007 increased 1.6% to $205,257,000 compared to $202,124,000 in the comparable period last year. As adjusted to exclude the $4.7 million rebate adjustments and effect of Pharmaceutical Technology Services segment reclassified as discontinued operation in fiscal 2006 and 2007 as described in the table above, net revenues for the twelve months of fiscal 2007 increased 6.3% to $198,503,000. Increases in the Company’s core segments were partially offset by a decline in the Company’s Pharmaceutical Technology Services segment.

     Following are the net revenues by business segment for the twelve months ended September 30, 2007 and 2006 (in thousands of dollars):

	NET REVENUES BY BUSINESS SEGMENT
	FOR THE YEARS ENDED
	SEPTEMBER 30,
	2007			2006		PERCENT
						CHANGE
Anesthesia	$	74,800		$	73,794	1.4	%
Respiratory/Critical Care		46,296			44,571	3.9	%
Sleep Disorder		48,770			42,850	13.8	%
Interventional Cardiology/Radiology(1)		28,637			25,538	12.1	%
Pharmaceutical Technology Services		11,487			15,371	(25.3	)%
Rebate allowance adjustment		(4,733	)		—	(100.0	)%
Net Revenues	$	205,257		$	202,124	1.6	%

     GAAP income/(loss) from continuing operations decreased 165% to ($5,347,000) for the fourth quarter of fiscal 2007 compared to $8,252,000 for the fourth quarter of fiscal 2006. GAAP earnings/(loss) from continuing operations per diluted share decreased 165% to ($0.40) per share, for the fourth quarter of fiscal 2007 compared to $0.62 per share for the fourth quarter of fiscal 2006.

     GAAP net revenues for the fourth quarter of fiscal 2007 decreased 3.5% to $50,484,000 compared to $52,334,000 in the comparable period last year. Anesthesia, Respiratory Critical/Care and Sleep Disorder’s net revenues increased 3.0% to $43,279,000 compared to $42,032,000 in the comparable period last year.

     Following are the net revenues by business segment for the fourth quarter of fiscal 2007 compared to the fourth quarter of fiscal 2006 (in thousands of dollars):

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	NET REVENUES BY BUSINESS SEGMENT
	FOR THE THREE MONTHS ENDED
	SEPTEMBER 30,
	2007			2006		PERCENT
						CHANGE
Anesthesia	$	18,348		$	19,925	(7.9	)%
Respiratory/Critical Care		11,515			11,626	(1.0	)%
Sleep Disorder		13,416			10,481	28.0	%
Interventional Cardiology/Radiology		8,841			7,239	22.1	%
Pharmaceutical Technology Services		3,097			3,063	1.11	%
Rebate allowance adjustment		(4,733	)		—	(100.0	)%
Net Revenues	$	50,484		$	52,334	(3.5	)%

     The reduction in Anesthesia and Respiratory/Critical Care net revenues in the fourth quarter was primarily caused by a temporary disruption in supply of facemasks from Respironics due to a delay between the termination of the 26 year supply agreement and the start-up of the current six month transition agreement. As of August 2007 Respironics sold all of its tooling, equipment, know-how, and intellectual property for manufacturing air-filled cushion masks to the Company, agreed to continue manufacturing masks during the transition process, and agreed to cooperate with the startup of the Company's Chinese joint venture. The joint venture is ramping up mask production and is currently supplying 40% to 50% of the Company's mask needs.

     Net revenues in the Company’s Sleep Disorder segment increased 28.0% for the three months ended September 30, 2007. At Breas, the Company’s manufacturer of personal ventilators and CPAP devices, revenues increased 20.7%.

     Net revenue for the fourth quarter in the Company’s interventional cardiology/radiology segment increased 22.1% to $8,841,000 due to strong demand for its flagship products.

     Net revenues in the Company’s Pharmaceutical technology services segment for the fourth quarter increased 1.1% to $3,097,000 million.

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     On December 10, 2007, the Board approved a quarterly dividend of $0.10 per share payable on January 2, 2008 to shareholders of record on December 21, 2007.

     Terry Wall, President and CEO of Vital Signs, commented “We are issuing guidance of $2.80-$2.85, fully diluted EPS for Fiscal 2008. We foresee this growth to be back-end loaded, as a result of the timing of new product introductions and cost savings projects which we have included in our estimates.

     We expect approximately 7% growth in net revenues from the Company’s Anesthesia and Respiratory/Critical Care segments as a result of the introductions of enFlow™, SteeLite™ and Redi-Tube™ and the continued success of our patented Limb-Θ circuit. We are expecting approximately 10% growth in our Interventional Cardiovascular/Radiology segment and 15% growth in Sleep Disorder (The percentage growth is based upon the fiscal 2007 results after non-GAAP adjustments).”

     The company has not yet completed its audit review process. The Company expects to file its audited financial statements as part of its Annual Report on Form 10-K by December 14, 2007.

     All statements in this press release (including our guidance for fiscal 2008) other than historical statements, constitute Forward Looking Statements under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from such statements as a result of a variety of risks and uncertainties, including unanticipated delays in bringing products to market, regulatory approval of new products, market conditions, and competitive responses, as well as other factors referred to by Vital Signs in its Annual Report on Form 10-K for the year ended September 30, 2007.

     Vital Signs, Inc. and its subsidiaries design, manufacture and market primarily single-use medical products for the anesthesia, respiratory/critical care and sleep/ventilation markets, achieving the number one market share position in five of its major product categories. In addition, Vital Signs provides single use products for interventional cardiology/radiology and pharmaceutical technology services to the pharmaceutical and medical device industry. Vital Signs is ISO 13485 certified and has CE Mark approval for its products. In 2006, Forbes Magazine named Vital Signs, Inc. as “one of the 200 Best Small Companies in America” based on financial criteria.

FOR FURTHER INFORMATION, CONTACT:	Terry D. Wall, President
	or Mark Mishler, CFO
	(973) 790-1330
	http://www.vital-signs.com

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VITAL SIGNS, INC.
FINANCIAL HIGHLIGHTS
STATEMENT OF INCOME

(In Thousands, Except Per Share Amounts)
(Unaudited)

	THREE MONTHS ENDED						FISCAL YEAR ENDED
	SEPTEMBER 30						SEPTEMBER 30,
	2007			2006			2007			2006
Gross revenues	$	73,404		$	70,634		$	283,364		$	271,182
Rebates		(22,467	)		(17,176	)		(74,798	)		(64,642	)
Other deductions		(453	)		(1,124	)		(3,309	)		(4,416	)
Net revenues		50,484			52,334			205,257			202,124
Cost of goods sold and services
performed		26,815			26,056			101,438			100,027
Gross profit		23,669			26,277			103,819			102,097
Expenses:
Selling, general and administrative		16,025			12,660			57,135			52,182
Research and development		1,860			1,740			7,511			7,034
Impairment charge		15,121			¯			15,121			¯
Interest and other (income)/expense, net		(1,615	)		(871	)		(5,824	)		(4,142	)
Income/(loss) from continuing operations
before provision for income taxes and non-
controlling interest		(7,722	)		12,748			29,876			47,023
Provision for income taxes		(2,285	)		4,248			9,985			15,828
Income/(loss) from continuing operations
before non-controlling interest		(5,437	)		8,500			19,891			31,195
Non-controlling share in net income of		(90	)		247			683			911
subsidiary
Income/(loss) from continuing operations		(5,347	)		8,253			19,208			30,284
Income/(loss) from discontinued operations,
net		(14	)		(208	)		(49	)		(167	)
Net income/(loss)	$	(5,361	)	$	8,045		$	19,159		$	30,117
Earnings (loss) per common share:
Basic:
Income/(loss) per share from continuing
operations	$	(0.40	)	$	0.62		$	1.45		$	2.34
Discontinued operations		(0.00	)		(0.01	)		(0.01	)		(0.01	)
Net earnings	$	(0.40	)	$	0.61		$	1.44		$	2.33
Diluted:
Income/(loss) per share from continuing
operations	$	(0.40	)	$	0.62		$	1.45		$	2.32
Discontinued operations		(0.00	)		(0.01	)		(0.01	)		(0.01	)
Net earnings	$	(0.40	)	$	0.61		$	1.44		$	2.31
Basic weighted average number of shares		13,275			13,217			13,238			12,966
Diluted weighted average number of shares		13,289			13,273			13,277			13,040

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VITAL SIGNS, INC.
FINANCIAL HIGHLIGHTS

BALANCE SHEET HIGHLIGHTS:

	(In Thousands)
	(Unaudited)
	September 30,
	2007		2006
Cash and cash equivalents	$	51,720	$	41,242
Short Term Investments		86,671		85,565
Accounts Receivable		36,915		34,284
Inventory		19,778		19,006
Current Assets		206,989		185,146
Non-Current Assets		124,946		120,708
Total Assets	$	331,935	$	305,854
Current Liabilities	$	17,825	$	15,355
Total Liabilities		19,302		15,355
Shareholders’ equity		306,582		285,813
Total Liabilities and Shareholders’ equity	$	331,935	$	305,854

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