----

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

| **x** | **Quarterly                Report Pursuant To Section 13 or 15(d) of the Securities Exchange                Act of                1934 for the Quarterly Period Ended September 30,                2007** |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **or** |
|--------|--------|

| ** ̈** | **Transition                Report Pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934 for the Transition Period                from    to** |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Commission      File Number 0-10763**

**Atrion      Corporation**

| **Delaware**                                                                  |   | **63-0821819**                                      |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S.                Employer Identification No.) |

|   | **One                  Allentown Parkway, Allen, Texas**  | **75002**                   |   |
|--------|-----------------------------------------------------------|-----------------------------|--------|
|   | (Address                  of Principal Executive Offices) | (Zip                  Code) |   |

|   | **(972)                390-9800**                                         |   |
|--------|---------------------------------------------------------------------------|--------|
|   | (Registrant’s                Telephone Number, Including Area Code) |   |

**x**

** **

** ̈**

** **

| Large                accelerated filer  ** ̈** |  Accelerated                filer  **x** | Non-accelerated                filer ** ̈** |
|--------------------------------------------------------------|---------------------------------------------------------|-------------------------------------------------|

** ̈**

** **

**x**

** **

|  **Title                of Each Class**               |   | **Number                of Shares Outstanding at****October                19, 2007** |
|------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|
| **Common                stock, Par Value $0.10 per share** |   | **1,902,467**                                                                         |

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**ATRION      CORPORATION AND SUBSIDIARIES**

**TABLE      OF CONTENTS**

| **PART                    I.**                    | **Financial                    Information**                                                                                                        | **2**  |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                              |                                                                                                                                                |   |
| **Item                    1.**                    | Financial                    Statements                                                                                                             |   |
|                                              |                                                                                                                                                |   |
|                                              | Consolidated                    Statements of Income (Unaudited) For the Three                    and Nine months Ended September 30, 2007 and 2006 | 3      |
|                                              |                                                                                                                                                |   |
|                                              | Consolidated                    Balance Sheets (Unaudited) September 30, 2007 and                    December 31, 2006                              | 4      |
|                                              |                                                                                                                                                |   |
|                                              | Consolidated                    Statements of Cash Flows (Unaudited) For the Nine                    months Ended September 30, 2007 and 2006       | 5      |
|                                              |                                                                                                                                                |   |
|                                              | Notes                    to Consolidated Financial Statements                    (Unaudited)                                                        | 6      |
|                                              |                                                                                                                                                |   |
| **Item                    2.**                    | Management's                    Discussion and Analysis of Financial Condition and                    Results of Operations                         | 10     |
|                                              |                                                                                                                                                |   |
| **Item                    3**.                    | Quantitative                    and Qualitative Disclosures About Market                    Risk                                                    | 15     |
|                                              |                                                                                                                                                |   |
| **Item                    4.**                    | Controls                    and Procedures                                                                                                          | 15     |
|                                              |                                                                                                                                                |   |
| **PART                    II. Other Information** | **16**                                                                                                                                              |
|                                              |                                                                                                                                                |   |
| **Item                    1.**                    | Legal                    Proceedings                                                                                                                | 16     |
|                                              |                                                                                                                                                |   |
| **Item                    1A.**                   | Risk                    Factors                                                                                                                     | 16     |
|                                              |                                                                                                                                                |   |
| **Item                    6.**                    | Exhibits                    and Reports on Form 8-K                                                                                                 | 16     |
|                                              |                                                                                                                                                |   |
| **SIGNATURES**                                    | **17**                                                                                                                                              |

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***Table            of Contents***

**PART      I**

**FINANCIAL      INFORMATION**

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***Table            of Contents***

| **Item                  1.** | **Financial                  Statements** |
|------------------------------|-------------------------------------------|

**ATRION      CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF INCOME**

**(Unaudited)**

|                                                                                                   |   | **Three                    Months Ended****September                    30,** |   |   | **Nine                    months Ended****September                    30,** |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------|--------|
|                                                                                                   |   | **2007**                                                                      |   |   | **2006**                                                                     |   |   | **2007** |   |   | **2006** |   |
|                                                                                                   |   | (in                    thousands, except per share amounts)                   |   |
| Revenues                                                                                               |   | $                                                                             | 21,315 |   |                                                                         | $      | 19,290 |   |   | $ | 67,552 |   |   | $ | 59,641 |   |
| Cost                    of goods sold                                                                  |   |                                                                          | 12,210 |   |                                                                         |   | 11,803 |   |   |   | 38,468 |   |   |   | 36,033 |   |
| Gross                    profit                                                                        |   |                                                                          | 9,105  |   |                                                                         |   | 7,487 |   |   |   | 29,084 |   |   |   | 23,608 |   |
| Operating                    expenses:                                                                 |   |                                                                          |   |   |                                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Selling                                                                                                |   |                                                                          | 1,494  |   |                                                                         |   | 1,415 |   |   |   | 4,818 |   |   |   | 4,631 |   |
| General                    and administrative                                                          |   |                                                                          | 2,595  |   |                                                                         |   | 2,190 |   |   |   | 7,682 |   |   |   | 6,541 |   |
| Dispute                    resolution                                                                  |   |                                                                          | (1,398 | )      |                                                                         |   | -- |   |   |   | (1,398 | ) |   |   | -- |   |
| Research                    and development                                                            |   |                                                                          | 619    |   |                                                                         |   | 696 |   |   |   | 2,024 |   |   |   | 2,072 |   |
|                                                                                                   |   |                                                                          | 3,310  |   |                                                                         |   | 4,301 |   |   |   | 13,126 |   |   |   | 13,244 |   |
| Operating                    income                                                                    |   |                                                                          | 5,795  |   |                                                                         |   | 3,186 |   |   |   | 15,958 |   |   |   | 10,364 |   |
| Other                    income:                                                                       |   |                                                                          |   |   |                                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Interest                    income                                                                     |   |                                                                          | 10     |   |                                                                         |   | 5 |   |   |   | 30 |   |   |   | 26 |   |
| Interest                    expense                                                                    |   |                                                                          | (33    | )      |                                                                         |   | (58 | ) |   |   | (251 | ) |   |   | (58 | ) |
| Other                    expense, net                                                                  |   |                                                                          | --     |   |                                                                         |   | (4 | ) |   |   | -- |   |   |   | (26 | ) |
|                                                                                                   |   |                                                                          | (23    | )      |                                                                         |   | (57 | ) |   |   | (221 | ) |   |   | (58 | ) |
| Income                    before provision for income taxes                                            |   |                                                                          | 5,772  |   |                                                                         |   | 3,129 |   |   |   | 15,737 |   |   |   | 10,306 |   |
| Provision                    for income taxes                                                          |   |                                                                          | (1,662 | )      |                                                                         |   | (433 | ) |   |   | (4,873 | ) |   |   | (2,685 | ) |
|                                                                                                   |   |                                                                          |   |   |                                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                    from continuing operations                                                   |   |                                                                          | 4,110  |   |                                                                         |   | 2,696 |   |   |   | 10,864 |   |   |   | 7,621 |   |
| Gain                    on disposal of discontinued operations, net of income                    taxes |   |                                                                          | --     |   |                                                                         |   | -- |   |   |   | -- |   |   |   | 165 |   |
| Net                    income                                                                          |   | $                                                                             | 4,110  |   |                                                                         | $      | 2,696 |   |   | $ | 10,864 |   |   | $ | 7,786 |   |
| Income                    per basic share:                                                             |   |                                                                          |   |   |                                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                    from continuing operations                                                   |   | $                                                                             | 2.17   |   |                                                                         | $      | 1.45 |   |   | $ | 5.77 |   |   | $ | 4.13 |   |
| Gain                    on disposal of discontinued operations                                         |   |                                                                          | --     |   |                                                                         |   | -- |   |   |   | -- |   |   |   | 0.09 |   |
|                                                                                                   |   | $                                                                             | 2.17   |   |                                                                         | $      | 1.45 |   |   | $ | 5.77 |   |   | $ | 4.22 |   |
| Weighted                    average basic shares outstanding                                           |   |                                                                          | 1,895  |   |                                                                         |   | 1,858 |   |   |   | 1,883 |   |   |   | 1,846 |   |
| Income                    per diluted share:                                                           |   |                                                                          |   |   |                                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                    from continuing operations                                                   |   | $                                                                             | 2.07   |   |                                                                         | $      | 1.38 |   |   | $ | 5.49 |   |   | $ | 3.91 |   |
| Gain                    on disposal of discontinued operations                                         |   |                                                                          | --     |   |                                                                         |   | -- |   |   |   | -- |   |   |   | 0.08 |   |
|                                                                                                   |   | $                                                                             | 2.07   |   |                                                                         | $      | 1.38 |   |   | $ | 5.49 |   |   | $ | 3.99 |   |
| Weighted                    average diluted shares outstanding                                         |   |                                                                          | 1,988  |   |                                                                         |   | 1,960 |   |   |   | 1,980 |   |   |   | 1,951 |   |
| Dividends                    per common share                                                          |   | $                                                                             | 0.24   |   |                                                                         | $      | 0.20 |   |   | $ | 0.64 |   |   | $ | 0.54 |   |

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***Table            of Contents***

**ATRION      CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED      BALANCE SHEETS**

**(Unaudited)**

| **Assets**                                                                                                                                                                                                                                   |   | **September                  30,****2007** |    |   | **December                  31,****2006** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|--------|-------------------------------------------|--------|
|                                                                                                                                                                                                                                         |   | (in                  thousands)            |    |
| Current                  assets:                                                                                                                                                                                                             |   |                                       |    |   |                                      |   |
| Cash                  and cash                  equivalents                                                                                                                                                                                  |   | $                                          | 1,045   |   |                                      | $      | 333 |   |
| Accounts                  receivable                                                                                                                                                                                                         |   |                                       | 10,422  |   |                                      |   | 10,542 |   |
| Inventories                                                                                                                                                                                                                                  |   |                                       | 17,727  |   |                                      |   | 17,115 |   |
| Prepaid                  expenses                                                                                                                                                                                                            |   |                                       | 1,029   |   |                                      |   | 1,530 |   |
| Other                                                                                                                                                                                                                                        |   |                                       | 738     |   |                                      |   | 1,138 |   |
|                                                                                                                                                                                                                                         |   |                                       | 30,961  |   |                                      |   | 30,658 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
| Property,                  plant and                  equipment                                                                                                                                                                              |   |                                       | 87,868  |   |                                      |   | 82,536 |   |
| Less                  accumulated depreciation and                  amortization                                                                                                                                                             |   |                                       | 34,298  |   |                                      |   | 31,094 |   |
|                                                                                                                                                                                                                                         |   |                                       | 53,570  |   |                                      |   | 51,442 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
| Other                  assets and deferred                  charges:                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
| Patents                                                                                                                                                                                                                                      |   |                                       | 2,030   |   |                                      |   | 2,264 |   |
| Goodwill                                                                                                                                                                                                                                     |   |                                       | 9,730   |   |                                      |   | 9,730 |   |
| Other                                                                                                                                                                                                                                        |   |                                       | 673     |   |                                      |   | 1,678 |   |
|                                                                                                                                                                                                                                         |   |                                       | 12,433  |   |                                      |   | 13,672 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
|                                                                                                                                                                                                                                         |   | $                                          | 96,964  |   |                                      | $      | 95,772 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
| **Liabilities                  and Stockholders’                  Equity**                                                                                                                                                             |   |                                       |    |   |                                      |   |   |   |
| Current                  liabilities:                                                                                                                                                                                                        |   |                                       |    |   |                                      |   |   |   |
| Accounts                  payable and accrued                  liabilities                                                                                                                                                                   |   | $                                          | 7,290   |   |                                      | $      | 6,041 |   |
| Accrued                  income and other                  taxes                                                                                                                                                                             |   |                                       | 1,172   |   |                                      |   | 882 |   |
|                                                                                                                                                                                                                                         |   |                                       | 8,462   |   |                                      |   | 6,923 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
| Line                  of                  credit                                                                                                                                                                                             |   |                                       | --      |   |                                      |   | 11,399 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
| Other                  non-current                  liabilities                                                                                                                                                                              |   |                                       | 6,433   |   |                                      |   | 6,555 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
| Stockholders’                  equity:                                                                                                                                                                                                 |   |                                       |    |   |                                      |   |   |   |
| Common                  shares, par value $0.10 per                  share; authorized 10,000 shares, issued 3,420                  shares                                                                                                   |   |                                       | 342     |   |                                      |   | 342 |   |
| Paid-in                  capital                                                                                                                                                                                                             |   |                                       | 15,367  |   |                                      |   | 14,140 |   |
| Accumulated                  other comprehensive                  loss                                                                                                                                                                       |   |                                       | (665    | )      |                                      |   | (892 | ) |
| Retained                  earnings                                                                                                                                                                                                           |   |                                       | 101,339 |   |                                      |   | 91,708 |   |
| Treasury                  shares,1,518 at                  September                  30,                  2007 and 1,546                  at                  December                  31,                  2006, at                  cost |   |                                       | (34,314 | )      |                                      |   | (34,403 | ) |
| Total                  stockholders’                  equity                                                                                                                                                                           |   |                                       | 82,069  |   |                                      |   | 70,895 |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
|                                                                                                                                                                                                                                         |   |                                       |    |   |                                      |   |   |   |
|                                                                                                                                                                                                                                         |   | $                                          | 96,964  |   |                                      | $      | 95,772 |   |

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***Table            of Contents***

**ATRION      CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                                 |   | **Nine                  months Ended****September                  30,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|---------|
|                                                                                                                                 |   | **2007**                                                                 |    |   | **2006** |   |
|                                                                                                                                 |   |  (in                  thousands)                     |    |
|                                                                                                                                 |   |                                                                     |    |   |   |   |
| Cash                  flows from operating                  activities:                                                              |   |                                                                     |    |   |   |   |
| Net                  income                                                                                                          |   | $                                                                        | 10,864  |   |   | $ | 7,786 |   |
| Adjustments                  to reconcile net                  income to net cash provided by operating                  activities: |   |                                                                     |    |   |   |   |   |   |
| Gain                  on disposal of discontinued                  operations                                                        |   |                                                                     | --      |   |   |   | (165 | ) |
| Depreciation                  and                  amortization                                                                      |   |                                                                     | 4,064   |   |   |   | 3,555 |   |
| Deferred                  income                  taxes                                                                              |   |                                                                     | 933     |   |   |   | 179 |   |
| Stock-based                  compensation                                                                                            |   |                                                                     | 269     |   |   |   | 61 |   |
| Pension                  charge                                                                                                      |   |                                                                     | 228     |   |   |   | -- |   |
| Other                                                                                                                                |   |                                                                     | 35      |   |   |   | 33 |   |
|                                                                                                                                 |   |                                                                     | 16,393  |   |   |   | 11,449 |   |
|                                                                                                                                 |   |                                                                     |    |   |   |   |   |   |
| Changes                  in operating assets and                  liabilities:                                                       |   |                                                                     |    |   |   |   |   |   |
| Accounts                  receivable                                                                                                 |   |                                                                     | 148     |   |   |   | (1,250 | ) |
| Inventories                                                                                                                          |   |                                                                     | (612    | ) |   |   | (573 | ) |
| Prepaid                  expenses                                                                                                    |   |                                                                     | 501     |   |   |   | (221 | ) |
| Other                  non-current                  assets                                                                           |   |                                                                     | 1,005   |   |   |   | (99 | ) |
| Accounts                  payable and current                  liabilities                                                           |   |                                                                     | 1,259   |   |   |   | 968 |   |
| Accrued                  income and other                  taxes                                                                     |   |                                                                     | 1,222   |   |   |   | (386 | ) |
| Other                  non-current                  liabilities                                                                      |   |                                                                     | (1,614  | ) |   |   | 31 |   |
| Net                  cash provided by continuing                  operations                                                         |   |                                                                     | 18,302  |   |   |   | 9,919 |   |
| Net                  cash provided by discontinued                  operations                                                       |   |                                                                     | --      |   |   |   | 165 |   |
|                                                                                                                                 |   |                                                                     | 18,302  |   |   |   | 10,084 |   |
|                                                                                                                                 |   |                                                                     |    |   |   |   |   |   |
| Cash                  flows from investing                  activities:                                                              |   |                                                                     |    |   |   |   |   |   |
| Property,                  plant and equipment                  additions                                                            |   |                                                                     | (6,021  | ) |   |   | (18,589 | ) |
| Property,                  plant and equipment                  sales                                                                |   |                                                                     | --      |   |   |   | 3 |   |
|                                                                                                                                 |   |                                                                     | (6,021  | ) |   |   | (18,586 | ) |
|                                                                                                                                 |   |                                                                     |    |   |   |   |   |   |
| Cash                  flows from financing                  activities:                                                              |   |                                                                     |    |   |   |   |   |   |
| Line                  of credit                  advances                                                                            |   |                                                                     | 19,426  |   |   |   | 30,221 |   |
| Line                  of credit                  repayments                                                                          |   |                                                                     | (30,825 | ) |   |   | (21,103 | ) |
| Exercise                  of stock                  options                                                                          |   |                                                                     | 541     |   |   |   | 1,029 |   |
| Purchase                  of treasury                  stock                                                                         |   |                                                                     | --      |   |   |   | (1,594 | ) |
| Tax                  benefit related to stock                  options                                                               |   |                                                                     | 502     |   |   |   | 658 |   |
| Dividends                  paid                                                                                                      |   |                                                                     | (1,213  | ) |   |   | (1,000 | ) |
|                                                                                                                                 |   |                                                                     | (11,569 | ) |   |   | 8,211 |   |
|                                                                                                                                 |   |                                                                     |    |   |   |   |   |   |
| Net                  change in cash and cash                  equivalents                                                            |   |                                                                     | 712     |   |   |   | (291 | ) |
| Cash                  and cash equivalents at                  beginning of period                                                   |   |                                                                     | 333     |   |   |   | 525 |   |
| Cash                  and cash equivalents at end                  of period                                                         |   | $                                                                        | 1,045   |   |   | $ | 234 |   |
|                                                                                                                                 |   |                                                                     |    |   |   |   |   |   |
|                                                                                                                                 |   |                                                                     |    |   |   |   |   |   |
|                                                                                                                                 |   |                                                                     |    |   |   |   |   |   |
| Cash                  paid                  for:                                                                                     |   |                                                                     |    |   |   |   |   |   |
| Interest                  (net of                  capitalization)                                                                   |   | $                                                                        | 309     |   |   | $ | 58 |   |
| Income                  taxes                                                                                                        |   | $                                                                        | 2,349   |   |   | $ | 2,552 |   |

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***Table            of Contents***

**ATRION        CORPORATIONAND        SUBSIDIARIES**

**NOTES        TO CONSOLIDATED FINANCIAL        STATEMENTS**

**(Unaudited)**

| **(1)** | **Basis                of Presentation** |
|---------|------------------------------------------|

| **(2)** | **Inventories** |
|---------|-----------------|

|                             |   | **September                30,** |       |   | **December                31,** |   |
|----------------------------------|--------|----------------------------------|------------|--------|---------------------------------|--------|
|                             |   | **2007**                         |       |   | **2006**                        |   |
| Raw                materials     |   | **$**                            | **7,153**  |   |                            | $      | 7,194 |   |
| Work                in process   |   | ** **                       | **4,578**  |   |                            |   | 4,084 |   |
| Finished                goods    |   | ** **                       | **5,996**  |   |                            |   | 5,837 |   |
| Total                inventories |   | **$**                            | **17,727** |   |                            | $      | 17,115 |   |

| **(3)** | **Income                per share** |
|---------|-------------------------------------|

|                                                              |   | **Three                months ended****September                30,**  |   |   | **Nine                months                ended****September                30,** |   |
|-------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------|--------|
|                                                              |   | 2007                                                                   |   |   | 2006                                                                                |   |   | 2007 |   |   | 2006 |   |
|                                                              |   | (in                thousands, except per share                amounts) |   |
| Income                from continuing operations                  |   | $                                                                      | 4,110  |   |                                                                                | $      | 2,696 |   |   | $ | 10,864 |   |   | $ | 7,621 |   |
|                                                              |   |                                                                   |   |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average basic shares outstanding          |   |                                                                   | 1,895  |   |                                                                                |   | 1,858 |   |   |   | 1,883 |   |   |   | 1,846 |   |
| Add:  Effect                of dilutive securities      |   |                                                                   | 93     |   |                                                                                |   | 102 |   |   |   | 97 |   |   |   | 105 |   |
| Weighted                average diluted shares outstanding        |   |                                                                   | 1,988  |   |                                                                                |   | 1,960 |   |   |   | 1,980 |   |   |   | 1,951 |   |
|                                                              |   |                                                                   |   |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| **Earnings                per share from continuing operations:** |   |                                                                   |   |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   | $                                                                      | 2.17   |   |                                                                                | $      | 1.45 |   |   | $ | 5.77 |   |   | $ | 4.13 |   |
| Diluted                                                           |   | $                                                                      | 2.07   |   |                                                                                | $      | 1.38 |   |   | $ | 5.49 |   |   | $ | 3.91 |   |

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***Table            of Contents***

**ATRION        CORPORATION AND        SUBSIDIARIES**

**NOTES        TO CONSOLIDATED FINANCIAL        STATEMENTS**

**(Unaudited)**

| **(4)** | **Pension                Benefits** |
|---------|-------------------------------------|

|                                             |   | **Three                Months ended****September                30,** |     |   | **Nine                months ended****September                30,** |   |
|--------------------------------------------------|--------|-----------------------------------------------------------------------|----------|--------|----------------------------------------------------------------------|--------|
|                                             |   | **2007**                                                              |     |   | **2006**                                                             |   |   | **2007** |   |   | **2006** |   |
| Service                cost                      |   | **$**                                                                 | **65**   |   |                                                                 | $      | 69 |   |   | **$** | **195** |   |   | $ | 207 |   |
| Interest                cost                     |   | ** **                                                            | **80**   |   |                                                                 |   | 83 |   |   | ** ** | **240** |   |   |   | 249 |   |
| Expected                return on assets         |   | ** **                                                            | **(123** | **)**  |                                                                 |   | (111 | ) |   | ** ** | **(369** | **)** |   |   | (333 | ) |
| Prior                service cost amortization   |   | ** **                                                            | **(9**   | **)**  |                                                                 |   | (9 | ) |   | ** ** | **(27** | **)** |   |   | (27 | ) |
| Net                curtailment/settlement losses |   | ** **                                                            | **(311** | **)**  |                                                                 |   | -- |   |   | ** ** | **(311** | **)** |   |   | -- |   |
| Actuarial                loss                    |   | ** **                                                            | **15**   |   |                                                                 |   | 29 |   |   | ** ** | **45** |   |   |   | 87 |   |
|                                             |   |                                                                  |     |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic pension cost         |   | **$**                                                                 | **(283** | **)**  |                                                                 | $      | 61 |   |   | **$** | **(227** | **)** |   | $ | 183 |   |

| **(5)** | **Recent                Accounting Pronouncements** |
|---------|-----------------------------------------------------|

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***Table            of Contents***

**ATRION        CORPORATION AND        SUBSIDIARIES**

**NOTES        TO CONSOLIDATED FINANCIAL        STATEMENTS**

**(Unaudited)**

| **(6)** | **Income                Taxes** |
|---------|---------------------------------|

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***Table            of Contents***

**ATRION        CORPORATION AND        SUBSIDIARIES**

**NOTES        TO CONSOLIDATED FINANCIAL        STATEMENTS**

**(Unaudited)**

| **(7)** | **Dispute                Settlement** |
|---------|---------------------------------------|

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***Table            of Contents***

| **Item                2.** | **Management’s                Discussion and                Analysis of Financial Condition and Results of                Operations** |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

**Overview**

|   | · | Focusing                on customer needs; |
|--------|--------|--------------------------------------------|

|   | · | Expanding                existing product lines and developing new                products; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Maintaining                a culture of controlling cost; and |
|--------|--------|---------------------------------------------------------------|

|   | · | Preserving                and fostering a collaborative, entrepreneurial management                structure. |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

**Results      for the three months ended September 30, 2007**

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***Table            of Contents***

|                          |   | Three                Months                endedSeptember                30, |   |
|-------------------------------|--------|------------------------------------------------------------------------------|--------|
|                          |   | 2007                                                                         |   |   | 2006 |   |
|                          |   |                                                                         |   |   |   |   |
| Fluid                Delivery |   | $                                                                            | 7,236  |   |   | $ | 6,121 |   |
| Cardiovascular                |   |                                                                         | 5,867  |   |   |   | 5,707 |   |
| Ophthalmology                 |   |                                                                         | 4,230  |   |   |   | 3,301 |   |
| Other                         |   |                                                                         | 3,982  |   |   |   | 4,161 |   |
| Total                         |   | $                                                                            | 21,315 |   |   | $ | 19,290 |   |

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***Table            of Contents***

**Results      for the nine months ended September 30, 2007**

|                          |   | Nine                months                endedSeptember                30, |   |
|-------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                          |   | 2007                                                                        |   |   | 2006 |   |
|                          |   |                                                                        |   |   |   |   |
| Fluid                Delivery |   | $                                                                           | 21,984 |   |   | $ | 19,180 |   |
| Cardiovascular                |   |                                                                        | 17,928 |   |   |   | 17,147 |   |
| Ophthalmology                 |   |                                                                        | 13,748 |   |   |   | 9,685 |   |
| Other                         |   |                                                                        | 13,892 |   |   |   | 13,629 |   |
| Total                         |   | $                                                                           | 67,552 |   |   | $ | 59,641 |   |

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***Table            of Contents***

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***Table            of Contents***

**Liquidity      and Capital Resources**

**Forward-Looking      Statements**

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***Table          of Contents***

| **Item                3.** | **Quantitative                and Qualitative                Disclosures About Market                Risk** |
|----------------------------|-------------------------------------------------------------------------------------------------------------|

| **Item                4.** | **Controls                and                Procedures** |
|----------------------------|-----------------------------------------------------------|

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***Table            of Contents***

**PART      II**

**OTHER      INFORMATION**

| **Item                1.** | **Legal                Proceedings** |
|----------------------------|--------------------------------------|

| **Item                1A.** | **Risk                Factors** |
|-----------------------------|---------------------------------|

| **Item                6.** | **Exhibitsand                Reports on Form                8-K** |
|----------------------------|-------------------------------------------------------------------|

|   | (a) | Exhibits |
|--------|-----|----------|

31.1 

31.2 

32.1 

32.2 

|   | (b) | Reports                on Form                8-K |
|--------|-----|---------------------------------------------------|

|   | OnAugust                7, 2007, the Company                filed a report on                Form 8-K with the SEC regarding the public dissemination of a press                release announcing its financial results for the second quarter ended                June 30,                2007 (Item                12). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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***Table            of Contents***

**SIGNATURES**

|   | Date:  November                7,                2007 | /s/Emile A. Battat                          |
|--------|-----------------------------------------------------------------|-------------------------------------------------------|
|   |                                                            | Emile A. Battat                             |
|   |                                                            | Chairman                and                           |
|   |                                                            | Chief                Executive                Officer |
|   |                                                            |                                                  |
|   | Date:  November                7,                2007 | /s/                Jeffery Strickland                 |
|   |                                                            | JefferyStrickland                                     |
|   |                                                            | Vice                President                and      |
|   |                                                            | Chief                Financial                Officer |

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