SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

FOR THE PERIOD ENDED JUNE 30, 2004               COMMISSION FILE NUMBER 0-10763


                               ATRION CORPORATION
             (Exact Name of Registrant as Specified in its Charter)


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

                    ONE ALLENTOWN PARKWAY, ALLEN, TEXAS 75002

               (Address of Principal Executive Offices) (Zip Code)

                                 (972) 390-9800

              (Registrant's Telephone Number, Including Area Code)

Indicate by check whether the registrant:  (1) has filed all reports required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                             YES  [check mark]   NO
                                  ------------     -----

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                               NUMBER OF SHARES OUTSTANDING AT
         TITLE OF EACH CLASS                           AUGUST 2, 2004
---------------------------------------     ----------------------------------
COMMON STOCK, PAR VALUE $0.10 PER SHARE                   1,717,507

<PAGE>

                                                         17

                       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 Six Months Ended
                         June 30, 2004 and 2003                               3

                     Consolidated Balance Sheets
                         June 30, 2004 (Unaudited) and December 31, 2003      4

                     Consolidated Statements of Cash Flows (Unaudited)
                         For the Six Months Ended
                         June 30, 2004 and 2003                               5

                     Notes to Consolidated Financial Statements (Unaudited)   6

       ITEM 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of
                  Operations                                                  8

PART II.      OTHER INFORMATION                                              13

       ITEM 4.   Submission of Matters to a Vote of Security Holders         13

       ITEM 6.   Exhibits and Reports on
                   Form 8-K                                                  13

SIGNATURES                                                                   14


                                       1
<PAGE>


                                     PART I

                              FINANCIAL INFORMATION

<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                       ATRION CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                         JUNE 30,                             JUNE 30,
                                                                  -------------------------         -------------------------
                                                                    2004             2003              2004            2003
                                                                  --------         --------         ----------       --------
                                                                            (in thousands, except per share amounts)
<S>                                                            <C>                <C>              <C>                <C>
Revenues                                                          $ 16,417         $ 16,175         $ 33,206         $ 31,896
Cost of goods sold                                                  10,351           10,598           21,185           20,723
                                                                  --------         --------         --------         --------
Gross profit                                                         6,066            5,577           12,021           11,173
                                                                  --------         --------         --------         --------
Operating expenses:
   Selling                                                           1,404            1,390            2,833            2,799
   General and administrative                                        2,019            1,951            4,100            3,885
   Research and development                                            579              531            1,123            1,060
                                                                  --------         --------         --------         --------
                                                                     4,002            3,872            8,056            7,744
                                                                  --------         --------         --------         --------
Operating income                                                     2,064            1,705            3,965            3,429
                                                                  --------         --------         --------         --------
Other income:
   Interest income                                                      11               20               22               39
   Interest expense                                                    (16)             (54)             (43)            (114)
   Other income (expense), net                                          39              (14)              45               (5)
                                                                  --------         --------         --------         --------
                                                                        34              (48)              24              (80)
                                                                  --------         --------         --------         --------
Income from continuing operations before provision for
    income taxes                                                     2,098            1,657            3,989            3,349
Provision for income taxes                                             655              509            1,259            1,051
                                                                  --------         --------         --------         --------
Income from continuing operations                                    1,443            1,148            2,730            2,298
Gain on disposal of discontinued operations, net of income
    taxes                                                              165              165              165              165
                                                                  --------         --------         --------         --------
Net income                                                        $  1,608         $  1,313         $  2,895         $  2,463
                                                                  ========         ========         ========         ========
Income per basic share:
   Income from continuing operations                              $   0.84         $   0.67         $   1.60         $   1.33
   Gain on disposal of discontinued operations                        0.10             0.10             0.10             0.10
                                                                  --------         --------         --------         --------
                                                                  $   0.94         $   0.77         $   1.70         $   1.43
                                                                  ========         ========         ========         ========
Weighted average basic shares outstanding                            1,710            1,702            1,706            1,733
                                                                  ========         ========         ========         ========
Income per diluted share:
   Income from continuing operations                              $   0.78         $   0.63         $   1.48         $   1.25
   Gain on disposal of discontinued operations                        0.09             0.09             0.09             0.09
                                                                  --------         --------         --------         --------
                                                                  $   0.87         $   0.72         $   1.57         $   1.34
                                                                  ========         ========         ========         ========
Weighted average diluted shares outstanding                          1,848            1,812            1,846            1,841
                                                                  ========         ========         ========         ========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       3

<PAGE>

                       ATRION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                               JUNE 30,
                                                                 2004         DECEMBER 31,
ASSETS                                                        (UNAUDITED)         2003
-------                                                        --------         --------
Current assets:
<S>                                                            <C>              <C>
   Cash and cash equivalents                                   $    691         $    298
   Accounts receivable                                            7,707            6,226
   Inventories                                                   12,784           11,314
   Prepaid expenses                                               1,233            1,894
   Other                                                            760              760
                                                               --------         --------
                                                                 23,175           20,492
                                                               --------         --------
Property, plant and equipment                                    47,522           45,767
Less accumulated depreciation and amortization                   23,522           21,578
                                                               --------         --------
                                                                 24,000           24,189
                                                               --------         --------
Other assets and deferred charges:
   Patents                                                        1,836            2,099
   Goodwill                                                       9,730            9,730
   Other                                                          3,226            3,540
                                                               --------         --------
                                                                 14,792           15,369
                                                               --------         --------
                                                               $ 61,967         $ 60,050
                                                               ========         ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
   Accounts payable and accrued liabilities                    $  7,007         $  6,038
   Accrued income and other taxes                                 1,440              651
                                                               --------         --------
                                                                  8,447            6,689
                                                               --------         --------
Line of credit                                                    1,701            4,287

Other non-current liabilities                                     4,373            4,470

Stockholders' equity:
   Common shares, par value $0.10 per share; authorized
      10,000 shares, issued 3,420 shares                            342              342
   Paid-in capital                                                9,915            9,673
   Retained earnings                                             71,385           68,900
   Treasury shares,1,705 at June 30, 2004 and 1,742
   at December 31, 2003, at cost                                (34,196)         (34,311)
                                                               --------         --------
       Total stockholders' equity                                47,446           44,604
                                                               --------         --------
                                                               $ 61,967         $ 60,050
                                                               ========         ========
</TABLE>


The accompanying notes are an integral part of these statements.

                                       4
<PAGE>


                       ATRION CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                               SIX MONTHS ENDED
                                                                   JUNE 30,
                                                             -------------------
                                                              2004       2003
                                                             ------    ---------
                                                               (In thousands)
Cash flows from operating activities:
<S>                                                         <C>         <C>
   Net income                                               $ 2,895     $ 2,463
   Adjustments to reconcile net income to
      net cash provided by operating activities:
        Gain on disposal of discontinued operations            (165)       (165)
        Depreciation and amortization                         2,509       2,218
        Deferred income taxes                                  (134)         94
        Tax benefit related to stock plans                       36         170
        Other                                                     1          25
                                                             ------     --------
                                                              5,142       4,805
    Change in operating assets and liabilities:
        Accounts receivable                                  (1,481)     (1,361)
        Inventories                                          (1,469)     (1,254)
        Prepaid expenses                                        661         397
        Other non-current assets                                314          77
        Accounts payable and current liabilities                969       1,365
        Accrued income and other taxes                          789         200
        Other non-current liabilities                            37         234
                                                             ------     --------
    Net cash provided by continuing operations                4,962       4,463
    Net cash provided by discontinued operations                165         165
                                                             ------     --------
                                                              5,127       4,628
                                                             ------     --------
Cash flows from investing activities:
  Property, plant and equipment additions                    (2,058)     (1,819)
  Property, plant and equipment sales                          --            14
                                                             ------     --------
                                                             (2,058)     (1,805)
                                                             ------     --------
Cash flows from financing activities:
  Net change in line of credit                               (2,586)       (651)
  Purchase of treasury stock                                   --        (4,069)
  Issuance of common stock                                      321       2,100
  Dividends                                                    (411)       --
                                                             ------     --------
                                                             (2,676)     (2,620)
                                                             ------     --------
Net change in cash and cash equivalents                         393         203
Cash and cash equivalents at beginning of period                298         353
                                                             ------     --------
Cash and cash equivalents at end of period                  $   691     $   556
                                                            =======     =======
Cash paid for:

  Interest                                                  $    50     $   119
  Income taxes                                              $     0     $   542

</TABLE>


The accompanying notes are an integral part of these statements.

                                       5

<PAGE>

                       ATRION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(1)      BASIS OF PRESENTATION

         In the opinion of  management,  all  adjustments  necessary  for a fair
         presentation  of results of operations  for the periods  presented have
         been  included in the  accompanying  unaudited  consolidated  financial
         statements of Atrion  Corporation  (the  "Company").  Such  adjustments
         consist  of  normal  recurring   items.   The  accompanying   financial
         statements  have been prepared in accordance  with the  instructions to
         Form  10-Q and  include  the  information  and notes  required  by such
         instructions.  Accordingly,  the consolidated  financial statements and
         notes  thereto  should  be  read  in  conjunction  with  the  financial
         statements  and notes  included in the Company's  2003 Annual Report on
         Form 10-K.

(2)      INVENTORIES

         Inventories  are  stated  at the  lower  of  cost  or  market.  Cost is
         determined by using the first-in, first-out method. The following table
         details the major components of inventories (in thousands):

<TABLE>
<CAPTION>
                                              JUNE 30,           DECEMBER 31,
                                                2004                 2003
--------------------------------------------------------------------------------
<S>                                        <C>                <C>
Raw materials                              $        6,824     $        5,641
Finished goods                                      4,522              4,044
Work in process                                     1,438              1,626
--------------------------------------------------------------------------------
Total inventories                          $       12,784     $       11,314
--------------------------------------------------------------------------------
</TABLE>


(3)      INCOME PER SHARE
         The following is the computation for basic and diluted income per
         share from continuing operations:


<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED JUNE 30,        SIX MONTHS ENDED JUNE 30,
                                                         2004            2003              2004            2003
                                                      --------------------------        --------------------------
                                                              (in  thousands,  except per share  amounts)
<S>                                                   <C>            <C>                <C>            <C>
Income from continuing operations                     $    1,443     $    1,148         $    2,730     $    2,298
                                                      =========================         =========================
         Weighted average basic shares outstanding         1,710          1,702              1,706          1,733
         Add:  Effect of dilutive securities
            (options)                                        138            110                140            108
                                                      -------------------------         -------------------------
         Weighted average diluted shares
            outstanding                                    1,848          1,812              1,846          1,841
                                                      =========================         =========================

        EARNINGS PER SHARE FROM CONTINUING

            OPERATIONS:

           Basic                                      $     0.84     $     0.67         $     1.60     $     1.33
                                                      =========================         =========================
           Diluted                                    $     0.78     $     0.63         $     1.48     $     1.25
                                                      =========================         =========================
</TABLE>

        Outstanding  options  that were not  included in the diluted  income per
        share  calculation  because their effect would be anti-dilutive  totaled
        52,000 and 39,500 for the  three-month  periods  ended June 30, 2004 and
        June 30,  2003,  respectively,and  52,000 and  25,250 for the  six-month
        periods ended June 30, 2004 and June 30, 2003, respectively.

                                       6
<PAGE>

                       ATRION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

 (4)     STOCK-BASED COMPENSATION

         At  June  30,  2004,  the  Company  had  three   stock-based   employee
         compensation  plans.  The  Company  accounts  for those plans under the
         recognition and measurement  provisions of Accounting  Principles Board
         Opinion No. 25, "Accounting for Stock Issued to Employees," and related
         interpretations. No stock-based employee compensation cost is reflected
         in net income, as all options granted under those plans had an exercise
         price equal to the market value of the  underlying  common stock on the
         date of grant. The following table illustrates the effect on net income
         and  income  per  share if the  Company  had  applied  the  fair  value
         recognition   provisions  of  FASB  SFAS  No.  123,   "Accounting   for
         Stock-Based Compensation," to stock-based employee compensation:

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED                       SIX MONTHS ENDED
                                                                     JUNE 30,                                JUNE 30,
                                                          -------------------------------         -----------------------------
                                                              2004               2003                2004               2003
                                                          -----------         -----------         -----------         ---------
                                                                         (in thousands, except per share amounts)
<S>                                                       <C>                 <C>                 <C>                 <C>
Net income, as reported                                   $     1,608         $     1,313         $     2,895         $   2,463
Deduct: Total stock-based employee
    compensation expense determined under
    fair value-based methods for all awards,
    net of tax effects                                            343                 106                 486               212
                                                          -----------         -----------         -----------         ---------
Pro forma net income                                      $     1,265         $     1,207         $     2,409         $   2,251
                                                          ===========         ===========         ===========         =========
Income per share:
    Basic - as reported                                   $      0.94         $      0.77         $      1.70         $    1.43
                                                          ===========         ===========         ===========         =========
    Basic - pro forma                                     $      0.74         $      0.71         $      1.41         $    1.30
                                                          ===========         ===========         ===========         =========
    Diluted - as reported                                 $      0.87         $      0.72         $      1.57         $    1.34
                                                          ===========         ===========         ===========         =========
    Diluted - pro forma                                   $      0.68         $      0.67         $      1.30         $    1.22
                                                          ===========         ===========         ===========         =========
</TABLE>

 (5)     PENSION BENEFITS

         The  components  of net  periodic  pension  cost are as follows for the
         three  and six  months  ended  June 30,  2004  and  June  30,  2003 (in
         thousands):

<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED     SIX MONTHS ENDED
                                                                  JUNE 30,              JUNE 30,
                                                             2004         2003     2004         2003
                                                            -----         ----     ----         ----
<S>                                                         <C>           <C>      <C>          <C>
Service cost                                                $  60         $ 53     $ 120        $ 106
Interest cost                                                  78           74       156          148
Expected return on assets                                    (106)         (87)     (212)        (174)
Prior service cost amortization                                (9)          (9)      (18)         (18)
Actuarial loss                                                 26           32        52           64
Transition amount amortization                                (11)         (11)      (22)         (22)
                                                            -----         ----     -----        -----
Net periodic pension cost                                   $  38         $ 52     $  76        $ 104
                                                            =====         ====     =====        =====
</TABLE>

                                       7

<PAGE>

                       ATRION CORPORATION AND SUBSIDIARIES

                                                          8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

         OVERVIEW

         The  Company  designs,  develops,  manufactures,   markets,  sells  and
         distributes  products  and  components,  primarily  for the medical and
         health care industry. The Company markets components to other equipment
         manufacturers  for  incorporation  in their products and sells finished
         devices to physicians,  hospitals, clinics and other treatment centers.
         The Company's  products and services primarily range from ophthalmology
         and  cardiovascular  products  to  fluid  delivery  devices,   contract
         manufacturing and kitting services.

         The Company's  products are used in a wide variety of  applications  by
         numerous  customers.  The Company encounters  competition in all of its
         markets and competes primarily on the basis of product quality,  price,
         engineering, customer service and delivery time.

         For the three months ended June 30, 2004, the Company reported revenues
         of $16.4  million,  operating  income of $2.1 million and net income of
         $1.6 million,  up 1 percent,  21 percent and 22 percent,  respectively,
         from the three  months  ended June 30,  2003.  For the six months ended
         June  30,  2004,  the  Company  reported  revenues  of  $33.2  million,
         operating  income of $4.0 million and net income of $2.9 million,  up 4
         percent, 16 percent and 18 percent,  respectively,  from the six months
         ended June 30, 2003.

         RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2004

         The Company's  income from  continuing  operations for the three months
         ended June 30, 2003 was $1.4 million,  or $0.84 per basic and $0.78 per
         diluted share,  compared with income from continuing operations for the
         three  months ended June 30, 2003 of $1.1  million,  or $0.67 per basic
         and  $0.63  per  diluted  share.  Consolidated  net  income,  including
         discontinued  operations,  totaled $1.6 million, or $0.94 per basic and
         $0.87  per  diluted  share,  in the  second  quarter  of 2004.  This is
         compared  with   consolidated   net  income,   including   discontinued
         operations,  of $1.3 million,  or $0.77 per basic and $0.72 per diluted
         share,  in the  second  quarter of 2003.  The  income  per basic  share
         computations are based on weighted average basic shares  outstanding of
         1,709,775  in the 2004 period and  1,701,627  in the 2003  period.  The
         income per diluted  share  computations  are based on weighted  average
         diluted  shares  outstanding  of  1,847,565  in  the  2004  period  and
         1,811,949 in the 2003 period.

         Consolidated  revenues of $16.4 million for the second  quarter of 2004
         were higher than  revenues of $16.2  million for the second  quarter of
         2003.  This 1 percent  increase in revenues  for the second  quarter of
         2004 over the  second  quarter  of 2003 is  primarily  attributable  to
         increases in the revenues from the Company's  fluid delivery  products,
         cardiovascular  products  and  other  products.   These  increases  are
         generally  attributable  to higher sales volumes.  These increases were
         largely  offset  by a  decrease  in the  revenues  from  the  Company's
         ophthalmic   products   following  the   fulfillment  of  a  customer's
         requirements in late 2003. Revenue comparisons for the remainder of the
         year will be similarly  affected by the completion of that order.  Cost
         of goods sold of $10.4  million  for the  second  quarter of 2004 was 2
         percent lower than in the comparable 2003 period  primarily as a result
         of a change in product mix.

<PAGE>


         Gross  profit  of $6.1  million  in the  second  quarter  of  2004  was
         $489,000, or 9 percent,  higher than in the comparable 2003 period. The
         Company's  gross profit  percentage  in the second  quarter of 2004 was
         36.9 percent of revenues  compared with 34.5 percent of revenues in the
         second  quarter of 2003.  This  increase in gross profit  percentage is
         primarily related to a change in product mix. The previously  mentioned
         reduced  ophthalmic  revenues generated a lower gross profit percentage
         as compared  with the gross profit  percentage  generated by the higher
         revenues from the Company's  fluid  delivery  products,  cardiovascular
         products and other products.

         The Company's  second quarter 2004  operating  expenses of $4.0 million
         were $130,000 higher than the operating expenses for the second quarter
         of  2003,   resulting   from  a  $68,000   increase   in  general   and
         administrative  (G&A) expenses,  a $15,000 increase in selling expenses
         and a $47,000 increase in research and development (R&D) expenses.  The
         increase in G&A  expenses  for the second  quarter of 2004 is primarily
         attributable  to increases in outside  services and  compensation.  The
         increase in R&D  expenses  for the second  quarter of 2004 is primarily
         attributable to increases in outside services.  Operating income in the
         second  quarter of 2004  increased  $359,000,  or 21  percent,  to $2.1
         million  from $1.7  million  in the second  quarter of 2003.  Operating
         income  margin was 12.6  percent of revenues  in the second  quarter of
         2004  compared to 10.5  percent of  revenues  in the second  quarter of
         2003. The improvement in operating income is primarily  attributable to
         the previously  mentioned gross profit improvement  partially offset by
         the increase in operating expenses.

         Interest expense for the second quarter of 2004 was $16,000 compared to
         interest  expense of $54,000 for the same period in the prior year. The
         decrease  in  the  2004  period  from  the  2003  period  is  primarily
         attributable  to the  Company's  lower average  borrowing  level in the
         current-year period.

         Income tax expense for the second quarter of 2004 was $655,000 compared
         to income tax  expense  of  $509,000  for the same  period in the prior
         year.  The effective  tax rate for the second  quarter of 2004 was 31.2
         percent compared with 30.7 percent for the second quarter of 2003.

         The Company recorded a gain on the disposal of discontinued  operations
         relating  to the 1997 sale of its natural  gas  operations  of $165,000
         after  tax,  or $0.10 per basic and $0.09 per  diluted  share,  for the
         second  quarter of 2004 and $165,000  after tax, or $0.10 per basic and
         $0.09 per diluted share, for the second quarter of 2003, resulting from
         the receipt of contingent deferred payments in each year.

         RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2004

         The  Company's  income from  continuing  operations  for the six months
         ended June 30, 2003 was $2.7 million,  or $1.60 per basic and $1.48 per
         diluted share,  compared with income from continuing operations for the
         six months ended June 30, 2003 of $2.3 million,  or $1.33 per basic and
         $1.25  per  diluted   share.   Consolidated   net   income,   including
         discontinued  operations,  totaled $2.9 million, or $1.70 per basic and
         $1.57 per  diluted  share,  in the first  six  months of 2004.  This is
         compared  with   consolidated   net  income,   including   discontinued
         operations,  of $2.5 million,  or $1.43 per basic and $1.34 per diluted
         share,  in the first six months of 2003.  The  income  per basic  share
         computations are based on weighted average basic shares  outstanding of
         1,706,464  in the 2004 period and  1,733,127  in the 2003  period.  The
         income per diluted  share  computations  are based on weighted  average
         diluted  shares  outstanding  of  1,846,309  in  the  2004  period  and
         1,841,258 in the 2003 period.

                                       9
<PAGE>

         Consolidated revenues of $33.2 million for the first six months of 2004
         were higher than  revenues of $31.9 million for the first six months of
         2003.  This 4 percent  increase in revenues for the first six months of
         2004 over the first six months of 2003 is primarily  attributable to an
         increase in the revenues from the Company's  fluid  delivery  products,
         cardiovascular  products  and  other  products.   These  increases  are
         generally  attributable  to higher sales volumes.  These increases were
         partially  offset by a  decrease  in the  revenues  from the  Company's
         ophthalmic   products   following  the   fulfillment  of  a  customer's
         requirements  in late 2003. Cost of goods sold of $21.2 million for the
         first six months of 2004 was 2 percent  higher  than in the  comparable
         2003 period. The increase in cost of goods sold is primarily the result
         of higher sales volumes.

         Gross  profit of $12.0  million  in the  first  six  months of 2004 was
         $848,000, or 8 percent,  higher than in the comparable 2003 period. The
         Company's  gross profit  percentage in the first six months of 2004 was
         36.2 percent of revenues  compared with 35.0 percent of revenues in the
         first six months of 2003.  This increase in gross profit  percentage is
         primarily related to a change in product mix. The previously  mentioned
         reduced  ophthalmic  revenues generated a lower gross profit percentage
         as compared  with the gross profit  percentage  generated by the higher
         revenues from the Company's  fluid  delivery  products,  cardiovascular
         products and other products.

         The  Company's  operating  expenses  of $8.1  million for the first six
         months of 2004 were $312,000 higher than the operating expenses for the
         first six months of 2003. This resulted from a $215,000 increase in G&A
         expenses, a $34,000 increase in selling expenses and a $63,000 increase
         in R&D expenses.  The increase in G&A expenses for the first six months
         of 2004 is  primarily  attributable  to a write-off of $124,000 for the
         impairment of a patent related to a discontinued  product and increased
         outside  services and  compensation.  Operating income in the first six
         months of 2004 increased $536,000,  or 16 percent, to $4.0 million from
         $3.4 million in the first six months of 2003.  Operating  income margin
         was 11.9  percent of revenues in the first six months of 2004  compared
         to 10.8  percent  of  revenues  in the  first six  months of 2003.  The
         improvement  in  operating  income  is  primarily  attributable  to the
         previously  mentioned gross profit improvement  partially offset by the
         increase in operating expenses.

         Interest  expense for the first six months of 2004 was $43,000 compared
         to interest  expense of $114,000 for the same period in the prior year.
         The  decrease  in the 2004  period  from the 2003  period is  primarily
         attributable  to the  Company's  lower average  borrowing  level in the
         current-year period.

         Income tax  expense  for the first six months of 2004 was $1.3  million
         compared to income tax  expense of $1.1  million for the same period in
         the prior year. The effective tax rate for the first six months of 2004
         was 31.6 percent compared with 31.4 percent for the first six months of
         2003.

         The Company recorded a gain on the disposal of discontinued  operations
         relating  to the 1997 sale of its natural  gas  operations  of $165,000
         after  tax,  or $0.10 per basic and $0.09 per  diluted  share,  for the
         first six months of 2004 and $165,000 after tax, or $0.10 per basic and
         $0.09 per diluted  share,  for the first six months of 2003,  resulting
         from the receipt of contingent deferred payments in each year.

                                       10
<PAGE>

         LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2004, the Company had cash and cash equivalents of $691,000
         compared  with   $298,000  at  December  31,  2003.   The  Company  had
         outstanding  borrowings of $1.7 million under its $25 million revolving
         credit facility  ("Credit  Facility") at June 30, 2004 and $4.3 million
         at December 31, 2003. The decrease in the outstanding balance under the
         Credit   Facility  in  the  first  six  months  of  2004  is  primarily
         attributable  to cash  provided by  continuing  operations.  The Credit
         Facility,  which expires  November 12, 2006,  and may be extended under
         certain circumstances,  contains various restrictive covenants, none of
         which  is  expected  to  impact  the  Company's  liquidity  or  capital
         resources.  At June 30, 2004,  the Company was in  compliance  with all
         financial covenants.

         As of June 30, 2004, the Company had working  capital of $14.7 million,
         including $691,000 in cash and cash equivalents.  The $925,000 increase
         in working  capital  during the first six months of 2004 was  primarily
         related to increases in accounts  receivable and inventories  offset by
         increases in current  liabilities.  The increase in accounts receivable
         during the first six months of 2004 is directly related to the increase
         in  revenues  for the second  quarter of 2004 as compared to the fourth
         quarter of 2003. The increase in inventories is primarily  attributable
         to planned increases related to new product introductions. The increase
         in current  liabilities is primarily  related to standard accruals made
         in the normal  course of  operations  and accruals for income and other
         taxes. Cash flows from continuing operations generated $5.0 million for
         the six months  ended June 30, 2004 as compared to $4.5 million for the
         six months ended June 30, 2003.  Earnings  from  continuing  operations
         were the primary  contributor  to this  increase.  During the first six
         months of 2004,  the Company  expended $2.1 million for the addition of
         property and equipment.  The Company  received net proceeds of $321,000
         from the exercise of employee stock options during the first six months
         of 2004. During the first six months of 2004 the Company paid dividends
         totaling $411,000 to its stockholders.

         The Company believes that its existing cash and cash equivalents,  cash
         flows from operations,  borrowings available under the Company's credit
         facility,  supplemented,  if necessary,  with equity or debt financing,
         which the Company  believes  would be available,  will be sufficient to
         fund the Company's cash requirements for the foreseeable future.

         FORWARD-LOOKING STATEMENTS

         The  statements in this  Management's  Discussion and Analysis that are
         forward-looking are based upon current expectations, and actual results
         may differ materially. Therefore, the inclusion of such forward-looking
         information  should not be regarded as a representation  by the Company
         that the  objectives  or plans of the Company  would be achieved.  Such
         statements include, but are not limited to, the Company's  expectations
         regarding  future  liquidity  and  capital  resources.  Words  such  as
         "anticipates,"  "believes,"  "expects,"  "estimated"  and variations of
         such words and  similar  expressions  are  intended  to  identify  such
         forward-looking   statements.   These  statements   involve  risks  and
         uncertainties.  The  following are some of the factors that could cause
         actual  results  to  differ  materially  from  those  expressed  in  or
         underlying the Company's forward-looking statements: changing economic,
         market and business  conditions;  market  acceptance  of the  Company's
         products;  the  effects  of  governmental  regulation;  acts  of war or
         terrorism;  competition and new  technologies;  slower-than-anticipated
         introduction of new products or implementation of marketing strategies;
         changes  in the prices or  availability  of raw  materials;  changes in
         product mix; product liability claims and product recalls;  the ability
         to  attract  and  retain  qualified  personnel  and  the  loss  of  any
         significant customer.  In addition,  assumptions relating to budgeting,
         marketing,  product  development  and other  management  decisions  are
         subjective in many respects and thus susceptible to interpretations and
         periodic  review  which may cause the  Company to alter its  marketing,
         capital  expenditures  or other  budgets,  which in turn may affect the
         Company's results of operations and financial condition.

                                       11
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         For the quarter ended June 30, 2004, the Company did not experience any
         material  changes in market risk exposures that affect the quantitative
         and  qualitative  disclosures  presented in the  Company's  2003 Annual
         Report on Form 10K.

ITEM 4. CONTROLS AND PROCEDURES

         With the  participation  of management,  the Company's  Chief Executive
         Officer and its Chief Financial  Officer evaluated the effectiveness of
         the Company's  disclosure  controls and procedures as of June 30, 2004.
         Based  upon this  evaluation,  the Chief  Executive  Officer  and Chief
         Financial Officer concluded that the Company's  disclosure controls and
         procedures   are   effective  in  timely   alerting  them  to  material
         information   relating  to  the  Company  (including  its  consolidated
         subsidiaries)  required to be  disclosed  by the Company in the reports
         that the Company files with the Securities and Exchange Commission.

         There  has been no  change  in the  Company's  internal  controls  over
         financial  reporting  during the Company's  most recent fiscal  quarter
         that has  materially  affected,  or is reasonably  likely to materially
         affect, the Company's internal control over financial reporting.


                                       12
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

              The Company held its 2004 Annual  Meeting of  Stockholders  on May
              27,  2004 at its offices in Allen,  Texas.  At such  meeting,  the
              Company's  stockholders ratified the appointment of Grant Thornton
              LLP as independent  accountants  with  1,511,009  shares voted for
              ratification,  8,886 voted against and 150 abstentions. The voting
              with respect to the  nominees  for  election as  directors  was as
              follows:

      NOMINEE                          VOTES FOR             VOTES WITHHELD
-----------------                      ----------            --------------
Roger F. Stebbing                      1,499,749                 20,276
John P. Stupp, Jr.                     1,499,749                 20,276

          The terms of the following directors continued after the meeting:
          Emile A. Battat, John H. P. Maley, Richard O. Jacobson and Hugh J.
          Morgan, Jr.


ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)    Exhibits

               31.1 Sarbanes-Oxley Act Section 302 Certification of Chief
                    Executive Officer

               31.2 Sarbanes-Oxley Act Section 302 Certification of Chief
                    Financial Officer

               32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted
                    Pursuant To Section 906 of The Sarbanes - Oxley Act Of 2002

               32.2 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted
                    Pursuant To Section 906 of The Sarbanes - Oxley Act Of 2002

              (b) Reports on Form 8-K

                     On April 29, 2005,  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 first
                     quarter ended March 31, 2004 (Item 12).


                                       13
<PAGE>

                                   SIGNATURES

         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 thereunto duly authorized.

                                         ATRION CORPORATION

                                            (Registrant)

         Date:  August 12, 2004               /s/ Emile A. Battat
                                              --------------------------
                                              Emile A. Battat
                                              Chairman, President and
                                              Chief Executive Officer

         Date:  August 12, 2004               /s/ Jeffery Strickland
                                              --------------------------
                                              Jeffery Strickland
                                              Vice President and
                                              Chief Financial Officer

                                       14