10-Q

UNITED STATES 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 quarterly period ended September 30, 1999
Commission file number: 0-16946

LabOne, Inc.
(Exact name of Registrant as specified in its charter)

Missouri	43-1039532
(State of Incorporation)	(I.R.S. Employer Identification No.)
10101 Renner Blvd. Lenexa, Kansas	66219
(Address of principal executive offices)	(Zip code)

Registrant's telephone number, including area code: (913) 888-1770

    Indicate by check mark 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  X  No   

    Number of shares outstanding of only class of Registrant's common stock as of October 31, 1999, $.01 par value common—11,533,493.

PART I. FINANCIAL INFORMATION

ITEM 1—Financial Statements

LabOne, Inc. and Subsidiaries
Consolidated Balance Sheets

	September 30, 1999			December 31, 1998
ASSETS
Current assets:
Cash and cash equivalents	$	1,558,600		$	15,223,336
Accounts receivable—trade, net of allowance for doubtful accounts of $2,248,798 in 1999 and $2,326,716 in 1998		21,049,300			18,729,939
Income taxes receivable		2,493,827			399,776
Inventories		1,089,586			1,798,481
Real estate available for sale		—			3,515,000
Prepaid expenses and other current assets		2,964,774			2,752,732
Deferred income taxes		1,906,271			3,972,575
Total current assets		31,062,358			46,391,839
Property, plant and equipment		79,063,255			72,919,414
Less accumulated depreciation		36,788,684			35,983,169
Net property, plant and equipment		42,274,571			36,936,245
Other assets:
Intangible assets, net of accumulated amortization		35,644,442			13,770,280
Bond issue costs, net of accumulated amortization of $18,924 in 1999 and $5,823 in 1998		173,223			186,324
Deferred income taxes—noncurrent		43,033			484,621
Deposits and other assets		223,388			237,864
Total assets	$	109,421,015		$	98,007,173
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,177,467		$	4,392,689
Retainage and construction payable		139,187			3,809,193
Current portion of long-term debt		1,863,226			1,860,168
Accrued payroll and benefits		3,418,803			4,148,593
Other accrued expenses		717,318			610,315
Other current liabilities		283,507			274,198
Total current liabilities		11,599,508			15,095,156
Long-term debt		25,241,954			18,097,308
Deferred income taxes—noncurrent		14,641			—
Total liabilities		36,856,103			33,192,464
Minority interests		—			10,275,611
Stockholders' equity:
Preferred stock, $.01 par value per share; 3,000,000 shares authorized, none issued		—			—
Common stock, 40,000,000 shares authorized; $.01 par value per share 13,050,020 shares issued in 1999		130,500			—
Common stock, 36,000,000 shares authorized, $.67 par value per share 11,250,000 shares issued in 1998		—			7,500,000
Additional paid-in capital		32,055,762			2,920,357
Equity adjustment from foreign currency translation		(768,072	)		(683,270	)
Retained earnings		71,291,927			74,945,615
		102,710,117			84,682,702
Less treasury stock of 1,516,527 shares in 1999 and 1,516,345 shares in 1998		30,145,205			30,143,604
Total stockholders' equity		72,564,912			54,539,098
Total liabilities and stockholders' equity	$	109,421,015		$	98,007,173

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

2

LabOne, Inc. and Subsidiaries

Consolidated Statements of Earnings

	Three Months Ended September 30,						Nine Months Ended September 30,
	1999			1998			1999			1998
Sales	$	28,814,326		$	25,834,180		$	84,714,563		$	74,929,877
Cost of sales depreciation		584,004			534,763			1,738,729			1,520,348
Cost of sales amortization		—			—			—			217,426
Other cost of sales		16,518,209			13,994,293			48,018,785			39,582,133
Gross profit		11,712,113			11,305,124			34,957,049			33,609,970
Selling, general and administrative depreciation		812,698			319,048			2,116,480			995,749
Selling, general and administrative amortization		847,498			630,397			2,208,018			1,891,191
Other selling, general and administrative expenses		8,398,233			7,793,493			24,283,162			22,414,268
Earnings from operations		1,653,684			2,562,186			6,349,389			8,308,762
Interest expense		(357,906	)		—			(947,528	)		—
Interest income and other		49,665			(182,644	)		305,250			448,045
Earnings before income taxes		1,345,443			2,379,542			5,707,111			8,756,807
Income tax expense		729,782			1,074,248			2,624,933			3,875,937
Earnings before minority interest		615,661			1,305,294			3,082,178			4,880,870
Minority interest		92,362			396,047			766,375			1,199,252
Net earnings	$	523,299		$	909,247		$	2,315,803		$	3,681,618
Basic and diluted earnings per common share	$	0.05		$	0.09		$	0.23		$	0.38
Dividends per common share	$	0.18		$	0.20		$	0.58		$	0.60
Basic weighted average common shares outstanding		10,750,955			9,733,655			10,076,481			9,733,655
Diluted weighted average common shares outstanding		10,758,069			9,733,655			10,092,428			9,733,655

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

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LabOne, Inc. and Subsidiaries

Consolidated Statement of Stockholders' Equity
Nine Months Ended September 30, 1999

	Common stock			Additional paid-in capital	Accumulated other comprehensive income		Retained earnings		Treasury stock		Total stockholders' equity		Comprehensive income
Balance at December 31, 1998	$	7,500,000		2,920,357	(683,270	)	74,945,615		(30,143,604	)	54,539,098
Comprehensive income:
Net earnings							2,315,803				2,315,803		2,315,803
Equity adjustment from foreign currency translation					(84,802	)					(84,802	)	(84,802	)
Comprehensive income													2,231,001
Cash dividends
($0.58 per share)							(5,969,491	)			(5,969,491	)
Stock split and change in par value		(7,369,500	)	7,369,500							0
Acquisition of minority interest in subsidiary				21,765,905							21,765,905
Purchase of 181.5 common shares for treasury stock									(1,601	)	(1,601	)
Balance at September 30, 1999	$	130,500		32,055,762	(768,072	)	71,291,927		(30,145,205	)	72,564,912

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

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LabOne, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	Nine months ended September 30,
	1999			1998
Cash provided by (used for) operations:
Net earnings	$	2,315,803		$	3,681,618
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization		6,083,145			4,589,765
Earnings applicable to minority interests		766,375			1,199,253
Provision for loss on accounts receivable		1,984,330			1,059,876
Loss (gain) on disposal of property and equipment		(785,319	)		6,009
Directors' stock compensation		—			68,597
Provision for deferred taxes		2,526,309			(233,472	)
Changes in:
Short term trading portfolio		—			613,706
Accounts receivable		(4,303,691	)		(6,048,448	)
Income taxes		(2,094,051	)		(621,440	)
Inventories		708,895			666,092
Prepaid expenses and other current assets		(212,042	)		(182,517	)
Accounts payable		(2,885,228	)		1,017,932
Accrued payroll & benefits		(729,790	)		(385,916	)
Accrued expenses		107,003			191,408
Other current liabilities		9,309			(62,905	)
Net cash provided by operations		3,491,048			5,559,558
Cash provided by (used for) investment transactions:
Purchases of investments held to maturity		—			(5,461,090	)
Proceeds from maturities of investments held to maturity		—			6,201,894
Property, plant and equipment, net		(4,892,513	)		(16,100,453	)
Acquisition of intangible assets, net		(16,561	)		(167,173	)
Acquisition of minority interest		(12,581,740	)		—
Other		43,687			(1,210,855	)
Net cash used for investment transactions		(17,447,127	)		(16,737,677	)
Cash provided by (used for) financing transactions:
Purchase of treasury stock		(1,601	)		—
Dividends paid to minority interest		(935,730	)		—
Proceeds from long-term debt		9,000,000			19,900,000
Payments on long-term debt		(1,859,115	)		—
Cash dividends		(5,969,491	)		(5,840,193	)
Net cash provided by financing transactions		234,063			14,059,807
Effect of foreign currency translation		57,280			(198,294	)
Net increase (decrease) in cash and cash equivalents		(13,664,736	)		2,683,394
Cash and cash equivalents—beginning of period		15,223,336			22,129,024
Cash and cash equivalents—end of period	$	1,558,600		$	24,812,418
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	951,348		$	106,462
Income taxes	$	2,251,466		$	4,711,053
Supplemental schedule of non cash investing and financing activities
Details of acquisition:
Fair value of assets acquired	$	(34,201,086	)
Common stock		19,278,214
Fair value of stock options and warrants		2,341,132
Acquisition of minority interests	$	(12,581,740	)

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

5

LabOne, Inc. and Subsidiaries

Notes to Consolidated Financial Statements
September 30, 1999 and 1998

    The accompanying consolidated financial statements include the accounts of LabOne, Inc. and its wholly-owned subsidiaries LabOne Canada Inc. and Systematic Business Services, Inc. (SBSI). All significant intercompany transactions have been eliminated in consolidation.

    The financial information furnished herein as of September 30, 1999 and for the periods ended September 30, 1999 and 1998 is unaudited; however, in the opinion of management, it reflects all adjustments, consisting of normal recurring adjustments, which are necessary to fairly state the Company's financial position, the results of its operations and cash flows. The balance sheet information as of December 31, 1998 has been derived from the audited financial statements as of that date. The financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances, and included in the financial statements are certain amounts based on management's estimates and judgments.

    The financial information herein is not necessarily representative of a full year's operations because levels of sales, capital additions and other factors fluctuate throughout the year. These same considerations apply to all year-to-year comparisons. See the Company's Annual Report on Form 10-K for the year ended December 31, 1998, for additional information not required by this Quarterly Report on Form 10-Q.

    This Quarterly report on Form 10-Q may contain "forward-looking statements," including projections, statements of plans and objectives, statements of future economic performance and statements of assumptions underlying such statements. Forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause actual results to differ materially from those that may be expressed or implied in such forward-looking statements, including, but not limited to, the volume and pricing of laboratory tests performed by the Company, competition, the extent of market acceptance of the Company's testing services in the healthcare and substance abuse testing industries, general economic conditions and other factors detailed from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.

    On August 10, 1999, LabOne, Inc. was merged into Lab Holdings, Inc. upon the approval of the required number of shareholders of both companies at their respective annual meetings. The combined company's name was then changed to LabOne, Inc. The merger provisions included a 3 for 2 stock split for all Lab Holdings common shares, the par value of the common shares was changed from $1.00 per share to $0.01 per share, and the authorized number of common shares was increased to 40 million. The Company paid $12.6 million, including transaction costs, to purchase 0.8 million shares of LabOne stock and exchanged 2.6 million shares of former LabOne stock on a one for one basis for Lab Holdings (the combined company) stock. The transaction was recorded under purchase accounting and resulted in $24.1 million in goodwill which is being amortized over 20 years. The following unaudited pro forma consolidated results of operations of the Company for the nine months ended September 30, 1999 and 1998 assumes the merger occurred as of January 1, 1998.

	Nine months ended September 30,
	1999		1998
	(in thousands except per share data)
Sales	$	84,715	74,930
Net Earnings		1,628	2,903
Earnings per share		0.14	0.25

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    Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results.

    On July 1, 1999, the Company announced a restatement of earnings for the year ended December 31, 1998. As requested by the staff of the Securities and Exchange Commission, the Company has changed the amortization schedule from fifteen years to five years on a customer list acquired during the first quarter 1997. The Company's original amortization period was based on historical performance, however the SEC has requested the amortization period be reduced to five years. This restatement is not the result of any changes in customer relationships and has no effect on any present or future cash flows. The effect of this restatement is as follows:

	Three months ended September 30, 1998			Nine months ended September 30, 1998
	As Previously Reported		As Restated	As Previously Reported		As Restated
Earnings before taxes	$	2,517,151	2,379,542	$	9,169,634	8,756,807
Net earnings		976,665	909,247		3,884,712	3,681,618
Basic earnings per share		0.10	0.09		0.40	0.38
Diluted earnings per share		0.10	0.09		0.39	0.37

    Effective October 30, 1998, LabOne acquired SBSI, a Missouri corporation. SBSI provides telephone inspections, motor vehicle reports, attending physician statements and claims investigation services to life and health insurers nationwide.

Business Segment Information

    The company operates in three lines of business: insurance risk appraisal testing, clinical diagnostic testing and substance abuse testing. The following table presents selected financial information for each segment:

	Three months ended September 30,						Nine months ended September 30,
	1999			1998			1999			1998
				(as restated)						(as restated)
Sales:
Insurance	$	17,894,206		$	16,676,601		$	53,952,222		$	51,070,850
Clinical		6,329,240			5,045,806			18,022,464			13,422,977
Substance abuse testing		4,590,880			4,111,773			12,739,877			10,436,051
Total sales	$	28,814,326		$	25,834,180		$	84,714,563		$	74,929,878
Operating income (loss):
Insurance	$	3,258,505		$	4,702,962		$	11,068,045		$	15,213,420
Clinical		(844,000	)		(1,431,106	)		(3,111,734	)		(4,875,551	)
Substance abuse testing		(26,833	)		128,409			(317,507	)		(10,213	)
General corporate income (expense)		(733,988	)		(838,082	)		(1,289,415	)		(2,018,894	)
Total earnings from operations		1,653,684			2,562,183			6,349,389			8,308,762
Other income (expense)		(308,241	)		(182,644	)		(642,278	)		448,045
Earnings before income taxes	$	1,345,443		$	2,379,539		$	5,707,111		$	8,756,807

    The Company's new facility was completed in early 1999, and the portions of the building identifiable to each segment have been allocated to those segments. Effective the second quarter, the associated depreciation expenses have been charged to the segments and are included in the operating income or loss

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information stated above. There were no other material changes in assets or in the basis of segmentation or measurement of segment operating income or loss.

Contingencies

Tax Assessment

    The Comptroller of the State of Texas has conducted an audit of LabOne for sales and use tax compliance for the years 1991 through 1997 and contends that LabOne's insurance laboratory services are taxable under the Texas tax code. The Texas Comptroller has issued a tax audit assessment, including interest and penalties, of approximately $1.9 million. The Texas State Hearing Attorney has issued a position letter agreeing to amend the audit based on the exclusion of non-Texas applicants. At this time, the Company is unable to estimate the possible liability, if any, that may be incurred as a result of this assessment, but believes the amount will be less than $0.5 million. The Company continues to appeal this assessment arguing that its services do not fit within the definition of insurance services under the Texas code.

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

RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA

	Three months ended Sept. 30,				Nine months ended Sept. 30,
			% Inc. (Dec)				% Inc. (Dec)
	1999	1998			1999	1998
Sales	$28,814,326	25,834,180	12	%	$84,714,563	74,929,877	13	%
Net earnings	523,299	909,247	(42	)%	2,315,803	3,681,618	(37	)%
Diluted earnings per common share	$0.05	0.09			$0.23	0.37
Cash dividends per common share	$0.18	0.20			$0.58	0.60

    The Company provides high-quality laboratory testing services to insurance companies, physicians and employers.

    LabOne provides risk-appraisal laboratory services to the insurance industry. The tests performed by the Company are specifically designed to assist an insurance company in objectively evaluating the mortality and morbidity risks posed by policy applicants. The majority of the testing is performed on specimens of individual life insurance policy applicants. The Company also provides testing services on specimens of individuals applying for individual and group medical and disability policies. Through its subsidiary, SBSI, the Company provides telephone inspections, motor vehicle reports, attending physician statements, and claims investigation services to life and health insurers nationwide.

    LabOne's clinical testing services are provided to the healthcare industry to aid in the diagnosis and treatment of patients. LabOne operates only one highly automated and centralized laboratory, which the Company believes has significant economic advantages over other conventional laboratory competitors. LabOne markets its clinical testing services to the payers of healthcare—insurance companies and self-insured groups. The Company does this through Lab Card®, a Laboratory Benefits Management (LBM) program.

    The Lab Card Program provides laboratory testing at reduced rates as compared to traditional laboratories. It uses a unique benefit design that shares the cost savings with the patient, creating an incentive for the patient to help direct laboratory work to LabOne. Under the Program, the patient incurs no out-of-pocket expense when the Lab Card is used, and the insurance company or self-insured group receives substantial savings on its laboratory charges. The Company's LBM programs, including BlueCross BlueShield of Tennessee and the Lab Card program, have more than 2.3 million lives enrolled.

8

    LabOne is certified by the Substance Abuse and Mental Health Services Administration to perform substance abuse testing services for federally regulated employers and is currently marketing these services throughout the country to both regulated and nonregulated employers. The Company's rapid turnaround times and multiple testing options help clients reduce downtime for affected employees and meet mandated drug screening guidelines.

THIRD QUARTER ANALYSIS

    Net sales increased 12% in the third quarter 1999 to $28.8 million from $25.8 million in the third quarter 1998. The increase of $3.0 million is due to increases in clinical laboratory revenue of $1.3 million, substance abuse testing (SAT) revenue of $0.5 million and insurance services revenue of $1.2 million.

    Clinical diagnostic testing revenue increased from $5.0 million to $6.3 million for the quarter due to a 25% increase in testing volumes. SAT revenue increased from $4.1 million in 1998 to $4.6 million in 1999 due to a 20% increase in testing volumes as compared to last year.

    The insurance services division revenue increased $1.2 million due to the addition of SBSI revenue and growth in non laboratory services revenue, reduced by lower laboratory and kit revenue. SBSI was acquired in October 1998 and contributed revenue of $2.2 million, and non laboratory services revenue increased $0.6 million or 184%. Insurance laboratory testing revenue decreased $1.3 million as a result of reductions in volume and price. The total number of insurance applicants tested in the third quarter 1999 decreased by 8% as compared to the same quarter last year due to competitive pressures and a reduction in the number of individuals applying for insurance. Average revenue per applicant decreased 3% primarily due to price reductions partially offset by increased ancillary test volumes. Kit and container revenue declined due to a decrease in the number of kits sold.

    Cost of sales increased $2.6 million or 18% in the third quarter 1999 as compared to the prior year, primarily due to increases in payroll, information services such as state motor vehicle report fees, and postage expense. A significant portion of these increases are related to the addition of SBSI and the growth of the SAT and clinical segments. These increases were partially offset by a decrease in insurance kit expenses due to lower sales volumes. Clinical cost of sales expenses were $4.2 million as compared to $3.7 million in the third quarter 1998. SAT cost of sales expenses were $3.2 million as compared to $2.8 million in the third quarter 1998. Insurance cost of sales expenses increased from $8.0 million to $9.7 million primarily due to the addition of SBSI.

    As a result of the above factors, gross profit for the quarter increased $0.4 million or 4% from $11.3 million in 1998 to $11.7 million in 1999. Clinical gross profit increased $0.8 million on an increase in revenue of $1.3 million. SAT gross profit increased $0.1 million as compared to the third quarter last year. Insurance gross profit decreased $0.5 million for the quarter.

    Selling, general and administrative expenses increased $1.3 million or 15% in the third quarter 1999 as compared to the prior year due primarily to the inclusion of SBSI and increases in bad debt, depreciation and amortization expenses. Amortization expense increased $0.2 million in the third quarter due to the mid-quarter merger. The full quarterly amortization expense related to the merger will be $0.3 million per quarter. Bad debt expense increased primarily due to the revenue growth in clinical and SAT segments which have inherently higher bad debt experience than the insurance testing segment. Insurance expenditures increased to $4.9 million for the quarter as compared to $4.0 million in 1998 primarily due to the addition of SBSI. Total clinical costs increased $0.2 million to $3.0 million in 1999 primarily due to an increase in bad debt expense and an increase in corporate overhead allocations to $1.0 million in 1999 from $0.8 million in 1998. SAT expenditures were $1.4 million as compared to $1.2 million last year.

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    Earnings from operations decreased from $2.6 million in the third quarter 1998 to $1.7 million in 1999. The clinical segment improved $0.6 million to an operating loss of $0.8 million. The SAT segment declined $0.2 million to a loss of $27,000 in the third quarter 1999. The insurance segment, including SBSI, declined $1.4 million to an operating profit of $3.3 million. The general corporate segment produced an operating loss of $0.7 million for the quarter primarily related to historical and merger related amortization expenses not charged to the operating divisions.

    Non operating expense increased $0.1 million primarily due to interest expense on the industrial revenue bonds and borrowings from the line of credit, partially offset by increased investment earnings over last year. The effective income tax rate increased from 45% in the third quarter 1998 to 54% in 1999 due to the non deductibility of goodwill amortizations for income tax purposes.

    The combined effect of the above factors resulted in net earnings of $0.5 million or $0.05 per share in the third quarter 1999 as compared to $0.9 million or $0.09 per share in the same period last year.

YEAR-TO-DATE ANALYSIS

    Revenue in the nine month period ended September 30, 1999 was $84.7 million as compared to $74.9 million in the same period last year. The increase of $9.8 million is due to increases in clinical revenue of $4.6 million, SAT revenue of $2.3 million and insurance revenue of $2.9 million

    Clinical laboratory revenue increased 34% from $13.4 million during the first nine months of 1998 to $18.0 million for the same period in 1999 due to increased testing volumes. SAT revenue increased 22% from $10.4 million in 1998 to $12.7 million in 1999 due to a 28% increase in testing volumes.

    The insurance services division revenue increased $2.9 million due to the addition of SBSI revenue and growth in non laboratory services revenue, reduced by lower laboratory and kit revenue. SBSI was acquired in October 1998 and contributed revenue of $6.2 million, and non laboratory services revenue increased $1.0 million. Insurance laboratory testing revenue decreased $2.9 million as a result of reductions in volume and price. The total number of insurance applicants tested year to date decreased by 6%. Average revenue per applicant decreased 2% primarily due to price reductions partially offset by increased ancillary test volumes. Kit and container revenue declined due to a decrease in the number of kits sold.

    Cost of sales increased $8.4 million year to date as compared to the prior year. This increase is due primarily to increases in payroll expenses, insurance information services and inbound freight. A significant portion of these increases are related to the addition of SBSI and the growth of the SAT and clinical segments. These increases were partially offset by a decrease in insurance kit expenses due to lower sales volumes. Clinical cost of sales expenses were $12.2 million as compared to $10.7 million during the first nine months of 1998. SAT cost of sales expenses were $9.2 million as compared to $7.2 million during 1998.

    As a result of the above factors, gross profit for the first nine months increased from $33.6 million in 1998 to $35.0 million in 1999. Clinical gross profit improved from $2.8 million in 1998 to $5.8 million in 1999. SAT gross profit increased to $3.5 million in the first nine months of 1999 from $3.2 million last year. Insurance gross profit decreased $2.1 million for the same period.

    Selling, general and administrative expenses increased $3.3 million or 13% in the nine month period ended September 30, 1999 as compared to the prior year due to the addition of SBSI and increases in depreciation expenses and bad debt accruals. Clinical expenditures were $8.9 million as compared to $7.6 million in 1998. SAT expenses increased from $3.2 million in 1998 to $3.8 million in 1999. The overhead allocation to the clinical and SAT segments for the period was $4.8 million as compared to an allocation of $3.9 million in 1998.

    Operating income decreased from $8.3 million in the first nine months of 1998 to $6.3 million in 1999. The insurance segment had operating income of $11.1 million as compared to $15.2 million in the first nine month of last year. The clinical segment had an operating loss of $3.1 million for the nine month period ended September 30, 1999 as compared to an operating loss of $4.9 million in 1998. The SAT segment had

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an operating loss of $0.3 million in 1999 as compared to an operating loss of $10,000 in 1998. The general corporate segment produced an operating loss of $1.3 million for the first nine months related to corporate and merger expenses, partially offset by gains on sale of the former laboratory and administrative facilities.

    Interest expense on the industrial revenue bonds and line of credit was $0.9 million in the first nine months of 1999. Investment income decreased $0.2 million primarily due to less funds available for investment. The effective income tax rate increased from 44% in 1998 to 46% in 1999.

    The combined effect of the above factors resulted in net earnings of $2.3 million or $0.23 per share in the nine month period ended September 30, 1999 as compared to $3.7 million or $0.38 per share in the same period last year.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

    LabOne's working capital position decreased by $11.8 million to $19.5 million at September 30, 1999 from $31.3 million at December 31, 1998. This decrease is primarily due to cash used in the merger, dividends paid, capital additions and debt payments exceeding cash provided by operations and line of credit borrowing. Cash flow from operations decreased by $2.1 million year to date primarily due to lower net income and an increase in payments on accounts payable.

    Additions to property, plant and equipment, net of the sale of the former laboratory and administrative facilities, were $4.9 million in the first nine months of 1999, primarily related to construction and fixtures for the new facility. Net additions in the first nine months of 1998 were $16.1 million. Capital additions, excluding building and fixtures, are expected to be approximately $4.0 million to $5.0 million annually.

    In August 1999, LabOne's Board of Directors declared a dividend of $0.18 per common share. This dividend was paid on September 2, 1999, to stockholders of record as of August 25, 1999, and totaled approximately $2.1 million. The board reviews the dividend payment policy on a periodic basis. There are currently no restrictions that would limit the Company's ability to make future dividend payments.

    At September 30, 1999, LabOne had total cash and investments of $1.6 million as compared to $15.2 million at December 31, 1998. The Company expects to fund operations and future dividend payments, if any, from a combination of cash flows from operations and short term borrowings. The Company borrowed $9 million on its line of credit in the third quarter 1999 to fund cash elections from the merger and to pay the third quarter dividend payment. Of the $10.3 million required to meet cash elections, $3.3 million was paid from available cash and $7.0 million was paid from the line of credit. Interest on the line of credit is based on the 30 day LIBOR rate plus three quarters of a percent and is currently approximately 6.2%. Interest on the Company's industrial revenue bond is based on a taxable seven day variable rate and, including letter of credit and remarketing fees, is currently approximately 6.2%. The Company expects to repay the bond over 11 years at $1.85 million per year plus interest. The first principle payment of $1.85 million was paid in September 1999.

    The total number of shares of LabOne stock held in treasury at September 30, 1999 was approximately 1.5 million at a total cost of $30.1 million or $19.88 per share.

YEAR 2000

    As of April 1999, LabOne has met all of its compliance criteria for mission critical systems. The Company's laboratory operating systems and its business processing systems were completely rewritten in the past ten years and were brought into compliance with Year 2000 date standards at that time. As part of construction of the new facility, certified compliant security systems, time clocks and heating and cooling systems (non-IT systems) were installed. The Company is currently engaged in a comprehensive system validation, running production systems in a year 2000 simulation. This effort will continue through the balance of 1999 as updates are made to our systems.

11

    LabOne is assessing the Year 2000 preparation and contingency plans of the Company's clients and vendors. LabOne has material relationships and dependencies with its primary telecommunications provider, Sprint Corp., its inbound shipping provider, Airborne Express, and municipal services providers. In the event of a service interruption, the Company has the ability to switch telecommunications services to AT&T at any time, and maintains backup electrical generators capable of meeting its electrical needs. LabOne currently tracks and controls routing of its inbound specimens and can use the United States Postal Service, airlines and other common carriers or express delivery services in the event of delivery problems with Airborne Express. The Company currently maintains approximately 8 weeks supply of most laboratory supplies, and does not expect significant problems in obtaining supplies. The Company continues to review the Year 2000 plans of these providers, and does not currently expect significant problems in these areas, however, there can be no assurance that the systems of clients and vendors will be converted to address Year 2000 problems in a timely and effective manner or that such conversions will be compatible with the Company's computer systems.

    Resources dedicated to the remaining effort are expected to cost less than $0.1 million and are not considered a material expense to the Company. These efforts have not caused delay to the Company's other ongoing information systems projects. LabOne has not hired any outside consultants or other independent validation provider at this time, and does not expect to do so.

    There can be no assurance that the Company's adjustments to its computer systems will completely eliminate all Year 2000 problems. Failure to properly address the Year 2000 problem could have a material adverse effect on the Company's business, financial condition and results of operations.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    A foreign currency risk exposure exists due to billing Canadian subsidiary revenue in Canadian dollars and the direct laboratory expenses associated with this revenue being incurred in US dollars. This exposure is not considered to be material. Any future material Canadian currency fluctuations against the US$ could result in a decision to hedge future foreign currency cash flows, or to increase Canadian prices.

    An interest rate risk exposure exists due to LabOne's liability of $18 million in industrial revenue bonds and $10 million line of credit. The interest expense incurred on the bonds is based on a taxable seven day variable rate, which including letter of credit and remarketing fees, is approximately 6.2% as of October 31, 1999. The interest expense on the line of credit is based on the 30 day LIBOR rate plus three quarters of one percent and is currently approximately 6.2%. This exposure is not considered material. Any future increase in interest rates would result in additional interest expense and could result in a decision to enter into a long-term interest rate swap transaction.

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PART II. OTHER INFORMATION

Item 2.—Changes in Securities

(a)

On August 10, 1999, LabOne, Inc. was merged into Lab Holdings, Inc. Under the Agreement and Plan of Merger, as amended and restated, dated as of March 7, 1999 by and between Lab Holdings, Inc. and LabOne, Inc., the Articles of Incorporation and Bylaws of the Company were amended in certain respects as of the effective time of the merger. The Articles of Incorporation and Bylaws, as amended, are attached hereto as Exhibits 3.1 and 3.2 and are incorporated herein by reference. The amendments to the Articles of Incorporation and Bylaws include the following:



(i)

The name of the Company was changed from Lab Holdings, Inc. to "LabOne, Inc."



(ii)

The par value of the common stock was reduced from $1.00 per share to $.01 per share, and the number of authorized shares of common stock was increased from 24,000,000 shares to 40,000,000 shares.



(iii)

New provisions were added to the Bylaws establishing an advance notice procedure for shareholders wishing to nominate candidates for election as directors or bring other business before an annual meeting of shareholders. The Bylaws require shareholders to deliver prior written notice of any shareholder proposal or nomination to the Secretary of the Company no later than ninety days before the meeting date or ten days after the meeting date is publicly announced, whichever is later.



(iv)

The Articles of Incorporation were amended to require that amendments to certain additional provisions of the Bylaws be approved by the affirmative vote of at least 80% of the outstanding shares of stock entitled to vote thereon, unless the amendments are favorably recommended by the affirmative vote of a majority of the entire board of directors. These provisions include those relating to who presides at shareholder meetings and the business that may be conducted at such meetings (including advance notice requirements), the powers of the board of directors and indemnification of the board of directors. The amendments also require an 80% vote to adopt provisions which are inconsistent with specified provisions of the Articles of Incorporation or Bylaws, unless favorably recommended by a majority of the entire board of directors. Prior to the amendments, the Articles of Incorporation waived the 80% shareholder vote requirement only if amendments were favorably recommended by the entire board of directors.



(v)

The fair price provisions of the Articles of Incorporation were amended to eliminate the concept of a "Continuing Director Quorum". This change together with other clarifying changes relating to action by continuing directors, as defined, eliminated a possible ambiguity in these provisions as to the requisite level of continuing director approval for certain business combinations.




The fair price provisions were also amended to include among those business combinations requiring extraordinary shareholder or continuing director approval mergers with subsidiaries in which certain additional by-law provisions do not appear in the by-laws of the surviving corporation or in which the by-laws of the surviving corporation contain provisions inconsistent with such provisions and other charter and by-law provisions. The additional by-law provisions include those relating to who presides at shareholder meetings and the business that may be conducted at such meetings (including advance notice requirements), the powers of the board of directors and indemnification of the board of directors.

(vi)

The Bylaws were amended to eliminate the right of the holders of four-fifths (4/5) of the outstanding shares to call a special meeting of shareholders.

13

(vii)

The Bylaws were amended to require that the chairman of the board, the president or a vice president preside at all shareholder meetings and to give such presiding officer the authority to adjourn the shareholder meeting from time to time on such presiding officer's own motion.



(viii)

The age limitation on directors in the Bylaws was eliminated.

Item 4.—Submission of Matters to a Vote of Securities Holders

(a)

The annual stockholders' meeting was held on August 6, 1999.



(c)

Brief description of each matter voted:



(i)

Election to adopt the Agreement and Plan of Merger by and between Lab Holdings, Inc. and LabOne, Inc. Of the 5,562,010 shares voted, 5,540,455 were voted in favor thereof and 13,413 were opposed. There were 8,142 abstentions and 927,091 broker non-votes.



(ii)

Election to amend Paragraph B.4 of Article X of the Articles of Incorporation. Of the 5,562,011 shares voted, 5,122,329 were voted in favor thereof and 27,640 were opposed. There were 412,042 abstentions and 927,090 broker non-votes.



(iii)

Election of two Class B directors. For Messrs. Robinson and Bentsen, there were 5,803,302 shares voted in favor thereof and 21,420 shares withheld.



(iv)

Election to ratify the appointment of KPMG LLP as independent certified public accountants of the corporation for the present fiscal year. Of the 5,824,720 shares voted, 5,803,202 were voted in favor thereof and 6,628 were opposed. There were 14,890 abstentions.

Item 6.—Exhibits and Reports on Form 8-K

(a)

Exhibits



2.1

Agreement and Plan of Merger, as amended and restated, dated as of March 7, 1999 by and between Lab Holdings, Inc. and LabOne, Inc. (incorporated by reference to Exhibit 2.3 to Amendment No. 4 to the Registration Statement on Form S-4 (Registration No. 333-76131) of the registrant filed on July 2, 1999).



3.1

Articles of Incorporation of LabOne, Inc., as amended in their entirety



3.2

Amended and Restated Bylaws of LabOne, Inc.



27.

Financial Data Schedule—as filed electronically by the Registrant in conjunction with this third quarter 1999 Form 10-Q.



(b)

Reports on Form 8-K

    A form 8-K Current Report was filed with the Commission on August 11, 1999 reporting that the merger of LabOne, Inc. into Lab Holdings, Inc. became effective August 10, 1999. The merger was approved by the requisite vote of the stockholders of LabOne at its annual stockholders' meeting held August 9, 1999, and by the stockholders of Lab Holdings at its annual stockholders' meeting held August 6, 1999.

    A form 8-K Current Report was filed with the Commission on August 23, 1999 reporting details of the merger of LabOne, Inc. into Lab Holdings, Inc. and references to proforma financial information for the merged company.

    A form 8-K Current Report was filed with the Commission on September 30, 1999 reporting that LabOne, Inc. has signed a letter of intent to acquire World Wide Health Services, Inc. of Voorhees, New Jersey. World Wide is a provider of examination and information services to life and health insurers nationwide.

14

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.

	LabOne, Inc.
Date: November 11, 1999	By	/s/ KURT E. GRUENBACHER Kurt E. Gruenbacher V.P. Finance, CAO and Treasurer
Date: November 11, 1999	By	/s/ ROBERT D. THOMPSON Robert D. Thompson Executive V.P., Chief Operating Officer and Chief Financial Officer

15

QuickLinks

PART I. FINANCIAL INFORMATION
ITEM 1—Financial Statements
Lab One , Inc. and Subsidiaries

Lab One , Inc. and Subsidiaries
Lab One , Inc. and Subsidiaries

Lab One , Inc. and Subsidiaries
ITEM 2—MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

PART II. OTHER INFORMATION
Item 2.—Changes in Securities

EX-3.1

                                                                EXHIBIT 3.1

                                    ARTICLES OF INCORPORATION

                                               OF

                                           LABONE, INC.,

                                   (FORMERLY LAB HOLDINGS, INC.)

                                    AS AMENDED IN THEIR ENTIRETY

                                         ARTICLE I

     The name of the Corporation is:   LabONE, Inc.

                                        ARTICLE II

     The address, including street and number, of the Corporation's initial
registered office in this state and the name of its initial agent is
CT Corporation System located at 120 S. Central Avenue, Clayton, Missouri
63105. The principal office of the Corporation shall be located in Kansas City,
Missouri.

                                       ARTICLE III

     The aggregate number of shares of capital stock which the Corporation is
authorized to issue is 43,000,000 divided into the following classes

     3,000,000 shares of Preferred Stock of the par value of $0.01 per share,
     which is hereinafter referred to as "Preferred Stock," and

     40,000,000 shares of Common Stock of the par value of $0.01 per share,
     which is hereinafter referred to as "Common Stock."

     The designations, preferences and relative, participating, optional or
other special rights of each class of stock and the qualifications,
limitations or restrictions of such preferences and/or rights are, or shall
be determined, as follows:

     A. Provisions Applicable to Preferred Stock.

        1.  Issuance of Shares.

            (a) Shares of Preferred Stock may be issued from time to time in
one or more series as provided herein.  Each such series shall be designated
so as to distinguish the shares thereof from the shares of all other series,
and shall have such voting powers, full, special

                                       -1-



or limited, or no voting powers, and such designations, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the Articles of Incorporation or any amendment thereto or in the
resolution or resolutions providing for the issue of such stock adopted by
the Board of Directors pursuant to authority expressly vested in it by the
provisions of these Articles of Incorporation.  The shares of Preferred Stock
of all series shall be of equal rank, and all shares of any particular series
of Preferred Stock shall be identical, except that, if the dividends thereon
are cumulative, the date or dates from which they shall be cumulative may
differ.  The terms of any series of Preferred Stock may vary from the terms
of any other series of Preferred Stock to the full extent now or hereafter
permitted by Missouri law, and the terms of each series shall be fixed, prior
to the issuance thereof, in the manner provided in subparagraph (b) of this
Paragraph 1. Without limiting the generality of the foregoing, shares of
Preferred Stock of different series may, subject to any applicable provisions
of law, vary with respect to the following terms:

                   (1) The distinctive designation of such series and the
number or shares of such series;

                   (2) The rate or rates at which shares of such series shall
be entitled to receive dividends, the conditions upon, and the times of
payment of, such dividends, the relationship and preference, if any, of such
dividends to dividends payable on any other class or classes or any other
series of stock, and whether such dividends shall be cumulative or
noncumulative, and, if cumulative, the date or dates from which such
dividends shall be cumulative;

                   (3) The right, if any, to exchange or convert the shares
of such series into shares of any other class or classes, or of any other
series of the same or any other class or classes of stock of the Corporation,
and if so convertible or exchangeable, the conversion price or prices, or the
rates of exchange, and the adjustments, if any, at which such conversion or
exchange may be made;

                   (4) If shares of such series are subject to redemption,
the time or times and the price or prices at which, at the terms and
conditions on which, such shares shall be redeemable;

                   (5) The preference of the shares of such series as to both
dividends and assets in the event of any voluntary or involuntary liquidation
or dissolution or winding up or distribution of assets of the Corporation;

                   (6) The obligation, if any, of the Corporation to
purchase, redeem or retire shares of such series and/or maintain a fund for
such purposes, and the amount or amounts to be payable from time to time for
such purpose or into such fund, the number of shares to be purchased,
redeemed or retired, and the other terms and conditions of any such
obligation;

                   (7) The voting rights, if any, full, special or limited,
to be given the shares of such series, including without limiting the
generality of the foregoing, the right, if any,

                                       -2-




as a series or in conjunction with other series or classes, to elect one or
more members of the Board of Directors either generally or at certain
specified times or under certain circumstances, and restrictions, if any, on
particular corporate acts without a specified vote or consent of holders of
such shares (such as, among others, restrictions on modifying the terms of
such series of Preferred Stock, authorizing or issuing additional shares of
Preferred Stock or creating any additional shares of Preferred Stock or
creating any class of stock ranking prior to or on a parity with the
Preferred Stock as to dividends or assets); and

                   (8) Any other preferences, and relative, participating,
optional, or other special rights, and qualifications, limitations or
restrictions thereof.

              (b) Authority is hereby expressly granted to and vested in the
Board of Directors at any time or from time to time to issue the Preferred
Stock as Preferred Stock of any series, and in connection with the creation
of each such series, so far as not inconsistent with the provisions of this
Article III applicable to all series of Preferred Stock, to fix, prior to the
issuance thereof, by resolution or resolutions providing for the issue of
shares thereof, the authorized number of shares of such series, which number
may be increased, unless otherwise provided by the Board of Directors in
creating such series, or decreased, but not below the number of shares
thereof then outstanding, from time to time by like action of the Board of
Directors, the voting powers of such series and the designations, rights,
preferences, and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, of such series.

     B. Provisions Applicable to Common Stock.

          1. Dividends.  Subject to the provisions of law and the rights of
the Preferred Stock and any other class or series of stock having a
preference as to dividends over the Common Stock then outstanding, the
holders of Common Stock shall be entitled to receive dividends at such times
and in such amounts as the Board of Directors shall determine.

          2. Liquidation Rights.  In the event of any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
holders of Common Stock, after payment in full to the holders of Preferred
Stock, or after provision for such payment shall have been made, all in
accordance with the terms governing such Preferred Stock, shall be entitled
to payment and distribution of the assets of the Corporation ratably in
accordance with the number of shares held by them respectively.

     C. General Provisions.

          1. Voting Rights.  Except as may be provided pursuant to
Paragraph 1 of Section A. of this Article III, the holders of the outstanding
stock, regardless of class, shall be entitled to one vote for each share held
on each matter submitted to a vote at a meeting of shareholders.

          2. Preemptive Rights.  No holder of any of the shares of any class
or series of stock or of options, warrants or other rights to purchase shares
of any class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe


                                       -3-




for any unissued stock of any class or series or any additional shares of any
class or series to be issued by reason of any increase in the authorized
capital stock of the Corporation of any class or series, or bonds,
certificates of indebtedness, debentures or other securities convertible into
or exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue or shares of any class or series
of stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of pursuant
to resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.

          3. Relative Powers of Preferred Stock Series.  The relative powers,
preferences and rights of each series of Preferred Stock in relation to the
powers, preferences and rights of each other series of Preferred Stock shall,
in each case, be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
subparagraph (b) of Paragraph 1, Section A. of this Article III, and the
consent, by class or series vote or otherwise, of the holders of such of the
series of Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other series of
Preferred Stock whether or not the powers, preferences and rights of such
other series shall be fixed by the Board Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding series,
or any of them; provided, however, that the Board of Directors may provide in
the resolution or resolutions as to any series of Preferred Stock adopted
pursuant to subparagraph (b) of paragraph 1 of Section A. of this Article III
that the consent of the holders of a majority (or such greater proportion as
shall be therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other series of
Preferred Stock.

          4. Issuance of Preferred Shares.  Subject to the provisions of
Paragraph 3 of this Section C., shares of any series of Preferred Stock may
be issued from time to time as the Board of Directors of the Corporation
shall determine, and on such terms and for such consideration as shall be
fixed by the Board of Directors.

                                  ARTICLE IV

     The name and place of residence of each incorporator is as follows:

            W.R. Mullens         9304 Buena Vista     Prairie Village, Kansas
            V.W. Voorhees, II    3816 W. 58th St.     Fairway, Kansas
            Robert L. Meeker     12601 Pawnee Lane    Leawood, Kansas


                                   ARTICLE V

     The number of directors to constitute the present Board of Directors of
the Corporation is fifteen.  Hereafter, the number of directors of the
Corporation shall be fixed by, or in the manner provided in, and elected in
the manner provided in, the Bylaws of the Corporation, the applicable
provisions of which shall be consistent with those provisions of The General
and Business


                                       -4-




Corporation Law of Missouri relating to election of directors.  Vacancies in
the Board of Directors shall be filled in the manner provided in the Bylaws.
Directors need not be shareholders unless the Bylaws of the Corporation
require them to be shareholders.

                                     ARTICLE VI

     The duration of the Corporation is perpetual.


                                     ARTICLE VII

     The Corporation is formed for the following purposes:

     A. To buy, lease, rent or otherwise acquire, own, hold, use, divide,
partition, develop, improve, operate and sell, lease, mortgage or otherwise
dispose of, deal in and turn to account, real estate, leaseholds, and any and
all interests or estates therein or appertaining thereto; and to construct,
acquire, manage, operate, improve, maintain, own, sell, lease or otherwise
dispose of or deal in buildings, structures and improvements situated or to
be situated on any real estate or leasehold, and to enter into joint venture,
partnership or any other type business relationships with other individuals,
firms, partnerships and corporations to acquire, lease, rent and develop real
estate.

     B. To purchase, acquire, own, hold, pledge, sell, exchange and dispose
of any stock, bonds and other securities and evidences of indebtedness of any
corporation, association or other entity or enterprise, either domestic or
foreign, without limit as to the nature or type of business activity thereof,
and while owner of any thereof, to exercise all of the rights, powers, and
privileges of ownership.

     C. To enter into any lawful contract or contracts with persons, firms,
corporations, other entities, governments or any agencies or subdivisions
thereof, including guaranteeing the performance of any contract or any
obligation of any person, firm, corporation or other entity.

     D. To purchase and acquire, as a going concern or otherwise, and to
carry on, maintain and operate all or any part of the property or business of
any corporation, firm, association, entity, syndicate or person whatsoever,
deemed to be of benefit to the Corporation, or of use in any manner in
connection with any of its purposes; and to dispose thereof upon such terms
as may be advisable to the Corporation.

     E. To purchase or otherwise acquire, hold, sell pledge, reissue,
transfer or otherwise deal in, shares of the Corporation's own stock,
provided that it shall not use its funds or property for the purchase of its
own shares of stock when such use would be prohibited by law, by the Articles
of Incorporation or by the Bylaws of the Corporation; and provided, further,
that shares of its own stock belonging to it shall not be voted upon directly
or indirectly.

     F. To invest, lend and deal with monies of the Corporation in any lawful
manner, and to acquire by purchase, by the exchange of stock or other
securities of the Corporation, by


                                       -5-




subscription or otherwise, and to invest in, to hold for investment or for
any other purpose, and to use, sell, pledge or otherwise dispose of, and in
general to deal in any interest concerning or enter into any transaction with
respect to (including "long" and "short" sales of) any stocks, bonds, notes,
debentures, certificates, receipts and other securities and obligations of
any government, state, municipality, corporation, association or other
entity, including individuals and partnerships and, while owner thereof, to
exercise all of the rights, powers and privileges of ownership, including,
among other things, the right to vote thereon for any and all purposes, and
to give consents with respect thereto.

     G. To borrow or raise money for any purpose of the Corporation and to
secure any loan, indebtedness or obligation of the Corporation, and the
interest accruing thereon, and for that or any other purpose, to mortgage,
pledge, hypothecate or charge all or any part of the present or hereafter
acquired property, rights and franchises of the Corporation, real, personal,
mixed or of any character whatever, subject only to limitations specifically
imposed by law.

     H. To do any or all of the things hereinabove enumerated alone for its own
account, or for the account of others, or as the agent for others, or in
association with others or by or through others, and to enter into all
lawful contracts and undertakings in respect thereof.

     I. To have one or more offices, to conduct its business, carry on its
operations and promote its objects within and without the state of
Missouri, in other states, the District of Columbia, the territories,
colonies and dependencies of the United States, in foreign countries and
anywhere in the world, without restriction as to place, manner or amount,
but subject to the laws applicable thereto; and to do any or all of the
things herein set forth to the same extent as a natural person might or
could do and in any part of the world, either alone or in company with
others.

     J. In general, to carry on any other business in connection with each
and all of the foregoing or incidental thereto, and to carry on, transact and
engage in any and every lawful business or other lawful thing calculated to
be of gain, profit or benefit to the Corporation as fully and freely as a
natural person might do, to the extent and in the manner, and anywhere within
and without the state of Missouri, as it may from time to time determine; and
to have and exercise each and all of the powers and privileges, either direct
or incidental, which are given and provided by or are available under the
laws of the state of Missouri in respect of general and business corporations
organized for profit thereunder, provided, however, that the Corporation
shall not engage in any activity for which a corporation may not be formed
under the laws of the state of Missouri.

     K. To advise and counsel others, and to act for and on behalf of others
concerning the acquisition, organization, promotion, development financing,
operation, management, disposition and termination of corporations,
associations, partnerships, firms and investments of all kinds, and to
perform any and all services relating to the foregoing and otherwise, and to
enter into and perform contracts, agreements and undertakings in connection
therewith.

     None of the purposes and powers specified in any of the paragraphs of
this Article VII shall be in any way limited or restricted by reference to or
inference from the terms of any other


                                       -6-




paragraph, and the purposes and powers specified in each of the paragraphs of
this Article VII shall be regarded as independent purposes and powers.  The
enumeration of specific purposes and powers in this Article VII shall not be
construed to restrict in any manner the general purposes and powers of this
Corporation, nor shall the expression of one thing be deemed to exclude
another, although it be of like nature.  The enumeration of purposes or
powers herein shall not be deemed to exclude or in any way limit by inference
any purposes or powers which this Corporation has power to exercise, whether
expressly by laws of the state of Missouri, now or hereafter in effect, or
impliedly by any reasonable construction of such laws.

                                   ARTICLE VIII

     A. Except as may be otherwise specifically provided by statute, or the
Articles of Incorporation or the Bylaws of the Corporation, as from time to
time amended, all powers of management, direction and control of the
Corporation shall be, and hereby are, vested in the Board of Directors, and
shall be exercised by them and by such officers and agents as they may from
time to time appoint and empower.  The Board shall have the power to make
such Bylaws, rules and regulations for the transaction of the business of the
Corporation as are not inconsistent with these Articles or the laws of the
state of Missouri.

     B. Subject always to the provisions of Article XI of these Articles of
Incorporation, the Bylaws of the Corporation may from time to time be
altered, amended, suspended or repealed, or new Bylaws may be adopted, in
either of the following ways:  (i) by the affirmative vote, at any annual or
special meeting of the shareholders, of the holders of a majority of the
outstanding shares of stock of the Corporation entitled to vote generally in
the election of directors, or (ii) by resolution adopted by a majority of the
full Board of Directors; provided, however, that the power of the Directors
to alter, amend, suspend or repeal the Bylaws or any portion thereof may be
denied as to any Bylaws or portion thereof enacted by the shareholders if at
the time of such enactment the shareholders shall so expressly provide.

                                     ARTICLE IX

     The Corporation reserves the right at any annual or special meeting of
shareholders to alter, amend or repeal any provision contained in its
Articles of Incorporation in the manner now or hereafter prescribed by the
statutes of Missouri, and all rights and powers conferred herein are granted
subject to this reservation.

                                      ARTICLE X

     A. No "Business Combination" (as hereinafter defined) shall be
consummated or effected unless such Business Combination shall have been
approved by the affirmative vote of the holders of not less than eighty
percent (80%) of the total voting power of all outstanding shares of voting
stock of the Corporation, voting as a single class.  Such vote shall be
required notwithstanding the fact that no vote for such a transaction may be
required by law or that approval by some lesser percentage of shareholders
may be specified by law or in any agreement with any national securities
exchange or otherwise; provided, however, that such eighty percent


                                       -7-




(80%) vote shall not be required, and the provisions of Missouri law relating
to the vote required for shareholder approval, if any, shall apply to any
such Business Combination if:

     1. Both of the following conditions are satisfied:

          (a) The Aggregate amount of the cash and the "Fair Market Value"
(as hereinafter defined) of the property, securities or other consideration
to be received per share of capital stock of the Corporation incident to the
consummation of such Business Combination by any holder of such stock, other
than the Related Person (as hereinafter defined) involved in such Business
Combination, is not less than the highest of (i) the "Highest Per Share
Price" or the "Highest Equivalent Price" (as those terms are hereinafter
defined), paid by such Related Person in acquiring any of its holdings of the
Corporation's capital stock during the five-year period preceding the
announcement of such Business Combination; (ii) a price that includes the
same or a greater premium over the market price of such capital stock
immediately prior to the announcement of such Business Combination as the
greatest premium over market price paid by such Related Person in the
purchase of any shares of any class of the Corporation's capital stock during
the five-year period preceding the announcement of such Business Combination;
(iii) the Highest Per Share Price or the Highest Equivalent Price that such
Related Person shall, during the five-year period preceding the announcement
of such Business Combination, have offered to the shareholders of the
Corporation for any shares of the Corporation's capital stock or indicated in
writing that it would be prepared to offer under specified conditions; or
(iv) the value determined by an investment banking or appraisal firm to be a
fair price, for such shares from the point of view of all shareholders of the
Corporation other than any Related Person (such firm to be engaged solely on
behalf of such shareholders, to be paid a reasonable fee for its services
upon receipt of its determination, which fee shall not be contingent upon the
consummation of the action or transaction, and to be selected (a) by the
affirmative vote of not less than two-thirds of all of the "Continuing
Directors" (as hereinafter defined) or, (b) if such selection by the
Continuing Directors cannot be effected for any reason, by the Secretary of
State of the State of Missouri); and

          (b) A proxy statement complying with the requirements of the
Securities Exchange Act of 1934, as amended, shall have been mailed to all
shareholders of the Corporation for the purpose of soliciting shareholder
approval of such Business Combination.  Such proxy statement shall contain at
the front thereof, in a prominent place, a statement by the Continuing
Directors of their position on the advisability (or inadvisability) of the
proposed Business Combination and an opinion of the investment banking or
appraisal firm described in Subsection 1(a)(iv) of this Section A. as to the
fairness of the terms of the proposed Business Combination from the point of
view of all shareholders of the Corporation other than any Related Person; or

     2.  The Continuing Directors shall have expressly approved such Business
Combination by the affirmative vote of not less than two-thirds of all of the
Continuing Directors either in advance of or subsequent to the acquisition of
outstanding shares of capital stock of the Corporation that caused the
Related Person involved to become a Related Person.  In determining whether
or not to approve any such Business Combination, the Continuing Directors
shall give due consideration to all factors they may consider relevant
including without limitation


                                       -8-




(i) the social, legal, environmental and economic effects on the
Corporation's and/or its subsidiaries' policyholders, employees, sales
representatives and clients, on the communities and geographic areas in which
the Corporation and its subsidiaries operate or are located, and on any of
the business and properties of the Corporation and its subsidiaries, and (ii)
the adequacy of the consideration offered in relation not only to the current
market price of the Corporation's outstanding securities, but also to the
current value of the Corporation in a freely negotiated transaction and the
Continuing Directors' estimate of the Corporation's future value (including
the unrealized value of its properties and assets) as an independent going
concern.

     B. For the purpose of this Article X:

          1. The term "Business Combination" shall mean (i) any merger,
consolidation or share exchange of the Corporation or any of its subsidiaries
with or into a Related Person, in each case irrespective of which corporation
or company is to be the surviving entity; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition to or with a Related Person
(in a single transaction or a series of related transactions) of all or a
substantial part of the assets of the Corporation (including without
limitation any securities of a subsidiary of the Corporation) or all or a
substantial part of the assets of any of its subsidiaries; (iii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition to or with
the Corporation, or to or with any of its subsidiaries (in a single
transaction or series of related transactions) of all or a substantial part
of the assets of a Related Person; (iv) the issuance or transfer by the
Corporation or any of its subsidiaries of any securities of the Corporation
or any of its subsidiaries to a Related Person (other than an issuance or
transfer of securities which is effected on a pro-rata basis to all
shareholders of the Corporation); (v) the acquisition by the Corporation or
any of its subsidiaries of any securities of a Related Person; (vi) any
recapitalization or reclassification of shares of any class of voting stock
of the Corporation or any merger or consolidation of the Corporation with any
of its subsidiaries which would have the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class of
capital stock of the Corporation (or any securities convertible into any
class of such capital stock) owned by any Related Person; (vii) any merger or
consolidation of the Corporation with any of its subsidiaries after which the
provisions of this Article X or Articles V, VIII, IX, or XI  of these
Articles of Incorporation shall not appear (or in which provisions
inconsistent with any such provisions shall appear) in the Articles of
Incorporation of the surviving entity or after which Article I, Sections 3,
5, 6 and 7, Article II, Sections 1, 2 and 4, Article IV and Article VI of the
Bylaws of the Corporation shall not appear (or in which provisions
inconsistent with any such provisions shall appear) in the Bylaws of the
surviving entity; (viii) any plan or proposal for the liquidation or
dissolution of the Corporation; and (ix) any agreement, contract or other
arrangement providing for any of the transactions described in this
definition of Business Combination.

          2. The term "Related Person" shall mean any individual,
corporation, partnership or other person or entity which, as of the record
date for the determination of shareholders entitled to notice of and to vote
on any Business Combination, or immediately  prior to the consummation of any
such Business Combination, is a "Beneficial Owner" (as defined in Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of
1934 as in effect at the date of the adoption of this Article X by the
shareholders of the Corporation) (collectively and as so in effect, the
"Exchange Act") of shares of any class or series of capital


                                       -9-




stock of the Corporation which, when combined with the shares of such class
or series of stock of which any "Affiliates" or "Associates" (as defined in
Rule 12b-2 of the Exchange Act) of such individual, corporation, partnership
or other person or entity are Beneficial Owners, amount to ten percent (10%)
or more of the outstanding shares of such class or series of stock, and any
Affiliate or Associate of any such Related Person.

              3. The term "Continuing Director" shall mean any director of
the Corporation elected to a term of office on or whose term of office
continued as of the effective time of the merger of Lab Holdings, Inc. and
LabOne, Inc., and any other director that a majority of Continuing Directors
shall designate as a Continuing Director or shall recommend or approve for
election or nomination for election as a director of the Corporation.

              4. Whether or not any proposed sale, lease, exchange, mortgage,
pledge, transfer or other disposition of part of the assets of any entity
involves a "substantial part" of the assets of such entity shall be
conclusively determined by the affirmative vote of not less than two-thirds
of all of the Continuing Directors; provided, however, that assets involved
in any single transaction or series of related transactions having an
aggregate Fair Market Value of more than fifteen percent (15%) of the total
consolidated assets of an entity and its subsidiaries as at the end of such
entity's last full fiscal year prior to such determination shall always be
deemed to constitute a "substantial part."

              5. For the purposes of Subsection (1)(a) of Section A. of this
Article X, the term "other consideration to be received" shall include,
without limitation, Common Stock or other capital stock of the Corporation
retained by shareholders of the Corporation other than Related Persons or
parties to such Business Combination in the event of a Business Combination
in which the Corporation is the surviving corporation.

              6. A "Related Person" shall be deemed to have acquired a share
of the capital stock of the Corporation at the time when such Related Person
became the Beneficial Owner thereof.  With respect to shares owned of record
by Affiliates or Associates of a Related Person or other persons whose
ownership is attributed to a Related Person under the foregoing definition of
Related Person, for purposes of Subsection 7 of this Section B., such Related
Person shall be deemed to have purchased such shares at the higher of (a) the
price paid upon the acquisition thereof by the Affiliate, Associate or other
person who owns such shares of record, or (b) the market price of the shares
in question at the time when the Related Person became the Beneficial Owner
thereof.

              7. The terms "Highest Per Share Price" and "Highest Equivalent
Price" shall mean the following: If there is only one class of capital stock
of the Corporation issued and outstanding, the Highest Per Share Price shall
mean the highest price that can be determined to have been paid or offered to
be paid during the preceding five years by the Related Person involved for
any share or shares of that class of capital stock.  If there is more than
one class of capital stock of the Corporation issued and outstanding, the
Highest Equivalent Price shall mean with respect to each class and series of
capital stock of the Corporation, the amount determined by two-thirds of the
Continuing Directors, on whatever basis they believe to be appropriate, to be
the highest per share price equivalent to the highest price that can be
determined to have been

                                       -10-




paid or offered to be paid during the preceding five years by the Related
Person involved or any Affiliate or Associate of such Related Person for any
share or shares of any other class or series of capital stock of the
Corporation.  In determining the Highest Per Share Price and Highest
Equivalent Price, all purchases by such Related Person or any such Affiliate
or Associate shall be taken into account regardless of whether the shares
were purchased before or after such Related Person became a Related Person.
The Highest Per Share Price and the Highest Equivalent Price shall include
any brokerage commissions, transfer taxes and soliciting dealers' fees paid
by such Related Person or any such Affiliate or Associate with respect to the
shares of capital stock of the Corporation acquired by such Related Person or
such Affiliate or Associate.  In the event any Business Combination involving
a Related Person shall be proposed, the Continuing Directors shall determine
the Highest Equivalent Price for each class and series of the capital stock
of the Corporation of which there are shares issued and outstanding.

              8. The term "Fair Market Value" shall mean (i) in the case of
stock, the highest closing sale price during the thirty day period
immediately preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock
is not quoted on the Composite Tape, on the New York Stock Exchange, or, if
such stock is not listed on the New York Stock Exchange, on the principal
United States securities exchange registered under the Exchange Act on which
such stock is listed, or, if such stock is not listed on any such exchange,
the highest closing sale price of such stock during the thirty day period
preceding the date in question on the National Association of Securities
Dealers, Inc.  Automated Quotations System or any system then in use, or, if
such stock is not the subject of last sale reporting, the highest closing bid
quotation with respect to a share, or, if no such quotations are available,
the fair market value on the date in question of a share of such stock as
determined by the affirmative vote of not less than two-thirds of all of the
Continuing Directors, and (ii) in the case of property other than cash or
stock, the fair market value of such property on the date in question as
determined by the affirmative vote of not less than two-thirds of all the
Continuing Directors.

                                      ARTICLE XI

     Notwithstanding any other provision of these Articles of Incorporation
or the Bylaws of the Corporation (and notwithstanding the fact that some
lesser percentage may be specified by law, these Articles of Incorporation or
the Bylaws of the Corporation), the affirmative vote by holders of not less
than eighty percent (80%) of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors shall be
required to amend, modify, alter or repeal Article I, Sections 3, 5, 6 and 7,
Article II, Sections 1, 2 and 4, Article IV and Article VI of the Bylaws of
the Corporation (or to adopt any provision of the Articles of Incorporation
inconsistent with any provision of such Bylaw provisions) or Articles V,
VIII, IX or X or this Article XI of these Articles of Incorporation (or to
adopt any provision of the Articles of Incorporation inconsistent therewith);
provided, however, that the favorable vote of a majority of the votes
entitled to vote generally in the election of directors shall be sufficient
to approve any such amendment, modification, alteration or repeal of the
foregoing provisions of the Bylaws or  Articles of Incorporation (or adoption
of any inconsistent provision) that has been favorably recommended to the
shareholders by resolution of the Board of Directors adopted by the
affirmative vote of not less than a majority of the entire Board of Directors.


                                       -11-




                                    ARTICLE XII

     The Board of Directors of the Corporation, when evaluating any offer or
proposal of another party to make a tender offering or exchange offer or
comparable offer for any equity security of the Corporation, to merge or
consolidate the Corporation with another corporation or to purchase or
otherwise acquire all or a substantial part of the assets of the Corporation
or to enter into any similar type of transaction, shall, in connection with
the exercise of its judgment in determining what is in the best interests of
the Corporation and its shareholders, give due consideration to the effect of
such a transaction on all relevant factors, including without limitation (a)
the consideration being offered in relation to the Board of Directors'
estimate of (i) the current value of the Corporation in a freely negotiated
sale of either the Corporation by merger, consolidation or otherwise, or all
or substantially all of the Corporation's assets, (ii) the current value of
the Corporation if orderly liquidated, and (iii) the future value of the
Corporation over a period of years as an independent entity discounted to
current value; (b) then existing political, economic and other factors
bearing on security prices generally or the current market value of the
Corporation's securities in particular; (c) whether the offer or proposal
might violate federal, state or local laws; (d) social, legal and economic
effects on the Corporation and its subsidiaries, and on policyholders,
employees, suppliers, customers, and others having similar relationships with
them, and the communities in which they conduct their businesses; (e) the
financial condition and earning prospects of the party making the offer or
proposal, including such party's ability to service its debt and other
existing or likely financial obligations; (f) the competence, experience and
integrity of the party making the offer or proposal; (g) the form of the
consideration offered, as well as such other factors as the Directors deem
relevant.  Nothing contained in this Article XII shall require the
Corporation or any Director or officer to respond to any particular offer or
proposal.



                                       -12-

EX-3.2

                                                                Exhibit 3.2

                                    AMENDED AND RESTATED

                                          BYLAWS

                                            OF

                                       LABONE, INC.

                                         ARTICLE I

                                        SHAREHOLDERS

     SECTION 1 - PLACE OF MEETINGS.  All meetings of the shareholders shall
be held at the principal office of the corporation in Missouri, except such
meetings as the Board of Directors, to the extent permissible by law,
expressly determines shall be held elsewhere, in which case such meetings
may, be held, upon notice thereof as hereinafter provided, at such other
place or places, within or without the State of Missouri, as the Board of
Directors shall have determined, and as shall be stated in such notice, and,
unless specifically, prohibited by law, any meeting may be held at any place
and time, and for any purpose, if consented to in writing by all the
shareholders entitled to vote thereat.

     SECTION 2 - ANNUAL MEETINGS.  An annual meeting of the shareholders to
elect directors and to transact such other business as may properly be
brought before the meeting shall be held each year on a date to be determined
by the Board of Directors at its meeting to be held in February of each year.

     SECTION 3 -  SPECIAL MEETINGS.  Special meetings of the shareholders may
be called by the chairman of the board, by the president, by the secretary,
by the Board of Directors, or by any officer directed to do so by the Board
of Directors.  Shareholders' requests for a special meeting shall be in
writing and shall state the nature of the business desired to be transacted
and shall comply with Article VI of these Bylaws.  The "call" and the
"notice" of any such meeting shall be deemed to be synonymous.

     SECTION 4 - NOTICE.  Written or printed notice of each meeting of the
shareholders, whether annual or special, stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes
thereof, shall be delivered or given to each shareholder entitled to vote
thereat, either personally or by mail, not less than ten (10) days or more
than fifty (50) days prior to the meeting unless, as to a particular matter,
other or further notice shall be given.  In addition to such written or
printed notice, published notice shall be given if (and in the manner) then
required by law.


                                       -1-




     Any notice of a shareholders' meeting sent by mail shall be deemed to be
delivered when deposited in the United States mail with postage thereon
prepaid addressed to the shareholder at his address as it appears on the
records of the corporation.

     SECTION 5 - PRESIDING OFFICIALS.  Every meeting of the shareholders, for
whatever object, shall be convened and presided over by either the president,
the chairman of the board or, in their absence, by any vice president.  The
officer presiding over any such meeting shall have the authority on his own
motion to adjourn the meeting from time to time.

     SECTION 6 - BUSINESS AT ANNUAL MEETINGS.  No business may be transacted
at an annual meeting of shareholders, other than business that is either (i)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors (or any duly authorized committee
thereof), (ii) otherwise properly brought before the annual meeting by or at
the direction of the Board of Directors (or any duly authorized committee
thereof) or (iii) otherwise properly brought before the annual meeting by any
shareholder of record of the corporation who is entitled to vote at such
meeting and who complies with the notice procedures set forth in Article VI
of these Bylaws.  Any business to be brought before the annual meeting by any
shareholder must also be a proper matter for shareholder action.

     SECTION 7 - BUSINESS WHICH MAY BE TRANSACTED AT SPECIAL MEETINGS.
Business transacted at all special meetings shall be confined to the purposes
stated in the notice of such meeting.

     SECTION 8 - QUORUM OF SHAREHOLDERS.  Except as otherwise provided by law
or by the Articles of Incorporation, a majority of the outstanding shares
entitled to vote at any meeting represented in person or by proxy shall
constitute a quorum at a meeting of the shareholders, but less than a quorum
shall have the right successively to adjourn the meeting to a specified date
not longer than ninety (90) days after such adjournment, and no notice need
be given of such adjournment to shareholders not present at the meeting.

     SECTION 9 - VOTING OF SHAREHOLDERS.  Subject to the right to elect
directors by cumulative voting,  each shareholder shall be entitled to as
many votes on any proposition as he has shares of stock in the corporation,
and he may vote them in person or by proxy.  Such proxy shall be in writing,
or in such other transmitted form as may be acceptable to the Secretary, and
shall state the name of the person authorized to cast such vote and the date
of the meeting at which such vote shall be cast, and no such proxy shall be
valid unless the same shall have been given within sixty (60) days prior to
the meeting at which such vote is to be cast and shall be filed with the
Secretary at or previous to the time of the meeting and before the votes are
cast.

     If the Board of Directors does not close the transfer books or set a
record date for the determination of the shareholders entitled to notice of,
and to vote at, a meeting of shareholders, only the shareholders of record at
the close of business on the twentieth day preceding the date of the meeting
shall be entitled to notice of, and to vote at, the meeting and any
adjournment of the meeting.


                                       -2-




     SECTION 10 - REGISTERED SHAREHOLDERS - EXCEPTIONS - STOCK OWNERSHIP
PRESUMED.  The corporation shall be entitled to treat the holders of the
shares of stock of the corporation, as recorded in the stock record or
transfer books of the corporation, as the holders of record and as the
holders and owners in fact thereof and, accordingly, the corporation shall
not be required to recognize any equitable or other claim to or interest in
any such shares on the part of any other person, firm, partnership,
corporation or association, whether or not the corporation shall have express
or other notice thereof, except as is otherwise expressly required by law,
and the term shareholder as used in these Bylaws means one who is a holder of
record of shares of the corporation.

                                   ARTICLE II

                                   DIRECTORS

     SECTION 1 - DIRECTORS - NUMBER AND VACANCIES.  Unless and until changed
by the Board of Directors as hereinafter provided, the number of directors to
constitute the Board of Directors shall be the same number as that provided
in the Articles of Incorporation.  The Board of Directors, to the extent
permitted by law, shall have the power to change the number of directors from
time to time provided that any notice required by law of any such change is
duly given.  Directors need not be shareholders unless the Articles of
Incorporation at any time so provide.

     Vacancies on the Board of Directors shall be filled for the unexpired
term by a majority of the remaining directors, or, if they are unable to do
so, by vote of a majority of shareholders at an annual or special meeting.

     No director shall be removed from his office as a director by vote or
other action of shareholders or otherwise unless the director to be removed
has been convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal or unless the director to be
removed has been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation by a court of competent
jurisdiction and such adjudication is no longer subject to direct appeal.

     SECTION 2 - DIRECTORS - CLASSIFICATION.  The Board of Directors shall be
divided into three classes so that there shall be an annual election for such
number or proportion of directors as may be found upon dividing the entire
number of directors by the number of years composing a term; provided,
however, that at the first meeting of the shareholders of the corporation
following the adoption of this amended bylaw, approximately one-third of the
directors, to be known as "Class A", shall be elected for a term of office,
such term of such Class expiring at the next following annual meeting of the
shareholders; approximately one-third of the directors, to be known as
"Class B", shall be elected for a term of office, such term of such Class
expiring at the second following annual meeting of the shareholders; and
approximately one-third of the directors, to be known as "Class C", shall
be elected for a term of office, such term of such Class expiring at the
third following annual meeting.  If the number of directors is not evenly
divisible into three classes, the Board of Directors shall determine which
of the three classes shall have a number of members differing from the other
two classes. At each subsequent annual meeting of shareholders, the
successors to the Class of directors whose terms shall expire at that meeting

                                       -3-




shall be elected to hold office for a term expiring at the third succeeding
annual meeting of shareholders.  If the number of directors is changed, any
newly created directorship or any decrease in directorships shall be
apportioned among the classes so as to make all classes as nearly equal in
number as possible; provided, that no decrease in the Board shall shorten the
term of any incumbent director.

     A director elected by the Board to fill a vacancy shall hold office for
the unexpired portion of the term of the director whose place he has been
elected to fill, which term may extend beyond the next succeeding annual
meeting of shareholders following the election of such director.

     SECTION 3 - DIRECTORS - EMPLOYMENT QUALIFICATIONS.  "Inside director"
shall be defined as any director who is also at that time an employee of the
corporation, or any subsidiary thereof.  The term of office of any person
serving as an "inside director" shall cease immediately upon termination of
employment with the corporation and all subsidiaries thereof for any reason.

     SECTION 4 - POWERS OF THE BOARD.  The property and business of the
corporation shall be controlled and managed by the directors, acting as a
Board.  The Board shall have and is vested with all and unlimited powers and
authorities, except as may be expressly limited by law, the Articles of
Incorporation or these Bylaws, to do or cause to be done any and all lawful
things for and in behalf of the corporation, to exercise or cause to be
exercised any or all of its powers, privileges, and franchises, and to seek
the effectuation of its objects and purposes.

     SECTION 5 - REGULAR MEETINGS.  Regular meetings of the Board of
Directors shall be held following the adjournment of the Annual Meeting of
the Shareholders on the same date and in the months of February, August and
November of each year; provided, however, that at any regular meeting,
special meeting or by action taken by written consent of all Directors,
severally or collectively, without a meeting, the Board of Directors may set
a date in some other month for the next succeeding regular meeting.  The
regular meetings shall be at a time set by notice mailed or telegraphed to
each director at least two days prior thereto.  Notice of any regular meeting
of the Board of Directors may be waived in writing or by telegram before or
after the meeting and attendance of a director at a meeting shall be deemed a
waiver of notice except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting
is not lawfully called or convened.  Neither the business to be transacted
at, nor the purpose of, any regular meeting of the Board of Directors need be
specified in the notice or waiver of notice of a meeting.  Any business may
be transacted at a regular meeting.

     SECTION 6 - SPECIAL MEETINGS.  Special meetings of the Board of
Directors shall be held at such time and place as is specified in the notice
of such meeting and shall be called by the chairman of the board, the
president, the secretary, any vice president, or a majority of the entire
Board of Directors.  Notice of any such meeting shall be given personally or
by mail or telegram to each member of the Board at least two hours prior to
the scheduled time of the meeting, but such notice may be waived in writing
or by telegram either before or after the meeting, and attendance at the
meeting by any director shall be deemed a waiver of such notice.


                                       -4-




     Special meetings of the Board of Directors may be held by means of
telephone conferences or equipment of similar communications by means of
which all directors participating in the meeting can hear each other.
Participating in a meeting by telephone or similar communications equipment
shall constitute presence in person at the special meeting, except where a
director participates in a meeting for the sole purpose of objecting to the
transaction of any business on the ground that the special meeting is not
lawfully convened or called.

     SECTION 7 - QUORUM.  A majority of the full Board of Directors shall
constitute a quorum for the transaction of business, but less than a quorum
may adjourn from time to time until a quorum is obtained.  The act of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.

     SECTION 8 - ACTION WITHOUT A MEETING.  If all the directors severally or
collectively consent in writing to any action to be taken by the directors,
such consents shall have the same force and effect as a unanimous vote of the
directors at a meeting duly held.  The secretary shall file such consents
with the minutes of the meetings of the Board of Directors.

     SECTION 9 - CONSULTING DIRECTORS.  The Board of Directors may appoint to
the office of consulting director any person whose abilities and interest in
the corporation, in the opinion of the Board, qualify him to render service
to the Board.  Such consulting directors may receive notice of and attend
meetings of the Board of Directors, shall have no vote in the affairs of the
corporation and shall not be counted for the purposes of determining a quorum
or majority of the Board for any purpose.  Such consulting directors shall
serve in an advisory capacity to the Board of Directors only and no action of
the Board shall be invalid because of the failure of any such consulting
director to receive notice of or to attend any meeting of the Board or to be
informed of or to approve of any action taken by the Board of Directors.

     SECTION 10 - EXECUTIVE COMMITTEE.  The Board of Directors may, by
resolution or resolutions adopted by a majority of the whole Board of
Directors, designate an executive committee, such committee to consist of two
or more directors of the corporation, which committee, to the extent provided
in said resolution or resolutions, shall have and may exercise all of the
authority of the Board of Directors in the management of the corporation;
provided, however, that the designation of such committee and the delegation
thereto of authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed upon it or him by law.

     The executive committee shall keep regular minutes of its proceedings,
which minutes shall be recorded in the minutes of the corporation.  The
secretary or an assistant secretary of the corporation may act as secretary
for the committee if the committee so requests.

     SECTION 11 - OTHER COMMITTEES.  The Board of Directors shall appoint an
Audit Committee and fix its duties, and may from time to time appoint and fix
the duties of such additional committees as they, in their discretion, shall
deem necessary or advisable for the proper operation of the corporation,
including a committee or committees which shall have authority to approve
salaries and increases in salaries for elected officers of the corporation.


                                       -5-




     SECTION 12 - COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS.  Each
director, as such, shall be entitled to receive reimbursement for his
reasonable expenses incurred in attending meetings of the Board of Directors
or any committee thereof or otherwise in connection with his attention to the
affairs of the corporation.  In addition, each director, who is not at the
time a regularly compensated officer or employee of the corporation or any of
its subsidiaries, shall be entitled to such fee for his services as a
director (and if a member of any committee of the Board of Directors, such
fee for his services as such member) as may be fixed from time to time by the
Board of Directors.  Such fees may be fixed both for meetings attended and on
an annual basis, or either thereof, and may be payable currently or deferred.
Nothing herein contained shall be construed to preclude any director or
committee member from serving the corporation or any of its subsidiaries in
any other capacity and receiving compensation therefor.

                                      ARTICLE III

                                       OFFICERS

     SECTION 1 - OFFICERS - WHO SHALL CONSTITUTE.  The officers of the
corporation shall be a chairman of the board, a president, one or more vice
presidents, a secretary and a treasurer.  The Board shall elect or appoint a
president and secretary at its annual meeting held after each annual meeting
of the shareholders.  The Board then, or from time to time, may also elect or
appoint one or more of the other prescribed officers or any other officers as
it shall deem advisable, but need not elect or appoint any officers other
than a president and a secretary.  The Board may, if it desires, further
identify or describe any one or more of such officers.

     The officers of the corporation need not be members of the Board of
Directors.  Any two or more offices may be held by the same person, except
the office of president and secretary.

     An officer shall be deemed qualified when he enters upon the duties of
the office to which he has been elected or appointed and furnishes any bond
required by the Board; but the Board may also require of such person his
written acceptance and promise faithfully to discharge the duties of such
office.

     SECTION 2 - TERM OF OFFICE.  Each officer of the corporation shall hold
his office at the pleasure of the Board of Directors or for such other period
as the Board may specify at the time of his election or appointment or until
his death, resignation or removal by the Board, whichever first occurs.  In
any event, the term of office of each officer of the corporation holding his
office at the pleasure of the Board shall terminate at the annual meeting of
the Board next succeeding his election or appointment and at which any
officer of the corporation is elected or appointed, unless the Board provides
otherwise at the time of his election or appointment.

     SECTION 3 - REMOVAL.  Any officer or agent elected or appointed by the
Board of Directors, and any employee, may be removed or discharged by the
Board whenever in its judgment the best interests of the corporation would be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.


                                       -6-




     SECTION 4 - SALARIES AND COMPENSATION.  Salaries and compensation of all
elected or appointed officers and of all employees of the corporation shall
be fixed, increased or decreased by the Board of Directors, but this power
(except as to the salary or compensation of the chairman of the board and the
president) may, unless prohibited by law, be delegated by the Board to the
chairman of the board, the president, a committee or such other officer or
officers as the Board may find convenient to so empower.

     SECTION 5 - DELEGATION OF AUTHORITY TO HIRE, DISCHARGE AND DESIGNATE
DUTIES.  The Board may, from time to time, delegate to the chairman of the
board, the president or other officer or executive employees of the
corporation, authority to hire, discharge and fix and modify the duties,
salary or other compensation of employees of the corporation under their
jurisdiction, and the Board may delegate to such officer or executive
employee similar authority with respect to obtaining and retaining for the
corporation the services of attorneys, accountants and other experts.

     SECTION 6 - THE CHAIRMAN OF THE BOARD.  If a chairman of the board be
elected or appointed, he shall, except as otherwise provided for in these
Bylaws, preside at all meetings of the directors at which he may be present
and shall have such other duties, powers and authority as may be prescribed
elsewhere in these Bylaws.  The Board of Directors may delegate such other
authority and assign such additional duties to the chairman of the board,
other than those conferred by law exclusively upon the president as it may
from time to time determine, and, to the extent permissible by law, the Board
may designate the chairman of the board as the chief executive officer of the
corporation under these Bylaws, or it may, from time to time, divide the
responsibilities, duties and authority for the general control and management
of the corporation's business and affairs between the chairman of the board
and the president.

     SECTION 7 - THE PRESIDENT.  Unless the Board otherwise provides, the
president shall be the chief executive officer of the corporation with such
general executive powers and duties of supervision and management as are
usually vested in the office of the chief executive officer of a corporation
and he shall carry into effect all directions and resolutions of the Board.
Except as otherwise provided for in these Bylaws, the president shall preside
at all meetings of the shareholders.  In the absence of the chairman of the
board, or if there be no chairman of the board, the president also shall
preside at all meetings of the Board of Directors.

     The president may execute all bonds, notes, debentures, mortgages, and
other contracts requiring a seal, under the seal of the corporation, and may
cause the seal to be affixed thereto, and may also execute any and all other
instruments for and in the name of the corporation.

     Unless the Board otherwise provides, the president, or any person
designated in writing by him, may (i) attend meetings of shareholders of
other corporations to represent this corporation thereat and to vote or take
action with respect to the shares of any such corporation owned by this
corporation in such manner as he or his designee may determine, and (ii)
execute and deliver waivers of notice and proxies for and in the name of the
corporation with respect to any such shares owned by this corporation.


                                       -7-




     He shall, unless the Board otherwise provides, be ex officio a member of
all standing committees.

     If a chairman of the board be elected or appointed and designated as the
chief executive officer of the corporation, as provided in these Bylaws, the
president shall perform such duties as may be specifically delegated to him
by the Board of Directors and as are conferred by law exclusively upon him,
and in the absence, disability or inability to act of the chairman of the
board, the president shall perform the duties and exercise the powers of the
chairman of the board.

     SECTION 8 - VICE PRESIDENTS.  The vice presidents in the order of their
seniority, as determined by the Board, shall, in the absence, disability or
inability to act of the president, perform the duties and exercise the powers
of the president, and shall perform such other duties as the Board of
Directors shall from time to time prescribe.

     SECTION 9 - THE SECRETARY AND ASSISTANT SECRETARIES.  The secretary
shall attend all meetings of the shareholders, and shall record or cause to
be recorded all votes taken and the minutes of all proceedings in a minute
book of the corporation to be kept for that purpose.  He shall perform like
duties for the executive and other standing committees when requested by the
Board or any such committee to do so.

     He shall see that all books, records, lists and information, or
duplicates required to be maintained at the principal office for the
transaction of the business of the corporation in Missouri, or elsewhere, are
so maintained.

     He shall keep in safe custody the seal of the corporation, and when duly
authorized to do so, shall affix the same to any instrument requiring it, and
when so affixed, he shall attest the same by his signature.

     He shall perform such other duties and have such other authority as may
be prescribed elsewhere in these Bylaws or from time to time by the Board of
Directors or the chief executive officer of the corporation, under whose
direct supervision he shall be.

     He shall have the general duties, powers and responsibilities of a
secretary of the corporation.

     Any assistant secretary, in the absence, disability or inability to act
of the secretary, may perform the duties and exercise the powers of the
secretary, and shall perform such other duties and have such other authority
as the Board of Directors may, from time to time, prescribe.

     SECTION 10 - THE TREASURER AND ASSISTANT TREASURERS.  The treasurer
shall have responsibility for the safekeeping of the funds and securities of
the corporation, shall keep or cause response to be kept full and accurate
accounts of receipts and disbursements in books belonging to the corporation
and shall keep, or cause to be kept, all other books of account and
accounting records of the corporation.  He shall deposit or cause to be
deposited all moneys and other valuable effects in the name and to the credit
of the corporation in such depositories as may


                                       -8-




be designated by the board of directors or by any officers of the corporation
to whom such authority has been granted by the Board of Directors,

     He shall disburse, or permit to be disbursed, the funds of the
corporation as may be ordered, or authorized generally, by the Board, and
shall render to the chief executive officer of the corporation and the
directors whenever they may require it, an account of all his transactions as
treasurer and of those under his jurisdiction, and of the financial condition
of the corporation.

     He shall perform such other duties and shall have such other
responsibility and authority as may be prescribed elsewhere in these Bylaws
or from time to time by the Board of Directors.

     He shall have the general duties, powers and responsibility of a
treasurer of a corporation, and shall, unless otherwise provided by the
Board, be the chief financial and accounting officer of the corporation.

     Any assistant treasurer, in the absence, disability or inability to act
of the treasurer, may perform the duties and exercise the powers of the
treasurer, and shall perform such other duties and have such other authority
as the Board of Directors may, from time to time, prescribe.

     SECTION 11 - DUTIES OF OFFICERS MAY BE DELEGATED.  If any officer of the
corporation be absent or unable to act, or for any other reason that the
Board may deem sufficient, the Board may delegate, for the time being, some
or all of the functions, duties, powers and responsibilities of any officer
to any other officer, or to any other agent or employee of the corporation or
other responsible person, provided a majority of the whole Board of Directors
concurs therein.

                                  ARTICLE IV

                        INDEMNIFICATION AND LIABILITY OF
                        DIRECTORS, OFFICERS AND EMPLOYEES

     SECTION 1 - INDEMNIFICATION.  A. Each person who is or was a director,
officer or employee of the corporation or is or was serving at the request of
the corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person) shall be indemnified by
the corporation as of right to the full extent permitted or authorized by the
laws of the State of Missouri, as now in effect and as hereafter amended,
against any liability, judgment fine, amount paid in settlement, cost and
expense (including attorneys' fees) asserted or threatened against and
incurred by such person in his capacity as or arising out of his status as a
director, officer, or employee of the corporation or, if serving at the
request of the corporation, as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise.  The
indemnification provided by this Bylaw provision shall not be exclusive of
any other rights to which those indemnified may be entitled under any other
bylaw or under any agreement, vote of shareholders or disinterested directors
or otherwise, and shall not limit in any way any right which the corporation
may have to make different or further indemnifications with respect to the
same or different persons or classes of persons.


                                       -9-




          B. Without limiting the foregoing, the corporation is authorized to
enter into an agreement with any person who is a director, officer or
employee of the corporation, or is serving at the request of the corporation
as a non-employee director of another corporation, partnership, joint
venture, trust or other enterprise, providing indemnification for such person
against expenses, including attorneys' fees, judgments, fines and amounts
paid in settlement that result from any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including any action by or in the right of the corporation,
that arises by reason of the fact that such person is or was a director,
officer or employee of the corporation, or, if not a director, officer or
employee of the corporation, is or was serving at the request of the
corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, or as a non-employee
director of another corporation, partnership, joint venture, trust or other
enterprise, to the full extent allowed by law, whether or not such
indemnification would otherwise be provided for in this Bylaw, except that no
such agreement shall indemnify any person from or on account of such person's
conduct which was finally adjudged to have been knowingly fraudulent
deliberately dishonest or willful misconduct.

          C. For the purposes of Section 1B of Article IV, any person who is
a director, officer or employee of the corporation who shall serve as a
director, officer or employee of another corporation, partnership joint
venture, trust or other enterprise, more than 50% of the voting stock of
which is owned by the corporation, and any other person who shall serve as a
non-employee director of, another corporation, partnership, joint venture,
trust or other enterprise, more than 50% of the voting of stock of which is
owned by the corporation, shall be deemed to be serving in such capacity at
the request of the corporation, unless the Board of Directors of the
corporation shall determine otherwise.  In all other instances where any
person shall serve as a director or officer of another corporation, joint
venture, trust or other enterprise of which the corporation is or was a
shareholder or creditor, or in which it is or was otherwise interested, if it
is not otherwise established that such person is or was serving as such
director or officer at the request of the corporation, the Board of Directors
of the corporation may determine whether such service is or was at the
request of the corporation, and it shall not be necessary to show any actual
or prior request for such service.  A person is a "non-employee director" of
a corporation, partnership, joint venture, trust or other enterprise if he or
she is a director, but not an employee of such corporation, partnership,
joint venture, trust or other enterprise.

     SECTION 2 - INSURANCE.  The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer or
employee of the corporation, or is or was serving at the request of the
corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of these Bylaws.

     SECTION 3 - LIABILITY.  No person shall be liable to the corporation for
any loss, damage, liability or expense suffered by it on account of any
action taken or omitted to be taken by him as a director, officer or employee
of the corporation or of any other corporation which he serves as a director,
officer or employee at the request of the corporation, if such person (i)
exercised the


                                       -10-




same degree of care and skill as a prudent man would have exercised under the
circumstances in the conduct of his own affairs, or (ii) took or omitted to
take such action in reliance upon advice of counsel for the corporation, or
for such other corporation, or upon statements made or information furnished
by directors, officers, employees, or agents of the corporation, or of such
other corporation which he had no reasonable grounds to disbelieve.


                                       ARTICLE V

                                     CAPITAL STOCK

     SECTION 1 - ISSUANCE OF CERTIFICATES.  Shares of the capital stock of
the corporation may be represented by entry on the stock record or transfer
books of the corporation and need not be represented by certificates.  When
shares of stock of the corporation are represented by certificates, such
certificates shall be numbered, shall be in such form as may be prescribed by
the Board of Directors in conformity with law, and shall be entered in the
stock books of the corporation as they are issued.  Such entries shall show
the name and address of the person, firm, partnership, corporation or
association to whom each certificate is issued.  Each certificate shall have
printed, typed or written thereon the name of the person, firm, partnership,
corporation or association to whom it is issued and the number of shares
represented thereby.  It shall be signed by at least one of either the
Chairman of the Board, the President or a Vice President and also by one of
either the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the corporation, and shall be sealed with the seal of
the corporation, which seal may be facsimile, engraved or printed.  If the
corporation has a transfer agent or a transfer clerk who signs such
certificates, the signatures of the Chairman of the Board or any of the
officers above mentioned may be facsimile, engraved or printed.  In case the
Chairman of the Board or any officer who has signed or whose facsimile
signature has been placed upon any such certificate shall have ceased to hold
the position or office specified on the certificate before such certificate
is issued, such certificate may nevertheless be issued by the corporation
with the same effect as if the individual held the position or office at the
date of its issue.

     SECTION 2 - TRANSFERS OF SHARES - TRANSFER AGENT  - REGISTRAR.  Transfers
of shares of stock shall be made on the stock record or transfer books of the
corporation only by the person named in the stock certificate, or by his
attorney lawfully constituted in writing, and upon surrender of the
certificate therefor.  The stock record book and other transfer records shall
be in the possession of the secretary or of a transfer agent or transfer
clerk for the corporation.  The corporation, by resolution of the Board, may
from time to time, appoint a transfer agent or transfer clerk, and, if
desired, a registrar, under such arrangements and upon such terms and
conditions as the Board deems advisable, but until and unless the Board
appoints some other person, firm or corporation as its transfer agent or
transfer clerk (and upon the revocation of any such appointment, thereafter
until a new appointment is similarly made), the secretary of the corporation
shall be the transfer agent or transfer clerk of the corporation without the
necessity of any formal action of the Board, and the secretary, or any person
designated by him, shall perform all of the duties thereof.

     SECTION 3 - LOST CERTIFICATES.  In case of the loss or destruction of
any certificate for shares of stock of the corporation, another may be issued
in its place upon proof of such loss or


                                       -11-




destruction and upon the giving of a satisfactory bond of indemnity to the
corporation and the transfer agent and registrar of such stock, if any, in
such sum as the Board of Directors may provide; provided, however, that a new
certificate may be issued without requiring a bond when, in the judgment of
the Board, it is proper so to do.

     SECTION 4 - REGULATIONS.  The Board of Directors shall have power and
authority to make all such rules and regulations as it may deem expedient
concerning the issue, transfer, conversion and registration of and all other
rights pertaining to certificates for shares of stock of the corporation, not
inconsistent with the laws of Missouri, the Articles of Incorporation or
these Bylaws.

                                      ARTICLE VI

                       ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS
                               AND SHAREHOLDER PROPOSALS

     SECTION 1 - WHO MAY NOMINATE.  Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors of the corporation at any meeting of shareholders at which
directors are to be elected.  Nominations of persons for election to the
Board of Directors may be made at any such meeting of shareholders (i) by or
at the direction of the Board of Director (or any duly authorized committee
thereof) or (ii) by any shareholder of record of the corporation who would be
entitled to vote in the election of directors at such meeting held on the
date of such shareholder's nomination and who complies with the notice
procedures set forth in Section 2. If such shareholder ceases to be a
shareholder entitled to vote for elections of directors prior to the record
date for the meeting at which the nomination would arise, the nomination
shall be deemed to be withdrawn.

     SECTION 2 - SHAREHOLDER NOMINATIONS.  If a shareholder proposes to
nominate one or more candidates for election as directors at a meeting of
shareholders at which directors are to be elected, the shareholder must give
timely notice thereof in proper written form to the Secretary of the
corporation, in addition to complying with any other applicable requirements.
To be timely, the shareholder's notice must be delivered to the Secretary at
the principal executive offices of the corporation not less than ninety days
prior to the date scheduled for such meeting; provided, however, that if
notice or public announcement of the scheduled date of the meeting is not
given or made at least one hundred (100) days prior to the date scheduled for
the meeting, such shareholder's notice must be so delivered to the Secretary
not more than ten (10) days following the day on which such notice of meeting
was mailed or such public announcement was made, whichever is earlier.  In no
event shall the postponement, deferral or adjournment of a shareholders'
meeting commence a new time period for the giving of notice by a shareholder
as described above.  For purposes of this Section, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

     To be in proper written form, a shareholder's notice to the Secretary
must set forth (i) as to each person whom the shareholder proposes to
nominate for election as a director (A) the


                                       -12-




name, age, business address and residence address of the person, (B) the
principal occupation or employment of the person, (C) the class and number of
shares of capital stock of the corporation that are owned beneficially and
owned of record by the person and (D) any other information concerning the
person that would be required to be disclosed in a proxy statement or other
filings in connection with the solicitation of proxies for the election of
such person as a director under Section 14 of the Securities Exchange Act of
1934, as amended from time to time (the "Exchange Act"), and the rules and
regulations promulgated thereunder; and (ii) as to the shareholder giving
the notice (A) the name and address, as they appear on the corporation's
books, of such shareholder, (B) the name and address of the beneficial owner,
if any, on whose behalf the nomination(s) are made, (C) the class and number
of shares of capital stock of the corporation that are owned beneficially and
owned of record by such shareholder and any such beneficial owner, (D) a
description of all arrangements or understandings between such shareholder or
beneficial owner and each proposed nominee or any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such shareholder and (E) any other information relating to such shareholder
or beneficial owner that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with
solicitations of proxies for the election of directors pursuant to Section 14
of the Exchange Act and the rules and regulations promulgated thereunder.
Such notice must be accompanied by a written consent of each proposed nominee
to being named as a nominee and to serve as a director if elected.

     SECTION 3 - SHAREHOLDER PROPOSALS.  If a shareholder proposes to bring
business before an annual meeting of shareholders, the shareholder must give
timely notice thereof in proper written form to the Secretary of the
corporation, in addition to complying with any other applicable requirements.
To be timely, a shareholder's notice must be delivered to the Secretary at
the principal executive offices of the corporation within the period
specified in Section 2 of this Article.  In no event shall the postponement,
deferral or adjournment of a shareholders' meeting commence a new time period
for the giving of notice by a shareholder.

     To be in proper written form, a shareholder's notice to the Secretary
must set forth (i) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and address, as they appear on the
corporation's books, of such shareholder, (iii) the name and address of the
beneficial owner, if any, on whose behalf of proposal is made, (iv) the class
and number of shares of capital stock of the corporation that are owned
beneficially and owned of record by such shareholder and any such beneficial
owner, (v) a description of all arrangements or understandings between such
shareholder or beneficial owner and any other person or persons (including
their names) in connection with the proposal of such business by such
shareholder, (vi) a description of any material financial or other interest
of such shareholder or beneficial owner in such proposal and (vii) any other
information that would be required to be disclosed in a proxy statement
soliciting proxies for approval of the proposal pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder.

     SECTION 4 - ADDITIONAL INFORMATION.  The Board of Directors, or a
designated committee thereof, may reject any shareholder's nomination or
shareholder's proposal which is not timely made in accordance with the
provisions of this Article VI.  If the Board of Directors, or a


                                       -13-




designated committee thereof, determines that the information provided in a
shareholder's notice does not comply with the requirements of this Article VI
in any material respect, the Secretary of the corporation shall notify the
shareholder of the deficiency.  The shareholder shall have an opportunity to
cure the deficiency by providing additional information to the Secretary
within five (5) days from the date such deficiency notice is given to the
shareholder, or such shorter time as may reasonably be deemed appropriate by
the Board or committee.  If the deficiency is not cured within such period,
or if the Board of Directors or such committee determines that the additional
information provided by the shareholder, together with the information
previously provided, does not satisfy the requirements of this Article VI in
any material respect, then the Board of Directors or committee may reject
such shareholder's notice.

     SECTION 5 - DETERMINATIONS.  Notwithstanding the procedures set forth in
Section 4 of this Article hereof, if the Board of Directors or any committee
thereof does not make a determination as to whether a shareholder's notice
complies with the provisions of this Article VI, the presiding officer of the
meeting shall make the determination and declare at the meeting whether the
shareholder has so complied.  If the presiding officer determines that the
shareholder has not so complied, then unless the presiding officer in his or
her sole and absolute discretion waives such noncompliance, the presiding
officer shall declare at the meeting that the shareholder's nomination or
proposal was not properly made and the defective nomination or shareholder
proposal shall be disregarded.

                                      ARTICLE VII

                                        GENERAL

     SECTION 1 - FIXING OF CAPITAL - TRANSFERS OF SURPLUS.  Except as may be
specifically otherwise provided in the Articles of Incorporation, the Board
of Directors is expressly empowered to exercise all authority conferred upon
it or the corporation by any law or statute, and in conformity therewith,
relative to:

     1.  the determination of what part of the consideration received for
         shares of the corporation shall be stated capital;

     2.  increasing stated capital;

     3.  transferring surplus to stated capital;

     4.  the consideration to be received by the corporation for its shares;
         and

     5.  all similar or related matters

provided that any concurrent action or consent by or of the corporation and
its shareholders required to be taken or given pursuant to law, shall be duly
taken or given in connection therewith.


                                       -14-




     SECTION 2 - DIVIDENDS.  Dividends upon the outstanding shares of the
corporation, subject to the provisions of the Articles of Incorporation and
of any applicable law, may be declared by the Board of Directors at any
meeting.  Dividends may be paid in cash, in property, or in shares of the
corporations stock.

     Liquidating dividends or dividends representing a distribution of
paid-in surplus or a return of capital shall be made only when and in the
manner permitted by law.

     SECTION 3 - CHECKS.  All checks and similar instruments for the payment
of money shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.  If no
such designation is made, and unless and until the Board otherwise provides,
the president and secretary or the president and treasurer, shall have power
to sign all such instruments for, in behalf and in the name of the
corporation which are executed or made in the ordinary course of the
corporation's business.

     SECTION 4 - RECORDS.  The corporation shall cause to be maintained
either at its principal place of business or at the offices of a duly
appointed stock transfer agent and registrar, books in which shall be
recorded the number of its shares subscribed, the names of the owners of its
shares, the numbers owned of record by them, respectively, the amount of
shares paid, and by whom, and the transfer of said shares with the date of
transfer.  The corporation shall also keep at its principal place of business
records indicating the amount of its assets and liabilities and the names and
places of residence of its officers, and from time to time such other or
additional records, statements, lists and information as may be required by
law, including shareholders' lists.

     SECTION 5 - INSPECTION OF RECORDS.  A shareholder, if he be entitled and
demands to inspect the records of the corporation pursuant to any statutory
or other legal right, shall be privileged to inspect such records only during
the usual and customary hours of business and in such manner as will not
unduly interfere with the regular conduct of the business of the corporation.
A shareholder may delegate his right of inspection to a certified public
accountant on the condition, to be enforced at the option of the corporation,
that the shareholder and accountant agree with the corporation to furnish to
the corporation promptly a true and correct copy of each report with respect
to such inspection made by such accountant.  No shareholder shall use, permit
to be used or acquiesce in the use by others of any information so obtained
to the competitive detriment of the corporation, nor shall he furnish or
permit to be furnished any information so obtained to any competitor or
prospective competitor of the corporation.  The corporation, as a condition
precedent to any shareholder's inspection of the records of the corporation,
may require the shareholder to indemnify the corporation, in such manner and
for such amount as may be determined by the Board of Directors, against any
loss or damage which may be suffered by it arising out of or resulting from
any unauthorized disclosure made or permitted to be made by such shareholder
of information obtained in the course of such inspection.

     SECTION 6 - CORPORATE SEAL.  The corporate seal shall have inscribed
thereon the name of the corporation and the words: Corporate Seal - Missouri.
Said seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any manner reproduced.


                                       -15-




     SECTION 7 - AMENDMENTS.  The Bylaws of the corporation may, from time to
time, be suspended, repealed, amended or altered, or new Bylaws may be
adopted, in the manner provided in the Articles of Incorporation.

                                      - 16-

EX-27

 


<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE THIRD
QUARTER 1999 REPORT ON FORM 10-Q FOR LABONE, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<CIK> 0000830158
<NAME> LABONE, INC.

                             
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-END>                               SEP-30-1999
<CASH>                                       1,558,600
<SECURITIES>                                         0
<RECEIVABLES>                               23,298,098
<ALLOWANCES>                                 2,248,798
<INVENTORY>                                  1,089,586
<CURRENT-ASSETS>                            31,062,358
<PP&E>                                      79,063,255
<DEPRECIATION>                              36,788,684
<TOTAL-ASSETS>                             109,421,015
<CURRENT-LIABILITIES>                       11,599,508
<BONDS>                                     25,241,954
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                       130,500
<OTHER-SE>                                  72,434,412
<TOTAL-LIABILITY-AND-EQUITY>               109,421,015
<SALES>                                              0
<TOTAL-REVENUES>                            84,714,563
<CGS>                                                0
<TOTAL-COSTS>                               49,757,514
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                             1,984,329
<INTEREST-EXPENSE>                             947,528
<INCOME-PRETAX>                              5,707,111
<INCOME-TAX>                                 2,624,933
<INCOME-CONTINUING>                          2,315,803
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 2,315,803
<EPS-BASIC>                                       0.23
<EPS-DILUTED>                                     0.23