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                                  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 THE QUARTERLY PERIOD ENDED AUGUST 31, 1999
                       COMMISSION FILE NUMBER 33-80770-01




                       SIGNAL INVESTMENT & MANAGEMENT CO.
                             A DELAWARE CORPORATION
                  I.R.S. EMPLOYER IDENTIFICATION NO. 62-1290284
                      1105 NORTH MARKET STREET, SUITE 1300
                           WILMINGTON, DELAWARE 19890
                             TELEPHONE: 302-656-3950







THIS REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1) (a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.

REGISTRANT 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, AND HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.

AS OF OCTOBER 15, 1999, 250 SHARES OF THE COMPANY'S COMMON STOCK, WITHOUT PAR
VALUE, WERE OUTSTANDING.

                                       1

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                       SIGNAL INVESTMENT & MANAGEMENT CO.

                                      INDEX

<TABLE>
<CAPTION>



                                                                                               PAGE NO.
                                                                                               --------
<S>                                                                                            <C>
PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements

    Balance Sheets as of August 31, 1999
      and November 30, 1998 ................................................................    3

    Statements of Income for the Three and Nine Months
      Ended August 31, 1999 and 1998 .......................................................    4

    Statements of Cash Flows for the Nine Months Ended
      August 31, 1999 and 1998 .............................................................    5

    Notes to Financial Statements...........................................................    6

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

PART II.  OTHER INFORMATION

  Item 6.  Exhibits and Reports on Form 8-K.................................................    9

SIGNATURES .................................................................................   10

EXHIBIT 27 - Financial Data Schedule

</TABLE>

                                       2

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                          PART 1. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                       SIGNAL INVESTMENT & MANAGEMENT CO.

                                 BALANCE SHEETS
                   (In thousands, except for number of shares)

<TABLE>
<CAPTION>


                                                                   AUGUST 31,            NOVEMBER 30,
                                                                     1999                   1998
                                                                  ----------             ----------
                                 ASSETS                           (Unaudited)
<S>                                                               <C>                    <C>
Current Assets:
  Cash and cash equivalents..................................     $       25             $       11
  Available-for-sale security - at market value..............             --                    415
  Royalties receivable from Chattem, Inc.....................          3,607                  2,669
                                                                  ----------             ----------
       Total current assets..................................          3,632                  3,095

Trademarks and Other Purchased Product Rights, Net.........          352,694                267,817
                                                                  ----------             ----------
           TOTAL ASSETS......................................     $  356,326             $  270,912
                                                                  ----------             ----------
                                                                  ----------             ----------
                  LIABILITIES AND STOCKHOLDER'S EQUITY

Liabilities:
  Payable to Chattem, Inc....................................     $  348,550             $  262,330
  Deferred income taxes......................................          5,741                  5,741
  Other......................................................             --                     20
                                                                  ----------             ----------
      Total liabilities......................................        354,291                268,091
                                                                  ----------             ----------

Stockholder's Equity:
  Common shares, without par value, 500 shares authorized,
      250 shares issued and outstanding......................              2                      2
  Retained earnings..........................................          2,033                  2,819
                                                                  ----------             ----------
      Total stockholder's equity.............................          2,035                  2,821
                                                                  ----------             ----------

            TOTAL LIABILITIES AND STOCKHOLDER'S
              EQUITY.........................................     $  356,326             $  270,912
                                                                  ----------             ----------
                                                                  ----------             ----------

</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       3

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                       SIGNAL INVESTMENT & MANAGEMENT CO.

                              STATEMENTS OF INCOME
                 (Unaudited and in thousands, except share data)

<TABLE>
<CAPTION>

                                                              FOR THE THREE MONTHS             FOR THE NINE MONTHS
                                                                ENDED AUGUST 31,                 ENDED AUGUST 31,
                                                       -------------------------------     ----------------------------
                                                            1999               1998             1999             1998
                                                       ---------          ---------        ---------        -----------
<S>                                                    <C>                <C>              <C>              <C>
REVENUES AND GAIN:
  Royalties from Chattem, Inc. ......                  $   3,620          $   2,932        $  10,422        $     7,222
  Investment income .................                          2                  1                3                  2
  Gain on sale of trademarks
   and other product rights .........                         --                (75)              --             10,328
                                                       ---------          ---------        ---------        -----------
       Total revenues and gain ......                      3,622              2,858           10,425             17,552
                                                       ---------          ---------        ---------        -----------

EXPENSES AND LOSS:
  Amortization of trademarks
   and other product rights .........                      2,419              1,813            7,063              3,989
  General and administrative ........                         --                  5               --                 18
  Loss on sale of investment ........                         --                 --                8                 --
                                                       ---------          ---------        ---------        -----------
       Total expenses and loss ......                      2,419              1,818            7,071              4,007
                                                       ---------          ---------        ---------        -----------
INCOME BEFORE
 PROVISION FOR INCOME
  TAXES .............................                      1,203              1,040            3,354             13,545


PROVISION FOR INCOME
 TAXES ..............................                        409                380            1,140              4,880
                                                       ---------          ---------        ---------        -----------
NET INCOME ..........................                  $     794          $     660        $   2,214        $     8,665
                                                       ---------          ---------        ---------        -----------
                                                       ---------          ---------        ---------        -----------
OUTSTANDING COMMON
 SHARES .............................                        250                250              250                250
                                                       ---------          ---------        ---------        -----------
NET INCOME PER
 COMMON SHARE .......................                  $   3,176          $   2,640        $   8,856        $    34,660
                                                       ---------          ---------        ---------        -----------
                                                       ---------          ---------        ---------        -----------
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                       4

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                       SIGNAL INVESTMENT & MANAGEMENT CO.

                            STATEMENTS OF CASH FLOWS
                          (Unaudited and in thousands)

<TABLE>
<CAPTION>

                                                                                 FOR THE NINE MONTHS ENDED
                                                                                       AUGUST 31,
                                                                             -----------------------------
                                                                                1999                  1998
                                                                             --------            ---------
<S>                                                                          <C>                 <C>
OPERATING ACTIVITIES:
  Net income ..............................................................  $  2,214            $   8,665
  Adjustments to reconcile net income to net cash
     provided by operating activities:
      Amortization ........................................................     7,063                3,989
      Income tax provision ................................................     1,140                4,880
      Gain on sale of trademarks and other product rights..................        --              (10,328)
      Loss on sale of investment ..........................................         8                   --
      Changes in operating assets and liabilities:
         Increase in royalties receivable from
          Chattem, Inc.....................................................      (938)              (1,396)
                                                                             --------            ---------
            Net cash provided by operating activities......................     9,487                5,810
                                                                             --------            ---------

INVESTING ACTIVITIES:
   Purchase of investment..................................................        --                 (395)
   Proceeds from sale of investment........................................       387                   --
                                                                             --------            ---------
            Net cash provided by (used in) investing activities............       387                 (395)
                                                                             --------            ---------

FINANCING ACTIVITIES:
   Payments to Chattem, Inc................................................    (6,860)              (2,248)
   Dividends paid to Chattem, Inc..........................................    (3,000)              (3,000)
                                                                             --------            ---------
            Net cash used in financing activities..........................    (9,860)              (5,248)
                                                                             --------            ---------

CASH AND CASH EQUIVALENTS:
   Increase for the period.................................................        14                  167
   At beginning of period..................................................        11                   55
                                                                             --------            ---------
   At end of period........................................................  $     25            $     222
                                                                             --------            ---------
                                                                             --------            ---------
SUPPLEMENTAL SCHEDULE OF NON-CASH
  TRANSACTIONS:
   INCREASE (DECREASE) IN PAYABLE TO CHATTEM, INC. IN
   CONNECTION WITH-
     Purchase of trademarks and other product rights.......................  $ 91,940            $ 171,724
     Provision for income taxes............................................  $  1,140            $   4,880
     Gain on sale of trademarks and other product rights...................  $     --            $ (10,328)

DIVIDENDS PER SHARE .......................................................  $     12            $      12
                                                                             --------            ---------
                                                                             --------            ---------

</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       5

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                       SIGNAL INVESTMENT & MANAGEMENT CO.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1.   The Company is a wholly-owned subsidiary of Chattem, Inc. ("Chattem") and
     is included in Chattem's consolidated financial statements and tax returns.

2.   The accompanying unaudited financial statements have been prepared in
     accordance with generally accepted accounting principles for interim
     financial information and the instructions to Form 10-Q and Rule 10-01 of
     Regulation S-X. Accordingly, they do not include all of the information and
     footnotes required by generally accepted accounting principles for complete
     financial statements. These financial statements should be read in
     conjunction with the audited financial statements and related notes thereto
     included in the Company's Form 10-K for the year ended November 30, 1998
     and with the audited consolidated financial statements and related notes
     thereto included in Chattem's Annual Report to Shareholders for the year
     ended November 30, 1998. The accompanying unaudited financial statements,
     in the opinion of management, include all adjustments necessary for a fair
     presentation. All such adjustments are of a normal recurring nature.

3.   The results of operations for the interim periods presented are not
     necessarily indicative of the results to be expected for the respective
     full years.

4.   The Company had no outstanding debt as the primary obligor as of the
     periods presented and therefore incurred no interest expense. See notes 8,
     9 and 10 below for certain of the indebtedness of Chattem guaranteed by the
     Company.

5.   A summary analysis of the activity between the Company and Chattem is as
     follows:

<TABLE>

<S>                                                       <C>
      Payable balance - November 30, 1998 ..............  $  262,330,000
              Repayments ...............................      (6,860,000)
              Income tax provision .....................       1,140,000
              Purchase of trademarks and other
               product rights ..........................      91,940,000
                                                          --------------
      Payable balance - August 31, 1999 ................  $  348,550,000
                                                          --------------
                                                          --------------

</TABLE>

     The weighted average balance due Chattem during the nine months ended
     August 31, 1999 was $328,249,000.

6.   The Company is a wholly-owned subsidiary of Chattem which provides the
     Company with the use of all of its information technology ("IT") systems.
     Chattem has replaced most of its current IT systems which are approximately
     20 years old; consequently, the new IT system will be year 2000 compliant.
     As a result, the year 2000 compliance requirements are considered only a
     portion of Chattem's systems replacement effort. This replacement is
     substantially complete. The total cost to Chattem will be approximately
     $3,000,000. Such costs are being capitalized as incurred.

                                       6

<PAGE>

     Chattem is also reviewing the possible impact of the year 2000 problem on
     its customers and suppliers and has requested and received from a majority
     of its principal customers and suppliers written statements regarding their
     knowledge of and plans for meeting the year 2000 compliance requirements.

     The Company's business could be adversely affected should Chattem or other
     entities with which Chattem does business be unsuccessful in completing
     critical modifications in a timely manner.

7.   On December 21, 1998 the Company and Chattem acquired the DEXATRIM,
     SPORTSCREME, ASPERCREME, CAPZASIN-P, CAPZASIN-HP and ARTHRITIS HOT brands
     from Thompson Medical Company, Inc. (the "Thompson Medical brands") for
     $95,000,000. The purchase price consisted of $90,000,000 cash and 125,500
     shares of Chattem's common stock. The cash portion of the purchase price
     was financed with a new senior credit facility.

8.   On December 21, 1998, Chattem, with the Company as guarantor, refinanced
     its existing credit facilities with $165,000,000 in senior secured credit
     facilities (the "Credit Facilities"). The Credit Facilities were provided
     by a syndicate of commercial banks. The Credit Facilities include a
     $50,000,000 revolving credit facility and a $115,000,000 term loan. The
     Credit Facilities were used to refinance existing senior debt, to finance
     the acquisition of the Thompson Medical brands and related fees and
     expenses and to finance working capital and other general corporate needs.
     The $50,000,000 revolving credit facility matures on the earlier of (i)
     December 21, 2003 and (ii) the date on which the term loan is repaid in
     full. The $115,000,000 term loan matures on December 21, 2003. The Credit
     Facilities contain covenants, representations, warranties and other
     agreements by Chattem that are customary in loan agreements and securities
     instruments relating to financing of this type.

9.   On May 7, 1999 Chattem, with the Company as guarantor, issued an additional
     $75,000,000 of 8.875% (priced to yield 8.8125%) senior subordinated notes
     under its indenture relating to the issuance of its $200,000,000 of 8.875%
     notes on March 24, 1998. The additional notes mature on April 1, 2008 and
     were issued under Chattem's $250,000,000 shelf registration statement filed
     on December 21, 1998 with the Securities and Exchange Commission. The
     proceeds from the issuance of the additional notes were used to retire
     $41,500,000 of the then outstanding balance of Chattem's $115,000,000 term
     bank loan and the outstanding balance of $25,500,000 of its revolving bank
     loan under the Credit Facilities.

     Concurrent with the closing of the $75,000,000 note issue, Chattem amended
     its Credit Facilities. The amended Facilities, provided by a syndicate of
     banks, consists of a $70,000,000 term loan and a $50,000,000 revolving
     credit facility. The revolving credit facility and the term loan both
     mature on December 21, 2003. The amended Credit Facilities contain
     covenants, representations, warranties and other agreements by Chattem that
     are customary in loan agreements relating to financing of this type. At
     August 31, 1999 the outstanding balances of the term loan and the revolving
     credit facility were $61,000,000 and $0, respectively.

10.  For the nine months ended August 31, 1999, Chattem retired $11,750,000 face
     amount of its 12.75% Senior Subordinated Notes, due 2004, for which notes
     the Company is guarantor. The remaining principal amount outstanding is
     $37,901,000. For the three months ended August 31, 1999, Chattem prepaid
     $7,000,000 of its term loan.

                                       7

<PAGE>

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

GENERAL

On December 21, 1998 the Company and Chattem acquired the DEXATRIM, SPORTSCREME,
ASPERCREME, CAPZASIN-P, CAPZASIN-HP and ARTHRITIS HOT brands from Thompson
Medical Company, Inc. for $95,000,000. The purchase price consisted of
$90,000,000 cash and 125,500 shares of Chattem's common stock. The cash portion
of the purchase price was financed with a new senior credit facility.

On May 7, 1999 Chattem, with the Company as guarantor, issued an additional
$75,000,000 of 8.875% (priced to yield 8.8125%) senior subordinated notes under
its indenture relating to the issuance of its $200,000,000 of 8.875% notes on
March 24, 1998. The additional notes mature on April 1, 2008 and were issued
under Chattem's $250,000,000 shelf registration statement filed on December 21,
1998 with the Securities and Exchange Commission. The proceeds from the issuance
of the additional notes were used to retire $41,500,000 of the then outstanding
balance of Chattem's $115,000,000 term bank loan and the outstanding balance of
$25,500,000 of its revolving bank loan dated December 21, 1998.

Concurrent with the closing of the $75,000,000 note issue, Chattem amended its
senior credit facility. The amended facility, provided by a syndicate of banks,
consists of a $70,000,000 term loan and a $50,000,000 revolving credit facility.
The revolving credit facility and the term loan both mature on December 21,
2003. The credit facility contains covenants, representations, warranties and
other agreements by Chattem that are customary in loan agreements relating to
financing of this type. At August 31, 1999 the outstanding balances of the term
loan and the revolving credit facility were $61,000,000 and $0, respectively.

For the nine months ended August 31, 1999, Chattem retired $11,750,000 face
amount of its 12.75% Senior Subordinated Notes, due 2004, for which notes the
Company is guarantor. The remaining principal amount outstanding is $37,901,000.
For the three months ended August 31, 1999, Chattem prepaid $7,000,000 of its
term loan.

                                       8

<PAGE>

COMPARISON OF NINE MONTHS ENDED AUGUST 31, 1999 AND 1998

The following narrative represents management's comparative analysis of the
material changes in the year-to-date results of operations of the Company
pursuant to General Instruction H(2)(a) of Form 10-Q:

Royalty income increased $3,200,000, or 44.3%, for the nine months ended August
31, 1999 from the corresponding period of the prior year. The increase was
primarily due to increased sales resulting from the acquisition of the BAN and
Thompson Medical brands' trademarks in March and December 1998, respectively.

Amortization expense increased $3,074,000, or 77.1%, for the nine months ended
August 31, 1999, from the corresponding period of the prior year. The increase
was primarily due to the purchase of the BAN and Thompson Medical brands'
trademarks in March and December 1998, respectively.

A pretax gain of $10,328,000 on the sale of trademarks and other product rights
associated with the CORNSILK product line divestiture was recognized during the
fiscal 1998 period.

                           PART II. OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.  Exhibits:

             Financial data schedule (Exhibit 27)

         b.  No reports on Form 8-K were filed with the Securities and Exchange
             Commission during the three months ended August 31, 1999.

                                       9

<PAGE>


                       SIGNAL INVESTMENT & MANAGEMENT CO.
                                   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.

                                    SIGNAL INVESTMENT & MANAGEMENT CO.
                                               (Registrant)


Dated:  October 14, 1999            /s/ A. Alexander Taylor II
                                    -------------------------------------------
                                    A. Alexander Taylor II
                                    President and Director
                                    (principal executive officer)




                                    /s/ Stephen M. Powell
                                    -------------------------------------------
                                    Stephen M. Powell
                                    Vice-President, Treasurer and
                                    Director
                                    (principal accounting officer)

                                       10