<PAGE>

                                  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 FEBRUARY 29, 2000
                       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 APRIL 12, 2000, 250 SHARES OF THE COMPANY'S COMMON STOCK, WITHOUT PAR
VALUE, WERE OUTSTANDING.


<PAGE>


                       SIGNAL INVESTMENT & MANAGEMENT CO.

                                      INDEX

<TABLE>
<CAPTION>

                                                                             PAGE NO.
                                                                             --------
<S>                                                                            <C>

PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements

    Balance Sheets as of February 29, 2000
      and November 30, 1999 ....................................................3

    Statements of Income for the Three Months
      Ended February 29, 2000 and February 28, 1999.............................4

    Statements of Cash Flows for the Three Months Ended
      February 29, 2000 and February 28, 1999...................................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
</TABLE>



                                       2
<PAGE>


                          PART 1. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                       SIGNAL INVESTMENT & MANAGEMENT CO.

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

<TABLE>
<CAPTION>
                                                                                                February 29,  November 30,
                                                                                                    2000          1999
                                                                                                ------------  ------------
                                 ASSETS                                                          (Unaudited)
<S>                                                                                                 <C>           <C>
Current Assets:
  Cash and cash equivalents ..................................................................      $     12      $     16
  Royalties receivable from Chattem, Inc. ....................................................         2,871         3,320
                                                                                                    --------      --------
       Total current assets ..................................................................         2,883         3,336

Trademarks and Other Purchased Product Rights, Net ...........................................       348,600       350,762
                                                                                                    --------      --------

         TOTAL ASSETS ........................................................................      $351,483      $354,098
                                                                                                    ========      ========

                  LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:
  Payable to Chattem, Inc. ...................................................................      $338,027      $339,932
  Deferred income taxes ......................................................................        12,550        12,550
                                                                                                    --------      --------
       Total liabilities .....................................................................       350,577       352,482
                                                                                                    --------      --------

Shareholder's Equity:
  Common shares, without par value, 500 shares authorized, 250 shares issued and outstanding .             2             2
  Retained earnings ..........................................................................           904         1,614
                                                                                                    --------      --------
       Total shareholder's equity ............................................................           906         1,616
                                                                                                    --------      --------

         TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY ..........................................      $351,483      $354,098
                                                                                                    ========      ========
</TABLE>



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



                                       3
<PAGE>


                       SIGNAL INVESTMENT & MANAGEMENT CO.

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

<TABLE>
<CAPTION>
                                                                                                  For the Three Months Ended
                                                                                                  February 29,     February 28,
                                                                                                          2000            1999
                                                                                                  ------------  ---------------
<S>                                                                                                     <C>             <C>
REVENUES:
  Royalties from Chattem, Inc. ...............................................................          $2,871          $2,961
  Investment income ..........................................................................               1               1
                                                                                                        ------          ------
       Total revenues ........................................................................           2,872           2,962
                                                                                                        ------          ------
EXPENSES AND LOSSES:
  Amortization of trademarks and other purchased product rights ..............................           2,428           2,225
  General and administrative .................................................................               5            --
  Loss on sale of investment .................................................................            --                 8
                                                                                                        ------          ------
       Total expenses and losses .............................................................           2,433           2,233

INCOME BEFORE PROVISION FOR INCOME TAXES .....................................................             439             729

PROVISION FOR INCOME TAXES ...................................................................             149             248
                                                                                                        ------          ------

NET INCOME ...................................................................................          $  290          $  481
                                                                                                        ======          ======
WEIGHTED AVERAGE NUMBER OF COMMON SHARES - BASIC AND DILUTED .................................             250             250
                                                                                                        ======          ======
NET INCOME PER COMMON SHARE - BASIC AND DILUTED ..............................................          $1,160          $1,924
                                                                                                        ======          ======
</TABLE>






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



                                       4
<PAGE>


                       SIGNAL INVESTMENT & MANAGEMENT CO.

                            STATEMENTS OF CASH FLOWS
                          (Unaudited and in thousands)

<TABLE>
<CAPTION>
                                                                          For the Three Months Ended
                                                                       February 29,           February 28,
                                                                            2000                  1999
                                                                       ------------           ------------
<S>                                                                        <C>                <C>
OPERATING ACTIVITIES:
  Net income ....................................................          $    290           $    481
  Adjustments to reconcile net income to net cash provided
    by operating activities:
      Amortization ..............................................             2,428              2,225
      Income tax provision ......................................               149                248
      Loss on sale of investment ................................              --                    8
      Changes in operating assets and liabilities:
        (Increase) decrease in royalties receivable from Chattem,
          Inc. ..................................................               449               (283)
                                                                           --------           --------
            Net cash provided by operating activities ...........             3,316              2,679
                                                                           --------           --------

INVESTING ACTIVITIES:
  Proceeds from sale of investment ..............................              --                  386
                                                                           --------           --------
            Net cash provided by investing activities ...........              --                  386
                                                                           --------           --------

FINANCING ACTIVITIES:
  Payments to Chattem, Inc. .....................................            (2,320)            (2,060)
  Dividends paid to Chattem, Inc. ...............................            (1,000)            (1,000)
                                                                           --------           --------
            Net cash used in financing activities ...............            (3,320)            (3,060)
                                                                           --------           --------

CASH AND CASH EQUIVALENTS:
  Increase (decrease) for the period ............................                (4)                 5
  At beginning of period ........................................                16                 11
                                                                           --------           --------
  At end of period ..............................................          $     12           $     16
                                                                           ========           ========

SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS:
  Increase in payable to Chattem, Inc. in connection with -
    Purchase of trademarks and other product rights .............          $    266           $ 91,275
    Provision for income taxes ..................................          $    149           $    248


DIVIDENDS PER SHARE .............................................          $      4           $      4
</TABLE>




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



                                       5
<PAGE>


                       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, 1999
     and with the audited consolidated financial statements and related notes
     thereto included in Chattem, Inc.'s Annual Report to Shareholders for the
     year ended November 30, 1999. 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 of the periods presented and
     therefore incurred no interest expense.

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

<TABLE>

     <S>                                               <C>
     Payable balance - November 30, 1999 ....          $ 339,932,000
             Repayments .....................             (2,320,000)
             Income tax provision ...........                149,000
             Purchase of trademarks and other
                   products rights ..........                266,000
                                                       -------------
     Payable balance - February 29, 2000 ....          $ 338,027,000
                                                       =============
</TABLE>


     The weighted average balance due Chattem, Inc. during the three months
     ended February 29, 2000, was $338,980,000.

6.   Chattem provides the Company with the use of all of its information
     technology (IT) systems. Chattem has successfully completed the replacement
     of its previous IT systems with those that are year 2000 compliant. The
     cost of the new IT systems to date is approximately $3,271,000, which has
     been capitalized.



                                       6
<PAGE>


     To date Chattem has experienced no major problems with its implementation,
     nor has it encountered any unusual situations with its principal customers
     and suppliers in connection with their year 2000 IT systems' compliance.
     However, if unanticipated problems arise in the future with regard to year
     2000 compliance with Chattem's new IT systems or those of its principal
     customers and suppliers, Chattem's business could be adversely affected.

7.   The Company is a guarantor of Chattem's $75,000,000 of 12.75% Series B
     Senior Subordinated Notes due 2004 and $275,000,000 of 8.875% Series B
     Senior Subordinated Notes due 2008, which guarantees and notes were
     registered under the Securities Act of 1933. During 1995, 1998 and 1999
     Chattem repurchased approximately $40,106,000 of the 12.75% Notes. The
     outstanding book values of the 12.75% and 8.875% Notes were $34,110,000 and
     $275,257,000, respectively, at February 29, 2000.

     Signal is also guarantor of Chattem's current bank credit facility which
     consists of a term loan and a working capital revolving loan maturing at
     various dates from December 31, 1999 to December 21, 2003. The outstanding
     balances as of February 29, 2000 were $53,600,000 for the term loan and
     $5,000,000 for the working capital revolving loan.

8.   There have been no material changes as of February 29, 2000 relating to the
     matters discussed in the Company's "Item 1. Business - Government
     Regulation" and "Item 3. Legal Proceedings" sections of its Annual Report
     on Form 10-K filed with the Securities and Exchange Commission for the year
     ended November 30, 1999.



                                       7
<PAGE>


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

COMPARISON OF THREE MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999

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 decreased $90,000, or 3.0%, in the three months ended February
29, 2000, from the corresponding period of the prior year. The decrease was due
to decline in the net sales of the brands subject to royalty payments.

Amortization expense increased $203,000, or 9.1%, in the three months ended
February 29, 2000, from the corresponding period of the prior year. The increase
was largely due to the purchase of the Thompson brands' trademarks in December
1998, and the additional amounts paid in fiscal 1999 to the former owners of the
SUNSOURCE product line for cancellation of their rights to receive any future
payments under the purchase agreement for these brands.



                                       8
<PAGE>


                           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 February 29, 2000.



                                       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:  April 14, 2000                      /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