SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

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Date of Report (Date of earliest event reported): March 24, 1998

CHATTEM, INC.
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(Exact name of registrant as specified in its charter)

Tennessee 0-5905 62-0156300
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(State of (Commission File No.) (IRS Employer
incorporation) Identification No.)

1715 West 38th Street, Chattanooga, Tennessee 37409
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(Address of principal executive offices, including zip code)

(423) 821-4571
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(Registrant's telephone number, including area code)

Item 2. Acquisition or Disposition of Assets.

On March 24, 1998, Chattem, Inc. (the "Company") and Signal Investment
& Management Co. ("Signal"), a wholly-owned subsidiary of the Company, acquired
the BAN line of deodorant and anti-perspirant products for a purchase price of
$165.0 million (subject to an inventory adjustment), plus the assumption of up
to $5.0 million of liabilities. The Company acquired the BAN trademarks,
formulae, certain patents pertaining to anti-perspirant/deodorant technology,
technical information, inventory, manufacturing equipment and packaging related
assets used in the manufacture of BAN but not the right to sell BAN in Japan.

Also on March 24, 1998, the Company issued $200,000,000 of 8 7/8%
Senior Subordinated Notes due 2008 (the "Notes") to NationsBanc Montgomery
Securities LLC (the "Initial Purchaser") and entered into an amended and
restated senior secured bank credit agreement. The proceeds of the note
offering were used to fund the BAN purchase, repay revolving bank
indebtedness and will be used for working capital.

The Notes were issued by the Company to the Initial Purchaser in a
transaction not registered under the Securities Act of 1933 ("Securities Act")
in reliance upon the exemption provided in Section 4(2) of the Securities Act.
The Initial Purchaser subsequently placed the Notes with qualified institutional
buyers and certain accredited investors in reliance upon Rule 144A under the
Securities Act.

The bank credit agreements, of which NationsBank of Tennessee, N.A. is
agent, include term loans of $27.5 million and $34.8 million and a working
capital facility of $30 million (the "Credit Agreements"). The working capital
facility and the $27.5 million term loan mature on June 26, 2002 and the $34.8
million term loan matures on June 14, 2004. The Company may elect either the
greater of the prime rate or federal funds plus 1/2% or a floating rate or
Eurodollar interest rate option applicable to loans under the Credit Agreements.
The floating rate and Eurodollar interest rate options are based on a base rate
plus a floating rate margin that fluctuates on the basis of the Company's
leverage ratio. In addition to the foregoing, the Credit Agreements contain
covenants, representations and other agreements by the Company that are
customary in loan agreements and security instruments relating to financings of
this type.

The Notes mature on April 1, 2008 and interest is payable
semi-annually on April 1 and October 1 of each year, commencing October 1, 1998.
The Notes are senior subordinated obligations of the Company, and are
subordinated in right of payment to all existing and future senior debt of the
Company. The Notes are initially guaranteed by Signal. The Notes may not be
redeemed until April 1, 2003, after which they may be redeemed at the option of
the Company. Upon the occurrence of certain events constituting a change of
control, the holders of the Notes may require the Company to repurchase the
Notes at a purchase price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest.

The Notes are issued under an indenture with SouthTrust Bank, National
Association, as indenture trustee, which restricts, among other things, the
ability of the Company and its subsidiaries to (i) incur additional indebtedness
and issue preferred stock, (ii) incur liens, (iii) pay dividends or make certain
other restricted payments, (iv) apply net proceeds from certain asset sales, (v)
enter into certain transactions with affiliates, (vi) merge or consolidate with
any other person, (vii) sell stock of its subsidiaries, or (viii) assign,
transfer, lease, convey or otherwise dispose of substantially all of the assets
of the Company.

Pursuant to a Registration Rights Agreement between the Company and
the Initial Purchaser, the Company has agreed to file with the Securities and
Exchange Commission (the "Commission") not later than May 24, 1998 and use its
reasonable efforts to have declared effective a registration statement with
respect to notes of the Company which will be identical in all material respects
to the Notes ("Series B Notes"). Upon such registration statement becoming
effective, the Company will offer the holders of the Notes the opportunity to
exchange their Notes for a like principal amount of Series B Notes.

Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits

(a) Financial Statements of Business Acquired

Report of Independent Public Accountants

Statement of BAN U.S. Assets and Liabilities as of December 31,
1997 and 1996

Statement of BAN U.S. Net Sales and Product Contribution for the
year ended December 31, 1997, 1996 and 1995

Notes to the Statement of BAN U.S. Assets and Liabilities and the
Statement of BAN U.S. Net Sales and Product Contribution

(b) Unaudited Pro Forma Financial Information

Unaudited Pro Forma Balance Sheet

Notes to Unaudited Pro Forma Consolidated Balance Sheet

Unaudited Pro Forma Consolidated Statement of Income

Notes to Unaudited Pro Forma Consolidated Statement of Income

March 3, 1998

To the Board of Directors and Stockholders
of Bristol-Myers Squibb Company:

We have audited the accompanying statement of United States (U.S.) assets
and liabilities as of December 31, 1997 and 1996, and the statement of U.S. net
sales and product contribution for the years ended December 31, 1997, 1996 and
1995, of the Ban deodorant and antiperspirant product lines (the Product) of
Bristol-Myers Products (the Business), a division of Bristol-Myers Squibb
Company. These financial statements are the responsibility of the Business's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of U.S. assets and liabilities
and the statement of U.S. net sales and product contribution are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in these statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of these
statements. We believe that our audits provide a reasonable basis for our
opinion.

The accompanying financial statements reflect the U.S. assets and
liabilities and the U.S. net sales and product contribution attributable to the
Product as described in Note 2 and are not intended to be a complete
presentation of the Product's assets, liabilities, revenues or expenses.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the U.S. assets and liabilities of the Product as
described in Note 2 as of December 31, 1997 and 1996 and the U.S. net sales and
product contribution of the Product as described in Note 2 for the years ended
December 31, 1997, 1996 and 1995, in conformity with generally accepted
accounting principles.

Price Waterhouse LLP

U.S. BAN

STATEMENT OF U.S. ASSETS AND LIABILITIES

(IN THOUSANDS)

DECEMBER 31, DECEMBER 31,
1997 1996
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ASSETS

Inventories, net:
Raw materials...................................................................... $ 1,089 $ 1,233
Packaging.......................................................................... 860 1,161
Work in process.................................................................... 19 342
Finished goods..................................................................... 6,284 7,497
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Total inventories, net........................................................... 8,252 10,233
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Property, plant and equipment, net:
Machinery and equipment............................................................ 21,897 21,799
Less: Accumulated depreciation..................................................... 12,963 10,946
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Total property, plant and equipment, net......................................... 8,934 10,853
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Total assets..................................................................... $ 17,186 $ 21,086

LIABILITIES

Accrued expenses
Advertising........................................................................ $ -- $ 722
Consumer promotion................................................................. 1,003 1,127
Trade promotion.................................................................... 3,676 2,140
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Total accrued expenses........................................................... $ 4,679 $ 3,989
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Assets less liabilities.......................................................... $ 12,507 $ 17,097
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The accompanying notes are an integral part of these financial statements.

U.S. BAN

STATEMENT OF U.S. NET SALES AND PRODUCT CONTRIBUTION

(IN THOUSANDS)

FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------

Net sales............................................................. $ 96,152 $ 97,547 $ 94,705
Cost of goods sold.................................................... 32,780 32,340 30,630
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Gross margin........................................................ 63,372 65,207 64,075

Distribution.......................................................... 6,594 7,131 6,169
Promotion............................................................. 25,018 21,952 18,908
Advertising and other marketing....................................... 7,019 9,251 10,691
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Product contribution................................................ $ 24,741 $ 26,873 $ 28,307
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The accompanying notes are an integral part of these financial statements.

U.S. BAN

NOTES TO THE STATEMENT OF U.S. ASSETS AND LIABILITIES AND THE
STATEMENT OF U.S. NET SALES AND PRODUCT CONTRIBUTION

(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS

The Business manufactures and markets topical deodorants and
antiperspirants. The products are sold through distributors and directly to end
users primarily in the retail markets in the United States (U.S.), Thailand,
Canada, Latin America and certain other Asian countries.

2. BASIS OF PRESENTATION

The accompanying financial statements present only the U.S. assets and
liabilities and the U.S. net sales and product contribution of the Product.
These financial statements include all adjustments necessary for a fair
presentation of the assets and liabilities at December 31, 1997 and 1996 and of
U.S. net sales and product contribution for the years ended December 31, 1997,
1996 and 1995. These financial statements have been prepared in accordance with
Bristol-Myers Squibb Company accounting principles which are in accordance with
generally accepted accounting principles.

These financial statements set forth only the U.S. net sales and operational
expenses attributable to the Product and do not purport to represent all the
costs and expenses associated with a stand alone, separate company. Accordingly,
not included in operating expenses are the expenses associated with product
management, legal, cash management/treasury functions, and various tax services
provided by BMS.

The statement of U.S. net sales and product contribution includes amounts
attributable to the manufacture, sale, promotion and advertisement of the
Product. Net sales include allowances for sales returns and cash discounts.
Product contribution represents net sales less cost of goods sold, distribution,
promotion, advertising and other marketing expenses attributable to the Product.
Included in product contribution is an allocation of certain expenses
attributable to the Product. These expenses have been allocated to the Product
by the Business based upon various factors which management believes are
reasonable.

Net sales by the Business to one customer comprised approximately 24%, 24%
and 23% of total net sales for the years ended December 31, 1997, 1996 and 1995,
respectively.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of management's estimates.

INVENTORIES, NET

Inventories, net of reserves for obsolescence, are valued at average costs,
not in excess of market.

PROPERTY, PLANT AND EQUIPMENT, NET

Expenditures for additions, renewals and betterments are capitalized at
cost. Depreciation is generally computed by the straight-line method based on
the estimated useful lives of the related assets ranging from 5 to 20 years.

U.S. BAN

NOTES TO THE STATEMENT OF U.S. ASSETS AND LIABILITIES AND THE
STATEMENT OF U.S. NET SALES AND PRODUCT CONTRIBUTION (CONTINUED)

(IN THOUSANDS)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The machinery and equipment is primarily located in Morrisville, North
Carolina, and at a third party manufacturer in Quebec, Canada.

4. COMMITMENTS AND CONTINGENCIES

Various lawsuits, claims and proceedings of a nature considered normal to
the Business are pending through BMS. Management believes that these lawsuits,
claims and proceedings are without merit or will not have a material adverse
effect on the Business's operating results, liquidity or financial position.

UNAUDITED PRO FORMA FINANCIAL DATA

The following Unaudited Pro Forma Consolidated Balance Sheet was prepared as
if the Transaction and Offering had occurred on November 30, 1997. The following
Unaudited Pro Forma Consolidated Statement of Income gives effect to the
Transaction and Offering as if they had occurred on December 1, 1996. The
Unaudited Pro Forma Consolidated Statement of Income does not purport to
represent what the Company's results of operations actually would have been if
the Transaction and Offering had occurred as of such date or what such results
will be for any future periods.

The Unaudited Pro Forma Consolidated Balance Sheet reflects the preliminary
allocation of the purchase price for the Acquisition to the Company's tangible
and intangible assets and liabilities. The final allocation of such purchase
price, and the resulting depreciation and amortization expense in the
accompanying Unaudited Pro Forma Consolidated Statement of Income, will differ
from the preliminary estimates due to the final allocation being based on: (a)
actual closing date amounts of assets and liabilities, and (b) final appraised
values of property, plant and equipment and other assets.

The Unaudited Pro Forma Financial Data are based on the historical financial
statements of the Company and the assumptions and adjustments described in the
accompanying notes. The Company believes that such assumptions are reasonable.
The Unaudited Pro Forma Financial Data should be read in conjunction with the
Consolidated Financial Statements of the Company and those of BAN and the
respective accompanying notes thereto appearing elsewhere in this Offering
Memorandum.

UNAUDITED PRO FORMA BALANCE SHEET
(IN THOUSANDS)

PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS
CHATTEM BAN ------------------------
AS OF AS OF ACQUISITION
NOVEMBER 30, DECEMBER 31, OFFERING OF BAN
1997 1997 ADJUSTMENTS ADJUSTMENTS PRO FORMA
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ASSETS
Current assets:
Cash and cash equivalents..................... $ 4,858 $ 189,600(a) $(178,350)(b) $ 16,108
Accounts receivable........................... 28,078 28,078
Inventories................................... 14,493 $ 8,252 22,745
Other current assets.......................... 2,543 2,543
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Total current assets........................ 49,972 8,252 69,474
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Property, plant and equipment, net.............. 10,988 8,934 19,922
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Other non-current assets:
Investment in Elcat, Inc...................... 6,640 6,640
Patents, trademarks and other purchased
product rights, net......................... 104,972 152,843(c) 257,815
Other non-current assets...................... 6,172 10,400(d) 16,572
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Total non-current assets.................... 117,784 281,027
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Total assets.............................. $ 178,744 $ 17,186 $ 370,423
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LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt.......... $ 8,919 $ 8,919
Accounts payable and other.................... 11,937 11,937
Accrued liabilities........................... 13,596 $ 4,679 18,275
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Total current liabilities................. 34,452 4,679 39,131
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Long-term debt.................................. 133,475 200,000(a) 320,475
(13,000) (b)

Other non-current liabilities................... 6,447 6,447

Shareholders' equity:
Net assets acquired........................... 12,507 (12,507)(e)
Common stock.................................. 1,945 1,945
Paid-in surplus............................... 63,975 63,975
Accumulated deficit........................... (60,229) (60,229)
Foreign currency translation.................. (1,321) (1,321)
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Total shareholders' equity.................. 4,370 12,507 4,370
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Total liabilities and
shareholders' equity $ 178,744 $ 17,186 $ 370,423
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)

The Pro Forma Consolidated Balance Sheet reflects the Transaction and the
Offering as if they had occurred as of November 30, 1997 (actual amounts may
differ from amounts estimated below).

(a) Reflects the issuance of the Notes and the Secured Credit Facility
Amendment:

Issuance of the Notes.......................................... $ 200,000
Issuance-related fees and expenses............................. (10,400)
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$ 189,600
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(b) Represents the following cash payments related to the Acquisition:

Purchase price................................................. $(165,000)
Acquisition expenses........................................... (350)
Repayment of revolving credit indebtedness..................... (13,000)
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$(178,350)
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---------

(c) The Acquisition will be accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations". The
purchase price is being allocated first to the tangible and identifiable
intangible assets and liabilities of BAN based upon preliminary estimates of
their fair market values, with the remainder allocated to "Patents,
trademarks, and other purchased products rights" as follows:

Purchase price................................................. $ 165,000
Acquisition expenses........................................... 350
Book value of net assets acquired.............................. (12,507)
---------
Increase in intangible assets.................................. $ 152,843
---------
---------

(d) Reflects the deferred financing costs related to the Offering and Secured
Credit Facility Amendment.

(e) Reflects the elimination of the BAN net asset balance.

UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)

HISTORICAL
CHATTEM FOR PRO FORMA
THE YEAR HISTORICAL BAN ADJUSTMENTS
ENDED FOR THE YEAR ------------------------
NOVEMBER 30, ENDED DECEMBER ACQUISITION OFFERING
1997 31, 1997 ADJUSTMENTS ADJUSTMENTS PRO FORMA
------------ -------------- ----------- ----------- -----------

Net sales................................... $ 143,235 $ 96,152 $ 239,387
Cost of sales............................... 39,253 32,780 $ (7,227)(a) 64,806
Advertising and promotion................... 56,176 32,037 3,821(b) 92,034
Selling, general and administrative......... 22,303 6,594 28,897
------------ -----------
Income from operations...................... 25,503 53,650
Interest expense............................ 15,934 $ 16,658(c) 33,708
1,116(d)
Other income, net........................... (1,679) (1,679)
------------ -----------
Income from continuing operations before
income taxes.............................. 11,248 21,621
Provision for income taxes.................. 3,993 8,907(e) 1,226(e) (6,399)(e) 7,727
------------ -----------
Income from continuing operations........... $ 7,255 $ 13,894
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Other Financial Data:
EBITDA...................................... $ 31,208 $ 64,069
EBITDA Margin............................... 21.8% 26.8%

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)

(a) Reflects management's estimate of the cost savings that will be generated
following consummation of the acquisition of BAN. The Company expects to
realize significant cost savings through agreements with contract
manufacturers for the production of BAN products. Chattem has identified and
is negotiating with three contract manufacturers to produce BAN. The Company
anticipates entering into agreements prior to the closing of the Acquisition
and shifting production to one or more of these contract manufacturers
within approximately three months after the closing of the Acquisition.

(b) Represents additional amortization of trademarks.

(c) Reflects the increase in cash interest expense resulting from the incurrence
of indebtedness under the Notes offset by the interest savings resulting
from the repayment of the revolving credit indebtedness. A change of 1/4% in
the interest rate on the Notes and the Secured Credit Facility would have an
impact on pro forma interest expense of $649 for the year ended November 30,
1997.

(d) To record the increase in interest expense related to the amortization of
deferred financing costs.

(e) Represents income tax expense (benefit) at an effective tax rate of 36.0%.

2.1 Asset Purchase Agreement dated as of February 22, 1998
by and among Bristol-Myers Squibb Company, Signal
Investment & Management Co. and Chattem, Inc.

23.1 Consent of Price Waterhouse LLP

99.1 Press Release dated March 24, 1998.

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 hereunto duly authorized.

April 8, 1998 CHATTEM, INC.

By: /s/ A. Alexander Taylor II
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A. Alexander Taylor II,
President and Chief Operating Officer