['The', 'reasons', 'for', 'variances', 'from', 'the', 'statutory', 'rate', 'are', 'as', 'follows:', 'Percent', 'of', 'Pre-Tax', 'Income', 'Years', 'Ended', 'December', '31', '1987', '1986', '1985', 'Statutory', 'rate.......-.eee-', 'we', 'wie', 'gage', 'ewe', 'BHT', 'TE', '40%', '46%', '46%', '(Decrease)', 'increase', 'in', 'income', 'tax', 'rate', 'resulting', 'from:', 'Benefits', 'of', 'tax', 'allocation', 'from', 'parent', 'and', 'affiliated', 'companies.......', '(21)', '(43)', '(41)', 'State', 'and', 'city', 'income', 'taxes...........--', '7', '2', '5', 'Other', '-', 'nNet..ceesevceneccecee', 'occ', 'eceeees', '__', '_1', 'Effective', 'income', 'tax', 'rate......', 'errr', 'Te', 'ee', '26%', '6%', '10%', '=ssc=', 'ss', 'z£23', 'The', "Company's", 'Federal', 'income', 'tax', 'returns', 'have', 'been', 'examined', 'and', 'settled', 'through', '1983.', 'While', 'tax', 'liabilities', 'for', 'subsequent', 'years', 'are', 'subject', 'to', 'audit', 'and', 'final', 'determination,', 'in', 'the', 'opinion', 'of', 'Management', 'the', 'amount', 'accrued', 'in', 'the', 'consolidated', 'balance', 'sheet', 'is', 'believed', 'to', 'be', 'adequate', 'to', 'cover', 'any', 'additional', 'assessments', 'which', 'may', 'be', 'made', 'by', 'Federal,', 'state', 'and', 'local', 'tax', 'authorities', 'and', 'should', 'not', 'have', 'a', 'material', 'effect', 'on', 'the', 'financial', 'condition', 'of', 'the', 'Company.', '8.', 'Legal', 'Proceedings', 'and', 'Contingent', 'Liabilities', 'and', 'Commitments', 'It', 'is', 'not', 'possible', 'to', 'predict', 'the', 'outcome', 'of', 'pending', 'litigation;', 'however,', 'on', 'the', 'basis', 'of', 'the', 'facts', 'presently', 'known', 'to', 'it,', 'Management', 'does', 'not', 'believe', 'that', 'the', 'actions', 'pending', 'will', 'have', 'a', 'material', 'adverse', 'effect', 'upon', 'the', 'financial', 'condition', 'of', 'the', 'Company.', 'Should', 'additional', 'facts', 'arise', 'in', 'the', 'future', 'indicating', 'a', 'probable', 'adverse', 'determination', 'of', 'any', 'such', 'actions,', 'such', 'ultimate', 'determination', 'might', 'have', 'a', 'material', 'adverse', 'effect', 'upon', 'the', "Company's", 'financial', 'condition.', 'Pending', 'litigation', 'includes', 'claims', 'seeking', 'damages', 'for', 'cancer', 'and', 'other', 'health', 'effects', 'claimed', 'to', 'have', 'resulted', 'from', 'tobacco', 'use.', 'The', 'Company', 'leases', 'its', 'executive', 'and', 'administrative', 'offices.', 'The', 'lease', 'expires', 'December', '31,', '2002', 'and', 'provides', 'for', 'a', 'Minimum', 'total', 'rental', 'of', 'approximately', '$27,200,000.', 'The', 'rent', 'is', 'subject', 'to', 'escalation', 'charges', 'as', 'defined', 'in', 'the', 'lease.', '9.', 'Quarterly', 'Financial', 'Data', '(Unaudited)', 'Total', 'Revenues', 'Net', 'Income', '(In', 'thousands)', '1986', 'Quarters', 'ended', 'March', '31......--.2eeee', 'eee', '$348,594', '§', '73,270', 'June', '30...', 'cece', 'ec', 'eceee', 'ees', '471,000', '119,580', 'September', '30.........', 'eee.', '324,343', '713,948', 'December', '31......2-eceeees', '453,989', '131,931', '1987', 'Quarters', 'ended', 'March', '31.......', 'wow', 'ete', 'enaee', '$316,996', '$', '37,016', 'June', '30....--6>', 'wiepeve', 'e', 'SR', 'TE,', '510,367', '91,759', 'September', '30.......-', 'Teron', '333,263', '50,437', 'December', '31.....--.02-', 'eeeee', '535,744', '188,299', '18', 'Tsc2.ce2g']