NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Total income taxes were allocated as follows: The provision for income taxes consists of the following: The rate reduction in “Other, net” in the above table consists primarily of a one-time tax benefit for the resolution of a tax uncertainty in 2004. DOLLAR TREE STORES, INC. • 2004 ANNUAL REPORT 37 A reconciliation of the statutory federal income tax rate and the effective rate follows: NOTE 3 – INCOME TAXES Year Ended Year Ended Month Ended Year Ended January 29, January 31, February 1, December 31, 2005 2004 2003 2002 Income (loss) from continuing operations $ 107,920 $111,169 $(3,279) $96,812  Cumulative effect of a change in accounting principle — — (3,309) — Accumulated other comprehensive (income) loss, marking derivative financial instruments to fair value 424 192 61 (633) Stockholders’ equity, tax benefit on exercise of stock options (2,144) (5,620) (65) (10,696) $ 106,200 $105,741 $(6,592) $85,483  Year Ended Year Ended Month Ended Year Ended January 29, January 31, February 1, December 31, 2005  2004 2003 2002 Federal - current $ 75,785 $ 76,017 $(3,778) $69,003  Federal - deferred 15,861 19,465 956 14,141  State - current 16,557 15,471 (611) 11,373  State - deferred (283) 216 154 2,295  $ 107,920 $111,169 $(3,279) $96,812  Year Ended Year Ended Month Ended Year Ended January 29, January 31, February 1, December 31, 2005 2004 2003 2002 Statutory tax rate 35.0% 35.0% 35.0% 35.0% Effect of: State and local income taxes, net of federal income tax benefit 3.6  3.5 3.5 3.5 Other, net (1.1) — — — Effective tax rate 37.5%  38.5% 38.5% 38.5%