MANAGEMENT’S DISCUSSION & ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS • Our profitability is vulnerable to future increases in operating and merchandise costs including shipping rates, freight costs, fuel costs, wage levels, inflation, competition and other adverse economic factors because we sell goods at the fixed $1.00 price point. • Our merchandise mix relies heavily on imported goods. An increase in the cost of these goods, for example because of inflation in their country of origin or currency revaluations, or disruption in the flow of these goods may significantly decrease our sales and profits because any transition to alternative sources may not occur in time to meet our demands. In addition, products and alternative sources may also  be of lesser quality or more expensive than those we currently import. • Our sales may be below expectations during the Christmas and Easter selling seasons, which may cause our operating results to suffer materially. • The performance of our distribution system is critical to our operations. Unforeseen disruptions or costs in our receiving and distribution systems could harm our sales and profitability. • Disruptions in the availability of quality, low-cost merchandise in sufficient quantities to maintain our growth may reduce sales and profits. Our forward-looking statements could be wrong  in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in this report could turn out to be materially different. We have no obligation to publicly update or revise our forward-looking statements after the date of this annual report and you should not expect us to do so. Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, we do not, by policy, selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any securities analyst regardless of the content of the statement or report. We generally do not issue financial forecasts or projections and we do not, by policy, confirm those issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not  our responsibility. As you read Management’s Discussion and Analysis, please refer to our consolidated financial statements, included in Item 8 of this Form 10-K, which present the results of operations for the fiscal years ended January 29, 2005 and January 31, 2004, the one-month period ended February 1, 2003, and the calendar year ended December 31, 2002. In Management’s Discussion and Analysis, we analyze and explain the annual changes in some specific line items in the consolidated financial statements for  the fiscal year 2004 compared to the comparable fiscal year 2003 and the fiscal year 2003 compared to the  fiscal year 2002. INTRODUCTORY NOTE: Unless otherwise stated, references to “we,” “our” and “Dollar Tree” generally refer to Dollar Tree Stores, Inc. and its direct and indirect subsidiaries on a consolidated basis. Unless specifically indicated otherwise, any references to “2005” or “fiscal 2005,” “2004” or “fiscal 2004,” and “2003” or “fiscal 2003” relate to as of or for the years ended January 28, 2006, January 29, 2005 and January 31, 2004, respectively. Any reference to “2002” or “fiscal 2002” relates to as of or for the year ended December 31, 2002. Our annual reports on Form 10-K, quarterly reports  on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange  Act are available free of charge on our website at www.dollartree.com as soon as reasonably practicable after electronic filing of such reports with the SEC. In Management’s Discussion and Analysis, we explain the general financial condition and the results of operations for our company, including: Available Information MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS • what factors affect our business; • what our earnings and costs were in 2004 and 2003; • why those earnings and costs were different from  the year before; • how all of this affects our overall financial condition; • what our expenditures for capital projects were in 2004 and what we expect them to be in 2005; and • where funds will come from to pay for future expenditures. 14 DOLLAR TREE STORES, INC. • 2004 ANNUAL REPORT