FOR IMMEDIATE RELEASE:
January 7, 2005

Contact
Ken Jones, Principal (610) 238-0210
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $30 MILLION IN BOOT COMPANY ACQUISITION

Bethesda, MD - January 7, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $30 million in Rocky Shoes and Boots Inc. (Nasdaq: RCKY), a manufacturer of rugged outdoor boots, to support its acquisition of EJ Footwear LLC, a manufacturer of boots for work applications and general outdoor use. American Capital's investment takes the form of a senior term loan B. GMAC Commercial Finance is providing a revolving credit facility and a senior term loan.

"American Capital is off to a great start in 2005 by supporting the combination of two leading, non-fashion, niche focused boot manufacturers," said American Capital COO Ira Wagner. "We are pleased to back Rocky's strong and experienced management team, enabling them to expand and strengthen their business with a complementary acquisition. Our ability to directly invest capital in middle market companies is critical to their growth and success."

American Capital invested approximately $2 billion in 2004 and approximately $750 million in the fourth quarter of 2004. For more information about American Capital's portfolio click here.

"Rocky and EJ fit very well together, possessing many similarities yet complementing each other with their product lines, customer bases and significant distribution channel diversity," said American Capital Principal Ken Jones. "Both companies have a long history in the business, stable core brands, low cost operations, including outsourced overseas manufacturing, low customer concentration, and are dedicated to product development. Furthermore, with a combined, broad product offering serving a larger, more diverse boot target audience, the Company insulates itself from market cyclicality. This acquisition is also expected to result in synergies and cost savings that will bode well for Rocky as it continues to expand."

Founded in 1932, Nelsonville, OH-headquartered Rocky is a manufacturer of outdoor, occupational and casual boots as well as hunter and outdoorsman clothing, gloves and accessories sold under the Rocky and Gates brand names. The Company sells its products to customers in manufacturing, farming and ranching, construction, law enforcement, postal service, emergency medical professions and the US military. Rocky's products are sold by more than 3,000 retail and mail order companies, including Belleville Shoe Manufacturing Company, Wal-Mart, Gander Mountain, Dick's Sporting Goods, Bass Pro Shops Inc., Cabela's Inc. and Shoe Show Inc. The Company employs over 1,000 primarily in its manufacturing facilities in the Dominican Republic and Puerto Rico. Rocky also has corporate and distribution operations in Ohio and Ontario, Canada. Pictured at left is Rocky's Retraction boot, a top quality, waterproof and insulated boot for the outdoorsman.

Founded in 1890 and headquartered in Franklin, TN, EJ Footwear is a manufacturer of outdoor, heavy duty use and western style boots, sold under five brands: Georgia Boot, Lehigh, Durango, Dickies and John Deere. EJ's footwear is sold in more than 10,000 retail locations in the U.S. Customers include Mid-States Inc., Tractor Supply Company, New York State, Human Technologies Inc., Wheatbelt Inc. and Quality Farm Stores Inc. EJ has four operating facilities in Tennessee and New York and employs nearly 500. Pictured at right is a Leigh waterproof insulated work boot with a LOCKRIM® Steel Toe Cap, providing comfort and safety.

The combined companies earned revenues of approximately $270 million in the twelve month period ending in September 2004.

"For our acquisition, we sought an investment partner who would understand our business, the dynamics of the competitive industry and our vision for growth, and we found that in American Capital," said Rocky Boots and Shoes CEO Mike Brooks. "Our acquisition of EJ is a significant milestone for Rocky. The acquisition is expected to greatly enhance our business by increasing customer relationships, expanding overseas sourcing relationships and extending our product line."

Click here for more information about the combination of these two leading manufacturers of outdoor and occupational boots.

ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of more than $4.8 billion. American Capital is an investor in and sponsor of management and employee buyouts, invests in private equity buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

As of December 31, 2004, American Capital shareholders have enjoyed a total return of 326% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital has paid a total of $645 million in dividends and paid or declared $16.03 dividends per share since its August 1997 IPO at $15 per share.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit our website.

This press release contains forward-looking statements. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.