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Bethesda, MD – May 6, 2008 - American Capital Strategies Ltd. (Nasdaq: ACAS) announced today its second quarter 2008 dividend, its results for the first quarter of 2008 and forecasts for 2008.

SECOND QUARTER 2008 DIVIDEND DECLARATION
American Capital's Board of Directors has declared a second quarter 2008 regular dividend of $1.03 per share to record holders as of June 13, 2008, payable on July 1, 2008. This is a 13% increase over the second quarter 2007 dividend of $0.91 per share. American Capital has paid a total of $2.3 billion in dividends and paid or declared dividends of $28.20 per share since its August 1997 IPO at $15.00 per share.

2008 DIVIDEND FORECAST
American Capital reiterates its 2008 dividend forecast of $4.19 per share, a 13% growth over total 2007 dividends of $3.72 per share. The remaining 2008 dividends per share are forecast to be in the following quarterly amounts.

$1.05 for Q3 2008, 14% increase over Q3 2007; and
$1.10 for Q4 2008, 10% increase over Q4 2007.

2008 FORECASTS
American Capital is forecasting $0.68 to $0.75 in net operating income (earnings less appreciation, depreciation, gains and loss ("NOI")) per diluted share for the second quarter of 2008.

American Capital is forecasting its Earnings less appreciation and depreciation ("Realized Earnings") for the second quarter of 2008 will exceed $1.10 per diluted share.

American Capital reiterates its forecast that it will have between $19 billion and $26 billion of alternative assets under management by year end, of which between $7 billion and $14 billion will be in external funds managed by American Capital, LLC; the balance will be approximately $12 billion on American Capital's balance sheet.

American Capital reiterates its forecast that its 2008 ordinary taxable income will exceed its 2007 ordinary taxable income. American Capital forecasts that almost half of its 2008 ordinary taxable income will be rolled over into 2009 to pay 2009 dividends.

American Capital reiterates its forecast that its 2008 taxable net long term capital gains will exceed its 2007 taxable net long term capital gains. American Capital forecasts that all of its 2008 taxable net long term capital gains will be rolled over into 2009 to pay 2009 dividends.

American Capital reiterates its forecast that it will roll over more than $500 million of ordinary taxable income and net long term capital gains from 2008 into 2009.

The preceding dividend forecast and other forecasts above assume that for 2008 there will be a recession in the U.S., no new capital will be raised at American Capital, American Capital will produce significant internally generated liquidity available for new investments and American Capital buyout investment volume will increasingly be funded by funds under management.

FIRST QUARTER 2008 RESULTS
Net Operating Income (NOI)
American Capital also announced today its results for the first quarter of 2008. NOI for the quarter increased 5% to $0.77 per diluted share, compared to $0.73 per diluted share for the first quarter of 2007.

Realized Earnings
Realized Earnings increased 16% to $0.94 per diluted share for the first quarter of 2008, compared to $0.81 per diluted share for the first quarter of 2007. Realized Earnings return on equity at cost for the twelve months through the first quarter of 2008 was 15%. The first quarter 2008 Realized Earnings per basic share covered 93% of the first quarter 2008 dividend per share of $1.01 per share.

Earnings
American Capital's Earnings for the first quarter of 2008 was a loss of $(4.16) per diluted share, a decrease of $5.02 per diluted share from the first quarter of 2007 Earnings of $0.86 per diluted share. Earnings return on equity for the twelve months through the first quarter of 2008 was (4)%. This loss was due to $997 million of unrealized depreciation, offset by $33 million of realized gains. During the first quarter, American Capital implemented Statement of Financial Accounting Standard No. 157, Fair Value Measurements, (SFAS 157), new principals based guidance to generally accepted accounting practices (GAAP), which caused certain changes to the methodologies used in valuing the Company's investments.

American Capital's net asset value ("NAV") per share at March 31, 2008 was $28.16, a decrease of $2.20 or 7% lower than the March 31, 2007 NAV per share of $30.36. The March 31, 2008 NAV was $4.72 per share less than the NAV at the end of 2007.

"We delivered NOI and Realized Earnings for the quarter in line with our expectations which allows us to reconfirm our guidance," said Malon Wilkus, Chairman, President and CEO. "The substantial decline in our Earnings is due to $997 million of unrealized depreciation, which we believe will have little impact on our future revenues, NOI and Realized Earnings. This depreciation was driven by declining trading prices, the continued widening of investment spreads and our adoption of SFAS 157. We expect assets that have experienced $656 million of depreciation in this or a prior quarter to appreciate and reverse this depreciation, as we hold the assets to settlement or maturity. The underlying credit quality of these assets remains in line with our forecasts, made at the time the investments were underwritten, which include a recession. We believe that with the adoption of SFAS 157, investors will need to focus on both reported GAAP fair values as well as values that we anticipate realizing on settlement or maturity of our investments, or Realizable Value. Our history bears this out. Under our previous valuation policies, the proceeds American Capital realized on $10 billion of investments exceeded the prior quarter valuations on average by less than 1%. In the future, we intend to report the anticipated realizable values on settlement or maturity of our investments as well as GAAP values so investors can consider both."

For the first quarter of 2008, net appreciation, depreciation, gains and losses totaled $(964) million consisting of $33 million of net realized gains less $(997) million of net depreciation, compared to $20 million of net appreciation, depreciation, gains and losses for the first quarter of 2007. The primary components of the $(997) million of net depreciation for the quarter were as follows:

• $(327) million of net depreciation of American Capital's private finance investments (excluding European Capital and American Capital, LLC, discussed below), which includes $180 million of depreciation due to the adoption of SFAS 157, with the balance due to a decline of cash flows and the trading multiples of comparable public companies of certain of our portfolio companies;
• $(361) million of depreciation from its Structured Products, due to the continued widening of investment spreads;
• $(123) million of depreciation of American Capital's investment in European Capital, due to a decline of its quoted market price. The valuation is based on the quoted market price plus a control premium. (During the first quarter, the company consulted with the SEC staff on its continued use of a control premium);
• $73 million of net appreciation from foreign currency translation, primarily related to its investment in European Capital;
• $(140) million of depreciation of American Capital, LLC, an alternative asset fund manager, due largely to declines in the trading multiples of comparable public companies and reduction of its projected management fees;
• $(46) million of reversals of prior appreciation associated with realized gains; and
• $(73) million of net depreciation of interest rate swaps due to changes in the forward yield curve.

"Credit quality remains good in light of the economic environment," stated John Erickson, Chief Financial Officer. "Most of the depreciation this quarter was not as a result of weakening credit as non-accruing loans at fair value remained within a reasonable level of 1.5% of total loans at fair value. While we believe the economy is in the early stages of a recession, our investment strategy during the past several years of buying non-cyclical companies appears to be paying off as those investments are generally performing very well. We think we are very well positioned to perform better through this cycle than in the recession in 2001, and we are in a much better position to take advantage of great investment opportunities. Additionally, while the economy may be in the early stages of a recession, we believe we are in the later stages of the liquidity crisis. We are seeing bids for some assets starting to tighten in the second quarter and today it looks like March may have been the low point for wide spreads and asset depreciation though we will need to see the trend continue in order to know for certain."

In the first quarter of 2008, American Capital invested $0.9 billion and received $0.9 billion of proceeds from realizations of portfolio investments. In addition, American Capital funds under management invested an additional $0.3 billion, for a total of $1.2 billion of new investments during the first quarter of 2008.

As of March 31, 2008, loans with a fair value of $80 million, were on non-accrual. The $80 million fair value of non-accruing loans represented 1.5% of total loans at fair value as of March 31, 2008, compared to the $55 million fair value of non-accrual loans representing 1.2% of total loans at fair value as of March 31, 2007 and the $122 million fair value of non-accrual loans representing 2.1% of total loans at fair value as of December 31, 2007.

"M&A volumes declined in the first quarter but high quality companies continue to come to market even in this somewhat tighter lending environment," said Ira Wagner, Chief Operating Officer. "However, debt capital continues to be available for middle market transactions and we continue to sell companies at attractive valuations. In addition, our Sponsor Finance Team continues to build new relationships with private equity firms looking to complete large transactions and who are seeking mezzanine investors since they can no longer turn to the syndicated 2nd lien market from Wall Street firms to finance their buyouts. We are seeing some very attractive investment opportunities as a result."

Since its August 1997 IPO through the first quarter of 2008, American Capital has earned a 16% compounded annual return, including interest, dividends, fees and net gains, on 230 realizations of senior debt, subordinated debt and equity investments, totaling $10 billion of committed capital. These realizations represent 45% of all amounts invested by American Capital since its August 1997 IPO. Proceeds from these realizations on average exceeded the total associated prior quarter valuation of the investments by 1%. American Capital earned a 29% compounded annual return on the exit of its equity investments, including dividends, fees and net gains.

"Over the past several months, numerous firms have been forced to issue dilutive equity in order to fix their balance sheets," stated Tom McHale, Senior Vice President of Finance. "We are one of the few financial institutions that raised significant capital last year ahead of the liquidity crisis. In the first quarter alone, we issued accretive equity, continuing to expand our capital resources."

During the first quarter, American Capital was also required to adopt Statement of Financial Accounting Standard No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which gave the Company the option to fair value its financial liabilities in its financial statements. American Capital did not elect the fair value option for any of its eligible financial liabilities. However, American Capital will begin providing its shareholders with supplemental information on the fair value of its financial liabilities. The cost basis and fair value of the Company's financial liabilities as of March 31, 2008, were $4,079 million and $3,875 million, respectively, or a positive difference of $204 million.

MATERIAL DIFFERENCES BETWEEN FAIR VALUE AND REALIZABLE VALUE
American Capital believes that approximately $656 million of the depreciation reflected in the results of this and prior quarters will ultimately be reversed when it exits the investments. American Capital invests primarily in illiquid assets, which are referred to in SFAS 157 as level 3 assets, with the intention to hold the assets to settlement or maturity. This is in contrast to the premise under GAAP that assets generally should be valued on the basis of their current market value and, if no market exists, on a hypothetical market value. American Capital has not historically sold most types of its investment assets on a market. For instance, it has typically settled its private finance investments at the time of a change of control transaction, such as through a sale or recapitalization of the portfolio company. Similarly, it expects to hold most of its Structured Products investments until settlement or maturity.

The current lack of liquidity in the financial markets has caused investment spreads between the cost of funds and investment income to widen dramatically on investments, which in most cases results in current fair values that are materially lower than the Company anticipates realizing on settlement or maturity. The Company's valuation practices have historically proved to be quite accurate, with the proceeds it has realized on $10 billion of investments to have exceeded the prior quarter valuations on average by less than 1%.

The Company notes that in March 2008, the SEC staff published a letter to a number of public companies regarding the disclosures in their periodic reports of the impact of SFAS 157. In the letter, companies are asked to consider disclosing for level 3 assets " ... whether you believe the fair values diverge materially from the amounts you currently anticipate realizing on settlement or maturity. If so, disclose why and provide the basis for your views." Because American Capital believes its GAAP fair values diverge materially from the amounts it anticipates to realize on settlement or maturity, the Company will begin to provide pro forma information on the realizable value of its assets in comparison to the fair value determined under GAAP.

As an example of this divergence, at the end of the first quarter of 2008, the Company held an investment in a commercial real estate collateralized debt obligation (CRE CDO), which had been depreciated $209 million from inception to date, including $160 million in the first quarter of 2008. The investment is currently producing approximately $8 million per quarter of cash flow but its current fair value determined in accordance with GAAP is $11 million due to a lack of liquidity in the financial markets for CDO investments which has caused investment spreads to widen. However, the Company anticipates realizing its $220 million investment on settlement or maturity based on its assumptions of future credit losses, which include a recession over the life of the investment.

The following table summarizes the current cost basis and fair value of our investments as of March 31, 2008 and the amount we currently anticipate realizing on settlement or maturity (in millions):

THIRD PARTY VALUATION OF PORTFOLIO INVESTMENTS
American Capital's Board of Directors is responsible for determining the fair value of American Capital's portfolio investments on a quarterly basis. In that regard, the board retains Houlihan Lokey Howard & Zukin Financial Advisors Inc. ("Houlihan Lokey") to assist it by having Houlihan Lokey regularly review a designated percentage of fair value determinations. Houlihan Lokey is a leading valuation firm in the U.S., engaged in over 1,000 valuation assignments per year for clients worldwide. Each quarter, Houlihan Lokey reviews approximately one quarter of American Capital's determination of the fair value of its portfolio company investments that have been portfolio companies for at least one year and that have a fair value in excess of $25 million, in accordance with American Capital's valuation procedures. In the first quarter of 2008, Houlihan Lokey reviewed valuations of 16 portfolio company investments having an aggregate $1.2 billion in fair value as of the period end. Over the last four quarters, Houlihan Lokey reviewed 82 portfolio companies totaling $6.8 billion in fair value as of their respective valuation dates, in accordance with American Capital's valuation procedures. In addition, Houlihan Lokey representatives attend American Capital's quarterly valuation meetings and provide quarterly reports and recommendations to the Audit and Compliance Committee of the Board of Directors.

For those portfolio company investments that Houlihan Lokey has reviewed during each applicable period, using the scope of review set forth by American Capital's Board of Directors and in accordance with American Capital's valuation procedures, the Board has made a fair value determination that is within the aggregate range of fair value for such investments as determined by Houlihan Lokey.

Financial highlights for the quarter are as follows:

AMERICAN CAPITAL STRATEGIES, LTD.

CONSOLIDATED BALANCE SHEETS

As of March 31, 2008, December 31, 2007 and March 31, 2007

(in millions)

NM = Not meaningful

AMERICAN CAPITAL STRATEGIES, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2008 and 2007

(in millions, except per share data)

(unaudited)

NM = Not meaningful.

AMERICAN CAPITAL STRATEGIES, LTD.

OTHER FINANCIAL INFORMATION

Three Months Ended March 31, 2008, December 31, 2007 and March 31, 2007

(in millions, except per share data)

(unaudited)