Bethesda, MD - February 2, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that its 2003 dividends of $2.79 per share were a distribution of ordinary income and should be reported to its stockholders as such on their 2003 IRS Form 1099-DIV. American Capital also announced that all of its 2003 dividends were ordinary non-qualified dividends.

"It has come to our attention that some brokers issuing Form 1099-DIV to their clients holding American Capital stock have mischaracterized the tax treatment of American Capital dividends," said American Capital Chief Financial Officer John Erickson. "Some stockholders may receive a Form 1099-DIV in which American Capital dividends reported in box 1a, for 'total ordinary dividends,' are also reported in box 1b, for 'qualified dividends.' This is incorrect. For 2003, none of American Capital dividends should be reported in box 1b, as 'qualified dividends.'"

American Capital must make certain distributions of its taxable income in order to maintain its tax status as a regulated investment company. Investors can refer to the Company's most recent report on SEC Form 10-K for more information about its tax status. American Capital reports the estimated tax characteristics of each dividend when announced, while the actual tax characteristics of each year's dividends are reported annually to stockholders on Form 1099-DIV.

A summary of American Capital's dividend history follows. American Capital offers a Dividend Reinvestment Plan (DRIP).

American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $2.5 billion. American Capital is an investor in and sponsor of management and employee buyouts; invests in private equity sponsored 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.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal, 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 or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.

Contact:
John Erickson, Chief Financial Officer (301) 951-6122
Tom McHale, Vice President, Finance & Investor Relations (301) 951-6122

SOURCE: American Capital Ltd.