FOR IMMEDIATE RELEASE:
January 7, 2005

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

A GOOD FIT FOR ROCKY BOOTS AND EJ FOOTWEAR

By Maureen Flanagan

Two well-known manufacturers of rugged outdoor and occupational boots have combined into a single company. In a January 6, 2005 transaction, Rocky Shoes and Boots, Inc., based in Nelsonville, OH, acquired EJ Footwear LLC, headquartered in Franklin, TN.

In support of the acquisition, American Capital Strategies, Ltd. (Nasdaq: ACAS) provided a $30 million senior term loan B. GMAC Commercial Finance provided additional senior financing and a revolving line of credit.

"This acquisition more than doubles the size of Rocky's business, providing new products, channels and customers that are complementary but not overlapping," said Mike Brooks, Rocky's CEO and the grandson of one of the founders of Rocky. "It also gives Rocky opportunities to expand its sourcing relationships and take advantage of operational synergies that will support continued growth."

Both companies compete in the non-fashion footwear market that focuses on functional performance, classic styling, premium quality, and a competitive price-value relationship. Together, the companies' footwear lines will be sold in more than 10,000 U.S. retail locations, including independent retailers, department stores, western, farm and ranch specialty stores, mass merchandisers, and family footwear outlets.

Rocky was established in 1932 as the William Brooks Shoe Company. It has been a manufacturer and marketer of boots and related accessories since its inception, going public in 1993 (Nasdaq: RCKY). The company's occupational footwear includes safety and work boots for workers in manufacturing, farming/ranching, construction and law enforcement as well as for postal workers, EMTs, and the U.S. military. Rocky is especially known for rugged outdoor footwear (pictured at left) such as all-season sport and hunting boots which are typically waterproof and insulated. The company leads the market with its camouflage hunting boots that claim more pages in top outdoor equipment catalogs than any other brand. Rocky is also the only hunting oriented footwear brand carried by Wal-Mart. In 2002 Rocky expanded into related outdoor gear including hunting apparel, socks and accessories. This diversification was continued in the 2003 acquisition of Gates, a maker of hunting, ski and dress gloves.

With a history dating to 1890, the Endicott-Johnson Shoe Company (the predecessor firm to EJ) at one time produced 175,000 shoes per day. EJ's Georgia Boot brand dates to 1937 and is a moderately priced, diverse boot line designed for workers, farmers and general outdoor use. Lehigh, another EJ brand, features a line of occupational safety/steel toe and soft toe, non-slip, shoes. These are sold directly to workplaces in 5,000 locations from a "shoe-mobile" truck or in a commissary. EJ also produces mid-priced western style boots under its Durango brand (pictured at right) and recently launched a line of casual and work shoes and boots under a licensing agreement with Dickies and John Deere.

With boot styles that are perennial classics, both EJ and Rocky have a track record of enhancing existing products and refreshing product lines through technical innovation. Both companies employ design teams that regularly incorporate innovative proprietary technologies and patented design features into their products as well as improve appearance, performance, and comfort. New lines are added yearly to target niches where growth opportunities exist. Approximately twenty percent of EJ's line is updated annually, while Rocky makes changes to nearly a quarter of its line every year.

With the January 2005 investment, Rocky joins American Capital's portfolio of more than 100 companies in a wide range of industries. Since 1997 American Capital has invested more than $3 billion in middle market. For more information about American Capital's portfolio click here.

Rocky is well positioned to take advantage of industry trends. With its resources combined with those of EJ, Rocky will be less sensitive to seasonal sales and weather-related volatility as its products reach a bigger and more diverse customer base through additional channels. In addition, Rocky will be able to realize significant operational synergies through an integrated sales force, better pricing from Asian sources and freight savings.

Managed by an experienced management team with deep roots in the footwear industry, Rocky is positioned to take great strides in the years ahead.