Analyst/Investors, please contact:
Jim Recob, Iomega Corporation, (801)332-4430 recob@iomega.com

FOR IMMEDIATE RELEASE

ROY, Utah, January 18, 2001 - Iomega Corporation (NYSE: IOM) today reported net income of $22.0 million, or $0.08 per diluted share, for the fourth quarter ended December 31, 2000, which included $13.9 million, or $0.05 per diluted share, attributable to a decrease in the Company's valuation allowance for net deferred tax assets. These results are within the range announced by the Company on January 5, 2001 and compare to earnings of $21.3 million, or $0.08 per diluted share, for the fourth quarter of 1999. Last year's fourth quarter included pretax charges of $47.3 million to reflect estimates of the net realizable value of inventory and equipment and purchase commitments, a restructuring charge of $3.4 million and $2.5 million attributable to a decrease in the Company's valuation allowance for net deferred tax assets.

Fourth quarter 2000 revenue of $331.1 million decreased $102.4 million from the fourth quarter of 1999, due to decreased Zip® and Jaz® revenue partially offset by increases in Iomega CD-RW and PocketZipTM revenue. Fourth quarter 2000 gross margin of $111.0 million compared to gross margin of $113.4 million in the fourth quarter 1999, which included pretax charges of $47.3 million to reflect estimates of the net realizable value of inventory and equipment and purchase commitments. Selling, general and administrative expense for the fourth quarter 2000 included a $0.9 million credit for compensation income. This credit resulted from the variable accounting treatment of stock options issued pursuant to the Stock Option Exchange Program.

"We were successful in our ability to remain profitable in the fourth quarter even when confronted with an unexpected downturn," said Bruce Albertson, president and CEO. "While we clearly faced significant revenue challenges during 2000, we delivered our first full year of reported profitability in the past three years.

"We are dedicated to the goal of sustained profitability, quarter-in and quarter-out," continued Albertson. "Our next most important goal for 2001 is to begin to grow revenue. While there are significant challenges ahead, there are also significant opportunities for growth, including increased Zip penetration within and beyond the PC market, further development of international markets, leveraging our brand and continued new product introductions. We believe that our newest products, HipZip, FotoShow and Predator, along with the award-winning new Peerless drive announced earlier this month at CES, demonstrate our commitment to develop new growth opportunities in new and existing markets."

Fourth quarter 2000 Zip product profit margin (PPM) of $51.0 million decreased $56.0 million compared with fourth quarter 1999. The Zip PPM decrease was due primarily to the revenue decline of $127.6 million due to lower Zip drive unit sales to both OEM and aftermarket customers and lower Zip disk sales. Iomega's fourth quarter 2000 Zip drive shipments were 1.8 million units (excluding licensee shipments), a decrease of 0.9 million units from the fourth quarter of 1999. Fourth quarter 2000 Zip disk units shipped were 10.4 million, a decrease of 6.7 million units from the fourth quarter 1999. Zip drive unit sales to OEM customers were 41 percent of total Zip drive shipments during fourth quarter 2000, down from 48 percent in the fourth quarter of 1999. Cumulative worldwide shipments (including licensee shipments) now exceed 40 million Zip drives and 250 million Zip disks.

Fourth quarter 2000 Jaz PPM of $10.0 million decreased $9.5 million compared with fourth quarter 1999, as Jaz revenue decreased $27.7 million. Jaz drive shipments in the fourth quarter of 2000 were 66 thousand units, a decrease of 41 thousand units from fourth quarter 1999. Jaz disk shipments in the fourth quarter of 2000 were 359 thousand units, a decrease of 157 thousand units from fourth quarter 1999.

Fourth quarter 2000 Iomega CD-RW product loss of $4.3 million compared to a product loss of $2.7 million in the fourth quarter of 1999. The product loss increased primarily due to higher operating expenses driven by marketing and development costs associated with the new Predator(tm) CD-RW drive. Revenue in the fourth quarter 2000 increased $38.9 million as Iomega introduced additional drives to its product line from the single drive offered in the fourth quarter of 1999. Iomega CD-RW drive shipments in the fourth quarter of 2000 were 346 thousand units, an increase of 251 thousand units from the fourth quarter of 1999. Iomega's newest CD-RW design, the Predator 8X4X32X drive, combines a breakthrough sleek design, interchangeable interfaces and an extensive software suite.

Fourth quarter 2000 PocketZipTM product loss of $10.1 million represented an improvement of $49.0 million over fourth quarter 1999 which included pretax charges of $47.3 million to reflect estimates of the net realizable value of inventory and equipment and purchase commitments. Fourth quarter 2000 PocketZip revenue increased $10.6 million from the fourth quarter 1999 primarily due to sales of HipZip(tm). PocketZip drive and disk shipments during the fourth quarter 2000 were 86 thousand and 144 thousand units, an increase of 60 thousand and 193 thousand units, respectively, from the fourth quarter 1999. In the fourth quarter of 1999, the Company's revenue recognition policy resulted in a negative (49) thousand disk units reported.

Iomega's net income for the year ended December 31, 2000 was $169.6 million, or $0.61 per diluted share. The 2000 results included $72.6 million, or $0.26 per diluted share, attributable to a decrease in the Company's valuation allowance for net deferred tax assets, and $4.8 million attributable to pre-tax reversals of restructuring charges previously recorded. This compared with a net loss of $103.5 million, or ($0.38) per diluted share in 1999. The 1999 results included pre-tax restructuring charges of $65.8 million, other charges of $67.0 million related to inventory and equipment write-downs, and an increase in the net deferred tax valuation allowance of $78.5 million.

Revenue for the full year 2000 totaled $1.3 billion, a decrease from $1.5 billion in 1999 due primarily to lower Zip and Jaz revenue partially offset by increased Iomega CD-RW revenue. Zip drive and disk shipments for 2000 decreased by 28 percent and 15 percent, respectively, from 1999. Profitability during 2000 was driven by improved gross margins and lower operating expenses compared with the prior two years.

Iomega's balance sheet and liquidity remained strong at the end of the fourth quarter of 2000. Excluding the note redemption and stock repurchases made during the fourth quarter of 2000, Iomega was cash flow positive $21.7 million with cash, cash equivalents, and temporary investments of $377.9 million at December 31, 2000. In October, the Company redeemed all $45.5 million of the Company's outstanding 6.75% convertible subordinated notes. Iomega repurchased 1.1 million shares of stock for $5.2 million during the fourth quarter of 2000.

The Company also announced plans to hold a conference call beginning at 4:30 EST on January 18th, after the release of fourth quarter results, to discuss Iomega's financial results and management's plans for 2001. A simultaneous webcast of the conference call and replays for two weeks will be available at http://www.vcall.com.

About Iomega
Iomega Corporation (NYSE:IOM) manufactures and markets the award-winning Zip®, Jaz® and PocketZipTM drives and disks, the HipZipTM digital audio player, the FotoShowTM digital image center, LifeWorksTM software, and Iomega Quik Sync 2 software; Iomega also markets Iomega CD-RW drives. Iomega's products help people to save, share, manage and create important information such as Internet downloads, audio files, personal photographs, spreadsheets, and slides, while protecting that content from viruses and hackers. Used in homes, businesses, government and educational facilities and by creative professionals everywhere, Iomega storage solutions are the enabling technologies preferred by millions. The Company can be reached at 1-888-4-IOMEGA (888-446-6342), or on the Web at http://www.iomega.com.

NOTE: The statements contained in this release regarding continued profitability and all other statements that are not purely historical, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are based upon information available to Iomega as of the date hereof, and Iomega disclaims any intention or obligation to update any such forward-looking statements. Actual results could differ materially from the current expectations. Factors that could cause or contribute to such differences include, but are not limited to risks and uncertainties identified in the reports filed from time to time by Iomega with the U.S. Securities and Exchange Commission, including Iomega's Annual Report on Form 10-K for the year ended December 31, 1999 and its most recent Quarterly Report on Form 10-Q.
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Copyright(c) 2001 Iomega Corporation. Iomega, Zip, Jaz, PocketZip, HipZip, FotoShow, LifeWorks and Peerless are either registered trademarks or trademarks of Iomega Corporation in the United States and/or other countries. Certain other product names, brand names, and company names may trademarks or designations of their respective owners.