Analyst/Investors, please contact:
Barry Zwarenstein, Iomega Corporation, (858) 314-7190

For Immediate Release

Iomega Reports Third Quarter 2003 Results

SAN DIEGO, October 15, 2003 ­ Iomega Corporation (NYSE: IOM) today reported a net loss of $13.1 million, or $0.25 per diluted share, for the quarter ended September 28, 2003. This net loss included pre-tax charges of $12.0 million for previously announced restructuring actions. The third quarter 2003 net loss compares to a third quarter 2002 net loss of $25.7 million, or $0.50 per diluted share. The third quarter 2002 net loss included costs relating to Iomega’s sale of its Penang, Malaysia, manufacturing subsidiary to Venture Corporation Limited, consisting of $10.7 million pre-tax impairment charges and an additional $26.8 million in related tax provisions.

Third quarter 2003 revenue of $91.0 million decreased $45.4 million, or 33%, compared to third quarter 2002, due primarily to declining Zip product sales. The third quarter 2003 gross margin percentage was 20%. The third quarter 2003 cost of sales included $5.0 million of pre-tax restructuring charges and third quarter 2002 cost of sales included $10.7 million of pre-tax Penang impairment charges. The decrease in the gross margin percentage was primarily due to a lower proportion of sales of higher margin Zip products. Third quarter 2003 operating expenses were $40.8 million, including $7.0 million in pre-tax restructuring charges, compared to $40.1 million during the same period in 2002. During third quarter 2003, the Company had an operating loss of $22.6 million, including $12.0 million in pre-tax restructuring charges, compared to $5.9 million operating income, including $10.7 million of pre-tax impairment charges, in the prior year.

The Company's total cash, cash equivalents, and temporary investments decreased by $14.2 million to $438.0 million during third quarter 2003. The reduction in cash during the quarter was due to $7.1 million in disbursements related to restructuring actions and $8.5 million in development expenses for, and capital investments in, the Company’s Digital Capture Technology (DCT) and Removable Rigid Disk (RRD) technologies. Included in the $438.0 million of total cash, cash equivalents, and temporary investments at the end of the third quarter was $257.2 million reserved for the previously announced one-time, cash dividend of $5.00 per share, which was paid to shareholders on October 1, 2003.

“We are making progress towards the commercialization of DCT and RRD, both intended for launch in the first half of next year. During the quarter, we maintained the pace in the technical development of these two technologies and, while challenges remain, we are confident of ultimately being able to resolve them. OEMs in the U.S., Europe and Asia have been evaluating working prototypes of each technology in a variety of applications and their responses continue to be favorable. In the case of DCT, though, there have been more challenges in aligning our product development schedules with those of some OEMs, which could lead to a delay in their commitment to the introduction of their DCT-enabled solutions. Our launch plans for RRD and DCT-based products under the Iomega brand are proceeding well,” said Werner Heid, president and CEO, Iomega Corporation. “I am also pleased to announce that our restructuring initiatives are now largely in place, although it will take several more months before full expense reductions are realized. These actions to realign our business model are designed to accommodate the continuing decline in the high margin, core Zip business and the substantial investments required for both our new product technologies and our emerging Network Storage Systems (NSS) business.”

“In addition, I have two announcements to make regarding our Board of Directors,” continued Heid. “First, Louis Caldera was recently appointed President of the University of New Mexico. His significant new responsibilities caused Mr. Caldera to reevaluate his other professional commitments and he has resigned from the Board. Second, after 23 years of guiding Iomega from its original venture-funded startup and as Chairman of the Board, David Dunn has announced that he will not stand for re-election to the Board at the next Annual Meeting of
Shareholders in May 2004. Under his direction, Iomega introduced highly successful products to the marketplace, such as Bernoulli, Zip, and Jaz drives and disks, of which Zip was an extraordinary success. These products provided billions of dollars of profitable sales to us and great value to our customers. On behalf of Iomega shareholders, the executive staff and all Iomega employees, we thank Dave for his leadership, support, his emphasis on strong corporate governance, and his continuous commitment to represent the best interests of all shareholders.”

Third quarter 2003 Zip product sales of $58.9 million decreased $51.8 million, or 47%, from third quarter 2002. Iomega's third quarter 2003 Zip drive shipments were 582 thousand units, a decrease of 433 thousand units, when compared to third quarter 2002. Third quarter 2003 Zip disk shipments were 3.3 million units, a decrease of 3.5 million units, when compared to third quarter 2002. Third quarter 2003 Zip drive unit shipments to OEM customers of 312 thousand units, decreased 259 thousand units from third quarter 2002 and represented 54% of total unit shipments in third quarter 2003, compared with 56% in third quarter 2002. Third quarter Zip product line gross margin was 30.8%, including $5.0 million in pre-tax restructuring charges. This compares to a 39.9% Zip gross margin in the prior year, which included $10.6 million in pre-tax Penang impairment charges. The decline in the third quarter gross margin percentage was mainly due to pricing and promotional actions and the impact of lower volumes on costs. Lower sales and gross margin dollars resulted in third quarter 2003 Zip product profit margin (PPM) of $15.0 million compared to $31.4 million in the prior year.

Third quarter 2003 Optical (CD-RW and DVD-RW) product sales of $15.6 million increased $1.4 million compared to third quarter 2002 due to our recently released DVD products. The third quarter 2003 Optical product loss was $1.3 million, compared to a product loss of $3.0 million in the prior year.

Other mobile and desktop storage product sales in third quarter 2003 were $11.8 million, an 83% increase, compared to $6.4 million in third quarter 2002. Currently, the three largest components in this category are external hard disk drives (HDD), USB flash drives and floppy disk drives. Sales from external HDD products totaled $6.5 million, compared with $4.0 million in third quarter 2002. Sales from Mini USB drives, introduced in fourth quarter 2002, were $3.8 million. Sales from floppy disk drives, introduced in second quarter 2003, were $1.0 million. Product loss for other mobile and desktop storage products for third quarter 2003 was $0.7 million compared to a product loss of $0.1 million in third quarter 2002. The increased product loss despite higher revenues was due to the competitive situation in the hard disk drive market.

Third quarter 2003 NSS product sales of $3.6 million increased by $1.6 million compared to third quarter 2002 and by $0.5 million compared to second quarter 2003. The NSS product loss in third quarter 2003 was $3.7 million due to under-absorbed operational overhead and continued research and development and sales and marketing spending designed to broaden and refresh the product offering. This compared to a product loss of $1.8 million in third quarter 2002 and $4.2 million in second quarter 2003.

During third quarter 2003, operational, engineering and product marketing expenses incurred in connection with the new product technologies under development, DCT and RRD, were $7.0 million. The Company also capitalized an additional $1.5 million during the quarter, primarily for supplier tooling and manufacturing equipment. During the fourth quarter of 2003, the Company expects to incur a further $6 million to $8 million in expenses, and invest a further $4 million to $6 million in supplier tooling and manufacturing equipment, relating to DCT and RRD.

Please refer to the attached supplemental information schedule for unit information by product line and revenue by region.

Conference Call Information
As previously announced, Iomega will host a conference call with simultaneous audio webcast beginning at 4:30 p.m. Eastern Time today to discuss Iomega's third quarter results and the other items announced today. The webcast may be accessed at http://www.iomega.com and will be available for replay through the close of business on Wednesday, October 29, 2003.

About Iomega
Iomega Corporation provides easy-to-use, high value storage solutions to help people protect, secure, capture and share their digital information. Iomega’s award-winning storage products include the popular Zip® 100MB, 250MB and 750MB drives, high-performance Iomega HDD Portable Hard Drives Iomega HDD Desktop Hard Drives, the Iomega Mini USB Drive, Iomega external CD-RW drives, Iomega® DVD drives and the Iomega Floppy USB-Powered Drive. Iomega simplifies data protection and sharing at home and in the workplace with Iomega® Automatic Backup software, Iomega Sync software, HotBurn® CD-recording software, and Active Disk™ technology. For networks, Iomega NAS servers offer capacities of 160GB to 1.4TB. For unlimited capacity and anytime, anywhere access, Iomega offers iStorage™, the secure online storage choice. Iomega also offers businesses and consumers a comprehensive data recovery services solution for recovering lost data due to hardware failure, file corruption or media damage. The Company can be reached at 1-888-4-IOMEGA (888-446-6342), or on the Web at www.iomega.com.

Special Note Regarding Forward-Looking Statements
The statements contained in this release regarding the plan to develop DCT and RRD new products with the goal to launch the new products during the first half of 2004, plans to resolve challenges in developing DCT and RRD products, plans to recruit OEMs for DCT and RRD products, plans to launch Iomega-branded DCT and RRD products, the amount and timing of costs savings to be achieved as a result of restructuring initiatives, expected investments in DCT and RRD during fourth quarter 2003, 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 technical difficulties, launch delays and cost challenges on planned DCT and RRD products, competitive pricing pressures or a lack of market acceptance with respect to any of the Company's planned DCT and RRD products, the failure to achieve OEM adoption on planned DCT and RRD products, any supplier technical or cost challenges, delays, constraints or failure of any DCT or RRD suppliers, unforeseen difficulties in implementing restructuring activities, the level of retail and OEM market acceptance of and demand for the Company's products, any rejection by customers of Iomega's “Destination Storage” marketing concept or failure in implementation thereof, declining consumer confidence levels and general market demand for PCs and consumer electronics products, the Company's success in the timely producing and marketing of its products, increased acceleration of the revenue decline on the Zip product line, unanticipated consequences resulting from the lower cash balances within the Company as a result of paying the one-time cash dividend, the Company's inability to achieve profitability on its NAS products, any inability to maintain stringent quality assurance standards and enhanced customer service, availability of critical product components, the failure or delay of any sole source supplier, products and technology obsolescence, manufacturing and inventory issues, management turnover, intellectual property rights and disputes, competition, adverse final judgments in litigation, the business failure of any significant customer, general economic and/or industry-specific conditions and the other 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 most recent Form 10-Q and Annual Report on Form 10-K.

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Copyright© 2003 Iomega Corporation. All rights reserved. Iomega, Zip, Jaz, HotBurn, Active Disk, iStorage, and ioLink 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 be trademarks or designations of their respective owners.