Analyst/Investors, please contact:
Barry Zwarenstein, Iomega Corporation, (858) 795-7188

For Immediate Release

Iomega Reports Fourth Quarter and Full Year Results

SAN DIEGO, January 16, 2003 - Iomega Corporation (NYSE: IOM) today reported revenue of $153.8 million and net income of $17.8 million, or $0.35 per diluted share, for the quarter ended December 31, 2002. In comparison, fourth quarter 2001 revenue was $188.4 million and net income was $3.9 million, or $0.07 per diluted share, including $2.8 million of after-tax restructuring charges. Full year 2002 revenue was $614.4 million, with net income of $34.7 million, or $0.68 per diluted share, compared with full year 2001 revenue of $831.1 million and a 2001 net loss of $93.3 million. Included in the 2002 net income were charges relating to the sale of its Penang, Malaysia manufacturing subsidiary, consisting of $10.7 million in pre-tax impairment charges, the related $26.8 million in net tax provisions and a reversal of $2.4 million pre-tax restructuring charges. Included in the 2001 net loss were pre-tax restructuring charges of $39.0 million and non-restructuring charges of $77.1 million.

Fourth quarter 2002 operating income was $23.2 million, compared to $4.8 million in the prior year. Fourth quarter 2002 operating income included $7.5 million of favorable changes in estimates of accruals for marketing and sales programs and a gain of $2.9 million from the settlement of a legal dispute. These two items, totaling $10.4 million, increased revenue by $5.6 million and reduced selling, general and administrative expenses by $4.8 million. Of the $5.6 million increase in revenue, $3.4 million related to the Zip product line, $1.2 million to the CD-RW product line and $1.0 million to the other product lines. Fourth quarter 2001 operating income included $4.6 million in pre-tax restructuring charges.

Fourth quarter 2002 revenue of $153.8 million decreased $34.6 million, or 18.4%, compared to fourth quarter 2001. The decrease was primarily due to decreased Zip® and Jaz® product line revenues, partially offset by increases in portable and desktop hard drives and networked attached storage (NAS) solutions. The fourth quarter 2002 gross margin percentage was 40.7% compared to 32.9% for the fourth quarter of the prior year. Fourth quarter 2002 operating expenses were $39.4 million, including the $4.8 million in favorable changes described above, compared with $57.2 million in the fourth quarter 2001, including $4.6 million in restructuring charges.

During fourth quarter 2002, the Company's total cash, cash equivalents, and temporary investments grew $63.5 million to $453.9 million as of December 31, 2002. Contributing to cash flow during the quarter was a $15.3 million tax refund resulting primarily from the March 2002 passage of the Job Creation and Worker Assistance Act and approximately $23 million relating to the Company's sale in November 2002 of its Penang manufacturing subsidiary, comprised of approximately $3 million in cash proceeds from the sale, net of $7 million cash on hand transferred to Venture Corporation, and approximately a $20 million increase in accounts payable from the delayed payment on the initial purchases of inventory that were not due as of December 31, 2002.

"We are encouraged by our ability in the fourth quarter to operate profitably and generate cash flow in a difficult worldwide economic environment," said Werner Heid, president and CEO, Iomega Corporation. "Our initiatives to grow revenue in mobile and desktop storage solutions to complement the Zip product line are progressing, and the reception of our networked storage solutions by the small and medium sized market has been encouraging. At the same time, we are disappointed that our initiatives to slow the rate of decline in Zip revenue have not been successful."

"Looking ahead into 2003, we must realistically expect continued revenue declines in the Zip product line, despite continuing interest from established users world-wide who value the product's ease of use, ruggedness and security," continued Heid. "Strategically, we are planning to leverage Iomega's strong brand, global channel presence and proprietary technology in removable magnetic storage by pursuing three key initiatives. First, our goal is to build a single destination for mobile and desktop storage solutions at the retail level, providing a broad portfolio of products under the Iomega brand in an easy to shop environment. Second, we are continuing to address the growing market of networked storage systems by bringing relevant enterprise class features to small and medium businesses via a channel assisted model. Third, we are developing innovative, small form factor, removable magnetic storage solutions with the goal of building new annuity streams in a variety of applications for 2004 and beyond."

Fourth quarter 2002 Zip revenue of $110.4 million decreased $33.6 million, or 23.3%, from fourth quarter 2001. Iomega's fourth quarter 2002 Zip drive shipments were 0.9 million units, a decrease of 0.3 million units when compared to fourth quarter 2001. Fourth quarter 2002 Zip disk shipments were 5.7 million units, a decrease of 1.7 million units when compared to fourth quarter 2001. Fourth quarter 2002 Zip drive unit shipments to OEM customers of 0.5 million units decreased 0.2 million units from fourth quarter 2001 and represented 49% of total unit shipments in the fourth quarter 2002 compared with 52% recorded in fourth quarter 2001. The fourth quarter 2002 Zip gross margin percentage of 51.2% increased from 43.1% in the same period a year ago, reflecting the $3.4 million benefit mentioned above, lower costs, and a continuing trend towards higher capacity and higher margin drives and disks. The improved margins and significantly lower operating expenses more than offset the impact of the decrease in sales, resulting in a fourth quarter 2002 Zip product profit margin (PPM) of $46.2 million compared with $40.5 million in fourth quarter 2001.

Fourth quarter 2002 CD-RW revenue of $22.4 million decreased $1.2 million from fourth quarter 2001. The fourth quarter 2002 CD-RW PPM was $0.4 million, including the $1.2 million benefit mentioned above, compared to a product loss of $7.8 million in the prior year. The year-over-year improvement was mainly the result of significantly lower fixed manufacturing overhead resulting from the change to a fully sourced model and of a shift to higher speed, higher margin drives.

Fourth quarter 2002 Jaz revenue of $2.3 million decreased $9.1 million from fourth quarter 2001. Jaz PPM in the fourth quarter 2002 was $1.1 million compared to $2.7 million in fourth quarter 2001. The fourth quarter year-over-year decrease in Jaz revenue and PPM was a result of the Company's earlier decision to discontinue the Jaz product line.

Other revenue in fourth quarter 2002 was $18.0 million, compared to $8.1 million in fourth quarter 2001. Revenue from external hard drive products totaled $12.4 million, comprised of $10.7 million for the Hard Disk Drive (HDD) line of portable and desktop hard drives introduced in the second quarter, and $1.7 million in Peerless™ revenue, compared with $6.0 million of Peerless revenue in the prior year quarter. Further, the Company recorded $4.5 million of NAS revenue during fourth quarter 2002.

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

Conference Call Information

AS PREVIOUSLY ANNOUNCED, THE COMPANY WILL HOLD A CONFERENCE CALL BEGINNING AT 4:30 P.M. EST TODAY TO DISCUSS IOMEGA'S FOURTH QUARTER RESULTS. A SIMULTANEOUS WEBCAST OF THE CONFERENCE CALL AND REPLAYS FOR TWO WEEKS WILL BE AVAILABLE AT http://www.iomega.com.

About Iomega
Iomega Corporation provides easy-to-use, high value storage solutions to help people protect, secure, capture and share their digital valuables. Iomega's award-winning storage products include the popular Zip® 100MB, 250MB and 750MB drives, high-performance Iomega® HDD Portable Hard Drives that feature capacities from 20GB to 60GB, Iomega® HDD Desktop Hard Drives that offer capacities from 40GB to 120GB, the new Iomega® Mini USB Drive, and Iomega® external CD-RW drives. 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 120GB to 720GB. 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 expected Zip product revenue declines, the goal to leverage Iomega's brand, channel presence and technology to pursue key initiatives, the goal to build a single destination for storage products at the retail level, the plan to continue to address the NAS market, the plan to develop new removable magnetic storage solutions with the goal to build new annuity streams in 2004 and beyond, 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 the level of retail and OEM market acceptance of and demand for the Company's products, any rejection by retailers of the "destination storage" 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 timely producing and marketing its products, increased acceleration of the revenue decline on the Zip product line, the Company's inability to achieve profitability on its NAS, HDD, and CD-RW product lines, technical difficulties, delays and cost challenges on new products, competitive pricing pressures or a lack of market acceptance with respect to any of the Company's new products, the failure to achieve OEM adoption on new products, the Company's 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, competition, adverse final judgments in the Nomai litigation, other 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.

Copyright© 2002 Iomega Corporation. All rights reserved. Iomega, Zip, Peerless, Predator, HotBurn, Active Disk 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.