Media please contact:
Chris Romoser, Iomega Corporation, (858) 314-7148 romoser@iomega.com

Analyst/Investors, please contact:
Tom Kampfer, Iomega Corporation, (858) 314-7188

For Immediate Release

Iomega Reports Third Quarter 2004 Financial Results

SAN DIEGO, October 21, 2004 – Iomega Corporation (NYSE: IOM) today reported a net loss of $15.9 million, or $0.31 per share, for the quarter ended September 26, 2004. This loss included $2.3 million in pre-tax restructuring charges and $4.6 million in pre-tax impairment and other charges associated with the previously announced discontinuance of the Company's DCT technology development program. Third quarter 2004 other income included a $1.8 million benefit associated with the release of various accruals for a European subsidiary for which operations have ceased. The third quarter 2004 net loss included a net tax benefit of $0.8 million, which was comprised of a $7.7 million statutory tax and state loss carryforward benefit, partially offset by a $6.9 million tax provision from an increased valuation allowance primarily for additional loss carryforwards. The third quarter 2004 net loss compares to a net loss of $13.1 million, or $0.25 per share, for third quarter 2003, which included pre-tax restructuring charges of $12.0 million. The $2.3 million in pre-tax restructuring charges are substantially all cash charges and the $4.6 million in pre-tax impairment and other charges associated with the discontinuance of the DCT program are substantially all non-cash charges.   

Third quarter 2004 sales of $77.3 million decreased $13.7 million, or 15.1%, compared to third quarter 2003, primarily due to continued lower Zip® and Optical drive product sales, partially offset by sales of new REV™ products and higher sales of other Sourced Branded products. The third quarter 2004 gross margin percentage was 15.3% (which included $4.6 million in impairment and other charges associated with the discontinuance of the DCT program), compared with 20% for third quarter 2003 (which included $5.0 million in restructuring charges). The decrease in the gross margin percentage was primarily due to the continued decline in sales of higher margin Zip products, lower margins on Sourced Branded products, and REV product startup costs. Operating expenses of $30.9 million, including pre-tax restructuring charges of $2.3 million, decreased $9.9 million compared to $40.8 million, including $7.0 million in pre-tax restructuring charges, in third quarter 2003. During third quarter 2004, the Company had an operating loss of $19.1 million, including $2.3 million in pre-tax restructuring charges and $4.6 million in pre-tax impairment and other charges associated with the discontinuance of the DCT program. This loss compares to an operating loss of $22.6 million, including $12.0 million in pre-tax restructuring charges, in the same period of the prior year.

"Although our third quarter loss was disappointing, we made positive business progress in a number of areas," said Werner Heid, president and CEO, Iomega Corporation. "We saw solid sequential growth in our new REV product sales with third quarter revenue of $10.3 million. In addition, we began to implement our previously announced restructuring actions and, when fully implemented by the end of the first quarter of 2005, these actions are expected to save approximately $30 to $35 million annually as compared to 2004 cost and expense run rates. We also wound down our DCT program and have refocused our research and development resources on new REV-related products and networked storage products targeted at consumers and small to medium-sized businesses. For the fourth quarter, our primary focus is to continue to invest in REV product awareness and demand generation with the goal to further improve REV product sales and margins, and to review and improve the financial results of our Sourced Branded products business," concluded Heid.  

Third quarter 2004 Zip product sales of $31.9 million decreased $27.1 million, or 46%, from third quarter 2003. The third quarter 2004 Zip product gross margin percentage of 45% improved from 31% in the prior year. Third quarter 2003 Zip gross margin included $5.0 million in pre-tax restructuring charges and approximately $3 million of various pricing programs associated with the transition to a dual format Zip disk. Lower sales and gross margin dollars resulted in a third quarter 2004 Zip product profit margin (PPM) of $12.6 million compared to $15.0 million in third quarter 2003.

Revenue during third quarter 2004 for the Sourced Branded products business - consisting of optical, hard disk (HDD), USB flash and floppy drives - was $30.9 million, an increase of $3.9 million, or 14.4%, compared to third quarter 2003. The third quarter 2004 product loss for the Sourced Branded business was $2.9 million, compared to a product loss of $1.8 million in third quarter 2003. The increased product loss was driven primarily by lower Mini USB flash drive gross margins due to price competition and third quarter costs associated with the implementation of the new supply chain, partially offset by improved gross margins on optical and HDD products.

Third quarter 2004 NSS revenue was $3.3 million, a decrease of $0.3 million compared to third quarter 2003. The NSS PPM in third quarter 2004 was breakeven compared to a product loss in third quarter 2003 of $3.7 million. The improvement in NSS PPM was driven by improved product gross margins and the continued benefit from decreased operating costs associated with the Company's fourth quarter 2003 decision to refocus its NSS product strategy toward the entry-level to low-end segments of the network attached storage market.

Following the successful global launch of REV products during the second quarter, third quarter 2004 REV product sales were $10.3 million with a product loss of $5.6 million. The product loss was primarily due to manufacturing startup costs and increased market development expenses. On a sequential basis, REV products revenue increased 38% from $7.5 million in the second quarter.     

General corporate expenses of $14.3 million that were not allocated to the total third quarter 2004 PPM, decreased by $3.4 million, compared to third quarter 2003 as a result of cost savings from third quarter 2003 restructuring actions.

During third quarter 2004, the Company's total cash, cash equivalents, and temporary investments declined by $14.9 million to $119.3 million as of September 26, 2004. Of this reduction in cash, $6.5 million was primarily due to the product loss and capital expenditures associated with the completion of development, launch and follow-on development of the REV products; $3.0 million was due to capital and other expenditures associated with the DCT program; and the remainder associated with operating losses.

Revenue by region during third quarter 2004 was $42.4 million in the Americas, $28.7 million in Europe, and $6.2 million in Asia, or 55%, 37%, and 8%, respectively. This compares to revenue by region during third quarter 2003 of $59.4 million in the Americas, $23.6 million in Europe, and $8.0 million in Asia, or 65%, 26%, and 9%, respectively.

Conference Call
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 financial results. The webcast may be accessed at www.iomega.com and will be available for replay through the close of business on Thursday, October 28, 2004.

About Iomega
Iomega Corporation provides easy-to-use, high value storage solutions to help people protect, secure, capture and share their valuable digital information. Iomega's award-winning storage products include the new 35GB Iomega REV™ Drive, popular Zip® 100MB, 250MB and 750MB drives, high-performance Iomega® HDD External Hard Drives in desktop and portable configurations, Iomega Mini USB Drives and Micro Mini™ USB Drives, Iomega external CD-RW drives, Iomega Super 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 1TB. For unlimited capacity and anytime, anywhere access, Iomega offers iStorage™ secure online storage. 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 goal to continue to invest in REV product awareness and demand generation with the goal to further improve REV product sales and margins, the goal to review and improve the financial results of the Company's Sourced Branded products business, expected cost and expense savings as a result of the third quarter 2004 restructuring actions and the wind down of the Company's DCT development program, 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 unforeseen difficulties in the sales ramp of REV products, unforeseen post-launch technical, manufacturing or supply issues regarding REV products, unforeseen difficulties in implementing the third quarter 2004 restructuring actions and any associated inability to achieve the expected savings, level of retail and OEM market acceptance of and demand for the Company's products including new REV products, 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 Sourced Branded business, technical difficulties, supplier constraints, 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 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 .

###