Analyst/Investors, please contact:
Barry Zwarenstein, Iomega Corporation, (858) 314-7188

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

For Immediate Release

IOMEGA REPORTS 2003 FOURTH QUARTER AND FULL YEAR RESULTS

SAN DIEGO, January 22, 2004 ­ Iomega Corporation (NYSE: IOM) today reported revenue of $93.4 million and a net loss of $15.5 million, or $0.30 per share, for the quarter ended December 31, 2003 . The net loss included an income tax charge of $6.7 million relating to an increase in the valuation allowance for net deferred tax assets, partially offset by $3.1 million of miscellaneous favorable tax adjustments. Also included in the loss was $4.5 million of pre-tax restructuring charges. In comparison, fourth quarter 2002 revenue was $153.8 million and net income was $17.8 million, or $0.35 per diluted share. Full year 2003 revenue was $391.3 million, with a net loss of $18.9 million, or $0.37 per share, compared with full year 2002 revenue of $614.4 million and 2002 net income of $34.7 million, or $0.68 per diluted share. Included in the 2003 net loss were pre-tax restructuring charges of $16.5 million of which $5.0 million was recorded in cost of goods sold. Included in 2002 net income were charges relating to the sale of Iomega's Penang , Malaysia manufacturing subsidiary consisting of $10.7 million in pre-tax impairment charges and $26.8 million in related net tax provisions, and a reversal of $2.4 million of pre-tax restructuring charges.

Fourth quarter 2003 operating loss was $20.4 million, compared to operating income of $23.2 million in the prior year. Fourth quarter 2003 operating loss included $4.5 million of pre-tax restructuring charges. 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.

Fourth quarter 2003 revenue of $93.4 million decreased $60.4 million, or 39%, compared to fourth quarter 2002 revenue of $153.8 million. The decrease was primarily due to decreased Zip product line revenues, partially offset by increases in sourced branded product sales. Fourth quarter 2003 gross margin percentage was 22.1% compared to 40.7% for fourth quarter 2002. Fourth quarter 2003 operating expenses were $41.0 million, compared with $39.4 million in fourth quarter 2002. Fourth quarter 2003 operating expenses included $4.5 million of pre-tax restructuring charges and a $1.2 million charge related to compensation on the Company's stock options as a result of the one-time cash dividend. Fourth quarter 2002 operating expenses included $3.3 million of favorable changes in estimates of marketing accruals and a $1.5 million gain from the settlement of a legal dispute.

During fourth quarter 2003, the Company's tota l c ash, cash equivalents, and temporary investments declined by $269.1 million to $168.9 million as of December 31, 2003 . The reduction in cash during the quarter was primarily due to the $257.2 million distribution of the previously announced one-time cash dividend of $5.00 per share, which was paid to shareholders on October 1, 2003 . With respect to the taxation of the dividend, the Company believes it is most probable that the taxable portion of the $5.00 dividend will fall within a range of approximately $0.20 to $0.50. The balance of the $5.00 dividend will be treated as either a return of capital or a capital gain depending on each shareholder's basis in the stock. This estimate is currently under review with outside tax advisors and the Company expects to finalize this matter in early February.

“Although I am disappointed in our financial results during the fourth quarter and full year 2003, I am encouraged by the progress we have made in other areas during the year,” stated Werner Heid , president and CEO, Iomega Corporation. “We successfully reduced operating expenses through extensive restructuring initiatives, paid a substantial one-time cash dividend to our shareholders, and successfully grew revenue in our sourced branded business. In the fourth quarter, we reoriented our NSS strategy to stem the losses we have been incurring at the upper end of our target market. Most importantly, we made considerable progress on our two new technology platforms. Our REV product, incorporating a removable hard drive with a capacity of 35GB native and 90GB compressed, is targeted for release at the end of this quarter. In the summer, we plan to release the DCT system, which is a PCMCIA form factor drive with a removeable 1.5GB media. We believe DCT has considerable potential in small form factor, mobile consumer electronic applications and as a data storage device. Our employees are achieving great things in preparing for the REV and DCT launches, and these new product platforms will make 2004 an exciting year for Iomega.”

“Looking ahead, it is however unlikely that we can return to profitability for the next few quarters as our Zip product sales continue to decline and as we complete the development of and incur the substantial launch costs for REV and DCT, with the goal to ramp these two products to deliver positive operating results,” continued Heid. “In the meantime, we wil l c ontinue to take the necessary actions to minimize these losses and diminish the drain on our considerable cash resources.”

Fourth quarter 2003 Zip revenue of $47.4 million decreased $63.1 million, or 57%, from fourth quarter 2002. The decline reflects the continuing trend away from Zip products to other products. The fourth quarter 2003 Zip product line gross margin percentage of 44.8% decreased from 51.2% in the same period a year ago. The decline in gross margin was driven by the weaker revenue and the related increased overhead on a per unit basis. Fourth quarter 2003 Zip product profit margin (PPM) was $18.4 million, compared with $46.2 million in fourth quarter 2002 due to lower revenue and lower gross margin percentage, partially offset by lower operating expenses.

The sourced branded business, made up of optical, hard disk, flash and floppy drives, achieved fourth quarter 2003 revenues of $40.7 million, an increase of $7.2 million, or 22%, versus fourth quarter 2002. The revenue increase was driven by strong consumer demand for storage solutions, the strength of the Iomega brand and channel relationships, and an increasingly broad product offering. The fourth quarter 2003 product loss for the sourced branded business was $1.1 million, compared to a product loss of $1.0 million in the fourth quarter of 2002.

Fourth quarter 2003 NSS product sales of $3.7 million, decreased by $0.9 million compared to fourth quarter 2002. The NSS product loss in fourth quarter 2003 was $6.1 million compared to a product loss of $2.1 million in fourth quarter 2002. Included in the fourth quarter 2003 product loss were $2.3 million in charges for inventory write-downs and other charges following the decision to reorient our NSS product strategy.

During fourth quarter 2003, operational, engineering and product marketing expenses incurred in connection with the new product technologies under development, REV and DCT, were $7.6 million. The Company also capitalized an additional $1.5 million during the quarter, primarily for supplier tooling and manufacturing equipment. During first quarter 2004, the Company expects to incur a further $7 million to $9 million in expenses to continue development of REV and DCT and to launch REV, and invest a further $4 million to $6 million in supplier tooling and manufacturing equipment, relating to these two technologies.

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 AND FULL YEAR 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 valuable digital information. Iomega’s award-winning storage products include the popular Zip® 100MB, 250MB and 750MB drives, high-performance Iomega HDD External Hard Drives in desktop and network 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 1.4TB. 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 plans to stem the losses in the NSS product line, the plan to release the REV product at the end of first quarter 2004, the plan to release the DCT product during summer 2004, statements regarding timing for a return to profitability, plans to continue to take necessary actions to minimize losses and diminish the drain on cash resources, the goal to ramp REV and DCT products to deliver positive operating results, the amount of estimated first quarter 2004 expenses to continue the development of REV and DCT and to launch REV, and the estimated amount of first quarter 2004 expenses for supplier tooling and manufacturing equipment relating to REV and DCT, the estimated tax treatment of the one-time cash dividend paid on October 1, 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 unforeseen difficulties in the timing or sales ramp of the REV product planned for first quarter 2004, unforeseen difficulties in the timing or sales ramp of the DCT product planned for summer 2004, level of retail and OEM market acceptance of and demand for the Company's products including new REV and DCT 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 NSS, HDD, and Optical product lines, 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 .

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Copyright© 2004 Iomega Corporation. All rights reserved. Iomega, Zip, 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.