UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 28, 1999


                         COMMISSION FILE NUMBER 1-12333


 
                               Iomega Corporation
             (Exact name of registrant as specified in its charter)

            Delaware                                 86-0385884
  (State or other jurisdiction            (IRS employer identification number)
of incorporation or organization)

                       1821 West Iomega Way, Roy, UT 84067
                    (Address of principal executive offices)

                                 (801) 332-1000
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                  Yes X   No

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of March 28, 1999.

Common Stock, par value $.03 1/3                            268,858,255
     (Title of each class)                              (Number of shares)
<PAGE>
                               IOMEGA CORPORATION
                                TABLE OF CONTENTS

                                      
                          PART I - FINANCIAL STATEMENTS
Item 1.  Financial Statements

         Condensed consolidated balance sheets at March 28, 1999
              and December 31, 1998...................................       3

         Condensed consolidated statements of operations for the quarters
              ended March 28, 1999 and March 29, 1998.................       5

         Condensed consolidated statements of cash flows for the quarters
              ended March 28, 1999 and March 29, 1998.................       6

         Notes to condensed consolidated financial statements.........       7

Item 2.  Management' Discussion and Analysis of Financial
              Condition and Results of Operations.....................      15

Item 3.  Quantitative and Qualitative Disclosures About Market Risk...      30

 
                           PART II - OTHER INFORMATION
Item 1.  Legal Proceedings............................................      31

Item 2.  Changes in Securities and Use of Proceeds....................      32

Item 4.  Submission of Matters to a Vote of Security Holders..........      33

Item 6.  Exhibits and Reports on 8-K..................................      33

Signatures............................................................      34

Exhibit Index.........................................................      35

This  Quarterly  Report  on Form  10-Q  contains  a  number  of  forward-looking
statements,  including,  without  limitation,  statements  referring to expected
second quarter  results;  the expected  sufficiency of cash and cash  equivalent
balances and  available  sources of financing;  expected  positive cash flow for
1999;  projected  effective tax rates;  the impact on gross margins of the sales
volumes of disks,  sales mix between disks and drives, the mix between OEM sales
and  sales  through  other  channels,  and the mix  between  Zip,  Jaz and Clik!
products;  targeted levels for gross margin, selling, general and administrative
expenses and research and development expenses; the success of the Company's Six

<PAGE>


Sigma quality and virtual enterprise model initiatives in achieving  substantial
product and process quality  improvements  and in reducing costs;  the impact of
the Euro conversion on the Company's business or financial condition; the impact
of organizational  changes,  including  recently  announced plans to consolidate
facilities and reduce  headcount,  on the Company's  revenue,  profitability and
asset  utilization;  expected sales levels due to seasonal demand; the timing of
the SyQuest Malaysian asset purchase; anticipated hedging strategies;  estimated
additional  expenditures  associated with the Company's  efforts to address Year
2000 issues;  and the anticipated Year 2000 compliance of the Company's computer
and non-IT  systems  hardware  and utility  software  products  and  third-party
suppliers. Any statements contained herein that are not statements of historical
fact may be  deemed  to be  forward-looking  statements.  Without  limiting  the
foregoing, the words "believes",  "anticipates",  "plans", "expects",  "intends"
and similar  expressions  are intended to identify  forward-looking  statements.
There are a number of important  factors  that could cause actual  events or the
Company's  actual  results to differ  materially  from those  indicated  by such
forward-looking statements. These factors include, without limitation, those set
forth under the captions "Liquidity and Capital  Resources",  "Factors Affecting
Future  Operating   Results",   "Disclosures  About  Market  Risk",  "Year  2000
Readiness"  included  under  "Management's  Discussion and Analysis of Financial
Condition  and  Results  of  Operations"  in Item 2 of Part I of this  Quarterly
Report on Form 10-Q.  The factors  discussed  below do not reflect the potential
impact of any future acquisitions, mergers or dispositions. The Company does not
assume any obligation to update any forward-looking statements made herein.


<PAGE>
                               IOMEGA CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                     ASSETS

                                 (In thousands)
<TABLE>

                                            March 28,       December 31,
                                                 1999               1998
                                        -------------      -------------
                                         (Unaudited)
<S>                                     <C>                <C>

CURRENT ASSETS:
     Cash and cash equivalents          $      93,964      $      90,273
     Trade receivables, net                   227,560            233,662
     Inventories                              158,018            165,132
     Income taxes receivable                   22,824             24,974
     Deferred income taxes                     45,155             49,827
     Other current assets                      20,629             20,246
                                        -------------      -------------                                     
         Total current assets                 568,150            584,114
                                        -------------      -------------

PROPERTY, PLANT AND EQUIPMENT, at cost        378,808            373,227
     Less:  Accumulated depreciation 
       and amortization                      (183,567)          (165,112)
                                        -------------      -------------
     Net property, plant and equipment        195,241            208,115
                                        -------------      -------------

INTANGIBLES, net                               32,629             33,580

OTHER ASSETS                                    7,628              4,350
                                        -------------      -------------

                                        $     803,648      $     830,159
                                        =============      =============

</TABLE>
                The accompanying notes to condensed consolidated
       financial statements are an integral part of these balance sheets.

<PAGE>
                               IOMEGA CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS'EQUITY

                        (In thousands, except share data)

<TABLE>

                                              March 28,       December 31,
                                                   1999               1998
                                           -------------      -------------
                                            (Unaudited)
<S>                                        <C>                <C>
CURRENT LIABILITIES:

     Related party notes payable (Note 4)  $      40,000      $      40,000
     Current portion of notes payable                101                101
     Accounts payable                            144,201            160,977
     Other current liabilities                   140,680            152,843
     Current portion of capitalized 
        lease obligations                          3,477              4,307
                                           -------------      -------------
         Total current liabilities               328,459            358,228
                                           -------------      -------------

CAPITALIZED LEASE OBLIGATIONS AND
NOTES PAYABLE,  net of current portions            3,569              4,607
                                           -------------      -------------
DEFERRED INCOME TAXES                              5,261              4,903
                                           -------------      -------------
CONVERTIBLE SUBORDINATED NOTES,
     6.75%, due 2001                              45,505             45,655
                                           -------------      -------------

STOCKHOLDERS' EQUITY:
     Preferred Stock, $.01 par value;
       authorized 4,750,000 shares,
       none issued                                     -                  -
     Series C, Junior Participating
         Preferred Stock, authorized
         250,000 shares, none issued                   -                  -
     Common Stock, $.03 1/3 par value;
         authorized 400,000,000 shares,
         issued 269,667,797 and
         268,186,096 shares at March 28,
         1999 and December 31, 1998, 
         respectively                              8,988              8,937
     Additional paid-in capital                  289,674            286,206
     Less:  809,542 Common Stock treasury
         shares at March 28, 1999 and 
         December 31, 1998, respectively,
         at cost                                  (6,088)            (6,088)
     Retained earnings                           128,280            127,711   
                                           -------------      -------------
         Total stockholders' equity              420,854            416,766
                                           -------------      -------------

                                           $     803,648      $     830,159
                                           =============      =============

</TABLE>
                The accompanying notes to condensed consolidated
       financial statements are an integral part of these balance sheets.

<PAGE>
<TABLE>

                               IOMEGA CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)


                                                   For the Quarter Ended       
                                               March 28,          March 29,
                                                    1999               1998
                                           -------------      -------------
                                                      (Unaudited)
<S>                                        <C>                <C>
SALES                                      $     386,212      $     407,500

COST OF SALES                                    292,476            305,364  
                                           -------------      ------------- 
     Gross margin                                 93,736            102,136     
                                           -------------      -------------

OPERATING EXPENSES:
     Selling, general and administrative          69,941            107,942
     Research and development                     20,713             23,133
                                           -------------      ------------- 
         Total operating expenses                 90,654            131,075     
                                           -------------      -------------

OPERATING INCOME (LOSS)                            3,082            (28,939)
     Interest and other income (expense), 
        net                                       (2,205)               437     
                                           -------------      -------------

INCOME (LOSS) BEFORE INCOME TAXES                    877            (28,502)
     Benefit (provision) for income taxes           (308)             9,926    
                                           -------------      -------------

NET INCOME (LOSS)                          $         569      $     (18,576)   
                                           =============      =============

NET INCOME (LOSS) PER COMMON SHARE (Note 1):
     Basic                                 $        0.00      $       (0.07)
                                           =============      =============

     Diluted                               $        0.00      $       (0.07)
                                           =============      =============

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (Note 1)                      268,390            262,238   

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - Assuming Dilution (Note 1)         273,087            262,238

</TABLE>

                The accompanying notes to condensed consolidated
         financial statements are an integral part of these statements.
<PAGE>
<TABLE>

                               IOMEGA CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                           For the Three Months Ended

                                                      For the Quarter Ended       
                                                   March 28,          March 29,
                                                        1999               1998
                                                ------------      -------------
                                                         (Unaudited)
<S>                                             <C>               <C>
Cash Flows from Operating Activities:
     Net Income (Loss)                          $        569      $     (18,576)
     Non-Cash Revenue and Expense Adjustments:
         Depreciation and amortization                22,271             12,885
         Deferred income tax provision (benefit)       5,030            (17,575)
         Tax benefit from dispositions of 
            employee stock                               688                696
         Other                                           804                741
     Changes in Assets and Liabilities:
         Trade receivables, net                        6,102             30,912
         Inventories                                   7,114            (67,249)
         Other current assets                           (383)            (1,423)
         Accounts payable                            (16,776)           (37,631)
         Accrued liabilities                         (12,163)           (15,048)   
         Income taxes                                  2,150             (8,895)
                                                ------------      -------------
             Net cash provided by (used in) 
                operating activities                  15,406           (121,163)
                                                ------------      -------------
 
Cash Flows from Investing Activities:
     Purchase of property, plant and equipment        (8,881)           (24,068)
     Sale of temporary investments                         -             36,319
     Net (increase) decrease in other assets          (3,647)                10
                                                ------------       ------------
         Net cash provided by (used in) 
            investing activities                     (12,528)            12,261    
                                                ------------       ------------

Cash Flows from Financing Activities:
     Proceeds from sale of Common Stock                2,681              1,353
     Proceeds from issuance of notes payable               -             30,000
     Payments on capitalized lease obligations        (1,868)            (1,524)
     Purchase of Common Stock                              -               (358)
                                                ------------       ------------
         Net cash provided by financing
            activities                                   813             29,471
                                                ------------       ------------

Net Increase (Decrease)  in Cash and 
  Cash Equivalents                                     3,691            (79,431)
Cash and Cash Equivalents at Beginning of Period      90,273            159,922       
                                                ------------       ------------
Cash and Cash Equivalents at End of Period      $     93,964       $     80,491        
                                                ============       ============

Supplemental Schedule of Non-Cash
Investing and Financing Activities:

     Property, plant and equipment financed 
         under capitalized lease obligations    $          -       $      1,223
                                                ============       ============
</TABLE>
                The accompanying notes to condensed consolidated
         financial statements are an integral part of these statements.
<PAGE>
                               IOMEGA CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

 

(1)  SIGNIFICANT ACCOUNTING POLICIES

     In the opinion of the  Company's  management,  the  accompanying  condensed
     consolidated financial statements reflect all adjustments  (consisting only
     of normal recurring  adjustments) which are necessary to present fairly the
     financial  position of the Company as of March 28,  1999 and  December  31,
     1998,  the results of operations  for the quarters ended March 28, 1999 and
     March 29, 1998,  and cash flows for the  quarters  ended March 28, 1999 and
     March 29, 1998.

     The  results of  operations  for the  quarter  ended  March 28, 1999 is not
     necessarily indicative of the results to be expected for the entire year or
     for any future period.

     These unaudited condensed  consolidated financial statements should be read
     in  conjunction  with  the  consolidated  financial  statements  and  notes
     included in or incorporated into the Company's latest Annual Report on Form
     10-K.

     Pervasiveness  of Estimates - The  preparation  of financial  statements in
     conformity  with  generally   accepted   accounting   principles   requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and liabilities and disclosures of contingent  assets and
     liabilities  at the  date of the  financial  statements  and  the  reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from these estimates.

     Principles  of  Consolidation  -  The  condensed   consolidated   financial
     statements   include   the   accounts   of  Iomega   Corporation   and  its
     majority-owned  subsidiaries after elimination of all material intercompany
     accounts and transactions.

     Revenue  Recognition - The Company's  customers include original  equipment
     manufacturers,   end  users,   retailers,   distributors  and  value  added
     manufacturers.  Revenue, less reserves for returns, is generally recognized
     upon shipment to the customer.

     In addition to reserves  for returns,  the Company  defers  recognition  of
     revenue  on  estimated  excess  inventory  in the  distribution  and retail
     channels.  For this  purpose,  excess  inventory is the amount of inventory
     which exceeds the channels' 30 day requirements as estimated by management.
     The gross  margin  associated  with  deferral  of revenue  for  returns and
     estimated

<PAGE>
                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (UNAUDITED)


     excess channel  inventory  totaled $20.7 million and $33.1 million at March
     28, 1999 and  December 31,  1998,  respectively,  and is included in "Other
     current  liabilities" in the accompanying  condensed  consolidated  balance
     sheets.

     Price  Protection  and Volume  Rebates - The  Company has  agreements  with
     certain of its customers  which,  in the event of a price  decrease,  allow
     those  customers  (subject  to  certain  limitations)  credit  equal to the
     difference between the price originally paid and the reduced price on units
     in the  customers'  inventories at the date of the price  decrease.  When a
     price decrease is anticipated,  the Company  establishes  reserves  against
     gross  accounts  receivable  for amounts  estimated to be reimbursed to the
     qualifying customers.

     In  addition,  the Company  records  reserves  at the time of shipment  for
     estimated  volume  rebates.  These  reserves  for volume  rebates and price
     protection  credits  totaled  $43.4  million and $47.6 million at March 28,
     1999 and December 31, 1998,  respectively,  and are netted against accounts
     receivable in the accompanying condensed consolidated balance sheets.

     Foreign  Currency  Translation  - For  purposes  of  consolidating  foreign
     operations,  the Company has  determined  the  functional  currency for its
     foreign operations to be the U.S. dollar. Therefore,  translation gains and
     losses are included in the determination of income.

     Cash Equivalents and Temporary Investments - For purposes of the statements
     of cash flows,  the Company  considers all highly  liquid debt  instruments
     purchased with maturities of three or fewer months to be cash  equivalents.
     Cash  equivalents  primarily  consist of investments in money market mutual
     funds,  commercial  paper,  auction  rate,  money  market  preferred  stock
     investments and taxable and  non-taxable  municipal bonds and notes and are
     recorded at cost, which approximates market. Instruments with maturities in
     excess of three months are classified as temporary investments.  There were
     no temporary investments at March 28, 1999 and December 31, 1998.

     Inventories  -  Inventories  include  direct  materials,  direct  labor and
     manufacturing  overhead  costs  and  are  recorded  at the  lower  of  cost
     (first-in,   first-out)   or  market  and  consist  of  the  following  (in
     thousands):

                                         March 28,      December 31,
                                              1999              1998
                                        ----------        ----------

                  Raw materials         $   59,476        $   62,613
                  Work-in-process           16,714             8,482
                  Finished goods            81,828            94,037
                                        ----------        ---------- 
                                        $  158,018        $  165,132
<PAGE>

                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (UNAUDITED)

     Other  Current  Liabilities  - Other  current  liabilities  consist  of the
     following (in thousands):

                                                        March 28,  December 31,
                                                             1999          1998
                                                        ---------    ----------
                  Accrued payroll, vacation and bonus   $  18,363    $   21,048
                  Deferred revenue                         20,654        33,114
                  Accrued advertising                      35,598        30,226
                  Other accrued liabilities                66,065        68,455
                                                        ---------    ----------
                                                        $ 140,680    $  152,843

     Reclassifications  -  Certain  reclassifications  were  made  to the  prior
     periods' condensed  consolidated  financial  statements to conform with the
     current period presentation.

     Net Income  (Loss) Per  Common  Share - Basic net income  (loss) per common
     share (Basic EPS) excludes  dilution and is computed by dividing net income
     (loss) by the weighted average number of common shares  outstanding  during
     the period.  Diluted net income per common share (Diluted EPS) reflects the
     potential  dilution that could occur if stock options or other contracts to
     issue common  stock were  exercised or  converted  into common  stock.  The
     computation  of  Diluted  EPS does not assume  exercise  or  conversion  of
     securities that would have an antidilutive  effect on net income per common
     share. In periods where losses are recorded, common stock equivalents would
     decrease  the loss per share and are  therefore  not added to the  weighted
     average shares outstanding.

     Following is a reconciliation of the numerator and denominator of Basic EPS
     to the numerator and  denominator of Diluted EPS for all periods  presented
     (in thousands, except per share data):

                                       Net
                                  Income (Loss)       Shares      Per Share
                                   (Numerator)    (Denominator)      Amount  
         For the Quarter Ended

         March 28, 1999
         Basic EPS                 $      569          268,390     $    0.00
            Effect of options               -            4,697
            Effect of convertible
              subordinated notes            -                -
                                   ----------          -------     ---------
         Diluted EPS               $      569          273,087     $    0.00
                                   ==========          =======     =========

         March 29, 1998
         Basic EPS                 $  (18,576)         262,238     $   (0.07)
            Effect of options               -                -
            Effect of convertible
               subordinated notes           -                -
                                   ----------          -------     ---------
         Diluted EPS               $  (18,576)         262,238     $   (0.07)
                                   ==========          =======     =========
<PAGE>
                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (UNAUDITED)


     Recent  Accounting  Pronouncement - In June 1998, the Financial  Accounting
     Standards Board issued Statement of Financial  Accounting Standards No. 133
     "Accounting  for  Derivative  Instruments  and Hedging  Activities"  ("SFAS
     133").  SFAS 133  establishes  new accounting  and reporting  standards for
     companies to report  information  about derivative  instruments,  including
     certain derivative  instruments embedded in other contracts,  (collectively
     referred to as derivatives) and for hedging  activities.  This statement is
     effective for financial statements issued for all fiscal quarters of fiscal
     years  beginning  after June 15, 1999. The Company has not determined if it
     will adopt  SFAS 133 prior to its  effective  date.  The  Company  does not
     expect  this  pronouncement  to have a  material  impact  on the  Company's
     results of operations, financial position or liquidity.

(2)  ACQUISITION

     During 1998, the Company  purchased  approximately 54% of the capital stock
     of Nomai, S.A. ("Nomai"), a France-based  manufacturer of removable storage
     systems,  from Nomai's principal and other major shareholders.  As required
     by French law,  the Company  conducted a tender  offer,  offering all other
     shareholders  of Nomai the  opportunity to sell their shares to the Company
     at  the  same  price  as  was  paid  to  the   principal  and  other  major
     shareholders.  The initial  purchase and the tender  offer  resulted in the
     Company owning  substantially all of Nomai's  outstanding shares. The total
     purchase  price of the  acquisition  was  approximately  $45  million  ($42
     million, net of cash acquired).

     The  transaction  was accounted  for as a purchase and, on this basis,  the
     excess  purchase price over the estimated fair value of net tangible assets
     has been allocated,  based upon an independent  third-party  valuation,  to
     purchased  in-process  technology  and  goodwill.  The  Company  recorded a
     non-cash,  pre-tax charge of $11.1 million related to purchased  in-process
     technology,  representing  the appraised  value of technology  still in the
     development  stage that was not  considered  to have reached  technological
     feasibility and had no alternative  future use.  Goodwill of  approximately
     $32  million   arising  from  the  acquisition  is  being  amortized  on  a
     straight-line  basis over seven years.  The  following  unaudited pro forma
     combined  financial  data presents the results of operations of the Company
     as if the  acquisition  had been  effective at the beginning of the periods
     presented (in millions, except per share data):

 
                                       March 28, 1999     March 29, 1998
 

              Revenue                         $  386            $    416
              Net income (loss)                    1                 (21)
              Diluted EPS                     $ 0.00             $ (0.08)

<PAGE>
                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (UNAUDITED)


(3)  INCOME TAXES

     For the quarter  ended March 28, 1999,  the Company  recorded an income tax
     provision  at an effective  rate of  approximately  35%.  This tax rate was
     based on the  Company's  projected  mix of domestic  and  non-U.S.  pre-tax
     income for 1999.

     U.S.  taxes have not been provided for unremitted  non-U.S.  earnings which
     are considered to be permanently invested in non-U.S. operations.

     Cash paid for income taxes was $1.1  million for the first  quarter of 1999
     and $16.5 million for the corresponding period in 1998.

(4)  DEBT

     Notes Payable - On March 11, 1997, the Company  entered into a $200 million
     Senior  Secured Credit  Facility with Morgan  Guaranty Trust Company of New
     York,  Citibank,  N.A.  and a syndicate of other  lenders.  During 1998 and
     January 1999, the Company and the lenders  agreed to several  amendments to
     and waivers under the Credit Facility (as most recently amended,  effective
     January 29, 1999,  the "Credit  Facility").  The Credit  Facility is a $150
     million secured revolving line of credit that expires on July 14, 2000, and
     is  secured  by   accounts   receivable,   domestic   inventory,   domestic
     intellectual property, general intangibles,  equipment,  personal property,
     investment  property  and a pledge  of 65% of the stock of  certain  of the
     Company's subsidiaries. Borrowing availability under the Credit Facility is
     based on an agreed upon advance rate on  receivables  and  inventory not to
     exceed $150 million with a floor of $110  million  through May 1999.  Under
     the Credit  Facility,  the Company may borrow at a base rate,  which is the
     higher  of prime or the sum of 0.5%  plus the  Federal  funds  rate  plus a
     margin of 0.88% to 1.63%,  for the first year, and thereafter  between 0.0%
     and 1.63%  depending on the Company's  earnings  before  interest  expense,
     income taxes,  depreciation and amortization  ("EBITDA") and utilization of
     the Credit  Facility,  or at LIBOR plus a margin of 2.0% to 2.75%,  for the
     first  year,  and  thereafter  between  1.25%  and 2.75%  depending  on the
     Company's EBITDA and utilization of the Credit Facility. Total availability
     under the Credit Facility at March 28, 1999 was $147.8  million,  and there
     were no  borrowings  outstanding.  Among  other  restrictions,  the  Credit
     Facility treats a change of control (as defined) as an event of default and
     requires the  maintenance  of minimum levels of  consolidated  tangible net
     worth, EBITDA and certain other covenants. On January 29, 1999, the Company
     obtained an  amendment to the Credit  Facility  with respect to the minimum
     consolidated  EBITDA financial covenant for the periods ending on March 28,
     1999 and June 27, 1999. As of March 28, 1999, the Company was in compliance
     with all covenants  under the Credit  Facility.  Depending on its financial
     performance in future quarters, the Company may be required to seek further
     covenant waivers and amendments under the Credit Facility.  There can be no
     assurance  that the  Company  will be able to obtain  any such  waivers  or
     amendments  on terms  acceptable  to the  Company,  if at all.  Loss of the
     Credit Facility may

<PAGE>
                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (UNAUDITED)


     require the Company to find an  alternative  source of funding  which could
     have a material  adverse  effect on the  Company's  business and  financial
     condition.

     Related  Party Notes - In July 1998,  the  Company  borrowed a total of $40
     million from Idanta Partners Ltd. and another entity  affiliated with David
     J. Dunn, Chairman of the Company's Board of Directors, pursuant to a series
     of three senior  subordinated notes. The initial interest rate was 8.7% per
     annum,  increasing through January 1, 1999 to 12.7% per annum. The proceeds
     of these notes were used for the cash  purchase of Nomai.  The Company used
     internally  generated funds to repay the principal and interest  associated
     with these notes upon their maturity on March 31, 1999.

     Capital Leases - The Company has entered into various  agreements to obtain
     capital  lease   financing  for  the  purchase  of  certain   manufacturing
     equipment,  software, office furniture and other equipment. The leases have
     terms  ranging from 36- to 60-months  and mature at various dates from July
     1998 to January  2001.  Principal and interest  payments  under the various
     agreements are payable  monthly or quarterly.  Interest rates are fixed and
     range  from  7.1% to  10.2%  per  annum.  The  leases  are  secured  by the
     underlying leased equipment, software and furniture.

     Cash paid for interest was $2.3 million and $1.9 million, respectively, for
     the first quarters of 1999 and 1998,  including interest on capital leases.
     Included  in  interest  expense  for the first  quarters  of 1999 and 1998,
     respectively, was $0.4 million and $0.2 million of amortization of deferred
     charges associated with obtaining the debt.

(5)  BUSINESS SEGMENT INFORMATION

     The accounting  policies of the Company's business segments are the same as
     those described in Note 1 "Significant Accounting Policies".  The Company's
     reportable  segments as of March 28, 1999 are consistent with the Company's
     reportable  segments as of December 31, 1998, as described in the Company's
     Annual  Report  on  Form  10-K  for  the  year  ended  December  31,  1998.
     Intersegment  sales,  eliminated in  consolidation,  are not material.  The
     Company  evaluates  performance  based on  product  profit  margin for each
     segment.  Product  profit  margin is  defined  as sales  and  other  income
     directly  related to a segment's  operations,  less both fixed and variable
     manufacturing,   research  and   development   and  selling,   general  and
     administrative  expenses  directly related to a segment's  operations.  The
     expenses  attributable  to  corporate  activity  are not  allocated  to the
     operating  segments.  The  information  in the  following  table is derived
     directly  from  the  segments'  internal  financial  information  used  for
     corporate management purposes.

<PAGE>
                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (UNAUDITED)

Reportable Operating Segment Information

                                March 28,        March 29,
                                     1999             1998
                                ---------        --------- 
                                       (In millions)
         Sales:
              Zip               $     302        $     267
              Jaz                      63              110
              Ditto                    10               31
              Clik!                     5                -
              Other                     6                -
                                ---------        ---------

         Total sales            $     386        $     408
                                =========        ========= 
         Product profit margin:
              Zip               $      51        $      29
              Jaz                      (3)              (3)
              Ditto                    (1)              (1)
              Clik!                   (13)              (8)
              Other                    (6)              (1)
                                ---------        ---------
         Total product profit 
            margin                     28               16
                                ---------        ---------
              General corporate 
                expenses              (25)             (45)
              Interest income           1                2
              Interest expense         (3)              (1)
              Other expense             -               (1)
                                ---------        ---------

         Income (loss) before 
           income taxes         $       1        $     (29)
                                =========        ========= 

     In March  1999,  the  Company  announced  that it had sold  certain  assets
     associated  with  its  Ditto  segment,   including  intellectual  property,
     exclusive  manufacturing rights, certain software and intellectual property
     rights, equipment, brand names and product logos. The Company will continue
     to sell its  current  Ditto  finished  goods  inventory  for  three  months
     following the closing of the sale, after which, the buyer will purchase the
     Company's  remaining  finished  goods  inventory.  The  Company  will  also
     continue to sell Ditto cartridges for a period of time.

(6)  OTHER MATTERS

     Significant  Customers - During the quarter ended March 28, 1999,  sales to
     Ingram Micro, Inc. accounted for approximately 11.0% of consolidated sales.
     During the  quarter  ended  March 29,  1998,  sales to Ingram  Micro,  Inc.
     accounted  for  14.3%  of  consolidated  sales.  No other  single  customer
     accounted for more than 10% of the Company's sales for these periods.

<PAGE>
                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)

                                   (UNAUDITED)

     Forward  Exchange  Contracts  - The  Company  has  commitments  to sell and
     purchase foreign currencies relating to forward exchange contracts in order
     to hedge against future currency fluctuations.

     At March 28, 1999 outstanding forward exchange sales (purchase)  contracts,
     which all mature in June 1999, were as follows:

                                                              Contracted
                  Currency                     Amount        Forward Rate

                  Australian Dollar          (320,000)               0.64
                  British Pound              (560,000)               0.61
                  European Euro             7,110,000                0.91
                  Japanese Yen            320,000,000              116.06
                  Korean Won             (175,000,000)           1,233.00
                  Singapore Dollar         (5,000,000)               1.71
                  Swiss Franc              (1,250,000)               1.44


     The contracts are revalued at the month-end spot rate.  Gains and losses on
     foreign  currency   contracts  intended  to  be  used  to  hedge  operating
     requirements are reported currently in income.  Gains and losses on foreign
     currency  contracts  intended to meet firm commitments are deferred and are
     recognized as part of the cost of the underlying  transaction being hedged.
     At March 28, 1999,  all of the Company's  foreign  currency  contracts were
     being used to hedge operating requirements.  The Company's theoretical risk
     in these  transactions  is the cost of replacing,  at current market rates,
     these contracts in the event of default by the counterparty.

(7)  SUBSEQUENT EVENT

     On January 13,  1999,  the  Company  announced  that it had entered  into a
     definitive agreement to purchase certain assets of SyQuest Technology, Inc.
     ("SyQuest"),  including all of its intellectual  property and its inventory
     and fixed assets in the U.S., for $9.5 million in cash,  subject to certain
     closing  conditions and  adjustments.  The Company's  purchase of SyQuest's
     U.S. assets closed on April 6, 1999. As part of the agreement,  the Company
     released  SyQuest  and  SyQuest  released  the  Company  from all claims in
     connection  with  patent  and  trademark  infringement  litigation  pending
     between the parties in Delaware and in Paris,  France. The Company has also
     entered  into an  agreement  to  purchase  certain  assets  from  SyQuest's
     subsidiary in Malaysia.  These assets are being offered for sale separately
     by a Receiver and Manager  appointed  in Malaysia at an estimated  purchase
     price of approximately $3.0 million.

<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

The Company reported sales of $386.2 million and net income of $0.6 million,  or
$0.00 per diluted share, in the first quarter of 1999. This compares to sales of
$407.5 million and a net loss of $18.6 million, or $(0.07) per diluted share, in
the first quarter of 1998.  Management  expects 1999 second quarter results from
operations  to be comparable  to the first  quarter of 1999,  excluding  special
charges.  However,  there can be no assurance that the expected  results will be
realized. The expected second quarter 1999 special charges will be the result of
the Company's  announced  plans to consolidate  facilities and reduce  headcount
during the second quarter of 1999. The Company plans to consolidate its magnetic
technology  expertise at its  headquarters  in Roy, Utah and will be closing its
Milpitas,  California  facility  and,  after a transition  period,  will also be
closing its San Diego, California facility.

SALES

Sales for the quarter ended March 28, 1999 decreased by $21.3 million,  or 5.2%,
when  compared to the  corresponding  period of 1998,  primarily  as a result of
price reductions on Zip and Jaz disk and drive products, lower than expected Jaz
sales  volumes and a  significant  decline in Ditto sales.  Total drive sales of
$228.5 million decreased by 8.2% as compared to the first quarter of 1998. Total
unit drive  shipments for the quarter ended March 28, 1999 increased by 24.7% as
compared  to the first  quarter  of 1998.  Total  disk  sales of $151.6  million
decreased  by 4.5% as  compared  to the first  quarter of 1998.  Total unit disk
shipments for the quarter ended March 28, 1999 increased by 30.8% as compared to
the first quarter of 1998.

Sales of Zip products in the first quarter of 1999 totaled  $301.5  million,  or
78.1% of total sales, and represented a 13.3% increase from the first quarter of
1998.  Zip unit drive  shipments  increased  by 42.5% from the first  quarter of
1998, while Zip unit disk shipments  increased by 38.5%. Sales of Zip OEM drives
accounted  for  approximately  53% of total  Zip  drive  shipments  in the first
quarter of 1999, compared to approximately 58% in the first quarter of 1998.

Jaz product sales in the first quarter of 1999 were $62.7  million,  or 16.2% of
total sales,  representing  a 43.2% decrease from the first quarter of 1998. Jaz
unit drive  shipments  decreased  by 44.7% as compared  to the first  quarter of
1998, while Jaz unit disk shipments decreased by 31.5%.

Ditto product sales in the first quarter of 1999 were $10.1 million,  or 2.6% of
total sales,  representing a 67.3% decline from the first quarter of 1998. Ditto
unit drive  shipments  decreased  by 80.9% as compared  to the first  quarter of
1998,  while Ditto unit disk  shipments  decreased by 55.1%.  In March 1999, the
Company announced that it had sold certain assets and rights associated with its
Ditto  product  line.  The sales price of $3.0  million for the Ditto assets and
rights  consisted of $1.0 million in cash and a $2.0 million note which  matures
in installments  over a period of two years.  The Company  recorded $1.0 million
from the sale during the first  quarter of 1999 and will record the remainder of
the sales price over the life of the note. The Company will continue to sell its
current Ditto finished goods inventory  through June 1999, after which the buyer
will purchase the Company's remaining finished goods inventory. The Company will
also continue to sell Ditto cartridges for a period of time.
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Clik!  product sales in the first quarter of 1999 were $5.1 million,  or 1.3% of
total sales.  The Company began  shipping Clik!  products in limited  quantities
during the fourth quarter of 1998. The Company also shipped  limited  quantities
during the first quarter of 1999 due to component shortages.

Geographically,  sales in the Americas  were $250.0  million,  or 64.7% of total
sales, in the first quarter of 1999, as compared to $298.5 million,  or 73.3% of
total sales, in the first quarter of 1998.  Sales in Europe were $103.3 million,
or 26.7% of total  sales,  in the first  quarter of 1999,  as  compared to $89.3
million,  or 21.9% of total sales,  in the first quarter of 1998.  Sales in Asia
were $32.9  million,  or 8.5% of total sales,  in the first  quarter of 1999, as
compared to $19.8 million, or 4.8% of total sales, in the first quarter of 1998.

GROSS MARGIN

The  Company's  overall  gross margin was 24.3% in the first quarter of 1999, as
compared to 25.1% in the first  quarter of 1998.  This  decrease in gross margin
for the first  quarter of 1999,  when  compared to the  corresponding  period of
1998,  was due  primarily  to price  reductions  on Zip and Jaz  drive  and disk
products  and lower than  expected  Jaz  volumes.  These price  reductions  were
partially  offset  by  reductions  in  component  material  costs  and per  unit
manufacturing overhead.

Future  gross  margin  percentage  will be impacted by the mix between OEM drive
sales,  which  generally  provide  lower gross  margins than sales through other
channels,  and retail  sales,  as well as other  factors.  Gross margins for the
remainder of 1999 will also depend on sales volumes of Zip, Jaz and Clik! disks,
which generate significantly higher gross margins than the corresponding drives,
and on the mix  between  disks  and  drives,  and  between  Zip,  Jaz and  Clik!
products. The Company is targeting overall gross margin percentages to be in the
mid to upper twenty  percent range for the second half of 1999.  However,  there
can be no assurance that such margin percentages will be realized.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and  administrative  expenses  decreased by $38.0 million,  or
35.2%, in the first quarter of 1999, when compared to the  corresponding  period
of 1998 and  decreased as a percentage of sales to 18.1% in the first quarter of
1999, from 26.5% in the first quarter of 1998. The decrease was primarily due to
the Company's  substantial marketing and advertising program expenditures in the
first quarter of 1998. In addition,  other general and administrative  expenses,
comprised mainly of legal fees and information system  expenditures,  were lower
in the first quarter of 1999 when compared to the corresponding  period of 1998.
Management  is  focused  on  maintaining  selling,  general  and  administrative
expenses  in a range  of 15% to 20% of sales  during  the  second  half of 1999.
However,  the Company's  success in achieving this depends in part on the levels
of sales  achieved  during the second half of 1999 and there can be no assurance
that the Company's cost reduction measures,  reorganization and other efforts to
reduce  the   percentage   of  sales   represented   by  selling,   general  and
administrative expenses will be successful.

<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESEARCH AND DEVELOPMENT EXPENSES

Research and  development  expenses for the first  quarter of 1999  decreased by
$2.4  million,  or 10.5%,  when  compared  to the  first  quarter  of 1998,  and
decreased as a percentage  of sales to 5.4% in the first  quarter of 1999,  from
5.7% in the first  quarter of 1998.  The  decrease in research  and  development
expense for the first quarter of 1999, when compared to the corresponding period
of 1998,  was primarily due to decreased  spending for  development of Clik! and
Zip 250 products  during the period as the Company began  shipping Clik! and Zip
250 products in limited quantities during the fourth quarter of 1998. Management
is  targeting  the level of spending for  research  and  development  during the
second  half of 1999 to be in the range of 3% to 5% of sales to support  planned
new  product  development  and  existing  product  enhancements.   However,  the
Company's  success  in  achieving  this  depends  in part on the levels of sales
achieved  during  the  second  half of 1999 and there can be no  assurance  that
efforts  to  reduce  the  percentage  of  sales   represented  by  research  and
development expenses will be successful.

OTHER INCOME AND EXPENSE

The Company  recorded  interest  income of $1.1 million in the first  quarter of
1999,  as  compared  to $1.7  million in the first  quarter  of 1998.  Decreased
average cash balances during the first quarter of 1999 resulted in a decrease in
interest  income when  compared to the  corresponding  period of 1998.  Interest
expense  was $2.8  million in the first  quarter of 1999,  as  compared  to $1.2
million in the first quarter of 1998.  The increase in interest  expense  during
the first quarter of 1999 was  primarily  due to the Company  entering into debt
agreements with Idanta Partners,  Ltd. and another entity  affiliated with David
J. Dunn, Chairman of the Company's Board of Directors, in July 1998, under which
the Company borrowed $40 million pursuant to a series of three notes.

Also  included in other  income and  expense  were bank  charges,  miscellaneous
royalty  income,  gains and losses on disposal  of assets and  foreign  currency
gains and losses.

INCOME TAXES

For the first quarter of 1999,  the Company  recorded an income tax provision of
$0.3 million,  representing an effective income tax rate of  approximately  35%.
The Company  expects its effective tax rate to remain at  approximately  35% for
the remainder of 1999. However,  differences  between the currently  anticipated
mix and the actual mix of non-U.S. income versus domestic income, along with the
ability of the Company to permanently  invest non-U.S.  earnings  outside of the
U.S. and its ability to meet the  requirements  for  favorable  tax treatment in
certain  jurisdictions  outside of the U.S. could impact the Company's effective
tax rate.



<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


SEASONALITY

The Company's Zip products are targeted  primarily to the personal  computer OEM
and retail consumer markets.  The Company's Jaz products are targeted  primarily
to the distribution and retail consumer market. The Company's Clik! products are
targeted to the retail consumer market and to consumer OEMs. Management believes
the markets for the  Company's  products are generally  seasonal,  with a higher
proportional  share of total  sales  occurring  in the fourth  quarter and sales
slowdowns  commonly  occurring  during  the first  quarter  and  summer  months.
Accordingly, revenues and growth rates for any prior quarter are not necessarily
indicative of the revenues or growth rates to be expected in any future quarter.

LIQUIDITY AND CAPITAL RESOURCES

At March 28, 1999,  the Company had cash and cash  equivalents of $94.0 million,
working  capital of $239.7  million,  and a ratio of  current  assets to current
liabilities of 1.7 to 1. During the first quarter of 1999, the Company generated
a total of $3.7  million of cash and cash  equivalents.  The primary  sources of
cash were reductions in accounts receivable and inventory and non-cash expenses.
These  sources  of cash were  partially  offset by the  reductions  in  accounts
payable  and  accrued  liabilities  and the  purchase  of  property,  plant  and
equipment.

Inventory  decreased by $7.1  million,  due  primarily to improved  supply chain
management and changes to the Company's procurement and manufacturing  processes
to a demand pull model  initiated  during 1998.  The decrease of $6.1 million in
accounts  receivable  was due  primarily to the timing of sales and  collections
during the respective periods and seasonally lower sales in the first quarter of
1999 when  compared to the fourth  quarter of 1998.  These  sources of cash were
partially offset by a $16.8 million decrease in accounts payable,  due primarily
to timing of inventory receipts and related payments to vendors. The decrease of
$12.2 million in accrued liabilities was due primarily to reductions in deferred
revenue and accrued payroll and related  liabilities  that were partially offset
by an increase in accrued advertising.

The Company used $12.5 million of cash in investing  activities during the first
quarter of 1999, primarily in the purchase of property,  plant and equipment and
an increase in other assets. Cash provided by financing  activities totaled $0.8
million  during the first quarter of 1999, and included $2.7 million of proceeds
from the sale of Common  Stock  that were  partially  offset by $1.9  million in
payments on capitalized lease obligations during the first quarter of 1999.

On March 11, 1997, the Company entered into a $200 million Senior Secured Credit
Facility with Morgan  Guaranty Trust Company of New York,  Citibank,  N.A. and a
syndicate of other  lenders.  During 1998 and January 1999,  the Company and the
lenders  agreed to several  amendments to and waivers under the Credit  Facility
(as most recently amended, effective January 29, 1999, the "Credit Facility").

<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENTS DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The Credit  Facility is a $150  million  secured  revolving  line of credit that
expires  on July 14,  2000,  and is  secured by  accounts  receivable,  domestic
inventory,  domestic  intellectual  property,  general  intangibles,  equipment,
personal  property,  investment  property  and a pledge  of 65% of the  stock of
certain of the Company's  subsidiaries.  Borrowing availability under the Credit
Facility is based on an agreed upon advance rate on  receivables  and  inventory
not to exceed $150 million with a floor of $110 million through May 1999.  Under
the Credit Facility,  the Company may borrow at a base rate, which is the higher
of prime or the sum of 0.5% plus the  Federal  funds rate plus a margin of 0.88%
to 1.63%, for the first year, and thereafter between 0.0% and 1.63% depending on
the Company's earnings before interest expense,  income taxes,  depreciation and
amortization ("EBITDA") and utilization of the Credit Facility, or at LIBOR plus
a margin of 2.0% to 2.75%, for the first year, and thereafter  between 1.25% and
2.75% depending on the Company's  EBITDA and utilization of the Credit Facility.
Total  availability  under the  Credit  Facility  at March 28,  1999 was  $147.8
million, and there were no borrowings outstanding. Among other restrictions, the
Credit  Facility  treats a change of control (as defined) as an event of default
and requires the  maintenance  of minimum  levels of  consolidated  tangible net
worth,  EBITDA and certain  other  covenants.  On January 29, 1999,  the Company
obtained  an  amendment  to the Credit  Facility  with  respect  to the  minimum
consolidated  EBITDA financial covenant for the periods ending on March 28, 1999
and June 27, 1999. As of March 28, 1999, the Company was in compliance  with all
covenants under the Credit Facility.  Depending on its financial  performance in
future  quarters,  the Company may be required to seek further  covenant waivers
and  amendments  under the Credit  Facility.  There can be no assurance that the
Company  will be able  to  obtain  any  such  waivers  or  amendments  on  terms
acceptable to the Company,  if at all.  Loss of the Credit  Facility may require
the Company to find an alternative source of funding which could have a material
adverse effect on the Company's business and financial condition.

The current and long-term portions of capitalized lease obligations at March 28,
1999 were $3.5 million and $3.5 million, respectively. The current and long-term
portions of notes  payable at March 28, 1999 were $0.1 million and $0.1 million,
respectively.  In July,  1998, the Company  borrowed a total of $40 million from
Idanta Partners Ltd. and another entity affiliated with David J. Dunn,  Chairman
of the  Company's  Board of  Directors,  pursuant  to a series  of three  senior
subordinated  notes.  The initial  interest rate was 8.7% per annum,  increasing
through  January 1, 1999 to 12.7% per annum.  The  proceeds  of these notes were
used for the cash purchase of Nomai. The Company used internally generated funds
to repay the  principal  and  interest  associated  with these  notes upon their
maturity on March 31, 1999.

The Company had $45.5 million of convertible  subordinated  notes outstanding at
March 28,  1999,  which bear  interest at 6.75% per year and mature on March 15,
2001.

The Company expects to generate positive cash flow for 1999. The Company expects
that its balance of cash and cash equivalents,  together with current and future
sources  of  available  financing,  will be  sufficient  to fund  the  Company's
operations  during the next twelve  months.  However,  whether the Company  will
achieve a positive cash flow for 1999,  and the precise amount and timing of the
Company's  future  financing  needs cannot be determined at this time,  and will

<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


depend on a number of factors,  including  the market  demand for the  Company's
products, the availability of critical components, the progress of the Company's
product  development  efforts,  the  success  of the  Company  in  managing  its
inventory,  accounts  receivable  and  accounts  payable  and the success of the
Company's efforts to consolidate facilities and reduce headcount.

On January 13, 1999, the Company announced that it had entered into a definitive
agreement to purchase certain assets of SyQuest Technology,  Inc.,  ("SyQuest"),
including all of its intellectual property and its inventory and fixed assets in
the U.S., for $9.5 million in cash,  subject to certain  closing  conditions and
adjustments.  The Company's purchase of SyQuest's U.S. assets closed on April 6,
1999.  As part of the  agreement,  the  Company  released  SyQuest  and  SyQuest
released the Company  from all claims in  connection  with patent and  trademark
infringement  litigation  pending  between the parties in Delaware and in Paris,
France.  The Company has also  entered  into an  agreement  to purchase  certain
assets from SyQuest's subsidiary in Malaysia. These assets are being offered for
sale separately by a Receiver and Manager  appointed in Malaysia at an estimated
purchase price of approximately  $3.0 million.  Provided all conditions are met,
the Company  anticipates  a second  quarter  1999 closing of its purchase of the
SyQuest Malaysian assets.

OTHER MATTERS

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 133 "Accounting for Derivative  Instruments
and Hedging  Activities"  ("SFAS 133").  SFAS 133 establishes new accounting and
reporting  standards  for  companies  to  report  information  about  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, (collectively referred to as derivatives) and for hedging activities.
This  statement  is effective  for  financial  statements  issued for all fiscal
quarters of fiscal  years  beginning  after June 15,  1999.  The Company has not
determined  if it will adopt SFAS 133 prior to its effective  date.  The Company
does not expect this  pronouncement  to have a material  impact on the Company's
results of operations, financial position or liquidity.

FACTORS AFFECTING FUTURE OPERATING RESULTS

Because  the  Company  is  relying on its Zip,  Jaz and Clik!  products  for the
substantial  majority  of its  sales in 1999,  the  Company's  future  operating
results  will  depend in large  part on the  success  of those  products  in the
market.  Although the Company  believes  there is a market  demand for removable
data storage solutions for personal computers and other devices, there can be no
assurance that the Company will be successful in establishing Zip, Jaz and Clik!
as the preferred  solutions for those market needs. The extent to which Zip, Jaz
and Clik!  achieve and maintain a significant market presence will depend upon a
number  of  factors,  including:  the  price,  performance,  quality  and  other
characteristics of the Company's products and of competing solutions  (existing,
announced  or  unannounced)  introduced  by other  vendors,  including,  without
limitation,  the LS-120, or SuperDisk (product co-developed by the consortium of
Compaq Computer,  Imation,  O.R. Technology and MKE), HiFD (product co-developed

<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


by Sony  Corporation  and Fuji Photo Film Co.,  Ltd.),  the UHD144  (product  in
development  by Caleb  Technology  Corporation),  the Orb (product  developed by
Castlewood  Systems,  Inc.),  the  Pro-FD  (product  in  development  by Samsung
Electro-Mechanics  Co., Ltd.),  the Microdrive  (product in development by IBM),
the  Memorystick  (product  developed by Sony  Corporation),  various formats of
flash memory,  CD-R and CD-RW drives,  announced  developments of rewritable DVD
drives and media, and announced products in development by Terastor Corporation;
the success of any third party in creating and marketing  media intended for use
with the Company's drive products without  infringing the Company's  proprietary
rights;  the success of the Company in meeting targeted  availability  dates for
enhanced  products;  the success of the Company in establishing  and maintaining
OEM arrangements  and meeting OEM quality,  supply and other  requirements;  the
willingness  of OEMs to  promote  computer  and other  products  containing  the
Company's  drives;  the ability of the Company to create demand for Zip, Jaz and
Clik!,  including demand from leading personal computer and other manufacturers;
the  success of the  Company in  educating  consumers  about the  existence  and
possible  uses of Zip,  Jaz and Clik!  storage  solutions;  the  success  of the
Company's  efforts  to make  continued  improvements  to  customer  service  and
satisfaction;  the public perception of the Company and its products,  including
statements  made  by  industry  analysts  or  consumers  and  adverse  publicity
resulting from such statements or from litigation filed against the Company; and
the overall market demand for personal  computers,  laptop and palmtop computers
and other devices with which the Company's products can be used.

The Company's  business strategy is substantially  dependent on maximizing sales
of its proprietary Zip, Jaz and Clik! disks, which generate significantly higher
margins than the related  drives.  If this  strategy is not  successful,  either
because the Company does not establish a  sufficiently  large  installed base of
Zip,  Jaz and Clik!  drives,  because the sales mix between  disks and drives is
below levels  anticipated  by the Company,  because  another  party  succeeds in
producing or marketing disks that are compatible with any of the Company's drive
products without infringing the Company's  proprietary  rights, or for any other
reason,  the  Company's  sales would be adversely  affected,  and its results of
operations would be disproportionately adversely affected.

Sales of Zip  products  in 1998 and the first  quarter of 1999  accounted  for a
significant majority of the Company's revenues.  However, these sales may not be
indicative of the  long-term  demand for Zip  products.  Accordingly,  the sales
levels  experienced  by the Company in any prior period should not be assumed to
be an  indication  of future sales levels.  In the fourth  quarter of 1998,  the
Company  introduced  the Zip 250 product.  The market  acceptance of the Zip 250
product and its impact on other Zip  products has not yet been  determined  and,
therefore,  may have an adverse impact on future sales. In addition, the Company
has experienced and may in the future experience significant fluctuations in its
quarterly  operating  results.  Moreover,  because the Company's  expense levels
(including  budgeted  selling,  general,  and  administrative  and  research and
development  expenses) are based in part on expectations of future sales levels,
a shortfall in expected sales could result in a disproportionate  adverse effect
on the Company's results of operations and cash flow. For example,  in 1998, the
Company's   operating  expenses  as  a  percentage  of  sales  fell  outside  of
management's  operating model resulting in a net operating loss for the year. In
addition, the Company's stock price, like other high-technology companies' stock
prices,  could be subject to  fluctuations  in response to actual or anticipated
variations  in  operating  results,  as well as  changes in  analysts'  earnings
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


estimates,  announcements  of new products or developments by the Company or its
competitors,  market conditions in the information  technology industry, as well
as general economic conditions and other factors external to the Company.

Clik!, a miniaturized  removable-media  storage solution for use in a variety of
handheld  electronic  devices,  represents the Company's  first product which is
primarily   targeted   to  digital   camera  and  other   consumer   electronics
manufacturers.  The Company does not have prior  experience  in these  channels.
Accordingly, there are additional risks that the Clik! products will not achieve
significant market presence or otherwise be successful.

Management of the Company's  inventory levels has become  increasingly  complex.
The Company's customers frequently adjust their ordering patterns in response to
various factors including:  the Company's  perceived ability to meet demand, the
Company's  and  competitors'  inventory  supply in the retail  and  distribution
channel, timing of new product introductions, seasonal fluctuations, Company and
customer promotions, the consolidation of customer distribution centers, pricing
considerations and the attractiveness of the Company's products as compared with
competing  products.  Customers  may increase  orders during times of shortages,
cancel orders if the channel is filled with  currently  available  products,  or
delay orders in anticipation of new products.  Any excess supply could result in
price reductions and inventory writedowns,  which in turn could adversely affect
the Company's results of operations.

The  Company  has  evolved  from an after  market  business  to a business  that
includes  a  significant  volume  of  OEM  sales.  In an  OEM  business,  a high
proportion of sales are concentrated  among a small number of customers.  As the
concentration of sales to OEM customers  continues to evolve, a relatively small
number of major  customers  will  represent a business  risk that loss of one or
more  accounts  could  adversely  affect the  Company's  financial  condition or
operating  results.  The  Company's  customers  are  generally  not obligated to
purchase  any  minimum  volume  and  are  generally  able  to  terminate   their
relationship with the Company at will. If changes in purchase volume or customer
relationships  resulted in decreased demand for the Company's drives, whether by
loss of or delays in orders,  the  Company's  financial  condition  or operating
results could be adversely affected.

The Company continues to refine the design of its Zip, Jaz and Clik! products in
an effort to improve  product  performance  and reduce  manufacturing  costs. In
addition,  the Company depends on independent parties for the supply of critical
components for its Zip, Jaz and Clik!  products.  Certain of these suppliers are
or may  become  competitors  of the  Company.  As a result  of these  and  other
factors,   the  Company  may  experience   problems  relating  to  the  quality,
reliability  and/or  availability of certain of its products.  For example,  the
Company  has   recalled   certain   products   and   experienced   manufacturing
interruptions  due to  supplier  quality  problems.  Any  product  availability,
quality or  reliability  problems  experienced  by the Company,  or claims filed
against the Company as a result of these problems,  could have an adverse effect
on the  Company's  sales and net  income,  result  in  damage  to the  Company's
reputation in the marketplace,  and/or subject the Company to damage claims from
its customers.  In addition,  component problems,  shortages,  quality issues or
other factors  affecting the supply of the Company's  products  could provide an
opportunity for competing products to increase their market share.
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


All of the factors described above for Zip, Jaz and Clik!  products are, or will
be,  relevant to the other  products  currently  sold by the Company and any new
products introduced by the Company in the future. In addition, the Company faces
development,  manufacturing,  demand and market  acceptance risks with regard to
recently introduced and future products.  The Company's future operating results
will depend in part on its success in introducing enhanced and new products in a
timely and competitively  effective manner. For example,  the Company's Jaz 2 GB
product,  originally  scheduled for shipment in the fourth  quarter of 1997, did
not ship  until  February  1998 and thus had a  material  adverse  effect on the
results of  operations  for the fourth  quarter of 1997 and the first quarter of
1998.  Future  operating  results will also depend on the  Company's  ability to
effectively  manage  obsolescence risks associated with products that are phased
out and its success in ramping to volume production of new or enhanced products.
Future operating results will also depend on intellectual property and antitrust
matters including the possibility that infringement claims asserted from time to
time against the Company  could  require the Company to pay royalties to a third
party in order to continue to market and distribute one or more of the Company's
current  or future  products,  and the  possibility  that the  Company  would be
required  to devote  unplanned  resources  to  developing  modifications  to its
products or marketing programs.

In early 1998,  the Company began  implementing  a virtual  enterprise  model to
improve  profitability and asset  utilization.  The virtual  enterprise model is
based upon a demand pull model,  in which  production  schedules are set to meet
expected  customer  sell-through  demand,  and  includes  making  changes to the
Company's  procurement and manufacturing  processes and supply chain management.
As part of this new model,  suppliers have been asked to arrange for supply hubs
to provide inventory delivery in a pull or just-in-time  fashion. If the Company
is not successful in meeting its  commitments to suppliers as a result of actual
supply requirements being different from anticipated supply requirements, or for
any other reason,  the Company's  relationships with suppliers could be damaged,
resulting in component problems, shortages or other factors affecting the supply
of the Company's  products.  There can be no assurance  that the Company will be
successful  in   implementing   the  virtual   enterprise   model  or  that  the
implementation will result in improved profitability and asset utilization.

Many  components  incorporated  in, or used in the manufacture of, the Company's
products are currently  available only from single or sole source suppliers.  In
particular, media used in Zip disks is obtained exclusively from Fuji Photo Film
and certain integrated circuits used in Zip drives are obtained exclusively from
LSI Logic.  The  Company  purchases  a portion of its  single,  sole and limited
source  components,  including  components  from Fuji  Photo Film and LSI Logic,
pursuant  to  purchase  orders  without  guaranteed  supply  arrangements.   The
inability to obtain sufficient components and equipment, or to obtain or develop
alternative  sources of supply at  competitive  prices and quality,  or to avoid
manufacturing  delays  could  prevent  the  Company  from  producing  sufficient
quantities  of its  products  to satisfy  market  demand  (or,  in the case of a
component  purchased  exclusively  from  one  supplier,  the  Company  could  be
prevented  from  producing  any quantity of the affected  product(s)  until such
component  becomes  available  from  an  alternative   source),   delay  product
shipments,  increase the Company's  material or manufacturing  costs or cause an
imbalance  in the  inventory  levels of  certain  components.  The  Company  has
experienced difficulty in the past, and may experience difficulty in the future,
in obtaining a sufficient  supply of certain key  components  on a timely basis.

<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Moreover,  difficulties in obtaining sufficient components may cause the Company
to modify the design of its products to use a more readily available  component,
and such design modifications may result in product performance problems. Any or
all of these problems could in turn result in the loss of customers,  provide an
opportunity  for competing  products to achieve market  acceptance and otherwise
adversely affect the Company's business and financial results.

The Company has announced plans to consolidate  facilities and reduce  headcount
during the second quarter of 1999 in order to streamline its efforts to focus on
earnings  growth.   Management  believes  that  the  planned   consolidation  of
facilities and the reduction of headcount will reduce total  operating  expenses
during the  second  half of 1999 and future  periods.  However,  there can be no
assurance that the Company will be successful in its efforts to reduce operating
expenses in future  periods.  The Company is also in the process of implementing
Six Sigma quality  initiatives  intended to make substantial product and process
quality  improvements  and to reduce costs.  However,  there can be no assurance
that  the  Company's  quality   initiatives  will  be  successful  in  providing
substantial product and process improvements and in reducing costs.

A  significant  portion of the  Company's  revenues are  generated in Europe and
Asia. The Company's existing infrastructure outside of the United States is less
mature and developed than in the United States.  Consequently,  future sales and
operating  income  from these  regions are less  predictable  than in the United
States. In addition,  operating expenses may increase as those operations mature
and  increase  in size.  The  Company's  international  sales  transactions  are
generally  denominated  in U.S.  dollars.  Weakening  in the  value  of  foreign
currencies  relative  to the U.S.  dollar  that are not  sufficiently  hedged by
foreign  customers  could  result in lower  sales and have an adverse  effect on
future  operating  results (see  "Disclosures  About Market  Risk"  below).  For
example,  management  believes that sales in Asia were adversely affected during
the  fourth  quarter  of 1997 and  through  the first  quarter  of 1999 and will
continue to be adversely  affected due to a regional  economic  downturn and the
devaluation of certain Asian currencies  vis-a-vis the U.S. dollar.  The Company
cannot  predict  with any  certainty  the impact that these or other such events
could have on its foreign operations.

On January 1, 1999,  eleven  countries of the European Union  established  fixed
conversion  rates between  their  existing  currencies,  and adopted the Euro as
their new  common  legal  currency.  Since  that  date,  the Euro has  traded on
currency exchanges,  with the legacy currencies remaining as legal tender in the
participating  countries  for a transition  period  between  January 1, 1999 and
January 1, 2002.  During the  transition  period,  parties  can elect to pay for
goods and  services  and  transact  business  using  either the Euro or a legacy
currency.  Between January 1, 2002 and July 1, 2002, the participating countries
will introduce  Euro bills and coins and withdraw all legacy  currencies so that
they will no longer be available.  The Euro  conversion may affect  cross-border
competition  by  creating  cross-border  price  transparency.   The  Company  is
assessing the  competitiveness  of its  pricing/marketing  strategy in a broader
European  market.  The  Company  is  also  assessing  whether  certain  existing
contracts  may require  modification  in addition to assessing  its  information
technology  systems to allow for  transactions  to take place in both the legacy
currencies and the Euro and the eventual  elimination of the legacy  currencies.
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The Company's  currency risk and risk management for operations in participating
countries may be reduced as the legacy currencies are converted to the Euro. The
Company will continue to evaluate  issues  involving  introduction  of the Euro.
Based on the Company's assessment from current information, the Company does not
expect the Euro  conversion to have a material  adverse  effect on the Company's
business or financial condition.  There can be no assurance,  however,  that the
Euro  conversion  will not  have a  material  adverse  effect  on the  Company's
European sales or otherwise adversely affect the Company's business,  results of
operations or financial condition.

The Company's success depends in large part upon the services of a number of key
employees.  The loss of the services of one or more of these key employees could
have a material  adverse  effect on the  Company.  The  Company's  success  also
depends in  significant  part upon its  ability to  continue  to attract  highly
skilled personnel to fill a number of vacancies. Effective June 5, 1998, Leonard
C.  Purkis  resigned  as Senior  Vice  President,  Finance  and Chief  Financial
Officer. Dan E. Strong, Vice President and Corporate Controller, has assumed the
role of interim Chief Financial  Officer while the Company conducts a search for
a Chief Financial Officer.  The Company is in the process of conducting a search
for an Executive Vice President to head the global Product,  Sales and Marketing
function.  Jodie K. Glore, who joined the Company as Chief Executive Officer and
President in October 1998, has assumed this role during the search period. There
can be no assurance  that the Company will be successful  in  attracting  and/or
retaining key  employees,  or that the  transition to a functional  organization
will  not  result  in  short-term  disruptions,  or  that  the  transition  will
eventually produce the desired results.

Factors  other than those  discussed  above that could  cause  actual  events or
actual results to differ materially from those indicated by any  forward-looking
statements  include the ability of  management to manage  increasing  volumes of
production and an increasingly complex business,  transportation issues, product
and component pricing, competition, technological changes and advances, adoption
of  technology or  communications  standards  affecting the Company's  products,
intellectual property rights, litigation,  general economic conditions,  changes
or slowdowns in overall  market  demand for personal  computer  products and any
difficulties  experienced by the Company as a result of the Year 2000 issue (see
"Year 2000 Readiness" below).

DISCLOSURES ABOUT MARKET RISK

The Company is exposed to various  interest rate and foreign  currency  exchange
rate risks  that  arise in the  normal  course of  business.  The  Company  uses
borrowings  comprised primarily of variable rate debt to finance its operations.
The Company has international  operations  resulting in receipts and payments in
currencies  that  differ  from  the  functional  currency  of the  Company.  The
Company's functional currency is the U.S. dollar.

The Company attempts to reduce foreign currency exchange rate risks by utilizing
financial  instruments,  including derivative  transactions  pursuant to Company
policies.  The  Company  uses  forward  contracts  to  hedge  those  assets  and
liabilities  that, when remeasured  according to generally  accepted  accounting
principles,  impact  the  consolidated  statement  of  operations.  All  forward
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


contracts entered into by the Company are components of hedging programs and are
entered into for the sole purpose of hedging an existing or anticipated currency
exposure,  not for speculation or trading purposes.  The contracts are primarily
in European currencies, the Singapore dollar and the Japanese yen. The contracts
have maturities  that do not exceed three months.  The Company has a substantial
presence in Malaysia.  In September 1998, the ruling party in Malaysia fixed the
Malaysian Ringgit to the U.S. dollar. The Company  experienced a loss related to
the fixing of the  currency.  The Company  recognized  this loss during the year
ended  December 31, 1998. The Company has material  amounts of accounts  payable
denominated in Ringgit.  Currently,  the foreign  currency markets are closed to
hedging  alternatives in Ringgit.  When the foreign currency markets re-open for
the Ringgit,  the Company plans to re-institute its hedging strategy for Ringgit
exposure.

When  hedging  balance  sheet  exposure,  realized  gains and  losses on forward
contracts  are  recognized in other income and expense in the same period as the
realized gains and losses on remeasurement  of the foreign currency  denominated
assets and liabilities  occur.  All gains and losses related to foreign exchange
contracts  are  included  in  cash  flows  from  operating   activities  in  the
consolidated statement of cash flows.

The fair value of the  Corporation's  long-term  debt and forward  contracts are
subject to change as a result of  potential  changes in market rates and prices.
The Company has performed a sensitivity  analysis  assuming a  hypothetical  10%
adverse  movement in foreign  exchange  rates and interest  rates applied to the
forward  contracts and underlying  exposures  described  above.  As of March 28,
1999,  the  analysis  indicated  that  such  market  movements  would not have a
material effect on the Company's  consolidated  financial  position,  results of
operations  or cash flows.  Factors that could impact the  effectiveness  of the
Company's   hedging  programs  include   volatility  of  the  currency  markets,
availability  of hedging  instruments  and the  Company's  ability to accurately
project net asset or liability positions.  Actual gains and losses in the future
may differ  materially from the Company's  analysis  depending on changes in the
timing and amount of interest rate and foreign  exchange rate  movements and the
Company's actual exposure and hedges.

YEAR 2000 READINESS 

The information  provided below  constitutes a "Year 2000 Readiness  Disclosure"
under the Year 2000 Information and Readiness Disclosure Act of 1998.

Overview. In general, the Year 2000 issue relates to computers and other systems
being unable to distinguish between the years 1900 and 2000 because they use two
digits,  rather  than  four,  to define  the  applicable  year.  The  Company is
addressing the Year 2000 issue in the following areas: (i) hardware and software
products sold by the Company; (ii) the Company's  information  technology ("IT")
systems;  (iii) the Company's  non-IT  systems (i.e.,  machinery,  equipment and
devices that utilize  "built-in"  technology such as embedded  microcontrollers)
and (iv)  third-party  suppliers and customers.  The Company is undertaking  its
Year 2000 review in the following phases:  Awareness  (education and sensitivity
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


to the Year 2000 issue),  Inventory  (identifying  the  equipment,  processes or
systems which are susceptible to the Year 2000 issue),  Assessment  (determining
the  potential  impact  of Year 2000 on the  equipment,  processes  and  systems
identified  during the  Inventory  phase and  assessing the need for testing and
remediation), Testing/Verification (testing to determine if an item is Year 2000
ready or the degree to which it is deficient) and  Implementation  (carrying out
necessary remedial efforts to address Year 2000 readiness,  including validation
of upgrades,  patches or other Year 2000  fixes).  The Company has formed a Year
2000  Committee  which meets  regularly  and has  responsibility  to oversee the
implementation  of Year  2000  initiatives.  The  Year  2000  Committee  reports
regularly to an executive management committee.

Products.  Under  the  direction  of the Year 2000  Committee,  the  Company  is
undertaking a systematic  review and testing of its products,  both hardware and
software.  The Company has  completed  the review and testing of all its current
release  products.  Hardware  testing was  conducted  by the  National  Software
Testing   Laboratories   ("NSTL")  according  to  NSTL  developed  standards  or
guidelines (NSTL YMark 2000, Version 97.08.15).  NSTL has verified that the Zip,
Jaz, Ditto, Buz and Clik! hardware products tested are Year 2000 ready when used
in an operating  system and with other products  which  themselves are Year 2000
ready.  The Company  tested its software  utility tools and drivers  internally.
When used in an operating  system and with other products  which  themselves are
Year 2000 ready,  the tested software  utility tools and drivers have been found
to be Year 2000 ready, except for Findit and CopyMachine  software  applications
used  with  Zip and Jaz  drives,  and the  Ditto  16-bit  software  applications
intended  for DOS and Windows  3.1 users.  For  Windows 95 and higher  users,  a
32-bit Year 2000 upgrade is available, on the Company's web site without charge,
for Findit and CopyMachine.  No solution is presently available for users of the
16-bit software versions of Findit,  CopyMachine and Ditto software applications
intended for DOS and Windows 3.1 users. The Company continues to investigate the
possibility of providing Year 2000 upgrades for these software applications. The
specific  results of hardware and software testing are provided on the Company's
Year 2000 web pages on its web site  (www.iomega.com).  The Company plans to use
its web site to  communicate  Year 2000 product issues that may be identified in
the future.

With respect to its legacy  products,  the Company  presently plans to conduct a
Year 2000 review on its Bernoulli drive product.  NSTL has tested four Bernoulli
drive  models and found  them to be Year 2000  ready  when used in an  operating
system and with other products which themselves are Year 2000 ready. The Company
plans to conduct an internal Year 2000 review of the remaining  Bernoulli  drive
models.  The Company will internally  test Company  developed  software  utility
tools and  drivers  used with  Bernoulli  drives.  Software  developed  by third
parties  which was bundled or sold with  Bernoulli  drive  products  will not be
tested by the Company;  rather, the third party provider of such software should
be contacted  for the Year 2000  readiness of such software  products.  The Year
2000 review of Bernoulli  drive products is expected to be completed by June 30,
1999.

The Company has started Year 2000 testing of currently  shipping  Nomai  branded
CD-RW  drives.  Software  provided  with  currently  shipping  CD-RW  drives was
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


developed by a third party,  who has  indicated  that such software is Year 2000
compliant;  therefore, the Company has not, and does not anticipate testing such
software.  The Company anticipates  completing the Year 2000 review of all Nomai
branded drive products by the end of the second quarter of 1999.

Notwithstanding  the results of the Company's  testing and remediation  efforts,
actual  backup,  restore  and  rollover  results in  specific  operating  system
environments  may vary  depending  on a number of  factors,  including,  without
limitation,  other hardware  utilized,  the specific  operating system utilized,
other software applications utilized and the Year 2000 readiness of each.

Internal IT  Systems.  During  1998,  the  Company  implemented  new HP computer
hardware and Oracle software for its financial,  accounting,  inventory control,
order  processing,  supply chain  management  and other  management  information
systems. According to the respective vendors, the hardware operating systems and
software  currently  in use by the  Company  are in various  stages of Year 2000
readiness. The respective vendors are providing Year 2000 software upgrades when
Year 2000  deficiencies  are  identified.  In January  1999,  the Company  began
testing the hardware  operating systems and software  applications in use by the
Company to  confirm  Year 2000  readiness.  The  Company  has  identified  other
hardware and applications  software used in its IT systems and is in the process
of  obtaining  Year  2000  compliance  information  from the  providers  of such
hardware  and  applications  software.  The Company  will assess and remedy,  as
deemed  appropriate,  Year 2000 issues it identifies with respect to critical IT
systems utilized by the Company. The Company does not anticipate any significant
Year  2000  issues  with  respect  to its IT  systems  and  therefore  does  not
contemplate any significant contingency planning for its IT systems.

Internal Non-IT Systems. The Company has substantially  completed  inventorying,
assessing  and testing its major non-IT  systems,  as well as  implementing  any
remedial  actions to the extent  deemed  appropriate.  The  Company  anticipates
completing  its Year 2000 review of its major  non-IT  systems by June 30, 1999.
The Company does not anticipate any significant Year 2000 issues with respect to
its  non-IT  systems  and  therefore  does  not   contemplate   any  significant
contingency planning for its non-IT systems.

Material Third-Party  Relationships.  The Company has significant  relationships
with various third parties (many located outside of the U.S.) and the failure of
any of these third parties to achieve Year 2000 compliance could have a material
impact on the Company's  business,  operating  results and financial  condition.
These  third   parties   include   energy  and  utility   suppliers,   financial
institutions,   material  and  product  suppliers,   transportation   providers,
communications vendors,  including value added network vendors and the Company's
significant  customers.  While the  Company  has  received  Year 2000  readiness
statements from its major  third-party  suppliers which in general indicate Year
2000  readiness,   the  Company  continues  in  the  process  of  conducting  an
audit/questionnaire  with each major  supplier and vendor to confirm  their Year
2000 readiness. The audit/questionnaire process for suppliers is now expected to
be completed in the third quarter of 1999.

<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Costs. Through the first quarter of 1999, the Company incurred approximately $38
million in costs to improve the Company's IT systems and for Year 2000 readiness
efforts.  Of this amount,  95%  represented  the costs of  transitioning  to new
computer hardware and software for its financial, accounting, inventory control,
order  processing,  supply chain  management  and other  management  information
systems,  of which  approximately  one-half is being  capitalized  and  one-half
expensed.  This system  hardware  and software  was  implemented  to upgrade and
improve the  Company's IT systems and to  facilitate  Year 2000  readiness.  The
balance was expended for hardware and software testing,  third-party  consulting
costs and third-party audits and reviews. The Company is not separately tracking
the  internal  costs  for its  Year  2000  review  activities;  such  costs  are
principally  the related  payroll  costs for the Company's  information  systems
group.  The Company  anticipates  incurring an  additional $6 million in 1999 in
connection  with  Year  2000  readiness  efforts,  including  additional  system
hardware and  software,  third-party  consulting  fees,  third-party  audits and
reviews and product  software and hardware  testing costs. The Company has set a
goal of having  substantially  all Year 2000 readiness  efforts completed by the
end of the third quarter of 1999.

Contingency Plans. The Company is preparing contingency plans for critical areas
to address Year 2000 failures if remedial efforts are not fully successful.  The
Company's contingency plans are expected to target the Company's most reasonably
likely  worst  case  scenarios  and to  include  items  such as  maintaining  an
inventory   buffer,   providing  for  redundant  IT  systems  and   establishing
alternative third-party logistics. The Company's contingency plans will be based
in part on the results of third-party  supplier  audits,  and thus are not fully
developed at this time.  Completion of initial contingency plans is targeted for
the third  quarter of 1999 (which plans will  thereafter be revised from time to
time as deemed appropriate).

General.  To supplement the Company's  efforts  described above, the Company has
engaged  outside IT and legal  advisors  to conduct  independent  reviews of the
Company's Year 2000 plans.

No  assurance  can be given that the Company  will not be  materially  adversely
affected by Year 2000 issues. Although the Company is not currently aware of any
material  operational  issues with  preparing its internal IT and non-IT systems
for the Year 2000, the Company may experience  material  unanticipated  problems
and costs caused by  undetected  errors or defects in its internal IT and non-IT
systems. In addition,  the failure of third parties to timely address their Year
2000 issues  could have a material  adverse  impact on the  Company's  business,
operations  and  financial  condition.  If, for example,  third party  suppliers
become unable to deliver  necessary  components,  the Company would be unable to
timely manufacture products and meet customer order requirements.  Similarly, if
international  shipping and freight forwarders were unable to ship product,  the
Company would be unable to deliver product to sales channels.

Additionally, there can be no assurance that the Company will not be the subject
of lawsuits  regarding the failure of the Company's products (former or present)
in the event they are not Year 2000 ready.  Despite the testing and  remediation
<PAGE>
                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


efforts undertaken by the Company,  the Company's products may contain errors or
defects associated with the Year 2000. Known or unknown errors or defects in the
Company's  products  could  result  in delay or loss of  revenue,  diversion  of
development  resources,  damage to the Company's reputation or increased service
and warranty costs, any of which could materially adversely affect the Company's
business,  operating results and financial condition.  In addition,  because the
computer  systems in which the  Company's  products are used  involve  different
hardware, software and firmware components from different manufacturers,  it may
be difficult to determine  which component in a system caused a Year 2000 issue.
As a  result,  the  Company  may be  subjected  to Year  2000  related  lawsuits
independent  of whether its products are Year 2000 ready.  Any Year 2000 related
suits,  if adversely  determined,  could have a material  adverse  affect on the
Company's business, operating results and financial condition.

The  foregoing   discussion  of  the  Company's  Year  2000  readiness  includes
forward-looking statements,  including estimates of the timeframes and costs for
addressing  the known Year 2000 issues  confronting  the Company and is based on
management's current estimates,  which were derived using numerous  assumptions.
There can be no  assurance  that these  estimates  will be  achieved  and actual
events and results  could differ  materially  from those  anticipated.  Specific
factors that might cause such material  differences include, but are not limited
to, the availability of personnel with required  remediation skills, the ability
of the  Company to  identify  and correct  all  relevant  computer  code and the
success of third parties with whom the Company does business in addressing their
Year 2000 issues.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A discussion  of the  Company's  exposure  to, and  management  of,  market risk
appears in Item 2 of this Form 10-Q under the heading  "Disclosures About Market
Risk".
<PAGE>


 IOMEGA CORPORATION

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

Except as set forth below,  or in the  Company's  Annual Report on Form 10-K for
the year ended December 31, 1998, in management's opinion, there are no material
pending legal proceedings,  other than ordinary routine litigation incidental to
its business,  to which the Company or any of its  subsidiaries is a party or to
which any of their property is subject.

As previously disclosed in the Company's Annual Report on Form 10-K for the year
ended  December 31, 1998,  on October 9, 1998,  Hi-Val,  Inc.  filed a complaint
against the Company and other parties, Hi-Val, Inc. v. Nomai, S.A., Nomus, Inc.,
Kevin Scheier and Iomega,  in the Superior Court of California,  County of Santa
Clara. The claims are related to an alleged  arrangement between Nomai, S.A. and
Hi-Val for Hi-Val to  distribute  Nomai's  XHD  cartridges.  Plaintiff  seeks to
recover $26 million in alleged,  unspecified  damages.  During the first quarter
following the Court's order sustaining Iomega's demurrers to the complaint,  the
plaintiffs filed an amended  complaint which alleges tortious  interference with
contract, intentional misrepresentation,  tortious interference with prospective
economic advantage,  unfair business practices, and conspiracy against Iomega, a
contingent  act claim,  an unfair  competition  claim,  and other claims against
other  parties to the  litigation.  The  Company  intends to  vigorously  defend
against such allegations.

As previously disclosed in the Company's Annual Report on Form 10-K for the year
ended  December  31, 1998,  on February 25, 1998,  the Company was served with a
complaint in a purported class action filed in the Supreme Court of the State of
New York,  entitled  Christian Champod v. Iomega Corporation as described in the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 1998. In
March 1999, the Company entered into a Memorandum of Understanding pertaining to
the  settlement  of this  litigation.  In  addition,  the parties  have  jointly
submitted  to the  court a  stipulation  containing  the  terms of the  proposed
settlement.

As previously disclosed in the Company's Annual Report on Form 10-K for the year
ended  December 31, 1998,  on July 23, 1997,  the Company  initiated  litigation
against SyQuest Technology, Inc. ("SyQuest") in the United States District Court
in the  District  of Delaware  for  infringing  the  Company's  U.S.  Patent No.
5,644,444,  U.S.  Design  Patent  No.  D378,518  and  the  Company's  registered
trademark "JET".  The complaint  sought monetary  damages and injunctive  relief
enjoining SyQuest from further infringement.  The matter was scheduled for trial
in April  1999;  however,  the trial date was  delayed as a result of  SyQuest's
filing of a  voluntary  petition  in the United  States  Bankruptcy  Court under
Chapter 11 of the U.S.  Bankruptcy Code in November 1998. The Company also filed
complaints  on March 6,  1998 and April 29,  1998 in the  Paris  District  Court
alleging claims of copyright and patent  infringement.  The Company's definitive
agreement  to  purchase  certain  assets  of  SyQuest,   including  all  of  its
intellectual  property, and its inventory and fixed assets in the U.S., for $9.5
million in cash closed on April 6, 1999. As part of the  agreement,  the Company
released  SyQuest and SyQuest released the Company from all claims in connection
with patent and trademark infringement litigation pending between the parties in
Delaware and in Paris, France.

The Company continues to be committed to vigorously protecting and enforcing its
intellectual  property  rights and to attacking  unfair  competition,  including
through the proceedings referenced above.
<PAGE>


Item 2.           Change in Securities and Use of Proceeds

During the first  quarter of 1999,  the Company  issued  30,378 shares of Common
Stock upon conversion of its 6-3/4%  Convertible  Subordinated Notes due 2001 in
reliance upon the exemption from  registration  set forth in Section  3(a)(9) of
the  Securities  Act.  No  underwriters  were  engaged in  connection  with such
issuances. The Company did not sell any other equity securities during the first
quarter of 1999 that were not registered under the Securities Act.
<PAGE>


Item 4.           Submission of Matters to a Vote of Security Holders.

The Company's  Annual  Meeting of  Stockholders  was held on April 20, 1999. The
following proposals were adopted by the vote specified below:

                                                  Against/
Proposal                         For              Withheld        Abstain
---------------------------      -----------     ---------        -------
1.    Election of Directors:
     Jodie K. Glore              246,493,935     4,730,275              -
     M. Bernard Puckett          246,616,801     4,607,409              -
     John M. Seidl               246,606,922     4,617,288              -

2.    Approval of amendments
      to the Company's 1997
      Stock Incentive Plan       229,113,952    20,700,890      1,409,368

3.    Ratification of Arthur
     Andersen LLP as
     Independent Auditors        247,453,591     3,060,019        710,600

In addition to the three directors listed above who were elected at the meeting,
the  terms of the  following  directors  continued  after the  meeting:  John W.
Barter, David J. Dunn, James E. Sierk, Robert P. Berkowitz, and John R. Meyers.

Item 6.           Exhibits and Reports on Form 8-K

(a)  Exhibits.  The exhibits listed on the Exhibit Index filed as a part of this
     Quarterly Report on Form 10-Q are incorporated herein by reference.

(b)  Reports on Form 8-K.  No reports on Form 8-K were filed  during the quarter
     for which this report on Form 10-Q is filed.

<PAGE>

                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                                  IOMEGA CORPORATION
                                                  ------------------
                                                     (Registrant)




                                                  /s/ Jodie K. Glore 
                                                  ------------------
Dated:   May 7, 1999                              Jodie K. Glore
                                                  Chief Executive Officer
                                                  and President



                                                  /s/ Dan E. Strong  
                                                  ------------------   
Dated:   May 7, 1999                              Dan E. Strong
                                                  Vice President and 
                                                  Corporate Controller
                                                  and Interim Chief 
                                                  Financial Officer





<PAGE>


                                  EXHIBIT INDEX


The following exhibits are filed as part of this Quarterly Report on Form 10-Q:

Exhibit No.   Description
-----------   -----------

10.23          1999 Bonus Plan

27             Financial Data Schedule (only filed as part of electronic copy)