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 29, 1998


                         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) 778-1000
              (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 29, 1998.

Common Stock, par value $.03 1/3                                263,253,504
      (Title of each class)                                  (Number of shares)
<PAGE>

                                                    
                               IOMEGA CORPORATION
                                TABLE OF CONTENTS
                                                                           Page
                          PART I - FINANCIAL STATEMENTS
Item 1.  Financial Statements

         Condensed consolidated balance sheets at March 29, 1998
              and December 31, 1997....................................       3

         Condensed consolidated statements of operations for the three months
              ended March 29, 1998 and March 30, 1997..................       5

         Condensed consolidated statements of cash flows for the three months
              ended March 29, 1998 and March 30, 1997..................       6

         Notes to condensed consolidated financial statements..........       8

Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations......................      14


                           PART II - OTHER INFORMATION
Item 1.  Legal Proceedings.............................................      23

Item 2.  Changes in Securities and Use of Proceeds.....................      25

Item 4. Submission of Matters to a Vote of Security Holders............      26

Item 6.  Exhibits and Reports on 8-K......................... .........      26

Signatures.............................................................      27

Exhibit Index..........................................................      28

This  Quarterly  Report  on Form  10-Q  contains  a  number  of  forward-looking
statements,  including  statements  relating  to  anticipated  second  and third
quarter  results;  the expected return to profitability in the fourth quarter of
1998; the sufficiency of cash and cash equivalent balances and available sources
of  financing;  projected  effective  tax rates;  expected  further  declines in
component and manufacturing  costs;  expected  decreases in inventory levels and
increases in inventory  turns;  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 Ditto products;
anticipated  expenditures (and the level of such expenditures as a percentage of
sales) for selling,  general and administrative purposes (including expenditures
for print and television  advertising) and research and development  activities;
delays in price decreases;  the anticipated negative impact on gross margins due
to Clik!  start-up costs;  the possible effects on future sales due to potential
quality  issues or  component  shortages;  the  possible  effects  of an adverse
outcome in legal  proceedings;  described  in Item 1 of Part II;  the  Company's
efforts  to protect  its  intellectual  property  rights;  estimated  additional
expenditures  associated with the Company's  transition to new computer systems;
and the  anticipated  Year  2000  compliance  of such  systems.  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"  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, and in the paragraph
immediately preceding,  the caption "Factors Affecting Future Operating Results"
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, and those set forth in Item 1 of Part II of this Quarterly  Report on Form
10-Q.


<PAGE>

<TABLE>

                               IOMEGA CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                 (In thousands)

                                               March 29,          December 31,
                                                    1998                  1997
                                                         (Unaudited)
<S>                                           <C>                 <C>

CURRENT ASSETS:
     Cash and cash equivalents                $   80,491             $ 159,922
     Temporary investments                             -                36,319
     Trade receivables, net                      249,270               280,182
     Inventories                                 313,632               246,383
     Deferred tax assets                          56,939                47,996
     Other current assets                         13,792                11,982
                                              ----------             ---------

         Total current assets                    714,124               782,784
                                              ----------             ---------

PROPERTY, PLANT AND EQUIPMENT, at cost           295,361               272,219
     Less:  Accumulated depreciation and 
               amortization                     (107,943)              (96,550)
                                              ----------             ---------

     Net property, plant and equipment           187,418               175,669
                                              ----------             ---------

OTHER ASSETS                                       3,176                 3,186
                                              ----------             ---------

                                              $  904,718             $  961,639
                                              ==========             ==========

</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 29,          December 31,
                                                    1998                  1997
                                                        (Unaudited)
<S>                                            <C>                <C>
CURRENT LIABILITIES:
     Accounts payable                          $ 219,650             $ 257,281
     Accrued payroll, vacation and bonus          16,461                31,728
     Deferred revenue                             35,235                42,423
     Income taxes payable                         13,545                22,440
     Accrued advertising                          37,776                32,628
     Other accrued liabilities                    54,872                52,613
     Current portion of capitalized lease 
        obligations                                5,259                 5,505
                                               ---------             ---------
         Total current liabilities               382,798               444,618
                                               ---------             ---------

CAPITALIZED LEASE OBLIGATIONS,
     net of current portion                        2,884                 2,939
                                               ---------            ----------
NOTES PAYABLE                                     30,000                     -
                                               ---------            ----------
DEFERRED INCOME TAXES                              1,702                10,334
                                               ---------            ----------
CONVERTIBLE SUBORDINATED NOTES,
     6.75%, due 2001                              45,683                45,683
                                               ---------            ----------

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 264,060,257 and 
        262,264,830 shares at March 29, 1998
        and December 31, 1997, respectively        8,801                 8,741
     Additional paid-in capital                   75,814               273,826
     Less:  806,753 and 829,210 Common 
        Stock treasury shares
        at March 29, 1998 and 
        December 31, 1997, respectively, 
        at cost                                   (6,070)               (6,099)
     Deferred compensation                          (251)                 (336)
     Retained earnings                           163,357               181,933
                                               ---------            ----------

         Total stockholders' equity              441,651               458,065
                                               ---------            ----------

                                               $ 904,718            $  961,639
                                               =========            ==========

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

                               IOMEGA CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)

<TABLE>
                                                For the Three Months Ended
                                               March 29,             March 30,
                                                    1998                  1997
                                                         (Unaudited)
<S>                                            <C>                   <C>
SALES                                          $ 407,500             $ 361,344

COST OF SALES                                    305,364               254,065
                                               ---------             ---------
     Gross margin                                102,136               107,279
                                               ---------             ---------

OPERATING EXPENSES:
     Selling, general and administrative         107,942                54,360
     Research and development                     23,133                14,717
                                               ---------             ---------
         Total operating expenses                131,075                69,077
                                               ---------             ---------

OPERATING INCOME (LOSS)                          (28,939)               38,202
     Interest and other income (expense), net        437                (2,872)
                                               ---------             ---------

INCOME (LOSS) BEFORE INCOME TAXES                (28,502)               35,330
     Benefit (provision) for income taxes          9,926               (12,316)
                                               ---------             ---------

NET INCOME (LOSS)                              $ (18,576)            $  23,014
                                               =========             =========

NET INCOME (LOSS) PER COMMON SHARE
     Basic                                     $   (0.07)            $    0.09
                                               =========             =========
     Diluted                                   $   (0.07)            $    0.08
                                               =========             =========

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (Notes 1 and 2)               262,238               257,286
                                               =========             =========

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - Assuming Dilution (Notes 1 and 2)  262,238               280,668
                                               =========             =========
</TABLE>



                       The accompanying notes to condensed
             consolidated financial statements are an integral part
                              of these statements.


<PAGE>

                               IOMEGA CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>

                                                   For the Three Months Ended
                                                  March 29,          March 30,
                                                      1998                1997
                                                           (Unaudited)
<S>                                               <C>                <C>
Cash Flows from Operating Activities:
     Net Income (Loss)                              $  (18,576)      $  23,014
     Non-Cash Revenue and Expense Adjustments:
         Depreciation and amortization expense          12,885           7,964
         Deferred income tax provision (benefit)       (17,575)            257
         Tax benefit from dispositions of employee 
            stock                                          696           1,056
         Other                                             741             197
     Changes in Assets and Liabilities:
         Trade receivables, net                         30,912              59
         Inventories                                   (67,249)         16,594
         Other current assets                           (1,423)         (1,592)
         Accounts payable                              (37,631)        (16,922)
         Accrued liabilities                           (15,048)         (6,934)
         Income taxes                                   (8,895)          7,716
                                                    ----------       ---------
         Net cash provided by (used in) operating 
             activities                               (121,163)         31,409
                                                    ----------       ---------

Cash Flows from Investing Activities:
     Purchase of property, plant and equipment         (24,068)        (14,489)
     Sale of temporary investments                      36,319               -
     Net decrease in other assets                           10             360
                                                    ----------       ---------
         Net cash provided by (used in) 
             investing activities                       12,261         (14,129)
                                                    ----------       ----------

Cash Flows from Financing Activities:
     Proceeds from sales of Common Stock                 1,353           1,168
     Proceeds from issuance of notes payable            30,000          86,725
     Payments on notes payable and capitalized
         lease obligations                              (1,524)        (94,982)
     Purchase of Common Stock                             (358)         (1,736)
                                                    ----------       ---------
         Net cash provided by (used in) financing
             activities                                 29,471          (8,825)
                                                    ----------       ---------

Net Increase (Decrease)  in Cash and Cash 
    Equivalents                                        (79,431)          8,455
Cash and Cash Equivalents at Beginning of Period       159,922         108,312
                                                    ----------       ---------
Cash and Cash Equivalents at End of Period          $   80,491       $ 116,767
                                                    ==========       =========
</TABLE>


                       The accompanying notes to condensed
             consolidated financial statements are an integral part
                              of these statements.


<PAGE>


                               IOMEGA CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd.)
                                 (In thousands)

<TABLE>
                                                   For the Three Months Ended
                                                  March 29,          March 30,
                                                      1998                1997
                                                           (Unaudited)
<S>                                               <C>                <C>

Supplemental Schedule of Non-Cash
Investing and Financing Activities:

     Property, plant and equipment financed under
         capitalized lease obligations            $    1,223         $   1,321
                                                  ==========         =========

     Issuance of Common Stock in lieu of
         compensation                             $      360         $      -
                                                  ==========         =========

</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



(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 29, 1998 and
         December  31,  1997,  the  results of  operations  for the  three-month
         periods ended March 29, 1998 and March 30, 1997, and cash flows for the
         three-month periods ended March 29, 1998 and March 30, 1997.

         The results of operations  for the  three-month  period ended March 29,
         1998 are 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 wholly
         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  excess channel  inventory  totaled $35.2 million
         and  $42.4   million  at  March  29,  1998  and   December   31,  1997,
         respectively,  and is included in deferred  revenue in the accompanying
         condensed consolidated balance sheets.






<PAGE>


                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


         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 $32.5 million and $28.5 million at March 29,
         1998 and  December  31,  1997,  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,  option rate  preferred
         stock and 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.  The Company has
         classified  its entire  portfolio of temporary  investments at December
         31, 1997, as  held-to-maturity.  These  temporary  investments  consist
         primarily of  commercial  paper and  municipal  bonds.  At December 31,
         1997, all temporary investments had maturities of less than six months.
         There were no temporary investments at March 29, 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):
<TABLE>

                                      March 29,              December 31,
<S>                                 <C>                     <C> 
                                           1998                      1997

              Raw materials         $   186,170             $   130,049
              Work-in-process            20,194                  18,714
              Finished goods            107,268                  97,620
                                    -----------              ----------

                                    $   313,632              $  246,383
                                    ===========              ==========

</TABLE>


<PAGE>


                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


         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.  Diluted EPS for the quarter ended March
         30, 1997, was  determined  under the  assumption  that the  convertible
         subordinated  notes were converted on January 1, 1997. 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.  Net income (loss) per common share amounts
         and share data have been restated for all periods  presented to reflect
         Basic and Diluted EPS and the stock split described in Note 2.

         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):
<TABLE>
                                   Net Income (Loss)        Shares    Per-Share
                                         (Numerator)  (Denominator)      Amount
         <S>                       <C>                <C>             <C>

         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)
                                         ==========         =======  

         March 30, 1997
         Basic EPS                       $   23,014         257,286   $   0.09
            Effect of options                     -          14,120
            Effect of convertible 
               subordinated notes               501           9,262
                                         ----------         -------
         Diluted EPS                     $   23,515         280,668   $   0.08
                                         ==========         =======
</TABLE>

         Recent  Accounting   Pronouncements  -  In  June  1997,  the  Financial
         Accounting  Standards  Board issued  Statement of Financial  Accounting
         Standards No. 130 "Reporting  Comprehensive  Income" (SFAS 130) and No.
         131   "Disclosures   about   Segments  of  an  Enterprise  and  Related
         Information"  (SFAS  131).  SFAS  130  establishes  standards  for  the
         reporting and display of  comprehensive  income and its  components and
         SFAS 131  establishes  new  standards  for public  companies  to report
         information  about their  operating  segments,  products and  services,
         geographic  areas and major  customers.  These statements are effective
         for  financial  statements  issued for  fiscal  years  beginning  after
         December 15, 1997.

         The Company  adopted SFAS 130 in the quarter ended March 29, 1998,  and
         plans to adopt SFAS 131 in its December 31, 1998 financial statements.


<PAGE>


                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



(2)      STOCK SPLIT

         In November 1997, the Board of Directors  declared a two-for-one Common
         Stock  split  which was  effected  in the form of a 100%  Common  Stock
         dividend  paid on December  22, 1997 to  stockholders  of record at the
         close of business on December 1, 1997.

         This stock  dividend  was  accounted  for as a stock split and has been
         retroactively  reflected  in the  accompanying  condensed  consolidated
         financial statements. In connection with this stock split, proportional
         adjustments   were  made  to   outstanding   stock  options  and  other
         outstanding obligations of the Company to issue shares of Common Stock.


(3)      INCOME TAXES

         Income tax benefit for the three  months  ended March 29, 1998 has been
         provided for at an effective rate of 35%. This tax rate is based on the
         Company's  projected  mix of domestic  and foreign  pre-tax  income for
         1998.

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

         Cash  paid for  income  taxes was $16.5  million  for the first  three
         months of 1998 and $3.3 million for the corresponding period in 1997.

(4)      DEBT

         Notes  Payable - On March 11,  1997,  the Company  entered  into a $200
         million Senior Secured Credit Facility ("Credit  Facility") with Morgan
         Guaranty Trust Company of New York,  Citibank,  N.A. and a syndicate of
         other  lenders.  During  January 1998,  the Company  amended the Credit
         Facility.  The  amended  Credit  Facility  is  a  three-year  unsecured
         revolving line of credit from the amendment date.  Borrowings under the
         Credit  Facility  were limited to $200 million for the first quarter of
         1998 and  thereafter  are  limited  to the  lesser  of 70% of the prior
         quarter's  eligible  accounts  receivable  or $200  million.  Under the
         Credit  Facility,  the Company may borrow at a base rate,  which is the
         higher  of prime or  federal  funds  plus a  margin  of 0.0% to  0.38%,
         depending on the  Company's  debt-to-equity  ratio,  or at LIBOR plus a
         margin  of 1.0% to 1.75%,  depending  on the  Company's  debt-to-equity
         ratio.  Total availability under the Credit Facility at March 29, 1998,
         was $200  million,  of which $30 million was  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 and earnings.  Prior to March
         29, 1998 the Company  requested,  and on March 29, 1998 it received,  a
         one-quarter  waiver of a covenant within the Credit Facility  requiring
         cash conversion days to be 80 days or less. Cash conversion days in the
         first quarter of 1998 were 83 days. The Company was in compliance  with
         all applicable covenants as of March 29, 1998.


<PAGE>


                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



         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%.  The
         leases are secured by the  underlying  leased  equipment,  software and
         furniture.

(5)      OTHER MATTERS

         Significant Customers - During the fiscal quarter ended March 29, 1998,
         sales to  Ingram  Micro,  Inc.  accounted  for  approximately  14.3% of
         consolidated  sales.  During the fiscal  quarter  ended March 30, 1997,
         sales to Ingram Micro, Inc. accounted for 13.2% of consolidated  sales.
         No other single  customer  accounted for more than 10% of the Company's
         sales for these periods.

         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  29,  1998  outstanding  forward  exchange  sales  (purchase)
         contracts, which all mature in June 1998, were as follows:
<TABLE>

                                                       Contracted
         Currency                         Amount     Forward Rate

<S>                                    <C>           <C> 
                  Australian Dollar        100,000           1.49
                  British Pound         (1,600,000)           .60
                  Dutch Guilder         (7,300,000)          2.05
                  French Franc          (1,000,000)          6.10
                  German Mark           (2,100,000)          1.82
                  Irish Punt               (80,000)           .73
                  Japanese Yen         550,000,000         127.25
                  Malaysian Ringgit    (14,400,000)          3.61
                  Singapore Dollar      (2,450,000)          1.60
                  Swiss Franc           (2,500,000)          1.48

</TABLE>


<PAGE>


                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



         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 29,  1998,  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.



<PAGE>



                               IOMEGA CORPORATION

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


RESULTS OF OPERATIONS

The Company reported 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. This compares to sales
of $361.3 million and net income of $23.0  million,  or $0.08 per diluted share,
in the first quarter of 1997. Management expects results in the range of a small
loss to  breakeven  for the second  and third  quarters  of 1998 and  expects to
return to profitability in the fourth quarter of 1998. However,  there can be no
assurance that the expected results will be realized.

SALES

Sales for the three months ended March 29, 1998 increased by $46.2  million,  or
12.8%, when compared to the corresponding  period of 1997. Sales of Zip products
totaled $266.1  million  representing a 24.3% increase from the first quarter of
1997.  Jaz product sales in the first quarter of 1998 were $110.3  million which
is approximately  equal to the comparable period of 1997. Ditto sales were $30.8
million  representing a 13.9% decline from the first quarter of 1997. Total unit
drive  shipments  increased by 47% as compared to the first quarter of 1997. Zip
unit drive shipments  increased by 61% and Jaz unit drive shipments increased by
20% while Ditto unit drive  shipments  decreased  by 7%. Sales of Zip OEM drives
accounted for over 50% of total Zip drive shipments in the first quarter of 1998
compared to 22% in the first  quarter of 1997.  International  aftermarket  unit
volume decreased,  while aftermarket unit volume in the Americas  increased when
compared to the first quarter of 1997.

Sales in the Americas were $298.5 million or 73.3% of total sales,  in the first
quarter of 1998, as compared to $227.0 million,  or 62.8% of total sales, in the
first  quarter  of 1997.  Sales in Europe  were $89.3  million,  or 22% of total
sales, in the first quarter of 1998, as compared to $107.2 million,  or 29.7% of
total sales, in the first quarter of 1997. Sales in Asia were $19.8 million,  or
4.8% of total sales, in the first quarter of 1998, as compared to $28.0 million,
or 7.7% of total sales, in the first quarter of 1997.

GROSS MARGIN

The  Company's  overall  gross margin was 25.1% in the first quarter of 1998, as
compared to 29.7% in the first  quarter of 1997.  This  decrease in gross margin
was due  primarily  to a higher  percentage  of Zip  drives  shipped  to the OEM
channel, where prices and margins are lower than drives sold to distribution and
retail  channels.  In addition,  decreased  prices on Zip and Jaz  products,  as
compared to the first quarter of 1997,  contributed  to the decline in the gross
margin percentage.  The ratios of disk sales to drive sales for both the Zip and
Jaz product  lines were down slightly  versus the first  quarter of 1997,  which
also contributed to the lower gross margin percentage.

Future gross margin percentage will continue to be impacted by the percentage of
OEM drive sales versus  retail and  distribution  sales.  Gross  margins for the
remainder of 1998 will also depend on sales volumes of Zip and Jaz disks,  which
generate significantly higher gross margins than the corresponding
<PAGE>
                                          
drives,  and on the mix between disks and drives, and between Zip, Jaz and Ditto
products.  Also, the Company's ability to realize future cost reductions will be
negatively impacted by the higher than desired levels of inventory at the end of
the  first  quarter  as  that  inventory  will be  utilized  before  lower  cost
components are incorporated in drive and disk products. Additionally, management
expects that the planned  introduction  of Clik!  products will initially have a
negative  impact on gross margins due to start-up  costs  associated  with early
production  volumes.  In  the  event  of  a  delay  in  the  planned  commercial
availability of Clik!, such negative impact may be greater.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and administrative  expenses increased by $53.6 million in the
first quarter of 1998, when compared to the first quarter of 1997, and increased
as a percentage of sales to 26.5% in the first quarter of 1998 from 15.0% in the
first quarter of 1997. The increase was primarily due to  substantial  marketing
and  advertising  program  expenditures  in the  first  quarter  of  1998  which
increased by approximately  $20 million versus the first quarter of 1997. Other,
non-advertising  related sales and marketing expenses increased by approximately
an additional $10 million,  primarily due to  international  expansion and other
fixed  and  variable  expenses.   Spending  on  customer  satisfaction  programs
increased  by  approximately  $10 million and other  general and  administrative
expenses,  comprised  mainly of information  system  expenditures,  increased by
approximately $10 million.  During the second quarter of 1998, the Company plans
to spend a substantial amount on advertising campaigns. The Company is currently
evaluating future  advertising  spending for the second half of 1998 in relation
to demand that is generated by the incremental  expenses.  Management is focused
on bringing selling,  general and administrative expenses back to a range of 15%
to 20% of sales.  However,  there can be no assurance that efforts to reduce the
percentage of sales represented by selling,  general and administrative expenses
will be successful.

RESEARCH AND DEVELOPMENT EXPENSES

Research and  development  expenses for the first  quarter of 1998  increased by
$8.4 million,  or 57%, when compared to the first quarter of 1997, and increased
as a percentage of sales to 5.7% in the first quarter of 1998,  from 4.1% in the
first quarter of 1997.  The increase was  primarily  the result of  expenditures
related to the  continued  development  and  enhancement  of Zip,  Jaz and Ditto
products  lines,  as well  as  continued  development  expenses  related  to new
products, including Clik! and Buz. Management is targeting the level of spending
for research and development  during the remainder of 1998 to be in the range of
between  3% to 5% of  sales to  support  planned  new  product  development  and
existing product enhancements.  However,  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 $1.7 million in the first  quarter of
1998, as compared to $1.1 million in the first quarter of 1997, due to increased
average cash  balances  during the first quarter of 1998.  Interest  expense was
$1.2 million in the first quarter of 1998, as compared to $2.5 million in the
<PAGE>
                                               

first  quarter of 1997.  The decrease in interest  expense was  primarily due to
decreased  average  borrowings  outstanding  during  the first  quarter of 1998,
resulting in large part from the repayment during March 1997 of amounts borrowed
under a European  financing  agreement,  the retirement of a promissory note for
the  purchase  of the  Company's  manufacturing  facility  in  Malaysia  and the
repayment of other term notes during 1997.

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


INCOME TAXES

For the first three months of 1998,  the Company  recorded an income tax benefit
of $9.9 million,  representing an effective  income tax rate of 35%. The Company
expects its effective tax rate to remain at approximately  35% for the remainder
of 1998.  However,  differences  between the currently  anticipated  mix and the
actual mix of foreign income versus domestic  income,  along with the ability of
the Company to permanently  invest foreign  earnings  outside of the U.S., could
impact the Company's effective tax rate.


SEASONALITY

The  Company's  Zip products are targeted to the retail  consumer  market and to
personal  computer  OEMs.  The  Company's  Jaz and Ditto  products  are targeted
primarily to the retail consumer market. 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 29, 1998,  the Company had cash and cash  equivalents of $80.5 million,
working  capital of $331.3  million,  and a ratio of  current  assets to current
liabilities of 1.9 to 1. During the first three months of 1998, the Company used
$121.2 million of cash for operating activities.  The primary components of cash
used for operating  activities were the net operating loss,  increased inventory
and reductions in accounts  payable and accrued  liabilities that were partially
offset by decreases in accounts receivable. Inventory increased by $67.2 million
due primarily to lower than  anticipated  sales in the first quarter of 1998 and
the fourth  quarter of 1997.  Inventory  turns were 3.9 for the first quarter of
1998 as  compared  to 6.5 for the  first  quarter  of 1997.  Management  expects
inventory levels to decrease and inventory turns to increase in future quarters.
However,  there  can be no  assurance  as to the  success  or the  timing of the
intended  reductions  in  inventory  levels or  increases  in  inventory  turns.
Accounts payable decreased by $37.6 million, due primarily to
<PAGE>
                           
timing  of  inventory   receipts  and  related  payments  to  vendors.   Accrued
liabilities  decreased  by $15.0  million due  primarily to decreases in accrued
payroll and related  liabilities.  These uses of cash were partially offset by a
$30.9 million  decrease in net accounts  receivable,  due primarily to decreased
sales and the timing of sales and collections during the respective periods. The
Company generated $12.3 million of cash in investing activities during the first
quarter  of 1998,  primarily  from the sale of  temporary  investments  that was
partially offset by the purchase of property, plant and equipment. Cash provided
by financing  activities totaled $29.5 million during the first quarter of 1998,
and included $30.0 million of proceeds from  borrowings on the Company's  Credit
Facility,  and proceeds of $1.4 million  from sales of Common  Stock,  partially
offset by $1.5 million in net payments on capitalized lease obligations.

On March 11, 1997, the Company entered into a $200 million Senior Secured Credit
Facility  ("Credit  Facility")  with Morgan  Guaranty Trust Company of New York,
Citibank,  N.A. and a syndicate  of other  lenders.  During  January  1998,  the
Company amended the Credit Facility. The amended Credit Facility is a three-year
unsecured revolving line of credit from the amendment date. Borrowings under the
Credit  Facility  were limited to $200 million for the first quarter of 1998 and
thereafter  are  limited  to the lesser of 70% of the prior  quarter's  eligible
accounts receivable or $200 million.  Under the Credit Facility, the Company may
borrow at a base  rate,  which is the  higher of prime or  federal  funds plus a
margin of 0.0% to 0.38% , depending on the Company's debt-to-equity ratio, or at
LIBOR plus a margin of 1.0% to 1.75%, depending on the Company's  debt-to-equity
ratio.  Total  availability under the Credit Facility at March 29, 1998 was $200
million,  of which $30 million was 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 and earnings.  Prior to March 29, 1998 the Company requested, and on March
29, 1998 received, a one-quarter waiver of a covenant within the Credit Facility
requiring cash  conversion  days to be 80 days or less.  Cash conversion days in
the first quarter of 1998 were 83 days.  The Company was in compliance  with all
applicable   covenants  as  of  March  29,  1998.  Depending  on  its  financial
performance  in future  quarters,  the Company  may be required to seek  further
covenant waivers under the Credit  Facility.  There can be no assurance that the
Company will be able to obtain any such required  waivers on terms acceptable to
the Company, if at all. Loss of the Credit Facility would require the Company to
find an alternative source of funding which could have a material adverse effect
on the Company's business and financial results.

The current and long-term portions of capitalized lease obligations at March 29,
1998 were $5.3 million and $2.9 million,  respectively.  During March 1997,  the
Company  repaid  all  amounts  outstanding  under  its  agreement  with a German
commercial  bank that  involved  the  factoring  of a portion  of the  Company's
European  accounts  receivable.  During the second  quarter of 1997, the Company
paid the entire $18 million obligation,  plus accrued interest,  relating to the
purchase of its Malaysian manufacturing facility. In addition, during the second
and third quarters of 1997, the Company paid off all remaining  other term notes
relating to equipment purchases.

<PAGE>

The Company had $45.7 million of convertible  subordinated  notes outstanding at
March 29,  1998,  which bear  interest at 6.75% per year and mature on March 15,
2001.  Additions to property,  plant and  equipment  during the first quarter of
1998 totaled $25.3  million,  partially  offset by $1.2 million in proceeds from
capital leases.

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,  the precise
amount and timing of the Company's  future  financing  needs,  if any, cannot be
determined at this time,  and will 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 and the
success of the  Company in  managing  its  inventory,  accounts  receivable  and
accounts payable.


FACTORS AFFECTING FUTURE OPERATING RESULTS

Because the Company is relying on its Zip and Jaz products  for the  substantial
majority of its sales in 1998,  the  Company's  future  operating  results  will
depend in large  part on the  ability  of those  products  to attain  widespread
market  acceptance.  Although the Company  believes there is a market demand for
removable  data  storage  solutions  for  personal  computers,  there  can be no
assurance that the Company will be successful in establishing Zip and Jaz as the
preferred  solutions  for that  market  need.  The  extent  to which Zip and Jaz
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 or media for use with the
Company's  drives  (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),  the SyJet 1.5 GB, EZ Flyer  230 and  SparQ 1.0 GB  (products  of  Syquest
Technology,  Inc.), the Shark 250 (product of Avatar  Peripherals,  Inc.),  HiFD
(product in  development  by Sony  Corporation  and Fuji Photo Film Co.,  Ltd.),
products of Nomai S.A., the new 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  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  the  products
containing the Company's drives; the ability of the Company to create demand for
Zip  and  Jaz,  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 and Jaz products as storage  devices;  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  regarding problems
or perceived  problems  experienced in using the Company's  products and adverse
publicity  resulting  from such  statements or from consumer  class action suits
filed against the Company;  and the overall market demand for personal computers
with which the Company's products can be used. In addition,  component problems,
<PAGE>

shortages, quality issues or other factors affecting the supply of the Company's
products  could  limit  the  Company's  sales and  provide  an  opportunity  for
competing  products  to  achieve  market  acceptance.  For  example,  sales were
adversely  affected  during  the  second  and  third  quarters  of 1997 due to a
shortage of certain  integrated  circuits  for Zip drives and  supplier  quality
problems, and were adversely affected in the fourth quarter due to a shortage of
components  for notebook Zip drives that became  commercially  available  during
November 1997 and may also be adversely  affected for these and similar  reasons
in the future.

The Company's  business strategy is substantially  dependent on maximizing sales
of its  proprietary  Zip and Jaz  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 and Jaz  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 net income would be
disproportionately   adversely  affected  (see  "Legal  Proceedings").   As  the
Company's mix of drive sales between OEM and retail customers continues to shift
towards a higher percentage of OEM sales, the ratio of disk sales to drive sales
are expected to continue to decrease from the levels experienced for 1997, which
could have an adverse effect on gross margin and net income.


Future  market  demand  for the  Company's  products  cannot be  predicted  with
certainty.  Sales of Zip products in 1997 and the first quarter of 1998 were the
primary  reasons for the Company's  revenues in these  periods.  However,  these
sales  may  not  be  indicative  of  the  long-term  demand  for  Zip  products.
Accordingly,  the sales  levels  experienced  by the  Company in 1997 and in the
first  quarter of 1998 should not be assumed to be an indication of future sales
levels.  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 net income.  For
example,  in the first quarter of 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 quarter.

Inventory  management has become increasingly  complex.  The Company's customers
constantly  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,  and the consolidation of customer distribution  centers.  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.
<PAGE>

During the second  quarter of 1998,  the  Company  plans to spend a  substantial
amount on print and  television  advertising  campaigns  which are  designed  to
create greater consumer awareness of and demand for both its aftermarket and OEM
drives and to educate  users on the potential  uses for multiple  disks so as to
increase  demand  for  disks.  The  Company  is  currently   evaluating   future
advertising  spending  for the second half of 1998 in relation to demand that is
generated by the incremental expenses.  Management cannot predict the success or
failure of these marketing  efforts.  To the extent that the increased  spending
does not generate  additional  demand, the spending would have an adverse effect
on net income.  Additionally,  in order to help offset the  expenses  associated
with the additional advertising, the Company has delayed or is planning to delay
certain price decreases that would have otherwise been effected earlier in 1998.
This strategy to delay price decreases  could allow competing  solutions to gain
market share.

The Company has significant  international  operations  with sales  transactions
generally  denominated  in U.S.  dollars.  Fluctuation  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.  For example,  management  believes that sales in Asia
were adversely  affected during the fourth quarter of 1997 and the first quarter
of 1998 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.

A significant portion of the Company's revenues are currently being 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  continues  to refine the design of its Zip and Jaz  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 and Jaz 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,  in the second quarter of
1997,  the Company  recalled a limited  number of its Jaz disks and in the third
quarter  of 1997 the  Company  experienced  manufacturing  interruptions  due to
supplier  quality  problems.  Any product  availability,  quality or reliability
problems experienced by the Company or consumer class action suits 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.

All of the factors  described  above for Zip and Jaz  products  are, or will be,
relevant to Clik!.  In addition to such factors,  demand from digital camera and
other consumer  electronics  manufacturers will affect the extent to which Clik!
achieves a  significant  market  presence.  The Company  will be  entering  into
additional or alternate  channels with the  introduction  of Clik!.  Because the
Company does not have prior  experience  in these new  channels,  there could be
additional risk that the Company or product will not be successful.

<PAGE>

In addition  to the risks  surrounding  existing  products,  the  Company  faces
development,  manufacturing,  demand and market  acceptance risks with regard to
recently introduced and future products,  including ZipPlus, the 15mm and 12.7mm
notebook  Zip  drives,  the  Jaz  2 GB  drive,  the  Ditto  Max  and  Ditto  Max
Professional  multiple  capacity  drives,  Clik!,  and Buz. 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 2GB  product,  previously  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.

The Company's success will depend 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 will
also depend in  significant  part upon its ability to continue to attract highly
skilled  personnel to fill a number of vacancies.  Effective March 24, 1998, Kim
B. Edwards  resigned as President  and Chief  Executive  Officer of the Company.
James E. Sierk,  a member of the Company's  Board of Directors,  has assumed the
role of interim President and Chief Executive Officer while the Company conducts
a search for a new President and Chief  Executive  Officer.  The Company is also
seeking  to fill a number  of other  key  management  vacancies,  including  the
appointment  of General  Managers  of the  Company's  Europe and Mobile  Storage
Divisions.  There can be no  assurance  that the Company will be  successful  in
attracting and/or retaining key employees.

The  Company is  currently  in the  process  of  transitioning  to new  computer
hardware and software for its financial,  accounting,  inventory control,  order
processing,  supply chain management and other management  information  systems.
The successful  implementation  of these new systems is crucial to the efficient
operation of the Company's business.  There can be no assurance that the Company
will implement its new systems in an efficient and timely manner or that the new
systems  will be adequate to support the  Company's  operations.  Problems  with
installation  or initial  operation of the new systems  could cause  substantial
difficulties in operations planning, financial reporting and management and thus
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of  operations.  In addition to  addressing  the Company's
increased computing needs, the Company's transition to new computer hardware and
software  systems will  achieve  Year 2000  compliance  for these  systems.  The
Company has incurred  approximately $20 million related to the transition to the
new  computer  hardware  and  software  systems of which  approximately  50% was
capitalized and  approximately  50% was expensed.  The Company estimates it will
incur an additional $10 million for this transition of which  approximately  50%
will be capitalized and approximately 50% will be expensed.

<PAGE>

In  general,  the Company  expects to resolve  Year 2000  issues  affecting  its
internal use software  through  planned  replacement or upgrades of its software
applications  and hardware with a goal of having all internal  systems Year 2000
compliant by the end of 1998.

In addition to addressing Year 2000 compliance for its own internal use systems,
the Company is addressing other "Year 2000 issues" on several  different fronts.
The Company is in the process of assessing all Iomega-branded  products for Year
2000  compliance.  The  Company  has  assigned a team to monitor  and  determine
product compliance. Additionally, the Company has requested Year 2000 compliance
certification from each of its major vendors and suppliers for their hardware or
software  products and for their internal  business  applications and processes.
Achieving Year 2000  compliance is dependent on many factors,  some of which are
not  completely  within the  Company's  control.  Should  either  the  Company's
internal systems or the internal  systems of one or more significant  vendors or
suppliers fail to achieve Year 2000 compliance,  the Company's business, results
of operations or financial condition could be adversely  affected.  In addition,
there can be no  assurance  that the  Company  will not  become  the  subject of
lawsuits  regarding  the  failure of any of the  Company's  products  (former or
present) to be Year 2000  compliant.  Any such suits,  if adversely  determined,
could have a  material  adverse  affect on the  Company's  business,  results of
operation or financial condition.

Other  factors  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 growth and an  increasingly  complex  business,
transportation issues, product and component pricing, competition,  intellectual
property  rights,   litigation  (see  "Legal  Proceedings"),   general  economic
conditions  and  changes or  slowdowns  in overall  market  demand for  personal
computer products.





<PAGE>


                               IOMEGA CORPORATION

                           PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

Except  as set forth  below,  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 described in prior  filings by the Company,  including  its Annual  Report on
Form 10-K for 1997,  the  Company is engaged  in ongoing  litigation  in several
jurisdictions against Nomai S.A., a French company,  Nomai's U.S. subsidiary and
several Nomai  distributors in connection with Nomai's XHD disk products,  which
Nomai claims to be compatible  with certain of the  Company's Zip drives,  and a
disk product planned by Nomai, but not yet introduced,  purportedly for use with
the Company's  Jaz drives,  and in connection  with various  claims  asserted by
Nomai,  including claims of patent and copyright  invalidity,  abuse of dominant
position,  and  improper  patent  markings and  warranty  terms in Germany.  The
principal ongoing proceedings are as follows:

Iomega  Corporation v. Nomai S.A. filed in the Paris District Court on March 25,
1997 and on September  30,  1997;  Nomai S.A. v. Iomega  International  S.A. and
Iomega  Corporation  filed in the District Court of Hamburg on October 13, 1997;
Nomus,  Inc.,  and Nomai S.A. v. Iomega  Corporation  filed in the United States
District Court for the Northern  District of California on October 15, 1997, and
amended  counterclaims  in such action  filed by Iomega on December  17, 1997; a
confidential  complaint  submitted by Nomai S.A.  against Iomega  Corporation on
October 15, 1997, to the European Commission in Brussels;  Iomega Corporation v.
Mac and More Limited,  Nomai S.A. and Marc-Andre Frouin filed in the London High
Court of Justice Chancery  Division on October 29, 1997, and Iomega  Corporation
v. Nomai S.A.  filed in the London  High Court of Justice  Chancery  Division on
March 9, 1998;  Iomega  Corporation  v. Nomai S.A.  filed in the Paris  District
Court on November 12, 1997, (with respect to Nomai's  so-called "DUO" product in
development  that  purports to be  compatible  with Iomega Jaz  drives);  Iomega
Corporation v Triangel  Computer GmbH filed in the Dusseldorf  District Court on
November  19, 1997;  Iomega  Corporation  v.  Prutting  (MediaCom)  filed in the
Mannheim  District Court on November 12, 1997;  Iomega  Corporation v. Speirings
Computers & Supplies B.V. and Nomai S.A.  filed in the Amsterdam  Regional Court
on December 24, 1997, and  counterclaims  in such action filed by the defendants
on January 28, 1998; Iomega  Corporation v. boeder Deutschland GmbH filed in the
Frankfurt  District  Court on December  11, 1997 and on February 6, 1998;  Nomai
S.A. v. Misco Germany, Inc. filed in the Frankfurt District Court on January 16,
1998 and Iomega  Corporation v. Nomai S.A., et al. filed in the Federal Court of
Australia Victoria District, Registry General Division on March 6, 1998.

In these  proceedings the Company has maintained that Nomai's products  infringe
the Company's  copyrights,  patents,  trademarks or other intellectual  property
rights and/or that Nomai and its distributors have engaged in unfair competition
or passing off.  Nomai has denied such  infringement,  contested the validity of
the underlying intellectual property right and/or denied such unfair competition
and passing  off, and in certain  European  proceedings  has asserted  antitrust
claims against the Company.  The Company has also applied for declaratory relief
against  Nomai in respect of certain  antitrust  allegations  under  English and
European  law.  The  proceedings  are at  various  stages.  In a  number  of the
proceedings,  the court has declined to enjoin  preliminarily  or to continue to
enjoin  preliminarily  sales  of the XHD  cartridge,  subject  in many  cases to
certain  restrictions on advertising claims made with respect to XHD cartridges,
or on use by Nomai or its  distributors  of Iomega  trademarks  and/or logos. In
<PAGE>

February 1998, the Amsterdam Regional Court issued a preliminary order requiring
the  Company  to  remove  the  light  baffle  from  notebook  Zip  drives in the
possession of European Union distributors and enjoining Iomega from including in
Zip drives,  sold in the future in the European  Union market,  any device which
has no purpose other than to prevent the compatibility of the XHD disks with Zip
storage systems. The court also preliminarily  enjoined Nomai from using certain
graphics in its packaging.  The Company has appealed this preliminary order and,
pending a final  decision by the  appellate  court,  Nomai and the Company  have
agreed not to enforce the preliminary order.

An adverse outcome in these  proceedings  could result in the continuing sale by
Nomai in one or more  countries,  or the  introduction  for  sale in the  United
Kingdom  (or other  countries  where the  product is not  presently  offered for
sale), of a disk product  claimed to be compatible with certain Zip drives,  and
could result in the  introduction and sale by Nomai of a disk product claimed to
be  compatible  with the  Company's  Jaz drives.  Any such  continuing  sales or
introductions  would  adversely  affect  the  Company's  sales and would  have a
disproportionately  negative  effect on the Company's  net income.  Such adverse
effects could be material.  In addition,  Nomai has asserted  various  antitrust
claims  against  the  Company,  which  if  decided  against  the  Company  could
materially and adversely affect the Company.

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  requests
monetary  damages  and  injunctive   relief   enjoining   SyQuest  from  further
infringement.  The matter is scheduled  for trial in January  1999.  On March 6,
1998,  the  Company  also  initiated  litigation  against  SyQuest,  its  French
subsidiary and a French  distributor of SyQuest products,  in the Paris District
Court, based on claims of copyright and patent infringement.  On April 29, 1998,
the Company initiated a second suit against SyQuest and its French subsidiary in
the Paris  District  Court based on claims of  infringement  by SyQuest's  SparQ
product.

The Company continues to be committed to vigorously protecting and enforcing its
intellectual  property  rights  and  to  attacking  unfair  competition  in  the
proceedings referenced above.

During 1997, two consumer class-action suits against the Company, Pizzimenti, et
al. v. Iomega Corporation,  filed in the Chancery Court of the State of Delaware
in and for New Castle County on March 10, 1997,  relating to  administration  of
consumer  rebate programs and Cox v. Iomega  Corporation,  filed in the Chancery
Court of the State of  Delaware in and for New Castle  County on July 16,  1997,
relating to technical support,  were settled. A settlement of the rebate related
Pizzimenti  class-action  suit was approved by the  Chancery  Court on March 24,
1998, and a settlement of the technical  support related Cox  class-action  suit
was  approved  by the  Chancery  Court on April 3, 1998.  The  Company  has also
responded to inquiries  received from the Federal Trade  Commission  relating to
certain   rebate  and   registration   card   programs   and   certain   product
advertisements.  The Company is engaged in discussions with the Commission staff
concerning  alleged  violations by the Company of the FTC Act and the Mail Order
Rule and is  attempting  to reach a resolution  with the  Commission  that would
avoid the necessity of litigating  these matters.  In the event such discussions
do not lead to a mutually acceptable resolution,  management of the Company does
not believe an adverse outcome in any resulting litigation would be material.
<PAGE>

Beginning on February 10, 1998, several purported  class-action  complaints were
filed in the United States  District  Court for the District of Utah against the
Company and certain of its officers on behalf of certain  persons who  purchased
the Company's  common stock during the period from September 22, 1997 to January
22,  1998.  The  complaints  allege that the Company and certain of its officers
violated  certain  federal  securities  laws. The complaints seek an unspecified
amount of damages.  Management  believes that the named  defendants  have highly
meritorious  defenses to the  allegations  made in the  lawsuits and the Company
intends to vigorously defend against such allegations.

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.  The named  plaintiff  claims to have
commenced  the  action on behalf of a  purported  class  consisting  of  certain
persons who purchased  Iomega Ditto tape drives since  February 18, 1992,  and a
subclass  consisting of such  purchasers who called the Company's "800" or "888"
telephone  number for  technical  assistance  and/or  customer  service and were
charged  a fee  for  the  call.  The  complaint  claims  violations  of  certain
provisions of the New York General Business Law and fraudulent inducement, based
on,   among  other   things,   alleged   advertising   and   product   packaging
representations   regarding  the  Ditto  products'  ability  to  "read"  certain
non-Ditto cartridges.  Additionally, the complaint alleges that Iomega's product
packaging,  indicating  that a  customer  could  call a toll free "800" or "888"
telephone number for technical assistance,  implicitly, but falsely, represented
that the customer  could receive free  telephone  technical  support.  It is the
Company's belief that these latter claims,  at least through  September 1, 1997,
i.e., the end of the class period for the Cox action discussed above,  have been
released  pursuant to the settlement of the Cox action.  As for the remainder of
the action, the Company is assessing the  maintainability of the suit as a class
action and intends to defend itself vigorously against the claims asserted.

Item 2.           Change in Securities and Use of Proceeds

The Company did not sell any equity  securities during the first quarter of 1998
that were not registered under the Securities Act of 1933.



<PAGE>


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

The Company's  Annual Meeting of  Stockholders  was commenced on April 21, 1998.
The following proposals were adopted by the vote specified below:

<TABLE>
                                                    Against/                Broker
Proposal                             For            Withheld      Abstain   Non-Votes
<S>                                  <C>            <C>           <C>       <C> 

1.    Election of Directors:
         David A. Duke               230,183,138    4,901,770           -           -
         David J. Dunn               229,519,378    5,565,530           -           -
         James E. Sierk              230,648,817    4,436,091           -           -

2.    Approval of amendments to
         the Company's 1995
         Director Stock Option Plan. 219,241,317   13,981,901   1,860,687       1,003

3.       Approval of the Company's
          1998 Employee  Stock  
          Purchase Plan and 1998
          International Employee
          Stock Purchase Plan and 
          reservation of 3,000,000
          shares of Common Stock
          for issuance thereunder.   225,346,563    8,117,819   1,619,526       1,000

4.    Ratification of Arthur
         Andersen LLP as
         Independent Auditors        231,724,940    2,450,658     909,310           -
</TABLE>

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 E. Nolan,
The  Honorable  John E.  Sheehan,  Robert P.  Berkowitz,  John R. Myers,  Kim B.
Edwards, Willem H. J. Andersen and Michael J. Kucha. Messrs.  Edwards,  Andersen
and Kucha resigned as directors effective April 21, 1998.

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. The Company  filed a current  report on Form 8-K dated
     March 27, 1998  incorporating  under Item 5 (Other  Events) a press release
     issued by the Company on March 25, 1998 entitled  "Iomega  Chief  Executive
     Officer Resigns".


<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/ James E. Sierk
                                           ---------------------
Dated:   May 11, 1998                      James E. Sierk
                                           President and Chief Executive Officer



                                           /s/ Leonard C. Purkis
                                           ----------------------
Dated:   May 11, 1998                      Leonard C. Purkis
                                           Senior Vice President, Finance
                                           and Chief Financial Officer


<PAGE>




                                  EXHIBIT INDEX


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

Exhibit No.      Description
<S>              <C>    

10.14(d)         Waiver of Credit Agreement dated March 29, 1998.

10.18            Letter Agreement between the Company and James E. Sierk dated
                 March 25, 1998.

10.19(a)         Severance  Agreement  and General  Release  between the Company
                 and Kim B. Edwards dated April 15, 1998.

10.19(b)         Secured Promissory Note dated April 15, 1998.

10.19(c)         Pledge Agreement between the Company and Kim B. Edwards dated
                 April 15, 1998.

10.19(d)         Non-Competition  and  Non-Recruitment  Agreement  between the
                 Company and Kim B. Edwards dated April 15, 1998.

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


</TABLE>