----

**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**WASHINGTON,        D.C.  20549**

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**FORM        10-Q**

| **                                                                                            (Mark One)**                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **                                                                                            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                  SECURITIES** |
| **EXCHANGE                  ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

**FOR        THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007**

**OR**

**[  ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE        SECURITIES**

**EXCHANGE        ACT OF 1934**

**For        the Transition Period from ………… to……………**

**COMMISSION        FILE NUMBER 1-12333**

**Iomega        Corporation**

| **Delaware**                                                                                        | **86-0385884**                                                             |
|-----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|
| (State                    or other jurisdictionof                    incorporation or organization) | (IRS                    employer identification                    number) |

**10955        Vista Sorrento Parkway, San Diego, CA 92130**

**(858)        314-7000**

| **Common                    Stock, par value $0.03 1/3** | **54,763,820**                        |
|----------------------------------------------------------|---------------------------------------|
| (Title                    of each class)                 | (Number                    of shares) |

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**IOMEGA      CORPORATION AND SUBSIDIARIES**

**TABLE      OF CONTENTS**

|   | Page |
|--------|------|

| Note                Regarding Forward-Looking                Statements....................................................................................................................... |   |   |   | 2 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---|--------|

Condensed      Consolidated Balance Sheets at September 30,      2007

|                       and                December 31,                2006......................................................................................................................................... |   |   |   | 3 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---|--------|

|   |   Condensed                Consolidated Statements of                Operations for the Three Months |
|--------|----------------------------------------------------------------------------------------------------------------|

|                                      Ended September 30, 2007 and October                1,                2006................................................................................................ |   |   |   | 4 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---|--------|

|   |   Condensed                Consolidated Statements of                Operations for the Nine Months |
|--------|---------------------------------------------------------------------------------------------------------------|

|                                      Ended September 30, 2007 and October                1,                2006............................................................................................... |   |   |   | 5 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---|--------|

|   |   Condensed                Consolidated Statements of Cash Flows for the                Nine Months |
|--------|---------------------------------------------------------------------------------------------------------------|

|                                      Ended September 30, 2007 and October 1,                2006............................................................................................... |   |   |   | 6 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---|--------|

|                                  Notes to Condensed Consolidated                Financial                Statements.................................................................................. |   |   |   | 7 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---|--------|

| Item                  2.      Management’s Discussion                  and Analysis of Financial |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|

|                                     Condition and Results of                Operations................................................................................................................. |   |   |   | 25 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|----|--------|

| Item                3.      Quantitative and                Qualitative Disclosures About Market                Risk.......................................................................... |   |   | 41 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----|--------|

| Item                4.      Controls and                Procedures......................................................................................................................................... |   |   |   | 41 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|----|--------|

| Item                1.      Legal                Proceedings.................................................................................................................................................... |   |   |   | 42 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|----|--------|

| Item                1A.  Risk                Factors............................................................................................................................................................... |   |   |   | 42 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|----|--------|

| Item                2.     Unregistered Sales of                Equity Securities and Use of                Proceeds........................................................................... |   |   | 49 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----|--------|

| Item                6.     Exhibits........................................................................................................................................................................ |   |   |   | 49 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|----|--------|

| Signatures................................................................................................................................................................................. |   |   |   | 50 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|----|--------|

| Exhibit                Index................................................................................................................................................................................ |   |   |   | 51 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|----|--------|

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**IOMEGA            CORPORATION AND SUBSIDIARIES**

**NOTE            REGARDING FORWARD-LOOKING            STATEMENTS**

**Forward-Looking        Statements**

*:*

| ·   | Our                goals for 2007, which are: (1) to continue to grow and deliver sustained                profitability; (2) to further increase the size of our HDD business;                (3)                to continue to penetrate the high-growth NAS market; (4) to ramp                REV®                70GB products                and push for broad market adoption; (5) to grow our managed services                business domestically and abroad; and (6) to continue to evaluate                new                opportunities where we can leverage our brand and channel                assets; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                goal of increasing cash flow from                operations; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Our                goal to achieve 2007 full year profitability and positive cash flow                from                operations through containing operating expense spending, growing                HDD                sales, maintaining or improving the gross margins of HDD and growing                REV                product sales; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | References                to the ongoing efforts to complete our transition to a new distribution                and logistics supplier; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | References                to our fourth quarter being seasonally strong, or our summer months                being                seasonally slow in Europe due to                holidays; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Expected                future taxes including taxes on repatriation of cash from Europe                to the                U.S.; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | References                to expected volatility, expected term and value of stock                options; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | The                Section below entitled “Risk Factors”, including all discussions therein                concerning things that could happen to Iomega®,                its                products, employees, profits or other aspects of the business in                the                future; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | All                references to our focus or intended focus for our sales efforts                and |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | The                belief that our balance of cash, cash equivalents and temporary                investments, together with cash flows from future operations, will                be                sufficient to fund anticipated working capital requirements, funding                of                restructuring actions, capital expenditures and cash required for                other                activities for at least one year. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**IOMEGA      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE      SHEETS**

** (In      thousands, except per share data)**

|                                                                                                                                                                                                                                                 |   | **Sept.                30, 2007** |    |   | **Dec.                31, 2006** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|--------|---------------------------------------|--------|
|                                                                                                                                                                                                                                                 |   | (Unaudited)                            |    |   |                                  |   |
| Current                Assets:                                                                                                                                                                                                                       |   |                                   |    |   |                                  |   |
| Cash                and cash                equivalents                                                                                                                                                                                              |   | $                                      | 53,356  |   |                                  | $      | 56,617 |   |
| Restricted                cash                                                                                                                                                                                                                       |   |                                   | 92      |   |                                  |   | 88 |   |
| Temporary                investments                                                                                                                                                                                                                 |   |                                   | 15,919  |   |                                  |   | 11,443 |   |
| Trade                receivables, less                allowance for doubtful accounts of$1,627                at Sept. 30, 2007 and                $1,535 at Dec. 31, 2006                                                                           |   |                                   | 48,016  |   |                                  |   | 30,418 |   |
| Inventories                                                                                                                                                                                                                                          |   |                                   | 68,183  |   |                                  |   | 42,593 |   |
| Deferred                income                taxes                                                                                                                                                                                                  |   |                                   | 1,997   |   |                                  |   | 2,747 |   |
| Other                current                assets                                                                                                                                                                                                   |   |                                   | 2,729   |   |                                  |   | 3,401 |   |
| Total                Current                Assets                                                                                                                                                                                                   |   |                                   | 190,292 |   |                                  |   | 147,307 |   |
|                                                                                                                                                                                                                                                 |   |                                   |    |   |                                  |   |   |   |
| Property                and Equipment, at Cost                                                                                                                                                                                                       |   |                                   | 70,705  |   |                                  |   | 84,845 |   |
| Accumulated                Depreciation                                                                                                                                                                                                              |   |                                   | (66,247 | )      |                                  |   | (78,292 | ) |
| Net                Property and                Equipment                                                                                                                                                                                             |   |                                   | 4,458   |   |                                  |   | 6,553 |   |
|                                                                                                                                                                                                                                                 |   |                                   |    |   |                                  |   |   |   |
| Goodwill                                                                                                                                                                                                                                             |   |                                   | 9,818   |   |                                  |   | 12,451 |   |
| Other                Intangibles, Net                                                                                                                                                                                                                |   |                                   | 891     |   |                                  |   | 1,043 |   |
| Other                Assets                                                                                                                                                                                                                          |   |                                   | 10      |   |                                  |   | 60 |   |
| Total                Assets                                                                                                                                                                                                                          |   | $                                      | 205,469 |   |                                  | $      | 167,414 |   |
|                                                                                                                                                                                                                                                 |   |
| Current                Liabilities:                                                                                                                                                                                                                  |   |                                   |    |   |                                  |   |   |   |
| Accounts                payable                                                                                                                                                                                                                      |   | $                                      | 72,145  |   |                                  | $      | 35,105 |   |
| Other                current                liabilities                                                                                                                                                                                              |   |                                   | 26,182  |   |                                  |   | 32,475 |   |
| Income                taxes                payable                                                                                                                                                                                                   |   |                                   | 1,830   |   |                                  |   | 454 |   |
| Total                Current                Liabilities                                                                                                                                                                                              |   |                                   | 100,157 |   |                                  |   | 68,034 |   |
|                                                                                                                                                                                                                                                 |   |                                   |    |   |                                  |   |   |   |
| Deferred                Income Taxes                                                                                                                                                                                                                 |   |                                   | 7,829   |   |                                  |   | 9,573 |   |
| Other                Liabilities                                                                                                                                                                                                                     |   |                                   | 3,064   |   |                                  |   | - |   |
|                                                                                                                                                                                                                                                 |   |                                   |    |   |                                  |   |   |   |
| Commitments                and Contingencies (Notes 4 and 5)                                                                                                                                                                                         |   |                                   |    |   |                                  |   |   |   |
|                                                                                                                                                                                                                                                 |   |                                   |    |   |                                  |   |   |   |
| Stockholders’                Equity:                                                                                                                                                                                                           |   |                                   |    |   |                                  |   |   |   |
| Common                Stock, $0.03 1/3 par                value - authorized 400,000,000shares,                issued 55,337,770                shares at September 30, 2007 and55,307,270                shares at December                31, 2006 |   |                                   | 1,847   |   |                                  |   | 1,846 |   |
| Additional                paid-in                capital                                                                                                                                                                                             |   |                                   | 60,713  |   |                                  |   | 59,635 |   |
| Less:                575,200 Common Stock                treasury shares, at cost, atSeptember                30, 2007 and December                31, 2006                                                                                          |   |                                   | (5,662  | )      |                                  |   | (5,662 | ) |
| Retained                earnings                                                                                                                                                                                                                     |   |                                   | 37,521  |   |                                  |   | 33,988 |   |
| Total                Stockholders’                Equity                                                                                                                                                                                       |   |                                   | 94,419  |   |                                  |   | 89,807 |   |
| Total                Liabilities and Stockholders’ Equity                                                                                                                                                                                      |   | $                                      | 205,469 |   |                                  | $      | 167,414 |   |

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Table          of Contents

**IOMEGA      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF      OPERATIONS**

**(In      thousands, except per share data)**

|                                                                          |   | **For                the Three Months Ended** |   |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                          |   | **Sept.                30,**** 2007**    |   |   | **Oct.                1,**** 2006** |   |
|                                                                          |   | (Unaudited)                                   |   |
| Sales                                                                         |   | $                                             | 80,667 |   |   | $ | 53,595 |   |
| Cost                of sales                                                  |   |                                          | 67,714 |   |   |   | 41,379 |   |
| Gross                Margin                                                   |   |                                          | 12,953 |   |   |   | 12,216 |   |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Operating                Expenses:                                            |   |                                          |   |   |   |   |   |   |
| Selling,                general and                administrative             |   |                                          | 9,452  |   |   |   | 8,216 |   |
| Research                and                development                        |   |                                          | 1,872  |   |   |   | 1,904 |   |
| Restructuring                reversals                                        |   |                                          | (153   | ) |   |   | (211 | ) |
| Goodwill                impairment                charge                      |   |                                          | -      |   |   |   | 2,513 |   |
| Bad                debt                expense                                |   |                                          | 668    |   |   |   | 441 |   |
| Total                Operating                Expenses                        |   |                                          | 11,839 |   |   |   | 12,863 |   |
| Operating                income (loss)                                        |   |                                          | 1,114  |   |   |   | (647 | ) |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Interest                income                                                |   |                                          | 792    |   |   |   | 722 |   |
| Interest                expense and other income (expense), net               |   |                                          | (64    | ) |   |   | 987 |   |
| Income                before income                taxes                      |   |                                          | 1,842  |   |   |   | 1,062 |   |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Provision                for income taxes                                     |   |                                          | (549   | ) |   |   | (209 | ) |
| Net                Income                                                     |   | $                                             | 1,293  |   |   | $ | 853 |   |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Net                Income Per Basic Share                                     |   | $                                             | 0.02   |   |   | $ | 0.02 |   |
| Net                Income Per Diluted Common Share                            |   | $                                             | 0.02   |   |   | $ | 0.02 |   |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Weighted                Average Common Shares Outstanding                     |   |                                          | 54,754 |   |   |   | 53,382 |   |
| Weighted                Average Common Shares Outstanding - Assuming Dilution |   |                                          | 55,518 |   |   |   | 53,389 |   |

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Table          of Contents

**IOMEGA      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF      OPERATIONS**

**(In      thousands, except per share data)**

|                                                                          |   | **For                the Nine Months Ended** |    |
|-------------------------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                                          |   | **Sept.                30,**** 2007**   |    |   | **Oct.                1,**** 2006** |   |
|                                                                          |   | (Unaudited)                                  |    |
| Sales                                                                         |   | $                                            | 215,970 |   |   | $ | 153,328 |   |
| Cost                of sales                                                  |   |                                         | 176,575 |   |   |   | 122,518 |   |
| Gross                Margin                                                   |   |                                         | 39,395  |   |   |   | 30,810 |   |
|                                                                          |   |                                         |    |   |   |   |   |   |
| Operating                Expenses:                                            |   |                                         |    |   |   |   |   |   |
| Selling,                general and                administrative             |   |                                         | 30,233  |   |   |   | 31,308 |   |
| Research                and                development                        |   |                                         | 5,395   |   |   |   | 6,946 |   |
| Restructuring                charges                (reversals)               |   |                                         | (235    | ) |   |   | 4,358 |   |
| Goodwill                impairment                charges                     |   |                                         | 2,963   |   |   |   | 7,935 |   |
| License                and patent fee                income                   |   |                                         | (452    | ) |   |   | (1,085 | ) |
| Bad                debt                expense                                |   |                                         | 302     |   |   |   | 166 |   |
| Total                Operating                Expenses                        |   |                                         | 38,206  |   |   |   | 49,628 |   |
| Operating                income (loss)                                        |   |                                         | 1,189   |   |   |   | (18,818 | ) |
|                                                                          |   |                                         |    |   |   |   |   |   |
| Interest                income                                                |   |                                         | 2,066   |   |   |   | 2,261 |   |
| Interest                expense and other income (expense), net               |   |                                         | (171    | ) |   |   | 852 |   |
| Income                (loss) before income                taxes               |   |                                         | 3,084   |   |   |   | (15,705 | ) |
|                                                                          |   |                                         |    |   |   |   |   |   |
| Benefit                for income taxes                                       |   |                                         | 449     |   |   |   | 1,990 |   |
| Net                Income (Loss)                                              |   | $                                            | 3,533   |   |   | $ | (13,715 | ) |
|                                                                          |   |                                         |    |   |   |   |   |   |
| Net                Income (Loss) Per Basic Share                              |   | $                                            | 0.06    |   |   | $ | (0.26 | ) |
| Net                Income (Loss) Per Diluted Common Share                     |   | $                                            | 0.06    |   |   | $ | (0.26 | ) |
|                                                                          |   |                                         |    |   |   |   |   |   |
| Weighted                Average Common Shares Outstanding                     |   |                                         | 54,741  |   |   |   | 52,230 |   |
| Weighted                Average Common Shares Outstanding - Assuming Dilution |   |                                         | 55,093  |   |   |   | 52,230 |   |

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Table          of Contents

** IOMEGA      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH      FLOWS**

**(In      thousands)**

|                                                                                                    |   | **For                the Nine Months Ended** |    |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                                                                    |   | **Sept.                30,**** 2007**   |    |   | **Oct.                1,**** 2006** |   |
|                                                                                                    |   | (Unaudited)                                  |    |
| Cash                Flows from Operating Activities:                                                    |   |                                         |    |   |   |   |
| Net                income                (loss)                                                         |   | $                                            | 3,533   |   |   | $ | (13,715 | ) |
| Adjustments                to Reconcile Net                Income (Loss) to Cash Flows from Operations: |   |                                         |    |   |   |   |   |   |
| Depreciation                and                amortization                                             |   |                                         | 2,445   |   |   |   | 3,538 |   |
| Deferred                income tax                benefit                                               |   |                                         | (994    | ) |   |   | (3,978 | ) |
| Tax                contingency                releases                                                  |   |                                         | (1,259  | ) |   |   | - |   |
| Stock-related                compensation                expense                                        |   |                                         | 770     |   |   |   | 503 |   |
| Goodwill                impairment                charges                                               |   |                                         | 2,963   |   |   |   | 7,935 |   |
| Non-cash                inventory write-offs                (reversals)                                 |   |                                         | 691     |   |   |   | (780 | ) |
| Bad                debt                expense                                                          |   |                                         | 302     |   |   |   | 166 |   |
| Other                                                                                                   |   |                                         | (197    | ) |   |   | (541 | ) |
| Changes                in Assets and                Liabilities (net of effects of 2006 acquisition):   |   |                                         |    |   |   |   |   |   |
| Restricted                cash                                                                          |   |                                         | (4      | ) |   |   | 169 |   |
| Trade                receivables                                                                        |   |                                         | (17,900 | ) |   |   | 359 |   |
| Inventories                                                                                             |   |                                         | (26,281 | ) |   |   | (6,405 | ) |
| Other                current                assets                                                      |   |                                         | 672     |   |   |   | 1,124 |   |
| Accounts                payable                                                                         |   |                                         | 37,040  |   |   |   | (4,119 | ) |
| Other                current                liabilities                                                 |   |                                         | (207    | ) |   |   | (4,967 | ) |
| Accrued                restructuring                                                                    |   |                                         | (1,763  | ) |   |   | (874 | ) |
| Income                taxes                                                                             |   |                                         | 1,376   |   |   |   | 522 |   |
| Net                cash provided by (used in)                operating activities                       |   |                                         | 1,187   |   |   |   | (21,063 | ) |
|                                                                                                    |   |                                         |    |   |   |   |   |   |
| Cash                Flows from Investing Activities:                                                    |   |                                         |    |   |   |   |   |   |
| Purchases                of property and                equipment                                       |   |                                         | (301    | ) |   |   | (1,558 | ) |
| Proceeds                from sales of                assets                                             |   |                                         | 136     |   |   |   | 173 |   |
| Purchases                of temporary                investments                                        |   |                                         | (20,206 | ) |   |   | (13,425 | ) |
| Sales                of temporary                investments                                            |   |                                         | 15,894  |   |   |   | 24,161 |   |
| Payments                associated with CSCI,                Inc. acquisition                           |   |                                         | (120    | ) |   |   | (4,339 | ) |
| Net                change in other assets and                other liabilities                          |   |                                         | 50      |   |   |   | 7 |   |
| Net                cash provided by (used in)                investing activities                       |   |                                         | (4,547  | ) |   |   | 5,019 |   |
|                                                                                                    |   |                                         |    |   |   |   |   |   |
| Cash                Flows from Financing Activities:                                                    |   |                                         |    |   |   |   |   |   |
| Proceeds                from sales of Common                Stock                                       |   |                                         | 99      |   |   |   | 416 |   |
| Net                cash provided by financing                activities                                 |   |                                         | 99      |   |   |   | 416 |   |
| Net                Decrease in Total Cash and Cash Equivalents                                          |   |                                         | (3,261  | ) |   |   | (15,628 | ) |
| Total                Cash and Cash Equivalents at Beginning of Period                                   |   |                                         | 56,617  |   |   |   | 70,943 |   |
| Total                Cash and Cash Equivalents at End of Period                                         |   | $                                            | 53,356  |   |   | $ | 55,315 |   |
|                                                                                                    |   |                                         |    |   |   |   |   |   |
| Non-Cash                Investing and Financing Activities:                                             |   |                                         |    |   |   |   |   |   |
| Issuance                of treasury stock in                CSCI, Inc. acquisition                      |   | $                                            | -       |   |   | $ | 7,000 |   |
| Adjustment                of CSCI, Inc.                acquisition                                      |   | $                                            | 210     |   |   | $ | - |   |
|                                                                                                    |   |                                         |    |   |   |   |   |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

** (Unaudited)**

**(1)  Operations      and Significant Accounting Policies**

*Reclassifications*

*Inventories*

|                          |   | **Sept.                30,**      |   |   | **Dec.                31,** |   |
|-------------------------------|--------|-----------------------------------|--------|--------|-----------------------------|--------|
|                          |   | **2007**                          |   |   | **2006**                    |   |
|                          |   | **(In                thousands)** |   |
|                          |   |                              |   |   |                        |   |
| Raw                materials  |   | $                                 | 32,247 |   |                        | $      | 16,475 |   |
| Finished                goods |   |                              | 35,936 |   |                        |   | 26,118 |   |
|                          |   | $                                 | 68,183 |   |                        | $      | 42,593 |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(1)  Operations      and Significant Accounting Policies (Continued)**

*Net      Income (Loss) Per Common Share*

|                                            |   | **Net                Income (Loss) (Numerator)**         |    |   | **Shares****(Denominator)** |   |   | **Per                Share Amount** |   |
|-------------------------------------------------|--------|----------------------------------------------------------|---------|--------|-----------------------------|--------|--------|-------------------------------------|--------|
|                                            |   | **(In                thousands, except per share data)** |    |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |
| **For                the Three Months Ended:**  |   |                                                     |    |   |                        |   |   |                                |   |
| **September                30, 2007:**          |   |                                                     |    |   |                        |   |   |                                |   |
| Basic                EPS                        |   | $                                                        | 1,293   |   |                        |   | 54,754 |                                |   | $ | 0.02 |   |
| Effect                of                options |   |                                                     | -       |   |                        |   | 764    |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | 1,293   |   |                        |   | 55,518 |                                |   | $ | 0.02 |   |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **October                1, 2006**:             |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| Basic                EPS                        |   | $                                                        | 853     |   |                        |   | 53,382 |                                |   | $ | 0.02 |   |
| Effect                of                options |   |                                                     | -       |   |                        |   | 7      |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | 853     |   |                        |   | 53,389 |                                |   | $ | 0.02 |   |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **For                the Nine Months Ended:**   |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **September                30, 2007:**          |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| Basic                EPS                        |   | $                                                        | 3,533   |   |                        |   | 54,741 |                                |   | $ | 0.06 |   |
| Effect                of                options |   |                                                     | -       |   |                        |   | 352    |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | 3,533   |   |                        |   | 55,093 |                                |   | $ | 0.06 |   |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **October                1, 2006**:             |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| Basic                EPS                        |   | $                                                        | (13,715 | )      |                        |   | 52,230 |                                |   | $ | (0.26 | ) |
| Effect                of                options |   |                                                     | -       |   |                        |   | -      |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | (13,715 | )      |                        |   | 52,230 |                                |   | $ | (0.26 | ) |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(1)  Operations      and Significant Accounting Policies (Continued)**

*Net      Income (Loss) Per Common      Share** **(Continued)*

|                                    |   | **For                the Three Months Ended** |    |   | **For                the Nine Months Ended** |   |
|-----------------------------------------|--------|-----------------------------------------------|---------|--------|----------------------------------------------|--------|
|                                    |   | **Sept.                30,**                  |    |   | **Oct.                1,**                   |   |   | **Sept.                30,** |   |   | **Oct.                1,** |   |
|                                    |   | **2007**                                      |    |   | **2006**                                     |   |   | **2007** |   |   | **2006** |   |
|                                    |   |                                          |    |   |                                         |   |   |   |   |   |   |   |
| Out                of the money options |   |                                          | 231,492 |   |                                         |   | 2,674,578 |   |   |   | 677,392 |   |   |   | 1,764,578 |   |

*Stock      Compensation Expense*

*Valuation      and Amortization.  *

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(1)  Operations      and Significant Accounting Policies (Continued)**

*Stock      Compensation Expense (Continued)*

*Expected      Term.*

*Expected      Volatility.  *

*Risk-Free      Interest Rate.  *

*Dividends.  *

*Forfeitures.*

|                                                                                                                                                                                               | ** For                the Three Months Ended   **                | **  For                the Nine Months Ended   **         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|
| **               Assumption               ** | **Sept.                30,****    2007    ** | **Oct.                1,****    2006    ** | **Sept.                30,****    2007    ** | **Oct.                1,****    2006    ** |
|                                                                                                                                                                                               | **(In                thousands)**                                                    |
|                                                                                                                                                                                               |                                                                                 |                                                                               |   |   |
| Average                expected term (in years)                                                                                                                                                    | 5.2                                                                                  | 3.9                                                                                | 5.2 | 3.9 |
| Expected                stock price volatility                                                                                                                                                     | 39%                                                                                  | 47%                                                                                | 39% | 56% |
| Risk-free                interest rate (range)                                                                                                                                                     | 4.1                – 5.0%                                                      | 4.6                – 4.9%                                                    | 4.1                – 5.1% | 4.3                - 5.1% |
| Expected                dividends                                                                                                                                                                  | Zero                                                                                 | Zero                                                                               | Zero | Zero |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(1)  Operations      and Significant Accounting Policies (Continued)**

*Accrued      Warranty*

|                                          |   | **For                the Three Months Ended** |   |   | **For                the Nine Months Ended** |   |
|-----------------------------------------------|--------|-----------------------------------------------|--------|--------|----------------------------------------------|--------|
|                                          |   | **Sept.                30 ,**                 |   |   | **Oct.                1,**                   |   |   | **Sept.                30,** |   |   | **Oct.                1,** |   |
|                                          |   | **2007**                                      |   |   | **2006**                                     |   |   | **2007** |   |   | **2006** |   |
|                                          |   | **(In                thousands)**             |   |
|                                          |   |                                          |   |   |                                         |   |   |   |   |   |   |   |
| Balance                at beginning of period |   | $                                             | 4,989  |   |                                         | $      | 4,077 |   |   | $ | 4,576 |   |   | $ | 4,973 |   |
| Accruals/additions                            |   |                                          | 1,341  |   |                                         |   | 1,372 |   |   |   | 4,612 |   |   |   | 3,009 |   |
| Claims                                        |   | ** **                                    | (1,163 | )      |                                         |   | (1,261 | ) |   |   | (4,021 | ) |   |   | (3,794 | ) |
| Balance                at end of period       |   | $                                             | 5,167  |   |                                         | $      | 4,188 |   |   | $ | 5,167 |   |   | $ | 4,188 |   |

*Recent      Accounting Pronouncements*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(2)  Income      Taxes**

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(2)  Income      Taxes (Continued)**

**(3)  Business      Segment Information**

| **              Business                Categories              ** | **                    Reportable                Segments                   ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                             |
| Consumer                Products                                                                                                                                                                               | 1.  Consumer                Storage Solutions                                                                                                                                                                                                                          |
|                                                                                                                                                                                                           | 2.  Zip®                Products                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                             |
| Business                Products                                                                                                                                                                               | 3.  REV®                Products                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                           | 4.  Network                Storage Systems                                                                                                                                                                                                                             |
|                                                                                                                                                                                                           | 5.  Services                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                             |
| Other                Products                                                                                                                                                                                  | 6.  Other                Products                                                                                                                                                                                                                                      |

***Consumer      Products***

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(3)  Business      Segment Information (Continued)**

***Business      Products***

***Other      Products***

***Product      Operating Income (Loss)***

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(3)  Business      Segment Information (Continued)**

**Reportable      Operating Segment Information:**

|                                                        |   | **For                the Quarter Ended**                         |   |   | **For                the Nine Months Ended**                   |   |
|-------------------------------------------------------------|--------|------------------------------------------------------------------|--------|--------|----------------------------------------------------------------|--------|
|                                                        |   | **Sept.                30,**** 2007                 ** |   |   | **Oct.                1,**** 2006                 ** |   |   | **Sept.                30,**** 2007                 ** |   |   | **Oct.                1,**** 2006                 ** |   |
|                                                        |   | **(In                thousands)**                                |   |
| **Sales:**                                                  |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                                                | 60,685 |   |                                                           | $      | 30,317 |   |   | $ | 153,262 |   |   | $ | 81,999 |   |
| Zip                Products                                 |   |                                                             | 3,816  |   |                                                           |   | 6,245 |   |   |   | 13,097 |   |   |   | 25,681 |   |
| Total                Consumer                Products       |   |                                                             | 64,501 |   |                                                           |   | 36,562 |   |   |   | 166,359 |   |   |   | 107,680 |   |
| Business                Products:                           |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                                             | 8,981  |   |                                                           |   | 11,201 |   |   |   | 29,388 |   |   |   | 30,869 |   |
| Network                Storage                Systems       |   |                                                             | 5,523  |   |                                                           |   | 4,473 |   |   |   | 15,077 |   |   |   | 12,724 |   |
| Services                                                    |   |                                                             | 1,653  |   |                                                           |   | 1,254 |   |   |   | 4,898 |   |   |   | 1,515 |   |
| Total                Business                Products       |   |                                                             | 16,157 |   |                                                           |   | 16,928 |   |   |   | 49,363 |   |   |   | 45,108 |   |
| Other                Products                               |   |                                                             | 9      |   |                                                           |   | 105 |   |   |   | 248 |   |   |   | 540 |   |
| Total                Sales                                  |   | $                                                                | 80,667 |   |                                                           | $      | 53,595 |   |   | $ | 215,970 |   |   | $ | 153,328 |   |
|                                                        |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| **Product                Operating Income (Loss):**         |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                                                | (545   | )      |                                                           | $      | (1,744 | ) |   | $ | (141 | ) |   | $ | (11,666 | ) |
| Zip                Products                                 |   |                                                             | 1,224  |   |                                                           |   | 767 |   |   |   | 1,804 |   |   |   | 1,874 |   |
| Total                Consumer                Products       |   |                                                             | 679    |   |                                                           |   | (977 | ) |   |   | 1,663 |   |   |   | (9,792 | ) |
| Business                Products:                           |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                                             | 204    |   |                                                           |   | (367 | ) |   |   | 234 |   |   |   | (5,742 | ) |
| Network                Storage                Systems       |   |                                                             | 566    |   |                                                           |   | 464 |   |   |   | 211 |   |   |   | 884 |   |
| Services                                                    |   |                                                             | (349   | )      |                                                           |   | (53 | ) |   |   | (1,404 | ) |   |   | 174 |   |
| Total                Business                Products       |   |                                                             | 421    |   |                                                           |   | 44 |   |   |   | (959 | ) |   |   | (4,684 | ) |
| Other                Products                               |   |                                                             | (139   | )      |                                                           |   | 75 |   |   |   | 250 |   |   |   | 1,011 |   |
| Non-restructuring                charge                     |   |                                                             | -      |   |                                                           |   | – |   |   |   | - |   |   |   | (995 | ) |
| Restructuring                (charges) reversals            |   |                                                             | 153    |   |                                                           |   | 211 |   |   |   | 235 |   |   |   | (4,358 | ) |
| Total                Operating Income                (Loss) |   | $                                                                | 1,114  |   |                                                           | $      | (647 | ) |   | $ | 1,189 |   |   | $ | (18,818 | ) |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(4)  Restructuring      Charges/Reversals**

|                                                     |   | **Sept.                30,**      |   |   | **Dec.                31,** |   |
|----------------------------------------------------------|--------|-----------------------------------|--------|--------|-----------------------------|--------|
|                                                     |   | **2007**                          |   |   | **2006**                    |   |
|                                                     |   | **(In                thousands)** |   |
|                                                     |   |                              |   |   |                        |   |
| **Other                Current Liabilities:**            |   |                              |   |   |                        |   |
| Third                Quarter 2001 restructuring actions  |   | $                                 | -      |   |                        | $      | 1,366 |   |
| 2003                restructuring actions                |   |                              | -      |   |                        |   | 6 |   |
| 2004                restructuring actions                |   |                              | 45     |   |                        |   | 77 |   |
| 2005                restructuring actions                |   |                              | 65     |   |                        |   | 219 |   |
| 2006                restructuring actions                |   |                              | -      |   |                        |   | 205 |   |
| Total                                                    |   | $                                 | 110    |   |                        | $      | 1,873 |   |
|                                                     |   |                              |   |   |                        |   |   |   |
| **Fixed                Asset Reserves:**                 |   |                              |   |   |                        |   |   |   |
| 2003                restructuring                actions |   | $                                 | -      |   |                        | $      | 114 |   |
| 2005                restructuring                actions |   |                              | 38     |   |                        |   | 131 |   |
| Total                                                    |   | $                                 | 38     |   |                        | $      | 245 |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(4)  Restructuring      Charges/Reversals (Continued)**

*2006      Restructuring Actions*

|                                             |   | **Balance**                       |   |   |          |   |   | ** Utilized ** |   |   | **Foreign****Currency** |   |   | **Balance** |    |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|--------------------------|--------|--------|-------------------------|--------|--------|-------------|---------|
|                                             |   | **7/2/07**                        |   |   | **Reversals** |   |   | **Cash**                 |   |   | **Non-Cash**            |   |   | **Changes** |    |   | **9/30/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2006                Restructuring Actions:**   |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 6      |   |          | $      | -      |                     |   | $      | (6                      | )      |   | $           | – |   |   | $ | - |   |   | $ | - |   |
| Miscellaneous                liabilities (a)     |   |                              | 12     |   |          |   | (12    | )                        |   |   | -                       |   |   |        | -       |   |   |   | – |   |   |   | - |   |
|                                             |   | $                                 | 18     |   |          | $      | (12    | )                        |   | $      | (6                      | )      |   | $           | -       |   |   | $ | - |   |   | $ | - |   |
|                                             |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 18     |   |          | $      | (12    | )                        |   | $      | (6                      | )      |   | $           | -       |   |   | $ | - |   |   | $ | - |   |

| (a)   | Amounts                represent primarily cash charges. |
|-----------------|----------------------------------------------------------|

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(4)  Restructuring      Charges/Reversals (Continued)**

*2006      Restructuring Actions (Continued)*

|                                             |   | **Balance**                       |   |   |          |   |   | ** Utilized ** |   |   | **Foreign****Currency** |   |   | **Balance** |    |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|--------------------------|--------|--------|-------------------------|--------|--------|-------------|---------|
|                                             |   | **12/31/06**                      |   |   | **Reversals** |   |   | **Cash**                 |   |   | **Non-Cash**            |   |   | **Changes** |    |   | **9/30/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2006                Restructuring Actions:**   |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |
| Severance                and benefits (a)        |   | $                                 | 133    |   |          | $      | (39    | )                        |   | $      | (95                     | )      |   | $           | – |   |   | $ | 1 |   |   | $ | - |   |
| Lease                termination costs (a)       |   |                              | 58     |   |          |   | (19    | )                        |   |   | (39                     | )      |   |        | – |   |   |   | - |   |   |   | - |   |
| Miscellaneous                liabilities (a)     |   |                              | 14     |   |          |   | (13    | )                        |   |   | (1                      | )      |   |        | -       |   |   |   | – |   |   |   | - |   |
|                                             |   | $                                 | 205    |   |          | $      | (71    | )                        |   | $      | (135                    | )      |   | $           | -       |   |   | $ | 1 |   |   | $ | - |   |
|                                             |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 205    |   |          | $      | (71    | )                        |   | $      | (135                    | )      |   | $           | -       |   |   | $ | 1 |   |   | $ | - |   |

| (a)   |  Amounts                represent primarily cash charges. |
|-----------------|----------------------------------------------------------------|

*2005      Restructuring Actions*

** **

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(4)  Restructuring      Charges/Reversals (Continued)**

*2005      Restructuring Actions (Continued)*

|                                             |   | **Balance**                       |   |   |          |   |    | **Net                Utilized ** |   |   | **Balance**  |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|---------|---------------------------------------|--------|--------|--------------|--------|
|                                             |   | **7/2/07**                        |   |   | **Reversals** |   |    | **Cash**                              |   |   | **Non-Cash** |   |   | **9/30/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2005                Restructuring Actions:**   |   |                              |   |   |          |   |    |                                  |   |   |         |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 84     |   |          | $      | (66     | )                                     |   | $      | 47           |   |   | $ | – |   |   | $ | 65 |   |
| Lease                related assets (b)          |   |                              | 64     |   |          |   | – |                                  |   |   | –      |   |   |   | (26 | ) |   |   | 38 |   |
|                                             |   | $                                 | 148    |   |          | $      | (66     | )                                     |   | $      | 47           |   |   | $ | (26 | ) |   | $ | 103 |   |
|                                             |   |                              |   |   |          |   |    |                                  |   |   |         |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |    |                                  |   |   |         |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 84     |   |          | $      | (66     | )                                     |   | $      | 47           |   |   | $ | – |   |   | $ | 65 |   |
| Fixed                asset reserves (b)          |   |                              | 64     |   |          |   | – |                                  |   |   | –      |   |   |   | (26 | ) |   |   | 38 |   |
|                                             |   | $                                 | 148    |   |          | $      | (66     | )                                     |   | $      | 47           |   |   | $ | (26 | ) |   | $ | 103 |   |

| (a)   | Amounts                represent primarily cash charges. |
|-----------------|----------------------------------------------------------|

|                                             |   | **Balance**                       |   |   |          |   |    | **Utilized ** |   |   | **Balance**  |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|---------|--------------------|--------|--------|--------------|--------|
|                                             |   | **12/31/06**                      |   |   | **Reversals** |   |    | **Cash**           |   |   | **Non-Cash** |   |   | **9/30/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2005                Restructuring Actions:**   |   |                              |   |   |          |   |    |               |   |   |         |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 219    |   |          | $      | (147    | )                  |   | $      | (7           | )      |   | $ | – |   |   | $ | 65 |   |
| Lease                related assets (b)          |   |                              | 131    |   |          |   | – |               |   |   | –      |   |   |   | (93 | ) |   |   | 38 |   |
|                                             |   | $                                 | 350    |   |          | $      | (147    | )                  |   | $      | 7            | )      |   | $ | (93 | ) |   | $ | 103 |   |
|                                             |   |                              |   |   |          |   |    |               |   |   |         |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |    |               |   |   |         |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 219    |   |          | $      | (147    | )                  |   | $      | (7           | )      |   | $ | – |   |   | $ | 65 |   |
| Fixed                asset reserves (b)          |   |                              | 131    |   |          |   | – |               |   |   | –      |   |   |   | (93 | ) |   |   | 38 |   |
|                                             |   | $                                 | 350    |   |          | $      | (147    | )                  |   | $      | (7           | )      |   | $ | (93 | ) |   | $ | 103 |   |

| (a)   | Amounts                represent primarily cash charges. |
|-----------------|----------------------------------------------------------|

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(4)  Restructuring      Charges/Reversals (Continued)**

*2004      Restructuring Actions*

** **

|                                             |   | **Balance**                       |   |   |          |   |   |          |   |   | **Net                Utilized ** |   |   | **Balance**  |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------------------------------|--------|--------|--------------|--------|
|                                             |   | **7/2/07**                        |   |   | **Additions** |   |   | **Reversals** |   |   | **Cash**                              |   |   | **Non-Cash** |   |   | **9/30/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2004                Restructuring Actions:**   |   |                              |   |   |          |   |   |          |   |   |                                  |   |   |         |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 111    |   |          | $      | -      |          |   | $      | (75                                   | )      |   | $            | 9      |   |   | $ | – |   |   | $ | 45 |   |
|                                             |   |                              |   |   |          |   |   |          |   |   |                                  |   |   |         |   |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |          |   |   |                                  |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 111    |   |          | $      | -      |          |   | $      | (75                                   | )      |   | $            | 9      |   |   | $ | – |   |   | $ | 45 |   |

| (a)   | Amounts                represent cash charges. |
|-----------------|------------------------------------------------|

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(4)  Restructuring      Charges/Reversals (Continued)**

*2004      Restructuring Actions (Continued)*

|                                             |   | **Balance**                       |   |   |          |   |   |          |   |   | **Utilized ** |   |   | **Balance**  |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|--------------|--------|
|                                             |   | **12/31/07**                      |   |   | **Additions** |   |   | **Reversals** |   |   | **Cash**           |   |   | **Non-Cash** |   |   | **9/30/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2004                Restructuring Actions:**   |   |                              |   |   |          |   |   |          |   |   |               |   |   |         |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 77     |   |          | $      | 81     |          |   | $      | (81                | )      |   | $            | (32    | ) |   | $ | – |   |   | $ | 45 |   |
|                                             |   |                              |   |   |          |   |   |          |   |   |               |   |   |         |   |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |          |   |   |               |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 77     |   |          | $      | 81     |          |   | $      | (81                | )      |   | $            | (32    | ) |   | $ | – |   |   | $ | 45 |   |

| (a)   |  Amounts                represent cash charges. |
|-----------------|------------------------------------------------------|

*2003      Restructuring Actions*

*Third      Quarter 2001 Restructuring Actions*

**(5)  Commitments      and Contingencies**

*Litigation*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(6)  Stockholders’      Equity**

*Share-Based      Compensation Plans*

*Stock      Option Plans*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(6)  Stockholders’      Equity (Continued)**

*Stock      Option Activity and Weighted Average Prices*

|                                                     |   |                                                                                               |             |   | **Weighted** |                              |
|----------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|------------------|--------|--------------|-----------------------------------|
|                                                     |   | **                            Shares** |             |   | **Average**  |                              |
|                                                     |   | ** **                                                                                         | **(000’s** | **)**  |         | **Exercise                Price** |   |
|                                                     |   |                                                                                               |             |   |         |                              |   |
| Outstanding                at beginning of year          |   |                                                                                               | 3,060            |   |         | $                                 | 3.90 |   |
| Granted                                                  |   |                                                                                               | 166              |   |         |                              | 4.18 |   |
| Exercised                                                |   |                                                                                               | (31              | )      |         |                              | 3.28 |   |
| Forfeited                / Cancelled / Expired           |   |                                                                                               | (124             | )      |         |                              | 4.50 |   |
| Outstanding                at September 30, 2007         |   |                                                                                               | 3,071            |   |         |                              | 3.90 |   |
| Options                exercisable at September 30, 2007 |   |                                                                                               | 1,305            |   |         |                              | 4.96 |   |

**(7)  Other      Matters**

*Other      Intangible Assets*

|                                                |   | **Sept.                30,**** 2007** |   |   | **Dec.                31,**** 2006** |   |
|-----------------------------------------------------|--------|--------------------------------------------|--------|--------|-------------------------------------------|--------|
|                                                |   | **(In                thousands)**          |   |
| **Other                Intangible Assets:**         |   |                                       |   |   |                                      |   |
| Gross                value                          |   | $                                          | 1,127  |   |                                      | $      | 1,127 |   |
| Accumulated                amortization             |   |                                       | (236   | )      |                                      |   | (84 | ) |
| Net                intangible                assets |   | $                                          | 891    |   |                                      | $      | 1,043 |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

** (Unaudited)**

**(7)  Other      Matters**
**(Continued)**

*Goodwill      Impairment*

----

Table          of Contents

**IOMEGA          CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S          DISCUSSION AND ANALYSIS OF**

**FINANCIAL          CONDITION AND RESULTS OF OPERATIONS**

| **ITEM                2.** | **MANAGEMENT’S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS:** |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------|

**Overview**

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Overview      (Continued)**

**Application      of Critical Accounting Policies**

**Seasonality**

**Results      of Operations**

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Sales**

|                                                     |   | **For                the Three Months Ended** |   |
|----------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                     |   | **Sept.                30,**                  |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                                     |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                     |   | **(In                thousands, except %)**   |   |
| **Sales:**                                               |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                        |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions |   | $                                             | 60,685 |   |   | $ | 30,317 |   |   | $ | 30,368 |   |   |   | 100 | % |
| Zip                Products                              |   |                                          | 3,816  |   |   |   | 6,245 |   |   |   | (2,429 | ) |   |   | (39 | ) |
| Total                Consumer                Products    |   |                                          | 64,501 |   |   |   | 36,562 |   |   |   | 27,939 |   |   |   | 76 |   |
| Business                Products:                        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                              |   |                                          | 8,981  |   |   |   | 11,201 |   |   |   | (2,220 | ) |   |   | (20 | ) |
| Network                Storage                Systems    |   |                                          | 5,523  |   |   |   | 4,473 |   |   |   | 1,050 |   |   |   | 23 |   |
| Services                                                 |   |                                          | 1,653  |   |   |   | 1,254 |   |   |   | 399 |   |   |   | 32 |   |
| Total                Business                Products    |   |                                          | 16,157 |   |   |   | 16,928 |   |   |   | (771 | ) |   |   | (5 | ) |
| Other                Products                            |   |                                          | 9      |   |   |   | 105 |   |   |   | (96 | ) |   |   | (91 | ) |
| Total                Sales                               |   | $                                             | 80,667 |   |   | $ | 53,595 |   |   | $ | 27,072 |   |   |   | 51 | % |

|                                             |   | **For                the Three Months Ended** |   |
|--------------------------------------------------|--------|-----------------------------------------------|--------|
|                                             |   | **Sept.                30,**                  |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                             |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                             |   | **(In                thousands, except %)**   |   |
| **Sales                Dollars:**                |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Europe                                           |   | $                                             | 53,072 |   |   | $ | 26,697 |   |   | $ | 26,375 |   |   |   | 99 | % |
| Americas                (includes Latin America) |   |                                          | 25,500 |   |   |   | 24,282 |   |   |   | 1,218 |   |   |   | 5 |   |
| Asia                Pacific                      |   |                                          | 2,095  |   |   |   | 2,616 |   |   |   | (521 | ) |   |   | (20 | ) |
| Total                                            |   | $                                             | 80,667 |   |   | $ | 53,595 |   |   | $ | 27,072 |   |   |   | 51 | % |
|                                             |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Percent                of Total Sales:**       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Europe                                           |   |                                          | 66     | % |   |   | 50 | % |   |   |   |   |   |   |   |   |
| Americas                (includes Latin America) |   |                                          | 32     |   |   |   | 45 |   |   |   |   |   |   |   |   |   |
| Asia                Pacific                      |   |                                          | 2      |   |   |   | 5 |   |   |   |   |   |   |   |   |   |
| Total                                            |   |                                          | 100    | % |   |   | 100 | % |   |   |   |   |   |   |   |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Sales      (Continued)**

|                                                     |   | **For                the Nine Months Ended** |    |
|----------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                     |   | **Sept.                30,**                 |    |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                                     |   | **2007**                                     |    |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                     |   | **(In                thousands, except %)**  |    |
| **Sales:**                                               |   |                                         |    |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                        |   |                                         |    |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions |   | $                                            | 153,262 |   |   | $ | 81,999 |   |   | $ | 71,263 |   |   |   | 87 | % |
| Zip                Products                              |   |                                         | 13,097  |   |   |   | 25,681 |   |   |   | (12,584 | ) |   |   | (49 | ) |
| Total                Consumer                Products    |   |                                         | 166,359 |   |   |   | 107,680 |   |   |   | 58,679 |   |   |   | 54 |   |
| Business                Products:                        |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                              |   |                                         | 29,388  |   |   |   | 30,869 |   |   |   | (1,481 | ) |   |   | (5 | ) |
| Network                Storage                Systems    |   |                                         | 15,077  |   |   |   | 12,724 |   |   |   | 2,353 |   |   |   | 18 |   |
| Services                                                 |   |                                         | 4,898   |   |   |   | 1,515 |   |   |   | 3,383 |   |   |   | 223 |   |
| Total                Business                Products    |   |                                         | 49,363  |   |   |   | 45,108 |   |   |   | 4,255 |   |   |   | 9 |   |
| Other                Products                            |   |                                         | 248     |   |   |   | 540 |   |   |   | (292 | ) |   |   | (54 | ) |
| Total                Sales                               |   | $                                            | 215,970 |   |   | $ | 153,328 |   |   | $ | 62,642 |   |   |   | 41 | % |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Sales      (Continued)**

|                                             |   | **For                the Nine Months Ended** |    |
|--------------------------------------------------|--------|----------------------------------------------|---------|
|                                             |   | **Sept.                30,**                 |    |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                             |   | **2007**                                     |    |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                             |   | **(In                thousands, except %)**  |    |
| **Sales                Dollars:**                |   |                                         |    |   |   |   |   |   |   |   |   |   |
| Europe                                           |   | $                                            | 142,874 |   |   | $ | 75,713 |   |   | $ | 67,161 |   |   |   | 89 | % |
| Americas                (includes Latin America) |   |                                         | 65,609  |   |   |   | 68,329 |   |   |   | (2,720 | ) |   |   | (4 | ) |
| Asia                Pacific                      |   |                                         | 7,487   |   |   |   | 9,286 |   |   |   | (1,799 | ) |   |   | (19 | ) |
| Total                                            |   | $                                            | 215,970 |   |   | $ | 153,328 |   |   | $ | 62,642 |   |   |   | 41 | % |
|                                             |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Percent                of Total Sales:**       |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Europe                                           |   |                                         | 66      | % |   |   | 49 | % |   |   |   |   |   |   |   |   |
| Americas                (includes Latin America) |   |                                         | 30      |   |   |   | 45 |   |   |   |   |   |   |   |   |   |
| Asia                Pacific                      |   |                                         | 4       |   |   |   | 6 |   |   |   |   |   |   |   |   |   |
| Total                                            |   |                                         | 100     | % |   |   | 100 | % |   |   |   |   |   |   |   |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Gross      Margin**

|                                        |   | **For                the Three Months Ended** |   |
|---------------------------------------------|--------|-----------------------------------------------|--------|
|                                        |   | **Sept.                30,**                  |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                        |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                        |   | **(In                thousands, except %)**   |   |
|                                        |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Total                Gross Margin (dollars) |   | $                                             | 12,953 |   |   | $ | 12,216 |   |   | $ | 737 |   |   |   | 6 | % |
| Total                Gross Margin (%)       |   |                                          | 16.1   | % |   |   | 22.8 | % |   |   |   |   |   |   |   |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Gross      Margin (Continued)**

|                                        |   | **For                the Nine Months Ended** |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | **Sept.                30,**                 |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                        |   | **2007**                                     |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                        |   | **(In                thousands, except %)**  |   |
|                                        |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Total                Gross Margin (dollars) |   | $                                            | 39,395 |   |   | $ | 30,810 |   |   | $ | 8,585 |   |   |   | 28 | % |
| Total                Gross Margin (%)       |   |                                         | 18.2   | % |   |   | 20.1 | % |   |   |   |   |   |   |   |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Product      Segment Operating Income (Loss)**

|                                                        |   | **For                the Three Months Ended** |   |
|-------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                        |   | **Sept.                30,**                  |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                                        |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                        |   | **(In                thousands, except %)**   |   |
| **Product                Operating Income (Loss):**         |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                             | (545   | ) |   | $ | (1,744 | ) |   | $ | 1,199 |   |   |   | 69 | % |
| Zip                Products                                 |   |                                          | 1,224  |   |   |   | 767 |   |   |   | 457 |   |   |   | 60 |   |
| Total                Consumer                Products       |   |                                          | 679    |   |   |   | (977 | ) |   |   | 1,656 |   |   |   | 169 |   |
| Business                Products:                           |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                          | 204    |   |   |   | (367 | ) |   |   | 571 |   |   |   | 156 |   |
| Network                Storage                Systems       |   |                                          | 566    |   |   |   | 464 |   |   |   | 102 |   |   |   | 22 |   |
| Services                                                    |   |                                          | (349   | ) |   |   | (53 | ) |   |   | (296 | ) |   |   | (558 | ) |
| Total                Business                Products       |   |                                          | 421    |   |   |   | 44 |   |   |   | 377 |   |   |   | 857 |   |
| Other                Products                               |   |                                          | (139   | ) |   |   | 75 |   |   |   | (214 | ) |   |   | (285 | ) |
| Restructuring                reversals                      |   |                                          | 153    |   |   |   | 211 |   |   |   | (58 | ) |   |   | (27 | ) |
| Total                Operating Income                (Loss) |   | $                                             | 1,114  |   |   | $ | (647 | ) |   | $ | 1,761 |   |   |   | 272 | % |
|                                                        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Product      Segment Operating Income (Loss) (Continued)**

|                                                        |   | **For                the Nine Months Ended** |   |
|-------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                        |   | **Sept.                30,**                 |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                                        |   | **2007**                                     |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                        |   | **(In                thousands, except %)**  |   |
| **Product                Operating Income (Loss):**         |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                            | (141   | ) |   | $ | (11,666 | ) |   | $ | 11,525 |   |   |   | 99 | % |
| Zip                Products                                 |   |                                         | 1,804  |   |   |   | 1,874 |   |   |   | (70 | ) |   |   | (4 | ) |
| Total                Consumer                Products       |   |                                         | 1,663  |   |   |   | (9,792 | ) |   |   | 11,455 |   |   |   | 117 |   |
| Business                Products:                           |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                         | 234    |   |   |   | (5,742 | ) |   |   | 5,976 |   |   |   | 104 |   |
| Network                Storage                Systems       |   |                                         | 211    |   |   |   | 884 |   |   |   | (673 | ) |   |   | (76 | ) |
| Services                                                    |   |                                         | (1,404 | ) |   |   | 174 |   |   |   | (1,578 | ) |   |   | (907 | ) |
| Total                Business                Products       |   |                                         | (959   | ) |   |   | (4,684 | ) |   |   | 3,725 |   |   |   | 80 |   |
| Other                Products                               |   |                                         | 250    |   |   |   | 1,011 |   |   |   | (761 | ) |   |   | (75 | ) |
| Non-Restructuring                Charges                    |   |                                         | -      |   |   |   | (995 | ) |   |   | 995 |   |   |   | 100 |   |
| Restructuring                (charges) reversals            |   |                                         | 235    |   |   |   | (4,358 | ) |   |   | 4,593 |   |   |   | 105 |   |
| Total                Operating Income                (Loss) |   | $                                            | 1,189  |   |   | $ | (18,818 | ) |   | $ | 20,007 |   |   |   | 106 | % |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Product      Segment Operating Income (Loss) (Continued)**

**Operating      Expenses**

|                                                              |   | **For                the Three Months Ended** |   |
|-------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                              |   | **Sept.                30,**                  |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                                              |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                              |   | **(In                thousands, except %)**   |   |
| **Operating                Expenses:**                            |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and                administrative |   | $                                             | 9,452  |   |   | $ | 8,216 |   |   | $ | 1,236 |   |   |   | 15 | % |
| Research                and                development            |   |                                          | 1,872  |   |   |   | 1,904 |   |   |   | (32 | ) |   |   | (2 | ) |
| Restructuring                reversals                            |   |                                          | (153   | ) |   |   | (211 | ) |   |   | 58 |   |   |   | 27 |   |
| Goodwill                impairment                charge          |   |                                          | -      |   |   |   | 2,513 |   |   |   | (2,513 | ) |   |   | (100 | ) |
| Bad                debt                expense                    |   |                                          | 668    |   |   |   | 441 |   |   |   | 227 |   |   |   | 51 |   |
| Total                Operating                Expenses            |   | $                                             | 11,839 |   |   | $ | 12,863 |   |   | $ | (1,024 | ) |   |   | (8 | )% |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Operating      Expenses (Continued)**

|                                                              |   | **For                the Nine Months Ended** |   |
|-------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                              |   | **Sept.                30,**                 |   |   | **Oct.                1,** |   |   |   |   |   |   |   |
|                                                              |   | **2007**                                     |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                              |   | **(In                thousands, except %)**  |   |
| **Operating                Expenses:**                            |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and                administrative |   | $                                            | 30,233 |   |   | $ | 31,308 |   |   | $ | (1,075 | ) |   |   | (3 | )% |
| Research                and                development            |   |                                         | 5,395  |   |   |   | 6,946 |   |   |   | (1,551 | ) |   |   | (22 | ) |
| Restructuring                charges                (reversals)   |   |                                         | (235   | ) |   |   | 4,358 |   |   |   | (4,593 | ) |   |   | (105 | ) |
| Goodwill                impairment                charges         |   |                                         | 2,963  |   |   |   | 7,935 |   |   |   | (4,972 | ) |   |   | (63 | ) |
| License                and patent fee                income       |   |                                         | (452   | ) |   |   | (1,085 | ) |   |   | 633 |   |   |   | 58 |   |
| Bad                debt                expense                    |   |                                         | 302    |   |   |   | 166 |   |   |   | 136 |   |   |   | 82 |   |
| Total                Operating                Expenses            |   | $                                            | 38,206 |   |   | $ | 49,628 |   |   | $ | (11,422 | ) |   |   | (23 | )% |

*Selling,      General and Administrative Expenses*

*Research      and Development Expenses*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Operating      Expenses (Continued)**

*Goodwill      Impairment Charges*

*License      and Patent Fee Income*

*Bad      Debt Expense*

**Restructuring      Charges**

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Restructuring      Charges (Continued)**

**Interest      Income**

**Interest      Expense and Other Income (Expense), Net**

**Income      Taxes**

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Income      Taxes (Continued)**

*Accounting for Uncertainty in Income Taxes – an      interpretation of FASB Statement No. 109 *

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Liquidity      and Capital Resources**

|                                                                                                                   |   | **Sept.                30,**                |   |   | **Dec.                31,** |   |   |                        |   |   |                        |   |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------|--------|
|                                                                                                                   |   | **2007**                                    |   |   | **2006**                    |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                                                                                   |   | **(In                thousands, except %)** |   |
|                                                                                                                   |   |                                        |   |   |                        |   |   |                        |   |   |                        |   |
| Total                cash, cash equivalents and temporaryinvestments                for the U.S.                entity |   | $                                           | 4,604  |   |                        | $      | 2,653  |                        |   | $      | 1,951                       |   |   |   | 74 | % |
| Total                cash, cash equivalents and temporaryinvestments for non-U.S. entities                (1)          |   |                                        | 64,763 |   |                        |   | 65,495 |                        |   |   | (732                        | )      |   |   | (1 | ) |
| Total                consolidated cash, cash equivalentsand temporary                investments                       |   | $                                           | 69,367 |   |                        | $      | 68,148 |                        |   | $      | 1,219                       |   |   |   | 2 |   |
|                                                                                                                   |   |                                        |   |   |                        |   |   |                        |   |   |                        |   |   |   |   |   |
| Working                capital                                                                                         |   | $                                           | 90,135 |   |                        | $      | 79,273 |                        |   | $      | 10,689                      |   |   |   | 13 | % |

| (1)   | Of                the $64.8 million in total cash, cash equivalents and temporary                investments for non-U.S. entities, $0.1 million was restricted at                September 30, 2007.  At December 31, 2006, $0.1 million of the                non-U.S. entity cash was                restricted. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

** **

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

**FINANCIAL        CONDITION AND RESULTS OF OPERATIONS (Continued)**

**Liquidity      and Capital Resources (Continued)**

**Other      Matters**

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**ITEM      3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK:**

**ITEM      4.  CONTROLS AND      PROCEDURES:**

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION**

**ITEM      1.  LEGAL PROCEEDINGS**

**ITEM      1A.  RISK FACTORS**

***Demand      for Our Products and Services and Operating      Efficiencies***

| ·   | Our                ability to improve and/or sustain satisfactory HDD gross                margins; |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | Our                ability to generate significant sales and profit margins from REV®                and NAS                products and OfficeScreen®                services; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to replace declining Zip®                revenues and                profits with revenues and profits from other products and                services; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Worldwide                market conditions and demand for digital storage                products; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | Our                success in meeting targeted availability dates for new and enhanced                products; |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to develop and commercialize new intellectual property and                to                protect existing intellectual                property; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to maintain profitable relationships with our distributors,                retailers and other resellers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to maintain an appropriate cost                structure; |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | Our                ability to attract and retain competent, motivated                employees; |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | Our                ability to comply with applicable legal requirements throughout the                world; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to avoid disruptions to our ongoing business as we evaluate                strategic investments, including the evaluation of new opportunities                related to services for small- and medium-sized                businesses; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to obtain HDD products from suppliers at a competitive price                and                in sufficient quantities; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to utilize reliable outsource partners for certain critical                functions at prices that keep us competitive                and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                ability to successfully manage litigation, including enforcing our                rights,                protecting our interests and defending claims made against                us. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION (Continued)**

**Risk      Factors (Continued)**

*Zip      Drives and Disks*

*REV      Products*

| ·   | Inability                to create product awareness or lack of market acceptance of the REV                70GB                Backup Drive; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Failure                to maintain acceptable arrangements with product component suppliers,                particularly in light of lower than anticipated                volumes; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Manufacturing,                technical, supplier, or quality-related delays, issues or concerns,                including the loss of any key supplier or failure of any key supplier                to                deliver high quality products on                time; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                      potential for further delays or other failures of our OEM partner                in the                broadcast industry, Thomson N.A.,  to introduce expected                products utilizing REV drives and disks in                2007; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Potential                declines in demand for REV 35GB products because of the launch of                REV 70GB                products; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                potential for cost overruns, schedule misses or performance issues                with                next generation REV products as we develop additional REV products                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | Risks                that third parties may assert intellectual property claims against                REV                products. |
|----------------------|-------------------------------------------------------------------------------------------------------------------------------------|

*Consumer      Storage Solutions Products*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION (Continued)**

**Risk      Factors (Continued)**

*Consumer      Storage Solutions Products (Continued)*

*U.S.      Sales*

*Development      and Introduction of New Products and Services and New Revenue      Streams*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION (Continued)**

**Risk      Factors (Continued)**

*Development      and Introduction of New Products and Services and New Revenue Streams      (Continued)*

*Restructuring,      Other Cost Reduction Activities and Retention of Key      Personnel*

*Internal      Control Reporting Compliance Efforts*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION (Continued)**

**Risk      Factors (Continued)**

*Product      Manufacturing and Procurement*

*Outsourced      Distribution and Logistics*

*Reporting      of Channel Inventory and Product Sales by Channel Partners*

*Concentration      of Credit Risk*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION (Continued)**

**Risk      Factors (Continued)**

*Company      Operations, Component Supplies and Inventory*

*Intellectual      Property Risks*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION (Continued)**

**Risk      Factors (Continued)**

*International      Operations*

*Legal      Risks*

*Uncertain      Tax Positions*

*Other      Risk Factors*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION**

**ITEM      2.  UNREGISTERED SALES OF EQUITY SECURITIES      ANDUSE OF PROCEEDS:**

**ITEM      6.  EXHIBITS:**

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**SIGNATURES**

|   | Vice                President of Finance and |
|--------|----------------------------------------------|

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**EXHIBIT        INDEX**

10.27 

31.7

31.8

32.7

32.8