---

# UNITED STATESSECURITIES
AND EXCHANGE COMMISSION

                                                        WASHINGTON, D.C. 20549

---

# FORM 10-Q

## [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                                         EXCHANGE ACT OF 1934

## FOR THE QUARTERLY PERIOD ENDED JULY 3, 2005

## 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(Exact name of registrant as specified in its charter)

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

10955 Vista Sorrento Parkway, San Diego, CA 92130(Address of principal executive offices)

(858) 314-7000(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  
Yes    X      
No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).     Yes    X      
No

Indicate the number of shares outstanding of each of the issuer's classes of common stock
as of July 29, 2005.

|Common Stock, par value $0.03 1/3(Title of each class) | 51,612,173(Number of shares)
|------------------------------------------------------ | ----------------------------

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# IOMEGA CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS

`Page

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

                                            PART I - FINANCIAL STATEMENTS

Item 1.  Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets at July 3, 2005
             and December 31, 2004.................................................................       3

         Condensed Consolidated Statements of Operations for the Quarter
             Ended July 3, 2005 and June 27, 2004..................................................       4

         Condensed Consolidated Statements of Operations for the Six Months
             Ended July 3, 2005 and June 27, 2004..................................................       5

         Condensed Consolidated Statements of Cash Flows for the Six Months
             Ended July 3, 2005 and June 27, 2004..................................................       6

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

Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations...................................................      18

Item 3.  Quantitative and Qualitative Disclosures About Market Risk................................      37

Item 4.  Controls and Procedures...................................................................      38

                                             PART II - OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds...............................      40

Item 4.  Submission of Matters to a Vote of Security Holders.......................................      40

Item 6.  Exhibits..................................................................................      40

Signatures.........................................................................................      41

Exhibit Index......................................................................................      42`

---

Copyright © 2005
Iomega Corporation. All rights reserved. Iomega, the stylized i
logo, Zip, REV, Jaz, Active Disk, iStorage, Micro Mini, QuikTouch and HotBurn,
are either registered trademarks or trademarks of Iomega Corporation in the United States
and/or other countries. All other trademarks referenced herein
are the property of their respective owners.

1

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## IOMEGA CORPORATION AND SUBSIDIARIES
NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on
Form 10-Q contains a number of forward-looking statements, including, without
limitation, any statements referring to:

- Anticipated future amortization expenses;
- The goal to return to operating profitability in the fourth quarter of 2005;
- Our  intention to wind down certain  product  lines and focus  ongoing  resources on hard  drive-based  product
         solutions  including REV products,  portable,  desktop,  network and mini hard disk drives  (HDD) and Network
         Storage  Systems  (NSS) for  consumer and small  business  markets and to continue to manage the Zip products
         business with the goal to maximize cash flow;
- The amount of anticipated restructuring charges under the restructuring plan announced July 26, 2005;
- Anticipated  benefits  resulting from the  restructuring  plan announced July 26, 2005,  including  anticipated
         annual  cost  savings,  streamlining  of products  and  internal  business  systems,  an improved  go-to-market
         strategy for new products and the possibility of sales growth and higher margins;
- The expectation that a streamlined  organization and faster  time-to-market will enable sales growth and higher
         margins;
- The estimates of income taxes that could be incurred upon repatriation of foreign earnings;
- Our  current  expectation  that we will not utilize  the cash  repatriation  provisions  of the  American  Jobs
         Creation Act of 2004;
- The goal to develop REV products into a significant part of our overall product portfolio;
- The goal to improve Consumer Storage Solutions product gross margins;
- The goal to reverse negative cash flows from operations through the July 2005  restructuring  actions and other
         cost reductions; and
- Our belief that our balance of total  unrestricted  cash, cash equivalents,  and temporary  investments will be
         sufficient to fund anticipated working capital requirements for at least one year.

Any other statements that
are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words believes,
anticipates, plans, expects,
intends, goal and similar expressions are intended to
identify forward-looking statements, although not all forward-looking statements
contain these words.

Numerous factors could
cause actual events or results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation, those set
forth under the captions Application of Critical Accounting
Policies, Liquidity and Capital Resources, Factors
Affecting Future Operating Results and Quantitative and Qualitative
Disclosures About Market Risk included in Items 2 and 3 of Part I of this
Quarterly Report on Form 10-Q. In addition, any forward-looking statements
represent our estimates only as of the date of this report and we specifically
disclaim any obligation to update forward-looking statements, even if our
estimates change.

2

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# IOMEGA
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

`July 3, 2005      Dec. 31, 2004
                                                                 ------------      -------------
                                                                  (Unaudited)
                                                    ASSETS
Current Assets:
  Cash and cash equivalents                                        $  86,467         $ 103,403
  Restricted cash                                                        259                 -
  Temporary investments                                               23,128            17,406
  Trade receivables, less allowance for doubtful accounts
    of $2,361 at July 3, 2005 and $2,885 at December 31, 2004         18,163            30,764
  Inventories                                                         21,599            31,345
  Deferred income taxes                                                7,056             9,710
  Other current assets                                                 4,923             7,045
                                                                   ---------         ---------
    Total Current Assets                                             161,595           199,673
                                                                   ---------         ---------

Property and Equipment, at Cost                                      100,436           128,395
Accumulated Depreciation                                             (89,585)         (114,832)
                                                                   ---------         ---------
    Net Property and Equipment                                        10,851            13,563
                                                                   ---------         ---------

Goodwill                                                              11,691            11,691
Other Intangibles, Net                                                 1,715             2,448
Other Assets                                                              69               127
                                                                   ---------         ---------
  Total Assets                                                     $ 185,921         $ 227,502
                                                                   =========         =========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                                                 $  23,734         $  35,166
  Other current liabilities                                           51,135            65,607
  Income taxes payable                                                   291               664
                                                                   ---------         ---------
    Total Current Liabilities                                         75,160           101,437
                                                                   ---------         ---------

Other Long-Term Liabilities                                               99               721
Deferred Income Taxes                                                 19,694            22,537
Commitments and Contingencies (Notes 4, 5 and 7)

Stockholders' Equity:
  Common Stock, $0.03 1/3 par value - authorized 400,000,000
    shares, issued 55,045,095 shares at July 3, 2005
    and 55,028,902 shares at December 31, 2004                         1,838             1,837
  Additional paid-in capital                                          79,198            78,713
  Less: 3,432,922 Common Stock treasury shares, at cost              (33,791)          (33,791)
  Retained earnings                                                   43,723            56,048
                                                                   ---------         ---------
    Total Stockholders' Equity                                        90,968           102,807
                                                                   ---------         ---------
      Total Liabilities and Stockholders' Equity                   $ 185,921         $ 227,502
                                                                   =========         =========`

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

3

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# IOMEGA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

`For the Quarter Ended
                                                                   ---------------------------
                                                                    July 3,          June 27,
                                                                     2005              2004
                                                                   ---------         ---------
                                                                           (Unaudited)
Sales                                                               $ 65,736         $  77,642
Cost of sales                                                         52,209            62,861
                                                                    --------         ---------
  Gross Margin                                                        13,527            14,781
                                                                    --------         ---------

Operating Expenses:
  Selling, general and administrative                                 16,134            24,441
  Research and development                                             4,116             6,704
  License and patent fees                                               (405)                -
  Restructuring charges (reversals)                                      (41)              152
  Bad debt credit                                                         (5)             (384)
                                                                    --------         ---------
    Total Operating Expenses                                          19,799            30,913
                                                                    --------         ---------
  Operating Loss                                                      (6,272)          (16,132)

Interest income                                                          532               361
Interest expense and other income and (expense), net                    (839)             (568)
                                                                    --------         ---------
  Loss Before Income Taxes                                            (6,579)          (16,339)

Benefit (provision) for income taxes                                     179            (3,454)
                                                                    --------         ---------
  Net Loss                                                          $ (6,400)        $ (19,793)
                                                                    ========         =========


Net Loss Per Basic and Diluted Common Share                         $  (0.12)        $   (0.38)
                                                                    ========         =========

Weighted Average Common Shares Outstanding                            51,612            51,529
                                                                    ========         =========`

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

4

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# IOMEGA
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

`For the Six Months Ended
                                                                    --------------------------
                                                                     July 3,          June 27,
                                                                      2005              2004
                                                                    ---------        ---------
                                                                            (Unaudited)
Sales                                                               $ 138,666        $ 161,768
Cost of sales                                                         108,594          122,637
                                                                    ---------        ---------
  Gross Margin                                                         30,072           39,131
                                                                    ---------        ---------

Operating Expenses:
  Selling, general and administrative                                  34,636           47,636
  Research and development                                              8,220           13,169
  License and patent fees                                                (412)               -
  Restructuring charges                                                   194              698
  Bad debt credit                                                        (292)            (260)
                                                                    ---------        ---------
    Total Operating Expenses                                           42,346           61,243
                                                                    ---------        ---------
  Operating Loss                                                      (12,274)         (22,112)

Interest income                                                           967              732
Interest expense and other income and (expense), net                   (1,728)            (509)
                                                                    ---------        ---------
  Loss Before Income Taxes                                            (13,035)         (21,889)

Benefit (provision) for income taxes                                      710           (2,769)
                                                                    ---------        ---------
  Net Loss                                                          $ (12,325)       $ (24,658)
                                                                    =========        =========


Net Loss Per Basic and Diluted Common Share                         $   (0.24)       $   (0.48)
                                                                    =========        =========

Weighted Average Common Shares Outstanding                             51,611           51,528
                                                                    =========        =========`

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

5

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# IOMEGA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

`For the Six Months Ended
                                                                    --------------------------
                                                                     July 3,          June 27,
                                                                      2005              2004
                                                                    ---------        ---------
                                                                            (Unaudited)
Cash Flows from Operating Activities:
  Net loss                                                          $ (12,325)       $ (24,658)
  Revenue and Expense Adjustments:
    Depreciation and amortization                                       3,945            4,393
    Deferred income tax (provision) benefit                              (328)           5,787
    Stock compensation expense                                            438              552
    Inventory write-offs                                                  980                -
    Bad debt credit                                                      (292)            (260)
    Other                                                                  87               83

  Changes in Assets and Liabilities:
    Restricted cash                                                      (259)             (50)
    Trade receivables                                                  12,893            9,415
    Inventories                                                         8,766            1,930
    Other current assets                                                2,122           (1,312)
    Accounts payable                                                  (11,472)          (2,900)
    Other current liabilities                                         (12,285)         (13,546)
    Accrued restructuring                                              (2,194)          (2,367)
    Income taxes                                                         (373)          (3,292)
                                                                    ---------        ---------
      Net cash used in operating activities                           (10,297)         (26,225)
                                                                    ---------        ---------

Cash Flows from Investing Activities:
  Purchases of property and equipment                                    (829)          (7,770)
  Proceeds from sale of assets                                            641              101
  Purchases of temporary investments                                  (33,174)        (181,182)
  Sales of temporary investments                                       27,464          161,326
  Initial investment in ByteTaxi (net of $171 of cash)                    (44)               -
  Net change in other assets and other liabilities                       (663)            (878)
                                                                    ---------        ---------
    Net cash used in investing activities                              (6,605)         (28,403)
                                                                    ---------        ---------

Cash Flows from Financing Activities:
  Payments on long-term debt                                              (40)               -
  Proceeds from sales of Common Stock                                       6               10
                                                                    ---------        ---------
    Net cash provided by (used in) financing activities                   (34)              10
                                                                    ---------        ---------
Net Decrease in Total Cash and Cash Equivalents                       (16,936)         (54,618)
Total Cash and Cash Equivalents at Beginning of Period                103,403          122,591
                                                                    ---------        ---------
Total Cash and Cash Equivalents at End of Period                    $  86,467        $  67,973
                                                                    =========        =========`

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

6

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# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

## (1)
Significant Accounting Policies

In our opinion, the
accompanying condensed consolidated financial statements reflect all adjustments
of a normal recurring nature which are necessary to present fairly our financial
position as of July 3, 2005 and December 31, 2004, the results of operations for
the quarter and six month periods ended July 3, 2005 and June 27, 2004 and cash
flows for the six month periods ended July 3, 2005 and June 27, 2004.

The results of operations
for the quarter and six month periods ended July 3, 2005 are not necessarily
indicative of the results to be expected for the entire year or for any future
period.

These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in our latest Annual Report
on Form 10-K.

Reclassifications

Certain reclassifications
have been made to the prior years condensed consolidated financial
statements and notes to condensed consolidated financial statements to conform
to the current years presentation. All prior year business segment
information has been restated to be consistent with the current year
presentation.

Inventories

Inventories include
material costs and inventory related overhead costs and are recorded at the
lower of cost (first-in, first-out) or market and consist of the following:

`July 3,      Dec. 31,
                                                    2005          2004
                                                  --------      --------
                                                      (In thousands)

   Raw materials                                  $    343      $    461
   Finished goods                                   21,256        30,884
                                                  --------      --------
                                                  $ 21,599      $ 31,345
                                                  ========      ========`

We evaluate the carrying
value of inventory on a quarterly basis to determine if the carrying value is
recoverable at estimated selling prices (including known future price
decreases). We include product costs and direct selling expenses in its analysis
of inventory realization. To the extent that estimated selling prices do not
exceed such costs and expenses, valuation reserves are established against
inventories through a charge to cost of sales. In addition, we generally
consider inventory which is not expected to be sold within established
timelines, as forecasted by our material requirements planning system, as excess
and thus appropriate inventory reserves are established through a charge to cost
of sales.

7

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# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (1)
Significant Accounting Policies (Continued)

Net Income (Loss) Per Common Share

Basic net income (loss) per
common share (Basic EPS) excludes dilution and is computed by
dividing net income (loss) by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per common share
(Diluted EPS) reflects the potential dilution that could occur if
stock options or other contracts to issue common stock were exercised or
converted into common stock. The computation of Diluted EPS assumes no exercise
or conversion of securities that would have an anti-dilutive effect on net loss
per common share. In periods where losses are recorded, common stock equivalents
would decrease the loss per share and therefore are not added to the weighted
average shares outstanding. Losses have been recorded for the quarters and six
month periods ending July 3, 2005 and June 27, 2004, thus there was no dilution
as all outstanding options were considered anti-dilutive. For the quarter and
six month period ending June 27, 2004, all unvested restricted common shares
granted under the Management Incentive Plan (MIP) were also
considered anti-dilutive. We had no securities that were considered dilutive for
all presented periods.

The table below shows the
number of outstanding options that had an exercise price greater than the
average market price of the common shares (out of the money options) for the
respective period as well as the number of MIP restricted shares that were not
vested:

`For the Quarter Ended        For the Six Months Ended
                                     -----------------------      --------------------------
                                      July 3,      June 27,        July 3,          June 27,
                                       2005          2004            2005             2004
                                     ---------    ----------      ---------        ---------

   Out of the money options          2,087,531     1,105,754      1,978,117        1,070,905
   Unvested MIP restricted shares            -        18,846              -           18,846`

Accrued Warranty

We accrue for warranty
costs based on estimated warranty return rates and estimated costs to repair. We
use a statistical-based model to estimate warranty accrual requirements. The
statistical model, used to project future returns, is based upon a rolling
monthly calculation that computes the number of units required in the warranty
reserve and is based upon monthly sales, actual returns and projected return
rates. Generally, if a product is subject to failure or likely to fail, the
product fails early in the usage cycle. Actual warranty costs are charged
against the warranty reserve. Factors that affect our warranty liability include
the number of units sold, historical and anticipated rates of warranty returns
and repair cost. We review the adequacy of our recorded warranty liability on a
quarterly basis and record the necessary adjustments to the warranty liability.

8

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# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (1)
Significant Accounting Policies (Continued)

Changes in our warranty
liability during all periods presented were as follows:

`For the Quarter Ended      For the Six Months Ended
                                      ---------------------      ------------------------
                                      July 3,      June 27,      July 3,         June 27,
                                       2005          2004         2005             2004
                                      -------      --------      -------         --------
                                                       (In thousands)

   Balance at beginning of period     $ 5,462       $ 4,664      $ 5,537          $ 5,225
     Accruals/additions                 1,261         2,489        3,370            4,545
     Claims                            (1,597)       (2,044)      (3,781)          (4,661)
                                      -------       -------      -------          -------
   Balance at end of period           $ 5,126       $ 5,109      $ 5,126          $ 5,109
                                      =======       =======      =======          =======`

Recent Accounting Pronouncements

In December 2004, the
Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 123r, Share-Based
Payment (SFAS 123r). SFAS 123r provides accounting guidance
for stock-based payments to employees. SFAS 123r revises SFAS 123 by eliminating
the choice of using the intrinsic recognition and measurement
provisions of Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees and requiring all companies to use the fair
value method of measuring stock compensation expense. SFAS 123r clarifies and
expands SFAS 123s guidance in several areas, including measuring fair
value, classifying an award as equity or a liability, attributing compensation
cost to reporting periods as well as adding several new disclosure requirements.
SFAS 123r also changes the accounting for the tax effects of options, including
the presentation of the tax effects on the condensed consolidated statements of
cash flows. On April 14, 2005, the SEC announced that it had delayed the
implementation date for calendar year-end companies to January 1, 2006. We are
currently accounting for all of our stock-based compensation under the fair
value method as outlined in SFAS 123 and will adopt SFAS 123r beginning in the
first quarter of 2006. We have not yet evaluated the potential impacts of SFAS
123r.

In May 2005, the FASB
issued SFAS No. 154, Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3 (SFAS
154). SFAS 154 was issued in part to improve the comparability of
financial reporting with International Accounting Standards. SFAS 154 requires
retrospective application for voluntary changes in accounting principle unless
it is impracticable to do so. SFAS 154 is effective for accounting changes made
in fiscal years beginning after December 15, 2005 and we will adopt it at that
time. The future impact to us will depend entirely on the nature of any future
accounting changes.

## (2) Income
Taxes

For the quarter ended July
3, 2005, we recorded an income tax benefit of $0.2 million on a pre-tax loss of
$6.6 million. The statutory tax benefit of $2.6 million, resulting from
operating losses, was entirely offset by a tax charge to increase the valuation
allowance. The net tax benefit of $0.2 million was comprised of small
adjustments related to deferred taxes.

9

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# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (2) Income Taxes (Continued)

For the quarter ended June
27, 2004, we recorded an income tax provision of $3.5 million on a pre-tax loss
of $16.3 million. The net tax provision for the quarter ended June 27, 2004 was
comprised of a $12.5 million tax charge to increase the valuation allowance
resulting primarily from new foreign tax credits and loss carryforwards,
partially offset by the statutory tax benefit of $6.4 million on the
quarters pre-tax loss, and a $2.6 million benefit resulting primarily from
the release of tax accruals associated with our foreign operations. Included in
the $12.5 million increase in the valuation allowance was an $8.5 million
valuation allowance resulting from new foreign tax credits created by deemed
Swiss withholding taxes on foreign earnings. The recording of the new foreign
tax credits was the result of a change in our intention to repatriate foreign
cash to the U.S. in the form of dividends in the future.

For the six months ended
July 3, 2005, we recorded an income tax benefit of $0.7 million on a pre-tax
loss of $13.0 million. The statutory tax benefit of $5.1 million, resulting from
operating losses, was entirely offset by tax charges to increase the valuation
allowance. The net tax benefit of $0.7 million was comprised of $0.4 million of
various foreign tax accrual releases due to a change in the estimate and the
likely outcome of selected tax issues and $0.3 million of various adjustments
related to deferred taxes.

For the six months ended
June 27, 2004, we recorded a net tax provision of $2.8 million on a pre-tax loss
of $21.9 million. The net tax provision was comprised of $13.2 million in tax
charges to increase the valuation allowance resulting primarily from new foreign
tax credits and loss carryforwards, partially offset by the statutory tax
benefit of $8.5 million on the pre-tax loss for the six months ended June 27,
2004 and a $1.9 million benefit resulting primarily from the release of tax
accruals associated with our foreign operations. Included in the $13.2 million
increase in the valuation allowance was an $8.5 million valuation allowance
resulting from deemed Swiss withholding taxes on foreign earnings described
above in the paragraph discussing the quarter ended June 27, 2004.

We have evaluated the
repatriation provisions of the American Jobs Creation Act of 2004 and at this
time, in an effort to conserve cash, we do not anticipate utilizing this
provision.

## (3) Business
Segment Information

We have five reportable
segments, which are organized into three business categories as follows:

`Business Categories                  Reportable Segments
    -----------------------          ------------------------------

    Consumer Products                1.  Zip Products
                                     2.  Consumer Storage Solutions

    Business Products                3.  REV Products
                                     4.  Network Storage Systems

    Other Products                   5.  Other Products`

Consumer Products

The Zip Products segment
involves the distribution and sale of Zip drives and disks to retailers,
distributors, resellers and OEMs throughout the world.

10

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# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (3) Business
Segment Information (Continued)

Our Consumer Storage
Solutions segment involves the worldwide distribution and sale of various
storage devices including: portable, desktop, network and mini hard disk drives
(HDD); CD-RW drives; DVD rewritable drives; Iomega Mini and Micro
Mini USB flash drives and external floppy disk drives. In some cases, we perform
final assembly work of purchased components; in other cases, we purchase and
resell substantially complete products.

Business Products

The REV Products segment
involves the development, distribution and sale of REV products to retailers,
distributors, OEMs and resellers throughout the world.The REV drives are
removable hard disk storage systems that have a native capacity of 35 gigabytes
(GB) (where 1 gigabyte equals 1 billion bytes) and up to 90GB
compressed capacity. REV products began shipping in April 2004.

The Network Storage Systems
(NSS) segment consists primarily of the development, distribution
and sale of Network Attached Storage servers in the entry-level and low-end
Network Attached Storage market.

Other Products

The Other Products segment
consists of license and patent fees and products that have been discontinued or
are otherwise immaterial, including: Jaz and PocketZip disks, Peerless drive
systems, Iomega software products such as Iomega Automatic Backup software and
other miscellaneous products. The Other Products segment included the research
and development of the Digital Capture Technology (DCT) development
program, which was cancelled in the second half of 2004.

Product Profit Margin

We evaluate product segment
performance based on product profit margin (PPM). PPM is defined as
sales and other income related to a segments operations, less both fixed
and variable product costs, research and development expenses, product
management expenses, specific selling and marketing expenses and depreciation
and amortization related to a segments operations. When such costs and
expenses exceed sales and other income, PPM is referred to as a product loss.
The accounting policies of the product segments are the same as those described
in Note 1. Intersegment sales, eliminated in consolidation, are not material.
The expenses attributable to general corporate activity are not allocated to the
product segments. Non-allocated operating expenses include: advanced research
and development, shared sales and corporate marketing expenses and general and
administrative expenses.

11

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# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (3) Business
Segment Information (Continued)

The information in the
following table was derived directly from the segments internal financial
information used for corporate management purposes. All 2004 amounts have been
reclassified to match the 2005 Business Category and Reportable Segment
presentation.

Reportable Operating Segment Information:

`For the Quarter Ended       For the Six Months Ended
                                        ---------------------       ------------------------
                                         July 3,     June 27,         July 3,       June 27,
                                          2005         2004            2005           2004
                                        --------     --------       ---------      ---------
Sales:                                                   (In thousands)
Consumer Products:
  Zip products                          $ 16,778     $ 32,319       $  36,923      $  76,539
  Consumer Storage Solutions              33,147       32,731          69,596         67,857
                                        --------     --------       ---------      ---------
    Total Consumer Products               49,925       65,050         106,519        144,396
Business Products:
  REV products                            11,141        7,491          23,234          7,491
  Network Storage Systems                  4,154        3,973           7,939          7,365
                                        --------     --------       ---------      ---------
    Total Business Products               15,295       11,464          31,173         14,856
Other Products                               516        1,128             974          2,516
                                        --------     --------       ---------      ---------
    Total sales                         $ 65,736     $ 77,642       $ 138,666      $ 161,768
                                        ========     ========       =========      =========

PPM (Product Loss):
Consumer Products:
  Zip products                          $  7,717     $ 10,675       $  17,779      $  28,842
  Consumer Storage Solutions              (2,160)      (1,195)         (3,041)          (724)
                                        --------     --------       ---------      ---------
    Total Consumer Products                5,557        9,480          14,738         28,118
Business Products:
  REV products                            (1,584)      (6,671)         (3,402)       (12,286)
  Network Storage Systems                     33          317            (266)          (494)
                                        --------     --------       ---------      ---------
    Total Business Products               (1,551)      (6,354)         (3,668)       (12,780)
Other Products                               562       (2,480)            655         (4,287)
                                        --------     --------       ---------      ---------
    Total PPM                              4,568          646          11,725         11,051


Common Expenses:
  General corporate expenses             (10,881)     (16,626)        (23,805)       (32,465)
  Restructuring (charges) reversals           41         (152)           (194)          (698)
  Interest and other income
    (expense), net                          (307)        (207)           (761)           223
                                        --------     --------       ---------      ---------
    Loss before income taxes            $ (6,579)    $(16,339)      $ (13,035)     $ (21,889)
                                        ========     ========       =========      =========`

12

---

# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (4)
Restructuring Charges/Reversals

As of July 3, 2005,
restructuring reserves existed under three different restructuring actions: the
2004 restructuring actions, the 2003 restructuring actions and the 2001
restructuring actions. For more detail related to the 2001 and 2003
restructuring actions, see our 2004 Annual Report on Form 10-K.

2004 Restructuring Actions

During 2004, we recorded
$3.7 million of restructuring charges for the 2004 restructuring actions. This
included $2.6 million of cash charges for severance and benefits for 141 regular
and temporary personnel worldwide who were notified during 2004 that their
positions were being eliminated (there were no charges related to the 17
temporary employees whose positions were eliminated), $0.7 million of cash
charges for lease termination costs and $0.4 million of non-cash charges related
to excess furniture. All of the $3.7 million of restructuring charges recorded
during 2004 were shown as restructuring expenses as a component of operating
expenses. None of these restructuring charges were allocated to any of the
business segments. The restructuring actions were part of an effort to align our
cost structure with our expected future revenue levels at that time.

The worldwide workforce
reduction was across all business functions and across all levels of Iomega. Of
the 141 regular and temporary individuals worldwide that were notified during
2004, 15 employees worked on a transition basis into the first and/or second
quarters of 2005. Three of these employees were rehired full-time which
decreased the headcount reduction to 138 employees.

The total separation
payments or liability for the 138 employees whose positions have been eliminated
under the 2004 restructuring plan was $2.8 million.

The total charges for the
2004 restructuring actions were $3.9 million. As of July 3, 2005, we have made
$3.2million in cumulative cash payments related to the 2004
restructuring actions, of which $1.1 million was disbursed during the first
quarter of 2005 and $0.3 million was disbursed during the second quarter of
2005.

Utilization of and other
activity related to the 2004 restructuring reserves during the quarter ended
July 3, 2005 are summarized below:

`Balance                                          Balance
2004 Restructuring Actions           04/03/05   Utilized    Additions   (Reversals)   07/03/05
---------------------------          --------   --------    ---------   -----------   --------
                                                          (In thousands)

Severance and benefits (a)            $ 131      $  (82)       $ 25        $ (63)      $  11
Lease termination costs (a)             528        (244)          -            -         284
Furniture (b)                           250         (48)          -            -         202
                                      -----      ------        ----        -----       -----
                                      $ 909      $ (374)       $ 25        $ (63)      $ 497
                                      =====      ======        ====        =====       =====

Balance Sheet Breakout:
  Other current liabilities (a)       $ 659      $ (326)       $ 25        $ (63)      $ 295
  Fixed asset reserves (b)              250         (48)          -            -         202
                                      -----      ------        ----        -----       -----
                                      $ 909      $ (374)       $ 25        $ (63)      $ 497
                                      =====      ======        ====        =====       =====

(a) Amounts represent primarily cash charges.
(b) Amounts represent primarily non-cash charges.`

13

---

# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

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

Utilization of and other
activity relating to the 2004 restructuring charges during the six months ended
July 3, 2005 are summarized below:

`Balance                                          Balance
2004 Restructuring Actions           12/31/04   Utilized    Additions   (Reversals)   07/03/05
---------------------------          --------   --------    ---------   -----------   --------
                                                          (In thousands)

Severance and benefits (a)            $   766   $   (952)     $ 260        $ (63)      $  11
Lease termination costs (a)               725       (441)         -            -         284
Furniture (b)                             346       (144)         -            -         202
                                      -------   --------      -----        -----       -----
                                      $ 1,837   $ (1,537)     $ 260        $ (63)      $ 497
                                      =======   ========      =====        =====       =====

Balance Sheet Breakout:
  Other current liabilities (a)       $ 1,491   $ (1,393)     $ 260        $ (63)      $ 295
  Fixed asset reserves (b)                346       (144)         -            -         202
                                      -------   --------      -----        -----       -----
                                      $ 1,837   $ (1,537)     $ 260        $ (63)      $ 497
                                      =======   ========      =====        =====       =====

(a) Amounts represent primarily cash charges.
(b) Amounts represent primarily non-cash charges.`

At July 3, 2005,
the remaining severance and benefits relate to an employee who was on transition
until the end of the second quarter of 2005. Lease payments are being made on a
continuous monthly basis, and of these facilities, the last lease expires in
2008. We are trying to sublease these facilities. We anticipate disposing of the
excess furniture by the end of 2005.

2001 and 2003 Restructuring Actions

During the first quarter of
2004, we recorded an additional $0.5 million in restructuring charges related to
the 2001 restructuring actions for our Ireland facility due to our inability to
sublease the facility as a result of continuing depressed real estate market
conditions in Ireland.

During the first quarter of
2004, we also recorded $0.3 million of restructuring charges related to the
ratable recognition of the severance and benefits costs to be paid to the
employees who remained in transition into 2004 under the 2003 restructuring
actions. However, during the first quarter of 2004, we also released $0.3
million of estimated outplacement liabilities as employee usage of outplacement
resources was less than originally estimated. During the second quarter of 2004,
we recorded an additional $0.2 million of restructuring charges related to the
ratable recognition of the severance and benefits costs to be paid to employees
who remained in transition into 2004 under the 2003 restructuring actions.

Cash disbursements of $0.5
million were made in both the first and second quarters of 2005 related to the
2001 and 2003 restructuring actions. As of July 3, 2005, approximately $1.9
million remains to be paid in cash for these two restructuring actions.

14

---

# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

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

Utilization of and other
activity related to the 2001 and 2003 restructuring charges during the quarter
ended July 3, 2005 are summarized below:

`Balance                               Balance
2001 and 2003 Restructuring Actions             04/03/05     Utilized   (Reversals)   07/03/05
-----------------------------------             --------     --------   -----------   --------
                                                               (In thousands)

Severance and benefits (a)                       $     2      $    -       $  -       $     2
Lease termination costs (a)                        2,436        (487)        (2)        1,947
Leasehold Improvements and Furniture (b)             293         (62)         -           231
                                                 -------      ------       ----       -------
                                                 $ 2,731      $ (549)      $ (2)      $ 2,180
                                                 =======      ======       ====       =======

Balance Sheet Breakout:
  Other current liabilities (a)                  $ 2,438      $ (487)      $ (2)      $ 1,949
  Fixed asset reserves (b)                           293         (62)         -           231
                                                 -------      ------       ----       -------
                                                 $ 2,731      $ (549)      $ (2)      $ 2,180
                                                 =======      ======       ====       =======

(a) Amounts represent primarily cash charges.
(b) Amounts represent primarily non-cash charges.`

Utilization of and other
activity relating to the 2001 and 2003 restructuring charges during the six
months ended July 3, 2005 are summarized below:

`Balance                               Balance
2001 and 2003 Restructuring Actions             12/31/04     Utilized   (Reversals)   07/03/05
-----------------------------------             --------     --------   -----------   --------
                                                                (In thousands)

Severance and benefits (a)                       $     2            -      $  -       $     2
Lease termination costs (a)                        2,945         (996)       (2)        1,947
Leasehold Improvements and Furniture (b)             360         (129)        -           231
                                                 -------     --------      ----       -------
                                                 $ 3,307     $ (1,125)     $ (2)      $ 2,180
                                                 =======     ========      ====       =======

Balance Sheet Breakout:
  Other current liabilities (a)                  $ 2,947     $   (996)     $ (2)      $ 1,949
  Fixed asset reserves (b)                           360         (129)        -           231
                                                 -------     --------      ----       -------
                                                 $ 3,307     $ (1,125)     $ (2)      $ 2,180
                                                 =======     ========      ====       =======

(a) Amounts represent primarily cash charges.
(b) Amounts represent primarily non-cash charges.`

Lease payments are being
made on a continuous monthly basis, and of these facilities, the last lease
expires in 2009. We are trying to sublease these facilities. The remaining
leasehold improvements are associated with subleased facilities and cannot be
disposed of until the related subleases expire. The last sublease will expire in
March 2006. We anticipate completing the disposal of the furniture by the end of
2005.

15

---

# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (5)
Commitments and Contingencies

Litigation

There are no material legal
proceedings to which we are a party. We are involved in lawsuits and claims
generally incidental to our business, none of which are expected to have a
material impact on our business or operations.

## (6) Other
Matters

Other Intangible Assets

At July 3, 2005, we had
$1.7 million in net intangible assets, all of which are subject to amortization.
Our intangible assets include a licensing agreement and intellectual property.
Intangible assets are amortized using the straight-line method over the
estimated useful life of the asset, subject to periodic review for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. There have been no indicators of impairment
from the time the impairment evaluation was performed in the first quarter of
2005 to July 3, 2005. During the quarter ended July 3, 2005, amortization
expense was $0.6 million. During the six months ended July 3, 2004, amortization
expense was $1.1 million. Amortization expense for each of the next five fiscal
years is anticipated to be approximately $0.9 million for the remainder of 2005,
$0.7 million in 2006, $0.1 million in 2007 and zero thereafter. As of July 3,
2005, the weighted average useful life of our intangible assets is approximately
one year.

The following table
presents the other intangible assets and associated amortization for all periods
presented:

`July 3,       Dec. 31,
                                                       2005           2004
                                                     --------       --------
                                                          (In thousands)
Other Intangible Assets:
  Gross value (1)                                    $ 12,157       $ 11,791
  Accumulated amortization                            (10,442)        (9,343)
                                                     --------       --------
    Net intangible assets                            $  1,715       $  2,448
                                                     ========       ========


(1) The intangible asset gross value increased $0.4 million in the first quarter of 2005
    due to the consolidation of intellectual property related to our investment in ByteTaxi
    in January 2005.`

16

---

# IOMEGA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

## (7) Subsequent
Event

On July 26, 2005, we
announced a restructuring plan to streamline our business strategy and align our
expenses with expected revenues. This plan includes the realignment of product
lines and go-to-market strategies and an approximate 30% workforce reduction
(120 regular employees) with the goal to return to operating profitability. We
intend to focus our ongoing resources on hard drive-based product solutions
(including REV, HDD and NSS drives) for consumer and small business markets and
we will continue to manage the Zip products business with the goal to maximize
cash flow.

We anticipate that these
actions will result in annual cost savings of approximately $38 million to $42
million as compared to first half 2005 run rates, when fully implemented.
Approximately 85% of the cost reductions are expected to be in operating
expenses. The cost reductions include the workforce reduction, consolidation of
facilities, consolidation of internal business systems, bringing in-house
certain work that is currently outsourced and a more focused approach to
marketing spending.

The restructuring charges,
expected to range between $7 million to $10 million, are anticipated to be
recorded in the second half of 2005, with the majority anticipated in the third
quarter. These charges will reflect expenses associated with the workforce
reduction; lease expenses associated with unutilized facilities; termination of
contractual obligations; asset write-downs and other miscellaneous charges. We
anticipate recording additional non-restructuring charges of $1 million to $3
million, primarily in the second half of 2005, associated with product line and
information system transitions to further streamline the business and reduce
future operating costs. Substantially all of the restructuring and
non-restructuring charges are expected to be cash charges.

17

---

## IOMEGA CORPORATION AND SUBSIDIARIES

## ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS:

## Overview

We design and market
products that help customers protect, secure, capture and share their valuable
digital information. Our reportable segments are based primarily on the nature
of our products and consist of Zip Products, Consumer Storage Solutions, REV
Products, Network Storage Systems (NSS) and Other Products.

The Zip Products segment
involves the distribution and sale of Zip drives and disks to retailers,
distributors, resellers and OEMs throughout the world. The Consumer Storage
Solutions segment involves the worldwide distribution and sale of various
storage devices including: portable, desktop, network and mini hard disk drives
(HDD); CD-RW drives; DVD rewritable drives; Iomega Mini and Micro
Mini USB flash drives and external floppy disk drives. The REV Products segment
involves the development, distribution and sale of REV products to retailers,
distributors, OEMs and resellers throughout the world.The REV drives are
removable hard disk storage systems that have a native capacity of 35 gigabytes
(GB) (where 1 gigabyte equals 1 billion bytes) and up to 90GB
compressed capacity. The NSS segment consists primarily of the development,
distribution and sale of Network Attached Storage servers in the entry-level and
low-end Network Attached Storage market. The Other Products segment consists of
license and patent fees and products that have been discontinued or are
otherwise immaterial, including: Jaz and PocketZip disks, Peerless drive
systems, Iomega software products such as Iomega Automatic Backup software and
other miscellaneous products.

Since 1996, the Zip Product
segment has been the largest contributor to our product profit margin
(PPM). As the Zip business has approached the end of its product
life cycle, we have been trying to find other profitable sources of revenue to
replace the declining high gross margin Zip business. In recent years, we have
invested significant efforts and dollars on the development of REV products,
which were launched in the second quarter of 2004. The REV Products segment has
yet to be profitable at the PPM level due primarily to development costs for
next generation REV products, significant marketing expenses to generate market
awareness and under-absorbed fixed overhead expenses at the current sales
volumes.

In other efforts to replace
the declining Zip business, we have launched and attempted to expand our
Consumer Storage Solutions and NSS businesses. Sales of the Consumer Storage
Solutions business segment now exceed Zip product sales. However, our Consumer
Storage Solutions segment has not generated significant gross margins and is not
profitable. The NSS business has also incurred losses during each year of its
existence, though it had a nominal PPM for the quarter ended July 3, 2005.

As part of an ongoing
effort to return to profitability, we announced the implementation of
restructuring actions on July 26, 2005 which include: worldwide workforce
reductions, consolidation of facilities, streamlining of products and internal
business systems and an improved go-to-market strategy for new products (See
Note 7 to the notes to condensed consolidated financial statements for details
on the anticipated restructuring charges). It is unlikely that any resulting
adjustments to our cost structure will benefit operating results for the third
quarter of 2005. However, it is our goal, based on the anticipated lower
operating expenses resulting from the 2005 restructuring actions that will be
implemented through the remainder of 2005, and with our current gross margin
structure, to achieve operating profitability in the fourth quarter of 2005.
Longer term, the streamlined organization and faster time-to-market are expected
to enable sales growth and higher margins.

18

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Application of
Critical Accounting Policies

Areas where significant
judgments occur include, but are not limited to: revenue recognition, price
protection and rebate reserves, inventory valuation reserves, tax valuation
allowances and impairment of goodwill and other intangible assets. Actual
results could differ materially from these estimates. For a more detailed
explanation of the judgments included in these areas, refer to our Annual Report
on Form 10-K for the year ended December 31, 2004. Our critical accounting
policies have not changed materially since December 31, 2004.

## Seasonality

Our Consumer Storage
Solutions business is typically strongest during the fourth quarter. Our
European sales are typically weakest during the third quarter due to summer
holidays. There can be no assurance that any historic sales patterns will
continue and, as a result, sales for any prior quarter are not necessarily
indicative of the sales to be expected in any future quarter.

## Results of
Operations

Our net loss for the
quarter ended July 3, 2005 was $6.4 million, or $0.12 per share, compared with a
net loss of $19.8 million, or $0.38 per share, for the quarter ended June 27,
2004.

Our net loss for the six
months ended July 3, 2005 was $12.3 million, or $0.24 per share, compared with a
net loss of $24.7 million, or $0.48 per share, for the six months ended June 27,
2004.

## Sales

As shown in the table
below, total sales for the quarter ended July 3, 2005 declined primarily due to
lower Zip product sales, partially offset by higher sales of our REV products,
which began shipping in April 2004.

`For the Quarter Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005        2004      $ Change      % Change
                                        --------    --------    ---------     --------
                                                   (In thousands, except %)
Sales:
Consumer Products:
  Zip Products                          $ 16,778    $ 32,319    $ (15,541)      (48)%
  Consumer Storage Solutions              33,147      32,731          416         1
                                        --------    --------    ---------
    Total Consumer Products               49,925      65,050      (15,125)      (23)
Business Products:
  REV Products                            11,141       7,491        3,650        49
  Network Storage Systems                  4,154       3,973          181         5
                                        --------    --------    ---------
    Total Business Products               15,295      11,464        3,831        33
Other Products                               516       1,128         (612)      (54)
                                        --------    --------    ---------
    Total sales                         $ 65,736    $ 77,642    $ (11,906)      (15)%
                                        ========    ========    =========`

19

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Sales
(Continued)

Zip product sales continued
its expected decline for the quarter ended July 3, 2005, both in terms of units
and sales dollars. The $0.4 million higher Consumer Storage Solutions sales
resulted from $9.2 million of higher HDD product sales partially offset by $6.6
million of lower Optical, $1.5 million of lower Iomega Mini and Micro Mini USB
flash and $0.7 million of lower floppy external drive sales. REV product sales
increased due primarily to increased awareness of the product line among end
users. REV products began shipping in April 2004. The higher NSS sales resulted
primarily from new products launched in the second half of 2004. Other Products
sales decreased due to lower sales of discontinued products.

Our sales by region for the
quarters ended July 3, 2005 and June 27, 2004 are shown in the table below:

`For the Quarter Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005        2004      $ Change      % Change
                                        --------    --------    ---------     --------
                                                   (In thousands, except %)
Sales Dollars:
Americas (includes Latin America)       $ 32,898    $ 41,934     $ (9,036)      (22)%
Europe                                    27,973      29,629       (1,656)       (6)
Asia Pacific                               4,865       6,079       (1,214)      (20)
                                        --------    --------    ---------
  Total                                 $ 65,736    $ 77,642    $ (11,906)      (15)%
                                        ========    ========    =========

Percent of Total Sales:
Americas (includes Latin America)            50%         54%
Europe                                       43          38
Asia Pacific                                  7           8
                                            ---         ---
  Total                                     100%        100%
                                            ===         ===`

The decrease in sales
dollars in the Americas was primarily due to lower Zip product sales, partially
offset by higher Consumer Storage Solutions and REV product sales. The decrease
in sales dollars in Europe was primarily from lower Zip product sales and lower
Consumer Storage Solutions product sales, partially offset by higher REV product
sales. Europes sales decline was partially mitigated by favorable foreign
currency movements. The decrease in sales dollars in the Asia Pacific region was
primarily due to lower Zip and Consumer Storage Solutions product sales,
partially offset by higher REV and NSS product sales.

20

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Sales
(Continued)

As shown in the table
below, total sales for the six months ended July 3, 2005 declined primarily due
to lower Zip product sales, partially offset by higher sales of REV products
which began shipping in April 2004.

`For the Six Months Ended
                                       -----------------------------------------------
                                        July 3,     June 27,
                                          2005        2004      $ Change      % Change
                                       ---------    --------    ---------     --------
                                                   (In thousands, except %)
Sales:
Consumer Products:
  Zip Products                         $  36,923    $ 76,539    $ (39,616)      (52)%
  Consumer Storage Solutions              69,596      67,857        1,739         3
                                       ---------    --------    ---------
    Total Consumer Products              106,519     144,396      (37,877)      (26)
Business Products:
  REV Products                            23,234       7,491       15,743       210
  Network Storage Systems                  7,939       7,365          574         8
                                       ---------    --------    ---------
    Total Business Products               31,173      14,856       16,317       110
Other Products                               974       2,516       (1,542)      (61)
                                       ---------    --------    ---------
    Total sales                        $ 138,666    $161,768    $ (23,102)      (14)%
                                       =========    ========    =========`

Zip product sales continued
its expected decline for the six months ended July 3, 2005, both in terms of
units and sales dollars. The $1.7 million higher Consumer Storage Solutions
product sales was comprised of $18.2 million of higher HDD product sales
partially offset by $14.4 million of lower Optical, $1.6 million of lower Iomega
Mini and Micro Mini USB flash and $0.5 million of lower floppy external drive
sales. REV products began shipping in April 2004 and sales increased during 2005
as REV products were available for sale for a longer period of time during 2005
than in 2004. The higher NSS sales resulted primarily from new products launched
in the second half of 2004. The lower Other Products sales resulted from lower
sales of discontinued products.

Our sales by region for the
six months ended July 3, 2005 and June 27, 2004 are shown in the table below:

`For the Six Months Ended
                                       -----------------------------------------------
                                        July 3,     June 27,
                                         2005         2004      $ Change      % Change
                                       ---------   ---------    ---------     --------
                                                   (In thousands, except %)
Sales Dollars:
Americas (includes Latin America)      $  66,694   $  86,355    $ (19,661)      (23)%
Europe                                    62,302      62,861         (559)       (1)
Asia Pacific                               9,670      12,552       (2,882)      (23)
                                       ---------   ---------    ---------
  Total                                $ 138,666   $ 161,768    $ (23,102)      (14)%
                                       =========   =========    =========

Percent of Total Sales:
Americas (includes Latin America)            48%         53%
Europe                                       45          39
Asia Pacific                                  7           8
                                            ---         ---
  Total                                     100%        100%
                                            ===         ===`

21

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Sales
(Continued)

The decrease in sales
dollars in the Americas was primarily due to lower Zip product sales, partially
offset by higher REV and Consumer Storage Solutions product sales. The decrease
in sales dollars in Europe was primarily from lower Zip product sales, partially
offset by higher REV and Consumer Storage Solutions product sales. Europes
sales decline was partially mitigated by favorable foreign currency movements.
The decrease in sales dollars in the Asia Pacific region was primarily due to
lower Zip and Consumer Storage Solutions product sales, partially offset by
higher REV product sales.

## Gross Margin

Our gross margin details
for the quarters ended July 3, 2005 and June 27, 2004 are shown in the table
below:

`For the Quarter Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005         2004     $ Change      % Change
                                        --------    --------    ---------     --------
                                                   (In thousands, except %)

Total Gross Margin (dollars)            $ 13,527    $ 14,781     $ (1,254)        (8)%
Total Gross Margin (%)                        21%         19%`

Total gross margin dollars
in the quarter ended July 3, 2005 decreased primarily from lower Zip product
sales. The gross margin percentage increased primarily from higher gross margin
percentages for Zip, REV and NSS products, partially offset by lower Consumer
Storage Solution gross margin percentages.

The Zip product gross
margin percentage increased for the quarter ended July 3, 2005 primarily from
lower material costs and fewer pricing, rebate and marketing programs. Total Zip
product gross margin dollars decreased due to lower Zip product sales.

Consumer Storage Solutions
product gross margins declined both in terms of dollars and percentages during
the quarter ended July 3, 2005, primarily from continued intense price
competition and increased inventory reserves for slow moving product. Our goal
is to improve Consumer Storage Solutions product gross margins, particularly on
HDD products, during the remainder of 2005 through continued focus on variable
costs and reducing fixed overhead costs through the 2005 restructuring actions.
We will also be eliminating certain product lines as part of the 2005
restructuring actions. All Consumer Storage Solutions products faced competitive
pricing pressures during the quarter ended July 3, 2005 and we anticipate
continued competitive pricing pressures on these products.

REV product gross margins
improved on both a dollar and percentage basis during the quarter ended July 3,
2005. The improvement was primarily due to the fact that manufacturing start-up
costs were incurred during the quarter ended June 27, 2004, but were not
incurred during the quarter ended July 3, 2005.

22

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Gross Margin
(Continued)

Our gross margin details for
the six months ended July 3, 2005 and June 27, 2004 are shown in the table
below:

`For the Six Months Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005        2004      $ Change      % Change
                                        --------    --------    ---------     --------
                                                   (In thousands, except %)

Total Gross Margin (dollars)            $ 30,072    $ 39,131     $ (9,059)       (23)%
Total Gross Margin (%)                        22%         24%`

Total gross margin dollars
for the six months ended July 3, 2005 decreased primarily from lower Zip product
sales. The lower gross margin percentage was impacted by a lower proportion of
Zip product sales. Changes in the gross margin percentages by product are the
same as described above.

Future gross margin
percentages will depend on a wide variety of factors, including those discussed
in the section entitled, Factors Affecting Future Operating Results.
We can provide no assurance that we will be able to improve gross margins in any
subsequent quarter or year.

## Product
Segment PPM

We evaluate product segment
performance based on PPM. PPM is defined as sales and other income related to a
segments operations, less both fixed and variable product costs, research
and development expenses, product management expenses, specific selling and
marketing expenses and depreciation and amortization related to a segments
operations. When such costs and expenses exceed sales and other income, PPM is
referred to as a product loss. The accounting policies of the product segments
are the same as those described in Note 1 of the notes to condensed consolidated
financial statements. Intersegment sales, eliminated in consolidation, are not
material. The expenses attributable to general corporate activity are not
allocated to the product segments. Non-allocated operating expenses include:
advanced research and development, shared sales and corporate marketing expenses
and general and administrative expenses.

23

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Product
Segment PPM (Continued)

Our PPM, product loss and
common expenses details for the quarters ended July 3, 2005 and June 27, 2004
are shown in the table below:

`For the Quarter Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005        2004      $ Change      % Change
                                        --------    --------    ---------     --------
                                                    (In thousands, except %)
PPM (Product Loss):
Consumer Products:
  Zip Products                          $  7,717    $ 10,675     $ (2,958)       (28)%
  Consumer Storage Solutions              (2,160)     (1,195)        (965)       (81)
                                        --------    --------     --------
    Total Consumer Products                5,557       9,480       (3,923)       (41)
Business Products:
  REV Products                            (1,584)     (6,671)       5,087         76
  Network Storage Systems                     33         317         (284)       (90)
                                        --------    --------     --------
    Total Business Products               (1,551)     (6,354)       4,803         76
Other Products                               562      (2,480)       3,042        123
                                        --------    --------     --------
    Total PPM                           $  4,568    $    646      $ 3,922        607
                                        ========    ========     ========

Common Expenses:
  General corporate expenses            $ 10,881    $ 16,626     $ (5,745)       (35)%`

The decrease in Zip PPM
resulted primarily from lower sales, partially offset by higher gross margin
percentages as described above. Zip PPM as a percentage of Zip product sales
increased to 46% for the quarter ended July 3, 2005 from 33% for the quarter
ended June 27, 2004, primarily from the higher gross margin percentages
described above and from lower sales and marketing expenses. We anticipate
future volatility in Zip PPM as the segment reaches the end of its life cycle.

Consumer Storage Solutions
product loss as a percentage of Consumer Storage Solutions product sales
increased to a negative 7% for the quarter ended July 3, 2005 from a negative
PPM of 4% of product sales for the quarter ended June 27, 2004. The increased
product loss resulted primarily from lower gross margins, both in terms of
dollars and percentage, as described above.

The REV product loss as a
percentage of REV product sales was a negative 14% for the quarter ended July 3,
2005 compared to a negative 89% for the quarter ended June 27, 2004. The REV
product loss for the quarter ended July 3, 2005 resulted primarily from
development costs for next generation REV products, marketing spending to
improve REV product awareness and under-absorbed fixed overhead expenses at
current volumes. The REV product loss for the quarter ended June 27, 2004
reflected development expenses in completing REV products, manufacturing
start-up costs and high levels of marketing expenses to generate market
awareness as sales began in April 2004. Research and development expenses
remained flat for the quarter ended July 3, 2005, compared to the quarter ended
June 27, 2004. Sales and marketing expenses decreased $2.4 million for the
quarter ended July 3, 2005, compared to the quarter ended June 27, 2004.

NSS had a nominal PPM for
the quarter ended July 3, 2005 compared to 8% of product sales for the quarter
ended June 27, 2004. NSS PPM for the quarter ended June 27, 2004 benefited from
a vendor credit related to royalty costs.

24

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Product
Segment PPM (Continued)

Other Products PPM improved
for the quarter ended July 3, 2005 compared to the quarter ended June 27, 2004,
primarily due to a lack of DCT costs as a result of the cancellation of the DCT
development program in the second half of 2004.

The decrease in general
corporate expenses for the quarter ended July 3, 2005 compared to the quarter
ended June 27, 2004 reflected lower costs resulting primarily from the
restructuring plans implemented in 2004 and cost reduction actions taken in the
second quarter of 2005. As a percentage of sales, general corporate expenses
decreased to 17% of sales for the quarter ended July 3, 2005 compared to 21% for
the quarter ended June 27, 2004.

Our PPM, product loss and
common expenses details for the six months ended July 3, 2005 and June 27, 2004
are shown in the table below:

`For the Six Months Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005        2004       $ Change     % Change
                                        --------    --------     ---------    --------
                                                    (In thousands, except %)

PPM (Product Loss):
Consumer Products:
  Zip Products                          $ 17,779    $ 28,842     $ (11,063)      (38)%
  Consumer Storage Solutions              (3,041)       (724)       (2,317)     (320)
                                        --------    --------     ---------
    Total Consumer Products               14,738      28,118       (13,380)      (48)
Business Products:
  REV Products                            (3,402)    (12,286)        8,884        72
  Network Storage Systems                   (266)       (494)          228        46
                                        --------    --------     ---------
    Total Business Products               (3,668)    (12,780)        9,112        71
Other Products                               655      (4,287)        4,942       115
                                        --------    --------     ---------
    Total PPM                           $ 11,725    $ 11,051     $     674         6
                                        ========    ========     =========

Common Expenses:
  General corporate expenses            $ 23,805    $ 32,465     $  (8,660)      (27)%`

The decrease in Zip PPM
resulted primarily from lower sales, partially offset by higher gross margin
percentages as described above. Zip PPM as a percentage of Zip product sales
increased to 48% for the six months ended July 3, 2005 from 38% for the six
months ended June 27, 2004, primarily from the higher gross margin percentages
described above and from lower sales and marketing expenses.

Consumer Storage Solutions
product loss as a percentage of Consumer Storage Solutions product sales
increased to a negative 4% for the six months ended July 3, 2005 from a negative
PPM of 1% of product sales for the six months ended June 27, 2004. The six
months ended July 3, 2005 included a $1.5 million benefit from a change in
estimated copyright royalty accruals in Europe. The increased product loss
percentage resulted primarily from lower gross margins, both in terms of dollars
and percentage, as described above and higher research and development expenses,
partially offset by lower sales and marketing expenses.

The REV product loss as a
percentage of REV product sales was a negative 15% for the six months ended July
3, 2005 compared to a negative 164% for the six months ended June 27, 2004. The
REV product loss for the quarter ended July 3, 2005 resulted primarily from
development costs for next generation REV products, marketing spending to
improve REV product awareness and under-absorbed fixed overhead expenses at
current volumes. The REV product loss for the six months ended June 27, 2004
reflected research and development expenses in completing REV products,
manufacturing start-up costs and high levels of marketing expenses to generate
market awareness as sales began in April 2004. Sales and marketing expenses
decreased $2.7 million for the six months ended July 3, 2005, compared to the
six months ended June 27, 2004.

25

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Product
Segment PPM (Continued)

The NSS product loss as a
percentage of NSS product sales was a negative 3% for the six months ended July
3, 2005, compared to a negative 7% of product sales for the six months ended
June 27, 2004. The improved NSS PPM for the six months ended July 3, 2005
resulted primarily from higher gross margins and higher sales, partially offset
by higher sales and marketing expenses.

Other Products PPM improved
for the six months ended July 3, 2005 compared to the six months ended June 27,
2004, primarily due to a lack of DCT costs as a result of the cancellation of
the DCT development program in the second half of 2004.

The decrease in general
corporate expenses for the six months ended July 3, 2005 compared to the six
months ended June 27, 2004 reflected lower costs resulting primarily from the
restructuring plans implemented in 2004. As a percentage of sales, general
corporate expenses decreased to 17% of sales for the six months ended July 3,
2005 compared to 20% for the six months ended June 27, 2004.

## Operating
Expenses

The table below shows the
details of and changes in operating expenses for the quarters ended July 3, 2005
and June 27, 2004.

`For the Quarter Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005        2004       $ Change     % Change
                                        --------    --------     --------     --------
                                                    (In thousands, except %)
Operating Expenses:
  Selling, general and administrative   $ 16,134    $ 24,441     $ (8,307)       (34)%
  Research and development                 4,116       6,704       (2,588)       (39)
  License and patent fees                   (405)          -         (405)         -
  Restructuring charges (reversals)          (41)        152         (193)      (127)
  Bad debt credit                             (5)       (384)         379         99
                                        --------    --------     --------
    Total Operating Expenses            $ 19,799    $ 30,913     $(11,114)       (36)%
                                        ========    ========     ========`

26

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Operating
Expenses (Continued)

The table below shows the
details of and changes in operating expenses for the six months ended July 3,
2005 and June 27, 2004.

`For the Six Months Ended
                                        ----------------------------------------------
                                         July 3,    June 27,
                                          2005        2004       $ Change     % Change
                                        --------    --------     ---------    --------
                                                    (In thousands, except %)
Operating Expenses:
  Selling, general and administrative   $ 34,636    $ 47,636     $ (13,000)      (27)%
  Research and development                 8,220      13,169        (4,949)      (38)
  License and patent fees                   (412)          -          (412)        -
  Restructuring charges                      194         698          (504)      (72)
  Bad debt credit                           (292)       (260)          (32)      (12)
                                        --------    --------     ---------
    Total Operating Expenses            $ 42,346    $ 61,243     $ (18,897)      (31)%
                                        ========    ========     =========`

Selling, General and Administrative Expenses

The decrease in selling,
general and administrative expenses for the quarter ended July 3, 2005 compared
to the quarter ended June 27, 2004 reflected lower costs resulting primarily
from implementing the 2004 restructuring plans. Selling, general and
administrative expenses also decreased as a percentage of sales to 25% for the
quarter ended July 3, 2005, compared to 31% for the quarter ended June 27, 2004.

The decrease in selling,
general and administrative expenses for the six months ended July 3, 2005
compared to the six months ended June 27, 2004 reflected lower costs resulting
primarily from implementing the 2004 restructuring plans. Selling, general and
administrative expenses also decreased as a percentage of sales to 25% for the
six months ended July 3, 2005, compared to 29% for the six months ended June 27,
2004.

Research and Development Expenses

Lower research and
development expenses for the quarter and six months ended July 3, 2005 reflected
the cancellation of the DCT development program in the second half of 2004 and
cost savings from the 2004 restructuring actions, partially offset by higher
Consumer Storage Solutions research and development activities, primarily on
HDD. As a result, research and development expenses decreased as a percentage of
sales to 6% for the quarter ended July 3, 2005, compared to 9% for the quarter
ended June 27, 2004 and decreased to 6% for the six months ended July 3, 2005,
compared to 8% for the six months ended June 27, 2004.

## Restructuring
Charges/Reversals

During the second quarter of
2005, we had a net release of less than $0.1 million related to excess severance
and benefits from the 2004 restructuring actions.

During the first quarter of
2005, we recorded restructuring charges of $0.2 million related to the ratable
recognition of severance and benefits for those employees that remained on
transition under the 2004 restructuring actions.

27

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Restructuring
Charges/Reversals (Continued)

During the first quarter of
2004, we recorded restructuring charges of $0.5 million related to lease
expenses for facilities vacated in 2001 as part of the restructuring actions
initiated during 2001, which we were unable to sublease until late 2004. See
Note 4, Restructuring Charges/Reversals of the notes to condensed
consolidated financial statements for more detail on the restructuring accrual
utilization.

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

Interest expense and other
income and (expense), net, was a net expense of $0.8 million for the quarter
ended July 3, 2005 compared to a net expense of $0.6 million for the quarter
ended June 27, 2004. The increased expense resulted primarily from foreign
currency losses for the quarter ended July 3, 2005.

Interest expense and other
income and (expense), net, was a net expense of $1.7 million for the six months
ended July 3, 2005 compared to a net expense of $0.5 million for the six months
ended June 27, 2004. The increased expense resulted primarily from foreign
currency losses for the six months ended July 3, 2005.

## Income Taxes

For the quarter ended July
3, 2005, we recorded an income tax benefit of $0.2 million on a pre-tax loss of
$6.6 million. The statutory tax benefit of $2.6 million, resulting from
operating losses, was entirely offset by a tax charge to increase the valuation
allowance. The net tax benefit of $0.2 million was comprised of small
adjustments related to deferred taxes.

For the quarter ended June
27, 2004, we recorded an income tax provision of $3.5 million on a pre-tax loss
of $16.3 million. The net tax provision for the quarter ended June 27, 2004 was
comprised of a $12.5 million tax charge to increase the valuation allowance
resulting primarily from new foreign tax credits and loss carryforwards,
partially offset by the statutory tax benefit of $6.4 million on the
quarters pre-tax loss, and a $2.6 million benefit resulting primarily from
the release of tax accruals associated with our foreign operations. Included in
the $12.5 million increase in the valuation allowance was an $8.5 million
valuation allowance resulting from new foreign tax credits created by deemed
Swiss withholding taxes on foreign earnings. The recording of the new foreign
tax credits was the result of a change in our intention to repatriate foreign
cash to the U.S. in the form of dividends in the future.

For the six months ended
July 3, 2005, we recorded an income tax benefit of $0.7 million on a pre-tax
loss of $13.0 million. The statutory tax benefit of $5.1 million, resulting from
operating losses, was entirely offset by tax charges to increase the valuation
allowance. The net tax benefit of $0.7 million was comprised of $0.4 million of
various foreign tax accrual releases due to a change in the estimate and the
likely outcome of selected tax issues and $0.3 million of various adjustments
related to deferred taxes.

For the six months ended
June 27, 2004, we recorded a net tax provision of $2.8 million on a pre-tax loss
of $21.9 million. The net tax provision was comprised of $13.2 million in tax
charges to increase the valuation allowance resulting primarily from new foreign
tax credits and loss carryforwards, partially offset by the statutory tax
benefit of $8.5 million on the pre-tax loss for the six months ended June 27,
2004 and a $1.9 million benefit resulting primarily from the release of tax
accruals associated with our foreign operations. Included in the $13.2 million
increase in the valuation allowance was an $8.5 million valuation allowance
resulting from deemed Swiss withholding taxes on foreign earnings described
above in the paragraph discussing the quarter ended June 27, 2004.

28

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Income Taxes
(Continued)

We have evaluated the
repatriation provisions of the American Jobs Creation Act of 2004 and at this
time, in an effort to conserve cash, we do not anticipate utilizing this
provision.

## Liquidity and
Capital Resources

Detail of our total cash, cash equivalents and temporary investments is shown in the table below:

`July 3,       Dec. 31,
                                               2005           2004      $ Change      % Change
                                             ---------     ---------    ---------     --------
                                                           (In thousands, except %)

Total cash and cash equivalents for the
  U.S. entity (1)                            $   8,047     $  14,307    $  (6,260)       (44)%
Total cash, cash equivalents and temporary
  investments for non-U.S. entities (2)        101,807       106,502       (4,695)        (4)
                                             ---------     ---------    ---------
Total consolidated cash, cash equivalents
  and temporary investments                  $ 109,854     $ 120,809    $ (10,955)        (9)
                                             =========     =========    =========

Working capital                              $  86,435     $  98,236    $ (11,801)       (12)%
                                             =========     =========    =========`

|(1) | Of the $8.0 million in total cash and cash  equivalents  for the U.S. entity at July 3, 2005, we do not have access
to less than $0.1 million which is from ByteTaxi.  We began consolidating ByteTaxi in January 2005.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Of the $101.8  million in total cash,  cash  equivalents  and  temporary  investments  for non-U.S.  entities,  $0.3
million  was  restricted  at July 3, 2005.  None of the  Company's  total cash,  cash  equivalents  and  temporary
investments were restricted at December 31, 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On average, we anticipate incurring
taxes of approximately 5% or less on cash balances repatriated to the U.S.

For the six months ended
July 3, 2005, cash used by operations amounted to $10.3 million. The primary
uses of cash from operations for the six months ended July 3, 2005 were from the
$12.3 million of operating losses; $2.4 million for restructuring disbursements;
$1.5 million for the payment of annual and other management bonus plans and
changes in current assets and current liabilities as described below.

Trade receivables decreased
in the six months ended July 3, 2005 primarily from strong collections, lower
sales and the timing of the sales within the respective periods. Days sales
outstanding (DSO) in receivables decreased from 31 days at December
31, 2004 to 25 days at July 3, 2005 primarily due to strong collections as well
as proactive steps to manage past due amounts. Inventories decreased during the
six months ended July 3, 2005 primarily due to lower material receipts and
improved materials management through the implementation of the regional
assembly process. Current deferred income taxes decreased primarily due to lower
accrued liability reserves.

29

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Liquidity and
Capital Resources (Continued)

Other current liabilities decreased
$14.5 million, primarily from (1) $3.2 million of lower marketing and
advertising accruals reflecting the lower marketing and advertising activity as
part of our cost cutting efforts, (2) $3.0 million of lower margin on deferred
sales as the estimated amount of excess channel inventory decreased, (3) $2.2
million of lower accrued restructuring charges due to a net utilization of the
accruals (See Note 4, Restructuring Charges/Reversals of the notes
to condensed consolidated financial statements for more detail on the
restructuring accrual utilization), (4) $1.8 million of lower accrued royalties
primarily from a $1.5 million nonrecurring benefit from a change in estimated
accrued copyright royalties in Europe and (5) $1.7 million of lower accrued
payroll, vacation and bonus accruals due to the payment of annual and other
management bonus plans in January 2005 that were accrued at December 31, 2004.
Accounts payable decreased due to lower purchases reflecting the lower sales
volumes and the increased effort to reduce inventories as well as an increased
effort to reduce operating costs. During the second quarter of 2005, we
negotiated extended payment terms with certain vendors, in most cases through
the end of 2005.

Our goal is to reverse the
negative cash flows from operations through the implementation of the 2005
restructuring actions and other cost reductions, continued focus on cash flow
management, improving REV product sales and margins, improving the financial
results of the Consumer Storage Solutions business, in particular HDD,
profitably growing the NSS business and managing the Zip Products business for
cash flow. However, we can give no assurance that we will be successful in
achieving any of these goals.

We believe that our balance
of total unrestricted cash, cash equivalents and temporary investments 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. However, cash flow from future operations,
investing activities and the precise amount and timing of our future financing
needs cannot be determined. Future cash flow will depend on a number of factors,
including those set forth in the section labeled Factors Affecting Future
Operating Results. Should we be unable to meet our cash needs from our
current balance of total unrestricted cash, cash equivalents and temporary
investments and future cash flows from operations, we would most likely incur
additional restructuring charges to adjust our expenditures to a level that our
cash flows could support and/or seek financing from other sources.

Our current balance of
total unrestricted cash, cash equivalents and temporary investments is our sole
source of liquidity. Given our history of sales declines and losses, there is no
assurance that, if needed, we would be able to obtain financing from external
sources or obtain a competitive interest rate.

30

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Other Matters

Recent Accounting Pronouncements

In December 2004, the
Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 123r, Share-Based
Payment (SFAS 123r). SFAS 123r provides accounting guidance
for stock-based payments to employees. SFAS 123r revises SFAS 123 by eliminating
the choice of using the intrinsic recognition and measurement
provisions of Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees and requiring all companies to use the fair
value method of measuring stock compensation expense. SFAS 123r clarifies and
expands SFAS 123s guidance in several areas, including measuring fair
value, classifying an award as equity or a liability, attributing compensation
cost to reporting periods as well as adding several new disclosure requirements.
SFAS 123r also changes the accounting for the tax effects of options, including
the presentation of the tax effects on the condensed consolidated statements of
cash flows. On April 14, 2005, the SEC announced that it had delayed the
implementation date for calendar year-end companies to January 1, 2006. We are
currently accounting for all of our stock-based compensation under the fair
value method as outlined in SFAS 123 and will adopt SFAS 123r beginning in the
first quarter of 2006. We have not yet evaluated the potential impacts of SFAS
123r.

In May 2005, the FASB
issued SFAS No. 154, Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3 (SFAS
154). SFAS 154 was issued in part to improve the comparability of
financial reporting with International Accounting Standards. SFAS 154 requires
retrospective application for voluntary changes in accounting principle unless
it is impracticable to do so. SFAS 154 is effective for accounting changes made
in fiscal years beginning after December 15, 2005 and we will adopt it at that
time. The future impact to us will depend entirely on the nature of any future
accounting changes.

Subsequent Event

On July 26, 2005, we
announced a restructuring plan to streamline our business strategy and align our
expenses with expected revenues. This plan includes the realignment of product
lines and go-to-market strategies and an approximate 30% workforce reduction
(120 regular employees) with the goal to return to operating profitability. We
intend to focus our ongoing resources on hard drive-based product solutions
(including REV, HDD and NSS drives) for consumer and small business markets and
we will continue to manage the Zip products business with the goal to maximize
cash flow.

We anticipate that these
actions will result in annual cost savings of approximately $38 million to $42
million as compared to first half 2005 run rates, when fully implemented.
Approximately 85% of the cost reductions are expected to be in operating
expenses. The cost reductions include the workforce reduction, consolidation of
facilities, consolidation of internal business systems, bringing in-house
certain work that is currently outsourced and a more focused approach to
marketing spending.

31

---

# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Other Matters (Continued)

The restructuring charges,
expected to range between $7 million to $10 million, are anticipated to be
recorded in the second half of 2005, with the majority anticipated in the third
quarter. These charges will reflect expenses associated with the workforce
reduction; lease expenses associated with unutilized facilities; termination of
contractual obligations; asset write-downs and other miscellaneous charges. We
anticipate recording additional non-restructuring charges of $1 million to $3
million, primarily in the second half of 2005, associated with product line and
information system transitions to further streamline the business and reduce
future operating costs. Substantially all of the restructuring and
non-restructuring charges are expected to be cash charges.

## Factors
Affecting Future Operating Results

Demand for our Products and Operating Efficiencies

Our future operating
results will depend upon our ability to operate profitably in an industry
characterized by intense competition, rapid technological advances, and low
margins. This, in turn, will depend on a number of factors, including:

- Worldwide market conditions in general and demand for digital storage products in particular;
- Our ability to replace  rapidly  declining  Zip  revenues  and profits  with  revenues  and profits  from other
 products, particularly our REV products;
- Our  ability to generate  significant  sales and PPM from REV  products,  which may  require  considerable  OEM
adoption of those products;
- Our ability to profitably operate our Consumer Storage Solutions business;
- 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  and  achieve  the cost  savings  goals of the 2005
         restructuring plan;
- Our ability to attract and retain competent, motivated employees;
- Our ability to comply with applicable legal requirements throughout the world; and
- Our ability to successfully manage litigation,  including enforcing our rights,  protecting our interests,  and
defending claims made against us.

These factors are difficult
to manage, satisfy, and influence. In spite of considerable efforts, we have
been unable to operate profitably on an annual basis since 2002, and we cannot
provide any assurance that we will be able to operate profitably in the future.

32

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# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Factors
Affecting Future Operating Results (Continued)

Zip Drives and Disks

Zip products have accounted
for the vast majority of our sales and PPM since 1997, and have provided our
only meaningful source of PPM for the past several years. However, Zip product
sales have declined consistently and significantly on a year-over-year basis
since peaking in 1999 (see the Zip product discussion in the section above
entitled, Sales). These declines will continue through the end of
the Zip product lifecycle due to declining demand, the obsolescence of Zip
technology, and the emergence of alternate means for storing, sharing, and
transporting large data files. Consequently, we will not be viable unless we
generate significant PPM from products other than Zip products. We have been
unable to do this for several years and can provide no assurance that we will be
able to do so in the future.

As Zip product segment
sales and profits continue to decline, the risk increases that the $11.7 million
of goodwill associated with the Zip product segment will become impaired and
that impairment charges will become necessary. We anticipate that the Zip
goodwill may start to become impaired in late 2005 or early 2006.

In light of the continuing
decline in Zip product sales, we can offer no assurance that we will be able to
maintain profitable operations on our Zip business in any subsequent quarter or
year.

REV Products

We continue to believe that
in the current environment, our REV product line (launched in April 2004)
represents the most realistic opportunity to develop a PPM stream which could at
least partially offset the rapidly declining Zip PPM. Our introduction of REV
products entails numerous risks relating to factors such as the following:

- Inability to create product awareness or lack of market acceptance;
- Failure to  maintain  acceptable  arrangements  with  product  suppliers,  particularly  in light of lower than
anticipated volumes;
- Failure to achieve significant OEM adoption of the products;
- Unforeseen manufacturing, technical, supplier, or quality-related delays, issues, or concerns;
- Intense competition from competing technologies; and
- Risks that third parties may assert intellectual property claims against REV products.

It is unlikely that we will
be able to operate profitably unless and until REV products generate significant
revenue, including OEM adoption and positive PPM. We can offer no assurance that
we will be able to successfully resolve any of the preceding challenges or that
we will be able to generate significant PPM from our REV business.

Consumer Storage Solutions

Through the second quarter
of 2005, our Consumer Storage Solutions segment was comprised of optical (CD-RW
and DVD rewritable) drives, external hard drives, Iomega Mini and Micro Mini USB
flash drives, and external floppy drives. After managing down current
inventories, we intend to focus our future efforts in this segment on hard-disk
drive related products. However, we may continue limited efforts with additional
consumer products.

33

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# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Factors
Affecting Future Operating Results (Continued)

Virtually all of our
Consumer Storage products are commodity-type products which are functionally
equivalent to many other widely available products. These competing products are
marketed by both name-brand manufacturers and generic competitors. Moreover, we
own little significant intellectual property relating to our consumer products.
Consequently, this segment is characterized by intense competition, the frequent
introduction of new products and upgrades for existing products, supply
fluctuations, and frequent end user price reductions. In order to successfully
compete, we must accurately forecast demand, closely monitor inventory levels,
secure quality products, meet aggressive product price and performance targets,
create market demand for our brand, and hold sufficient, but not excess,
inventory. Historically, we have failed to accomplish these objectives. Since we
entered the optical market in 1999 and began sourcing products from other
third-party suppliers, we have reported product losses on the Optical and the
Consumer Storage Solutions business as a whole every year through 2004.

We intend to continue our
efforts with respect to our Consumer Storage Solutions segment. However, in
light of the preceding challenges, we can offer no assurance that we will
achieve sustainable profitability on this segment.

Network Storage Systems

We have reported operating
losses on our Network Storage Systems segment every year since we entered the
Network Attached Storage server market in 2002. We focus on the entry-level and
low-end Network Attached Storage markets, where we attempt to leverage our
small- to medium-sized business customer base and channel customers, including
existing resellers already focused on these customers. Notwithstanding this
leverage of existing channels, we have not been profitable and can offer no
assurance that we will achieve sustainable profitability on this segment.

Development and Introduction of New Products and New Revenue Streams

We believe that we must
continually either develop or acquire the right to profitably sell new products
in order to remain viable in the data storage industry. However, our efforts in
this regard have frequently been unsuccessful. Since 1999, we have developed
and/or acquired the right to market a variety of new products, but we have been
unable to maintain consistent materially profitable operations on any of them.

We are spending significant
resources attempting to develop new products, including next-generation REV
products. We may spend additional resources attempting to acquire the rights to
new technologies, to fund development of such technologies, or to otherwise
differentiate existing products. We can provide no assurance that any of these
expenditures will result in products or technology which we can profitably sell
or license.

Restructuring, Other Cost Reduction Activities and Retention of Key Personnel

As discussed in Note 7 of
the notes to condensed consolidated financial statements, we have announced a
significant restructuring plan in conjunction with ongoing attempts to simplify
our business, align our cost structure with expected revenue streams and return
to profitability. We face risks of losing key institutional knowledge and
internal controls as a result of workforce reductions and changes within the
executive management team. In addition, our ability to retain key employees may
be adversely affected as a result of the recent restructuring activities, our
recent financial performance, increased workloads resulting from the
restructuring, and recent improvements in the U.S. economy. Moreover, our
decision to wind down activities in various product lines may result in excess
inventory, the inability to sell existing inventory, or may adversely affect our
relationships with resellers. Any of these events could have a material adverse
impact upon our business. We can offer no assurance that we will achieve
projected cost savings or return to profitability as a result of our
restructuring efforts, or that we will be able to retain key management,
employees, and know-how.

34

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# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Factors
Affecting Future Operating Results (Continued)

Internal Control Reporting Compliance Efforts

Under Section 404 of the
Sarbanes-Oxley Act of 2002, we are required to include in each annual report a
report on internal control over financial reporting.

For the year ended December
31, 2004, we reported a material weakness in internal control related to control
weaknesses at our distribution and logistics service provider. We believe that
we have been able to remediate this control weakness through internal
compensating controls.

However, we are at risk
that any future failure of our own internal controls or the internal control at
any of our outsourcing partners could result in additional reported material
weaknesses. We try to reduce this risk through the use of compensating or
redundant controls. We also require a written, audited report (known as a
SAS 70 Report) from our key outsourced service providers on their
internal controls. We can provide no assurance that we will be successful in
these efforts to avoid reporting future material weakness of internal control.
Any such reported material weakness could have a material impact on our market
capitalization, financial statements or have other adverse consequences.

Collection Risks

Although we use
commercially reasonable steps to manage the credit granted to our customers,
certain trade receivable balances from one or more of our customers may become
uncollectible, or we may have to increase our allowance for doubtful accounts in
the future. Either event could adversely affect our financial results.

Company Operations

In light of our declining
revenues and recent operating losses, it is becoming increasingly difficult to
negotiate or maintain favorable pricing, supply, business, or credit terms with
our vendors, suppliers, and service providers; in some cases existing vendors,
suppliers and service providers have begun imposing more stringent terms or even
eliminating credit altogether. We anticipate continued challenges in this area
for the foreseeable future.

Inventory Management

Management of our inventory
levels is complex. Our customers frequently adjust their ordering patterns in
response to factors such inventory supplies in the retail and distribution
channel; new product introductions; seasonal fluctuations; company and customer
promotions; market demand; and other factors. Excess inventories could force us
to reduce prices, write down such inventory or take other actions which in turn
could adversely affect our operating results.

35

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# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Factors
Affecting Future Operating Results (Continued)

Product Procurement

We have fully outsourced
all manufacturing and have no direct control over the manufacturing processes of
our products. This lack of control may increase quality or reliability risks and
could limit our ability to quickly increase or decrease production rates.

Zip and REV products are
each manufactured by single manufacturers, which creates risks of disruption in
the event of labor, quality or other problems at the Zip or REV product
manufacturers. In addition, product manufacturing costs may increase if we fail
to achieve anticipated volumes. There can be no assurance that we will be able
to successfully manage these risks.

Distribution and Logistics

Because we have outsourced
our distribution and logistics centers, we rely upon the computer systems,
business processes, and internal controls of our distribution and logistics
services providers. These systems may develop communication, compatibility,
control or reliability problems. In addition, we face risks of operational
interruptions, missed or delayed shipments, and inventory management risks.
Since the first quarter 2004 transition to the current distribution and
logistics service providers, we have experienced operational disruptions and
have reported a material weakness in internal control over financial reporting
due to some of these factors. We hope to realize cost savings and operational
efficiencies as a result of outsourcing distribution and logistics services, but
can provide no assurance that we will do so.

Reporting of Channel Inventory and Product Sales by Channel Partners

We defer recognition of
sales on estimated excess inventory in the distribution, retail and catalog
channels. For this purpose, excess inventory is the amount of inventory that
exceeds the channels four-week requirements as estimated by management. We
rely on reports from our distributors and resellers to make these estimations.
Although we have processes and systems checks in place to help reasonably ensure
the accuracy of the reports, we cannot guarantee that the third-party data, as
reported, will be accurate.

Component Supplies

Although we have fully
outsourced our manufacturing, we have retained responsibility for the supply of
certain key components. It can be difficult to obtain a sufficient supply of key
components on a timely and cost effective basis. Many components that we use are
available only from single source or from a limited number of
suppliers and are purchased without guaranteed supply arrangements. Should REV
product volumes fail to ramp significantly, we may experience component cost
increases and other component availability challenges. We can offer no assurance
that we will be able to obtain a sufficient supply of components on a timely and
cost effective basis. Our failure to do so would lead to a material adverse
impact on our business.

The purchase orders under
which we buy many of our components and sourced products generally extend one to
three quarters in the future. The quantities on the purchase orders are based on
forecasted future sales requirements. It is difficult to estimate future product
demand for new products or products with declining sales. Such estimates may
result in excess purchase commitments. We have recorded significant charges in
the past relating to excess purchase commitments and inventory reserves. We may
be required to take similar charges attributable to forecasting inaccuracies in
the future.

36

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# IOMEGA
CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

## Factors
Affecting Future Operating Results (Continued)

Intellectual Property Risks

Patent, copyright,
trademark or other intellectual property infringement claims have been and may
continue to be asserted against us at any time. Such claims could have a number
of adverse consequences, including an injunction against current or future
product shipments, liability for damages and royalties, indemnification
obligations and significant legal expenses. We try to protect our intellectual
property rights through a variety of means, including seeking and obtaining
patents, trademarks and copyrights, and through license, nondisclosure and other
agreements. Any failure or inability to adequately protect our intellectual
property rights could have material adverse consequences.

Legal Risks

We have entered into
multiple agreements, including license, service, supply, resale, distribution,
development and other agreements in multiple jurisdictions throughout the world.
We are also subject to an array of regulatory and compliance requirements,
including foreign legal requirements and a complex worldwide tax structure. In
addition, we employ several hundred individuals throughout the world. Although
we attempt to fulfill all of our obligations, enforce all of our rights, and
comply with all applicable laws and regulations under these agreements and
relationships, we can offer no assurance that we will be able to do so. We have
been sued and may be sued under numerous legal theories, including breach of
contract, tort, products liability, intellectual property infringement, and
other theories. Such litigation, regardless of outcome, may have an adverse
effect upon our profitability or public perception.

Other Risk Factors

We are subject to risks
associated with general economic conditions and consumer confidence. Any
disruption in consumer confidence or general economic conditions including those
caused by acts of war, terrorism or other factors could affect our operating
results. Significant portions of our sales are generated in Europe and Asia. We
invoice the majority of our European customers in Euros and invoice our
remaining customers in U.S. dollars. Fluctuations in the value of foreign
currencies relative to the U.S. dollar that are not sufficiently hedged by
international customers invoiced in U.S. dollars could result in lower sales and
have an adverse effect on future operating results.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

For quantitative and
qualitative disclosures about market risk affecting Iomega, see Item 7A,
Quantitative and Qualitative Disclosures About Market Risk, of our
Annual Report on Form 10-K for the fiscal year ended December 31,
2004, which is incorporated herein by reference. Our exposure to market risk has
not changed materially since December 31, 2004.

37

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# IOMEGA
CORPORATION AND SUBSIDIARIES

## ITEM 4.
CONTROLS AND PROCEDURES:

Our management, with the
participation of our chief executive officer and chief financial officer,
evaluated the effectiveness of our disclosure controls and procedures as of July
3, 2005. The term disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SECs rules and forms.Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the companys management, include its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure. Management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving their objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of the Companys disclosure controls and procedures
as of July 3, 2005, our chief executive officer and chief financial officer
concluded that, as of such date, our disclosure controls and procedures were
effective at the reasonable assurance level.

As previously disclosed,
for the year ended December 31, 2004, we determined a material weakness existed
in our internal control over financial reporting related to controls maintained
by our third-party distribution/logistics service provider and our lack of
adequate or comprehensive compensating internal control. We are reliant upon
this service provider for worldwide inventory management, product pack-out,
order fulfillment, final product assembly on certain product lines and order
management in Europe. The material weakness was primarily attributable to: (i)
pervasive control weaknesses in the third-party distribution/logistics service
providers general information technology (IT) controls
relating to change management and system access and (ii) control weaknesses in
the third-party distribution/logistics service providers inventory
management processes, primarily in the areas of physical security and inventory
receipts, combined with (iii) a lack of adequate or comprehensive compensating
internal controls by us.

The material weakness has
not resulted in the restatement of any previously reported financial statements,
results of operations or any other related financial disclosures.

As disclosed in our Annual
Report on Form 10-K as amended for the year ended December 31, 2004, we have
implemented several new procedures with the goal to remediate this material
weakness and as of July 3, 2005, these new procedures have been implemented and
are now considered by management to be effective.

The new procedures that have been implemented included the following:

- We participate in quarter-end physical inventories in every location in which
our inventory is held and our representatives played an expanded role in such
inventories (our past practice was to participate in such inventories at only
the larger locations);
- Our third-party distribution/logistics service provider has completed their
detailed action plan which discussed how they were going to correct their
control weaknesses and
- We are performing periodic monitoring, auditing and testing of the third-party
distribution/logistics service providers controls to obtain first-hand
knowledge of issues and to verify that required and promised improvements have
been achieved.

The remediation steps
needed to be taken by the third-party distribution/logistics service provider
were fully implemented by July 3, 2005. Based on testing that we have performed,
management has concluded that the material weakness no longer exists.

38

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# IOMEGA
CORPORATION AND SUBSIDIARIES
CONTROLS AND PROCEDURES (Continued)

At the end of the first
quarter of 2005, we transitioned our Asia Pacific region distribution facility
from one outsourcing partner to another. The transition was completed as of the
beginning of the second quarter of 2005. During this transition, we closely
monitored the relocation of inventory, through reconciliations, on-site
observations and the performance of physical inventory counts. Through these and
other steps, we are not aware of any material adverse impacts on internal
controls as a result of this change.

No other changes in our
internal controls over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) occurred during the second quarter ended July
3, 2005, that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

The certifications of our
chief executive officer and chief financial officer attached as Exhibits 31.7
and 31.8 to this Quarterly Report on Form 10-Q include, in paragraph 4 of such
certifications, information concerning our disclosure controls and procedures
and internal control over financial reporting. Such certifications should be
read in conjunction with the information contained in this Item 4 for a more
complete understanding of the matters covered by such certifications.

39

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# IOMEGA CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION

## ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS:

We did not sell
any equity securities during the quarter ended July 3, 2005 that were not
registered under the Securities Act of 1933.

During the quarter ended
July 3, 2005, we did not repurchase any shares of our Common Stock.
As of July 3, 2005, approximately $122.3 million remained
available for future repurchases under the $150 million stock repurchase plan
authorized by our Board of Directors on September 28, 2000. The
repurchase plan does not have a fixed termination date.

## ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

Our 2005 Annual Meeting of
Stockholders was held on Wednesday, May 11, 2005. At the Annual Meeting, our
stockholders voted upon the following two proposals:

|1. | Election of seven directors, each for a one-year term.
|-- | ------------------------------------------------------

|2. | Approval of the 2005 Director  Stock Option Plan to replace the 1995  Director  Stock Option Plan which expired
in April 2005.
|-- | ------------------------------------------------------------------------------------------------------------------------------

The following table
indicates the votes received for each proposal, each of which was approved by
our stockholders.

`Against/                       Broker
                  Proposal                       For         Withheld       Abstain       Non-Votes
    -----------------------------------       ----------     ---------     ---------      ---------

1.  Election of seven directors, each
      for a term of one year:
        Robert P. Berkowitz                   41,428,646     5,243,053             -              -
        Bruce B. Darling                      41,514,071     5,157,627             -              -
        Stephen N. David                      40,598,400     6,073,298             -              -
        Margaret L. Hardin                    41,492,436     5,179,262             -              -
        Werner T. Heid                        41,635,107     5,036,591             -              -
        Jonathan S. Huberman                  41,627,702     5,043,996             -              -
        John E. Nolan                         41,530,123     5,141,575             -              -

2.  Approval of the 2005 Director Stock
      Option Plan                             20,536,515     5,777,042     1,955,746     18,402,395`

ITEM 6.
EXHIBITS:

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

40

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# IOMEGA CORPORATION AND SUBSIDIARIES
SIGNATURES

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

|Dated: August 8, 2005
Dated: August 8, 2005 | IOMEGA CORPORATION
        (Registrant)/s/ Werner T. Heid
    Werner T. Heid
      
President and Chief Executive Officer    /s/ Thomas Liguori
Thomas Liguori
      
Vice President, Finance and
      
      
Chief Financial
Officer
      
      
(Principal financial and
      
      
accounting officer)
|------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41

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## IOMEGA CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX

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

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

|10.26 | (1) | 2005 Director Stock Option Plan.
|----- | --- | --------------------------------

|10.27 | Standard Director Option Agreement under Iomega s 2005 Director Stock Option Plan.
|----- | -----------------------------------------------------------------------------------

|10.28 | Executive Agreement, dated  June 15, 2005, between Iomega and Werner T. Heid.
|----- | -----------------------------------------------------------------------------

|10.29 | Executive Agreement, dated  July 26, 2005, between
 Iomega and Sean P. Burke.
|----- | -----------------------------------------------------------------------------

|10.30 | Executive Agreement, dated  July 26, 2005, between Iomega
 and Thomas D. Kampfer.
|----- | ---------------------------------------------------------------------------------

|31.7 | Section 302 certification letter from Werner T. Heid, President and Chief Executive Officer.
|---- | --------------------------------------------------------------------------------------------

|31.8 | Section 302 certification letter from Thomas Liguori, Vice President, Finance
and Chief Financial Officer.
|---- | ----------------------------------------------------------------------------------------------------------

|32.5 | Section 906 certification letter from Werner T. Heid, President and Chief Executive Officer.
|---- | --------------------------------------------------------------------------------------------

|32.6 | Section 906 certification letter from Thomas Liguori, Vice President, Finance
and Interim Chief Financial Officer.
|---- | ------------------------------------------------------------------------------------------------------------------

---

|(1) | Incorporated herein by reference to Exhibit A of Iomegas Proxy Statement for the
2005 Annual Meeting of Stockholders (File No. 1-12333).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

42

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