----

**UNITED        STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C.  20549**

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**FORM      10-Q**

**                                                                                      (Mark      One)**

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

**EXCHANGE      ACT OF 1934**

**FOR      THE QUARTERLY PERIOD ENDED JULY 1, 2007**

**OR**

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

**EXCHANGE      ACT OF 1934**

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

**COMMISSION      FILE NUMBER 1-12333**

**Iomega      Corporation**

**                                                                        Delaware                                                                                                                             86-0385884**

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

**(858)      314-7000**

**Common      Stock, par value $0.03      1/3                                                                                                                           55,319,520**

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**IOMEGA      CORPORATION AND SUBSIDIARIES**

**TABLE      OF CONTENTS**

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

Financial      Statements (Unaudited)

Condensed      Consolidated Balance Sheets at July 1,      2007

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

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

|                      Ended                July 1, 2007 and July 2,                2006................................................................................................ |   | 4 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|

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

|                     Ended                July 1, 2007 and July 2,                2006................................................................................................. |   | 5 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|

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

|                     Ended                July 1, 2007 and July 2,                2006................................................................................................. |   | 6 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|

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

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

|                                    Condition                and Results of                Operations............................................................................................. |   | 29 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

| Item                3.    Quantitative and                Qualitative Disclosures About Market Risk........................................................ | 46 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|

| Item                4.    Controls and                Procedures........................................................................................................................ |   | 46 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

| Item                1.  Legal Proceedings..................................................................................................................................... |   | 47 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

| Item                1A. Risk Factors............................................................................................................................................. |   | 47 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

| Item                2.  Unregistered Sales of Equity                Securities and Use of Proceeds........................................................... | 55 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|

| Item                4.  Submission of Matters to a Vote of                Security Holders......................................................................... |   | 55 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

| Item                6.  Exhibits........................................................................................................................................................ |   | 55 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

| Signatures................................................................................................................................................................. |   | 56 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

| Exhibit                Index............................................................................................................................................................. |   | 57 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----|

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Table          of Contents

**IOMEGA          CORPORATION AND SUBSIDIARIES**

**NOTE          REGARDING FORWARD-LOOKING STATEMENTS**

**Forward-Looking        Statements**

*:*

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

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

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

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

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

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

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

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

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

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

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Table          of Contents

**IOMEGA      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

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

|                                                                                                                                                                                                                                           |   | **July                1, 2007** |    |   | **Dec.                31, 2006** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|----------------------------------|--------|
|                                                                                                                                                                                                                                           |   | (Unaudited)                     |    |   |                             |   |
| Current                Assets:                                                                                                                                                                                                                 |   |                            |    |   |                             |   |
| Cash                and cash                equivalents                                                                                                                                                                                        |   | $                               | 70,274  |   |                             | $      | 56,617 |   |
| Restricted                cash                                                                                                                                                                                                                 |   |                            | 88      |   |                             |   | 88 |   |
| Temporary                investments                                                                                                                                                                                                           |   |                            | 4,766   |   |                             |   | 11,443 |   |
| Trade                receivables, less                allowance for doubtful accounts of$955                at July 1, 2007 and $1,535                at December 31, 2006                                                                     |   |                            | 21,402  |   |                             |   | 30,418 |   |
| Inventories                                                                                                                                                                                                                                    |   |                            | 41,530  |   |                             |   | 42,593 |   |
| Deferred                income                taxes                                                                                                                                                                                            |   |                            | 2,247   |   |                             |   | 2,747 |   |
| Other                current                assets                                                                                                                                                                                             |   |                            | 2,385   |   |                             |   | 3,401 |   |
| Total                Current                Assets                                                                                                                                                                                             |   |                            | 142,692 |   |                             |   | 147,307 |   |
|                                                                                                                                                                                                                                           |   |                            |    |   |                             |   |   |   |
| Property                and Equipment, at Cost                                                                                                                                                                                                 |   |                            | 75,846  |   |                             |   | 84,845 |   |
| Accumulated                Depreciation                                                                                                                                                                                                        |   |                            | (70,685 | )      |                             |   | (78,292 | ) |
| Net                Property and                Equipment                                                                                                                                                                                       |   |                            | 5,161   |   |                             |   | 6,553 |   |
|                                                                                                                                                                                                                                           |   |                            |    |   |                             |   |   |   |
| Goodwill                                                                                                                                                                                                                                       |   |                            | 9,818   |   |                             |   | 12,451 |   |
| Other                Intangibles, Net                                                                                                                                                                                                          |   |                            | 925     |   |                             |   | 1,043 |   |
| Other                Assets                                                                                                                                                                                                                    |   |                            | 17      |   |                             |   | 60 |   |
| Total                Assets                                                                                                                                                                                                                    |   | $                               | 158,613 |   |                             | $      | 167,414 |   |
|                                                                                                                                                                                                                                           |   |
| Current                Liabilities:                                                                                                                                                                                                            |   |                            |    |   |                             |   |   |   |
| Accounts                payable                                                                                                                                                                                                                |   | $                               | 30,888  |   |                             | $      | 35,105 |   |
| Other                current                liabilities                                                                                                                                                                                        |   |                            | 22,350  |   |                             |   | 32,475 |   |
| Income                taxes                payable                                                                                                                                                                                             |   |                            | 1,646   |   |                             |   | 454 |   |
| Total                Current                Liabilities                                                                                                                                                                                        |   |                            | 54,884  |   |                             |   | 68,034 |   |
|                                                                                                                                                                                                                                           |   |                            |    |   |                             |   |   |   |
| Deferred                Income Taxes                                                                                                                                                                                                           |   |                            | 8,048   |   |                             |   | 9,573 |   |
| Other                Liabilities                                                                                                                                                                                                               |   |                            | 2,842   |   |                             |   | - |   |
|                                                                                                                                                                                                                                           |   |                            |    |   |                             |   |   |   |
| Commitments                and Contingencies (Notes 4 and 5)                                                                                                                                                                                   |   |                            |    |   |                             |   |   |   |
|                                                                                                                                                                                                                                           |   |                            |    |   |                             |   |   |   |
| Stockholders’                Equity:                                                                                                                                                                                                     |   |                            |    |   |                             |   |   |   |
| Common                Stock, $0.03 1/3 par                value - authorized 400,000,000shares,                issued 55,317,270                shares at July 1, 2007 and55,307,770                shares at December                31, 2006 |   |                            | 1,847   |   |                             |   | 1,846 |   |
| Additional                paid-in                capital                                                                                                                                                                                       |   |                            | 60,426  |   |                             |   | 59,635 |   |
| Less:                575,200 Common Stock                treasury shares, at cost, atJuly                1, 2007 and December 31,                2006                                                                                          |   |                            | (5,662  | )      |                             |   | (5,662 | ) |
| Retained                earnings                                                                                                                                                                                                               |   |                            | 36,228  |   |                             |   | 33,988 |   |
| Total                Stockholders’                Equity                                                                                                                                                                                 |   |                            | 92,839  |   |                             |   | 89,807 |   |
| Total                Liabilities and Stockholders’ Equity                                                                                                                                                                                |   | $                               | 158,613 |   |                             | $      | 167,414 |   |

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Table          of Contents

**IOMEGA      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

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

|                                                                          |   | **For                the Three Months Ended** |   |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                          |   | **July                1,**** 2007**      |   |   | **July                2,**** 2006** |   |
|                                                                          |   | (Unaudited)                                   |   |
| Sales                                                                         |   | $                                             | 59,319 |   |   | $ | 40,652 |   |
| Cost                of sales                                                  |   |                                          | 47,180 |   |   |   | 33,859 |   |
| Gross                Margin                                                   |   |                                          | 12,139 |   |   |   | 6,793 |   |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Operating                Expenses:                                            |   |                                          |   |   |   |   |   |   |
| Selling,                general and                administrative             |   |                                          | 10,397 |   |   |   | 10,510 |   |
| Research                and                development                        |   |                                          | 1,784  |   |   |   | 2,475 |   |
| Restructuring                charges                (reversals)               |   |                                          | (44    | ) |   |   | 4,291 |   |
| Goodwill                impairment                charge                      |   |                                          | 1,253  |   |   |   | 2,341 |   |
| License                and patent fee                income                   |   |                                          | (102   | ) |   |   | (1,085 | ) |
| Bad                debt                credit                                 |   |                                          | (102   | ) |   |   | (153 | ) |
| Total                Operating                Expenses                        |   |                                          | 13,186 |   |   |   | 18,379 |   |
| Operating                loss                                                 |   |                                          | (1,047 | ) |   |   | (11,586 | ) |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Interest                income                                                |   |                                          | 605    |   |   |   | 776 |   |
| Interest                expense and other income (expense), net               |   |                                          | 307    |   |   |   | (386 | ) |
| Loss                before income                taxes                        |   |                                          | (135   | ) |   |   | (11,196 | ) |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Benefit                for income taxes                                       |   |                                          | 1,226  |   |   |   | 797 |   |
| Net                Income (Loss)                                              |   | $                                             | 1,091  |   |   | $ | (10,399 | ) |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Net                Income (Loss) Per Basic Share                              |   | $                                             | 0.02   |   |   | $ | (0.20 | ) |
| Net                Income (Loss) Per Diluted Common Share                     |   | $                                             | 0.02   |   |   | $ | (0.20 | ) |
|                                                                          |   |                                          |   |   |   |   |   |   |
| Weighted                Average Common Shares Outstanding                     |   |                                          | 54,737 |   |   |   | 51,658 |   |
| Weighted                Average Common Shares Outstanding - Assuming Dilution |   |                                          | 55,148 |   |   |   | 51,658 |   |

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Table          of Contents

**IOMEGA      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

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

|                                                                          |   | **For                the Six Months Ended** |    |
|-------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                          |   | **July                1,**** 2007**    |    |   | **July                2,**** 2006** |   |
|                                                                          |   | (Unaudited)                                 |    |
| Sales                                                                         |   | $                                           | 135,303 |   |   | $ | 99,733 |   |
| Cost                of sales                                                  |   |                                        | 108,861 |   |   |   | 81,139 |   |
| Gross                Margin                                                   |   |                                        | 26,442  |   |   |   | 18,594 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Operating                Expenses:                                            |   |                                        |    |   |   |   |   |   |
| Selling,                general and                administrative             |   |                                        | 20,781  |   |   |   | 23,092 |   |
| Research                and                development                        |   |                                        | 3,523   |   |   |   | 5,042 |   |
| Restructuring                charges                (reversals)               |   |                                        | (82     | ) |   |   | 4,569 |   |
| Goodwill                impairment                charges                     |   |                                        | 2,963   |   |   |   | 5,422 |   |
| License                and patent fee                income                   |   |                                        | (452    | ) |   |   | (1,085 | ) |
| Bad                debt                credits                                |   |                                        | (366    | ) |   |   | (275 | ) |
| Total                Operating                Expenses                        |   |                                        | 26,367  |   |   |   | 36,765 |   |
| Operating                income (loss)                                        |   |                                        | 75      |   |   |   | (18,171 | ) |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Interest                income                                                |   |                                        | 1,274   |   |   |   | 1,539 |   |
| Interest                expense and other income (expense), net               |   |                                        | (107    | ) |   |   | (135 | ) |
| Income                (loss) before income                taxes               |   |                                        | 1,242   |   |   |   | (16,767 | ) |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Benefit                for income taxes                                       |   |                                        | 998     |   |   |   | 2,199 |   |
| Net                Income (Loss)                                              |   | $                                           | 2,240   |   |   | $ | (14,568 | ) |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Net                Income (Loss) Per Basic Share                              |   | $                                           | 0.04    |   |   | $ | (0.28 | ) |
| Net                Income (Loss) Per Diluted Common Share                     |   | $                                           | 0.04    |   |   | $ | (0.28 | ) |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Weighted                Average Common Shares Outstanding                     |   |                                        | 54,735  |   |   |   | 51,653 |   |
| Weighted                Average Common Shares Outstanding - Assuming Dilution |   |                                        | 55,054  |   |   |   | 51,653 |   |

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Table          of Contents

** IOMEGA      CORPORATION AND      SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In      thousands)**

|                                                                                                                                                                    |   | **For                the Six Months Ended** |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                                                                                                                    |   | **July                1,**** 2007**    |    |   | **July                2,**** 2006** |   |
|                                                                                                                                                                    |   | (Unaudited)                                 |    |
| Cash                Flows from Operating Activities:                                                                                                                    |   |                                        |    |   |   |   |
| Net                income                (loss)                                                                                                                         |   | $                                           | 2,240   |   |   | $ | (14,568 | ) |
| Adjustments                to Reconcile Net                Income (Loss) to  Cash Flows from         Operations: |   |                                        |    |   |   |   |   |   |
| Depreciation                and                amortization                                                                                                             |   |                                        | 1,687   |   |   |   | 2,675 |   |
| Deferred                income tax provision                (benefit)                                                                                                   |   |                                        | (1,025  | ) |   |   | (2,122 | ) |
| Tax                contingency net                releases                                                                                                              |   |                                        | (1,481  | ) |   |   | - |   |
| Stock-related                compensation                expense                                                                                                        |   |                                        | 555     |   |   |   | 171 |   |
| Goodwill                impairment                charges                                                                                                               |   |                                        | 2,963   |   |   |   | 5,422 |   |
| Non-cash                inventory write-offs                (reversals)                                                                                                 |   |                                        | 582     |   |   |   | (742 | ) |
| Bad                debt                credits                                                                                                                          |   |                                        | (366    | ) |   |   | (275 | ) |
| Other                                                                                                                                                                   |   |                                        | (36     | ) |   |   | (372 | ) |
| Changes                in Assets and                Liabilities:                                                                                                        |   |                                        |    |   |   |   |   |   |
| Restricted                cash                                                                                                                                          |   |                                        | – |   |   |   | 169 |   |
| Trade                receivables                                                                                                                                        |   |                                        | 9,382   |   |   |   | 14,397 |   |
| Inventories                                                                                                                                                             |   |                                        | 481     |   |   |   | (1,154 | ) |
| Other                current                assets                                                                                                                      |   |                                        | 1,016   |   |   |   | 279 |   |
| Accounts                payable                                                                                                                                         |   |                                        | (4,217  | ) |   |   | (18,226 | ) |
| Other                current                liabilities                                                                                                                 |   |                                        | (4,142  | ) |   |   | (4,372 | ) |
| Accrued                restructuring                                                                                                                                    |   |                                        | (1,660  | ) |   |   | 1,156 |   |
| Income                taxes                                                                                                                                             |   |                                        | 1,192   |   |   |   | (599 | ) |
| Net                cash provided by (used in)                operating activities                                                                                       |   |                                        | 7,171   |   |   |   | (18,161 | ) |
|                                                                                                                                                                    |   |                                        |    |   |   |   |   |   |
| Cash                Flows from Investing Activities:                                                                                                                    |   |                                        |    |   |   |   |   |   |
| Purchases                of property and                equipment                                                                                                       |   |                                        | (279    | ) |   |   | (403 | ) |
| Proceeds                from sales of                assets                                                                                                             |   |                                        | 56      |   |   |   | 82 |   |
| Purchases                of temporary                investments                                                                                                        |   |                                        | (6,795  | ) |   |   | (11,280 | ) |
| Sales                of temporary                investments                                                                                                            |   |                                        | 13,554  |   |   |   | 17,420 |   |
| Additional                payments associated                with CSCI, Inc. acquisition                                                                                |   |                                        | (120    | ) |   |   | - |   |
| Net                change in other assets and                other liabilities                                                                                          |   |                                        | 43      |   |   |   | 7 |   |
| Net                cash provided by investing                activities                                                                                                 |   |                                        | 6,459   |   |   |   | 5,826 |   |
|                                                                                                                                                                    |   |                                        |    |   |   |   |   |   |
| Cash                Flows from Financing Activities:                                                                                                                    |   |                                        |    |   |   |   |   |   |
| Proceeds                from sales of Common                Stock                                                                                                       |   |                                        | 27      |   |   |   | 34 |   |
| Net                cash provided by financing                activities                                                                                                 |   |                                        | 27      |   |   |   | 34 |   |
| Net                Increase (Decrease) in Total Cash and Cash Equivalents                                                                                               |   |                                        | 13,657  |   |   |   | (12,301 | ) |
| Total                Cash and Cash Equivalents at Beginning of Period                                                                                                   |   |                                        | 56,617  |   |   |   | 70,943 |   |
| Total                Cash and Cash Equivalents at End of Period                                                                                                         |   | $                                           | 70,274  |   |   | $ | 58,642 |   |
|                                                                                                                                                                    |   |                                        |    |   |   |   |   |   |
| Non-Cash                Investing and Financing Activities:                                                                                                             |   |                                        |    |   |   |   |   |   |
| Adjustment                of CSCI, Inc.                acquisition                                                                                                      |   | $                                           | 210     |   |   | $ | - |   |
|                                                                                                                                                                    |   |                                        |    |   |   |   |   |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

** (Unaudited)**

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

*Reclassifications*

*Inventories*

|                          |   | **July                1,**        |   |   | **Dec.                31,** |   |
|-------------------------------|--------|-----------------------------------|--------|--------|-----------------------------|--------|
|                          |   | **2007**                          |   |   | **2006**                    |   |
|                          |   | **(In                thousands)** |   |
|                          |   |                              |   |   |                        |   |
| Raw                materials  |   | $                                 | 1,645  |   |                        | $      | 1,891 |   |
| Finished                goods |   |                              | 39,885 |   |                        |   | 40,702 |   |
|                          |   | $                                 | 41,530 |   |                        | $      | 42,593 |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*Net      Income (Loss) Per Common Share*

|                                            |   | **Net                Income (Loss) (Numerator)**         |    |   | **Shares****(Denominator)** |   |   | **Per                Share Amount** |   |
|-------------------------------------------------|--------|----------------------------------------------------------|---------|--------|-----------------------------|--------|--------|-------------------------------------|--------|
|                                            |   | **(In                thousands, except per share data)** |    |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |
| **For                the Three Months Ended:**  |   |                                                     |    |   |                        |   |   |                                |   |
| **July                1, 2007:**                |   |                                                     |    |   |                        |   |   |                                |   |
| Basic                EPS                        |   | $                                                        | 1,091   |   |                        |   | 54,737 |                                |   | $ | 0.02 |   |
| Effect                of                options |   |                                                     | -       |   |                        |   | 411    |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | 1,091   |   |                        |   | 55,148 |                                |   | $ | 0.02 |   |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **July                2, 2006**:                |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| Basic                EPS                        |   | $                                                        | (10,399 | )      |                        |   | 51,658 |                                |   | $ | (0.20 | ) |
| Effect                of                options |   |                                                     | -       |   |                        |   | -      |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | (10,399 | )      |                        |   | 51,658 |                                |   | $ | (0.20 | ) |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **For                the Six Months Ended:**    |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **July                1, 2007:**                |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| Basic                EPS                        |   | $                                                        | 2,240   |   |                        |   | 54,735 |                                |   | $ | 0.04 |   |
| Effect                of                options |   |                                                     | -       |   |                        |   | 319    |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | 2,240   |   |                        |   | 55,054 |                                |   | $ | 0.04 |   |
|                                            |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| **July                2, 2006**:                |   |                                                     |    |   |                        |   |   |                                |   |   |   |   |
| Basic                EPS                        |   | $                                                        | (14,568 | )      |                        |   | 51,653 |                                |   | $ | (0.28 | ) |
| Effect                of                options |   |                                                     | -       |   |                        |   | -      |                                |   |   | - |   |
| Diluted                EPS                      |   | $                                                        | (14,568 | )      |                        |   | 51,653 |                                |   | $ | (0.28 | ) |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

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

|                                    |   | **For                the Three Months Ended** |    |   | **For                the Six Months Ended** |   |
|-----------------------------------------|--------|-----------------------------------------------|---------|--------|---------------------------------------------|--------|
|                                    |   | **July                1,**                    |    |   | **July                2,**                  |   |   | **July                1,** |   |   | **July                2,** |   |
|                                    |   | **2007**                                      |    |   | **2006**                                    |   |   | **2007** |   |   | **2006** |   |
|                                    |   |                                          |    |   |                                        |   |   |   |   |   |   |   |
| Out                of the money options |   |                                          | 846,892 |   |                                        |   | 1,180,621 |   |   |   | 848,392 |   |   |   | 1,507,955 |   |

*Stock      Compensation Expense*

*Valuation      and Amortization.  *

*Expected      Term.*

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*Stock      Compensation Expense (Continued)*

*Expected      Volatility.  *

*Risk-Free      Interest Rate.  *

*Dividends.  *

*Forfeitures.*

|                                                                                                                                                                                               |   | **For                the Three Months Ended** |          |   | **For                the Six Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------------|--------|---------------------------------------------|--------|
| **               Assumption               ** |   | **July                1,**** 2007**      |          |   | **July                2,**** 2006**    |   |   | **July                1,**** 2007** |   |   | **July                2,**** 2006** |   |
|                                                                                                                                                                                               |   | **(In                thousands)**             |          |
|                                                                                                                                                                                               |   |                                          |          |   |                                        |   |   |   |   |   |   |   |
| Average                expected term (in years)                                                                                                                                                    |   |                                          | 3.9           |   |                                        |   | 3.9 |   |   |   | 3.9 |   |   |   | 3.9 |   |
| Expected                stock price volatility                                                                                                                                                     |   |                                          | 39            | %      |                                        |   | 55 | % |   |   | 39 | % |   |   | 59 | % |
| Risk-free                interest rate (range)                                                                                                                                                     |   |                                          | 4.6–4.9 | %      |                                        |   | 4.5–5.1 | % |   |   | 4.5-4.9 | % |   |   | 4.3-5.1 | % |
| Expected                dividends                                                                                                                                                                  |   |                   Zero              |          |   |                   Zero            |   |   |                   Zero |   |   |                    Zero |   |
|                                                                                                                                                                                               |   |                                          |          |   |                                        |   |   |   |   |   |   |   |   |   |   |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*Accrued      Warranty*

|                                          |   | **For                the Three Months Ended** |       |   | **For                the Six Months Ended** |       |
|-----------------------------------------------|--------|-----------------------------------------------|------------|--------|---------------------------------------------|------------|
|                                          |   | **July                ,**                     |       |   | **July                2,**                  |       |   | **July                1,** |   |   | **July                2,** |   |
|                                          |   | **2007**                                      |       |   | **2006**                                    |       |   | **2007** |   |   | **2006** |   |
|                                          |   | **(In                thousands)**             |       |
|                                          |   |                                          |       |   |                                        |       |   |   |   |   |   |   |
| Balance                at beginning of period |   | $                                             | 5,099      |   |                                        | $          | 4,455 |   |   | $ | 4,576 |   |   | $ | 4,973 |   |
| Accruals/additions                            |   |                                          | 1,276      |   |                                        |       | 942 |   |   |   | 3,272 |   |   |   | 1,637 |   |
| Claims                                        |   | ** **                                    | **(1,386** | **)**  |                                        | ** ** | **(1,320** | **)** |   | ** ** | **(2,859** | **)** |   | ** ** | **(2,533** | **)** |
| Balance                at end of period       |   | $                                             | 4,989      |   |                                        | $          | 4,077 |   |   | $ | 4,989 |   |   | $ | 4,077 |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*Recent      Accounting Pronouncements (Continued)*

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

**(2)  Income      Taxes**

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

**(3)  Business      Segment Information**

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

***Consumer      Products***

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

***Business      Products***

***Other      Products***

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

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

**Reportable      Operating Segment Information:**

|                                                        |   | **For                the Quarter Ended**                       |   |   | **For                the Six Months Ended**                    |   |
|-------------------------------------------------------------|--------|----------------------------------------------------------------|--------|--------|----------------------------------------------------------------|--------|
|                                                        |   | **July                1,**** 2007                 ** |   |   | **July                2,**** 2006                 ** |   |   | **July                1,**** 2007                 ** |   |   | **July                2,**** 2006                 ** |   |
|                                                        |   | **(In                thousands)**                              |   |
| **Sales:**                                                  |   |                                                           |   |   |                                                           |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                                           |   |   |                                                           |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                                              | 40,088 |   |                                                           | $      | 20,150 |   |   | $ | 92,577 |   |   | $ | 51,682 |   |
| Zip                Products                                 |   |                                                           | 3,763  |   |                                                           |   | 7,793 |   |   |   | 9,281 |   |   |   | 19,436 |   |
| Total                Consumer                Products       |   |                                                           | 43,851 |   |                                                           |   | 27,943 |   |   |   | 101,858 |   |   |   | 71,118 |   |
| Business                Products:                           |   |                                                           |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                                           | 9,203  |   |                                                           |   | 8,889 |   |   |   | 20,407 |   |   |   | 19,668 |   |
| Network                Storage                Systems       |   |                                                           | 4,816  |   |                                                           |   | 3,395 |   |   |   | 9,554 |   |   |   | 8,251 |   |
| Services                                                    |   |                                                           | 1,353  |   |                                                           |   | 146 |   |   |   | 3,245 |   |   |   | 261 |   |
| Total                Business                Products       |   |                                                           | 15,372 |   |                                                           |   | 12,430 |   |   |   | 33,206 |   |   |   | 28,180 |   |
| Other                Products                               |   |                                                           | 96     |   |                                                           |   | 279 |   |   |   | 239 |   |   |   | 435 |   |
| Total                Sales                                  |   | $                                                              | 59,319 |   |                                                           | $      | 40,652 |   |   | $ | 135,303 |   |   | $ | 99,733 |   |
|                                                        |   |                                                           |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| **Product                Operating Income (Loss):**         |   |                                                           |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                                           |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                                              | 50     |   |                                                           | $      | (4,723 | ) |   | $ | 404 |   |   | $ | (9,922 | ) |
| Zip                Products                                 |   |                                                           | 225    |   |                                                           |   | 48 |   |   |   | 580 |   |   |   | 1,107 |   |
| Total                Consumer                Products       |   |                                                           | 275    |   |                                                           |   | (4,675 | ) |   |   | 984 |   |   |   | (8,815 | ) |
| Business                Products:                           |   |                                                           |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                                           | (274   | )      |                                                           |   | (3,759 | ) |   |   | 30 |   |   |   | (5,375 | ) |
| Network                Storage                Systems       |   |                                                           | (764   | )      |                                                           |   | 33 |   |   |   | (355 | ) |   |   | 420 |   |
| Services                                                    |   |                                                           | (535   | )      |                                                           |   | 125 |   |   |   | (1,055 | ) |   |   | 227 |   |
| Total                Business                Products       |   |                                                           | (1,573 | )      |                                                           |   | (3,601 | ) |   |   | (1,380 | ) |   |   | (4,728 | ) |
| Other                Products                               |   |                                                           | 207    |   |                                                           |   | 981 |   |   |   | 389 |   |   |   | 936 |   |
| Non-restructuring                charge                     |   |                                                           | -      |   |                                                           |   | - |   |   |   | - |   |   |   | (995 | ) |
| Restructuring                (charges) reversals            |   |                                                           | 44     |   |                                                           |   | (4,291 | ) |   |   | 82 |   |   |   | (4,569 | ) |
| Total                Operating Income                (Loss) |   | $                                                              | (1,047 | )      |                                                           | $      | (11,586 | ) |   | $ | 75 |   |   | $ | (18,171 | ) |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

**(4)  Restructuring      Charges/Reversals**

|                                                     |   | **July                1,**        |   |   | **Dec.                31,** |   |
|----------------------------------------------------------|--------|-----------------------------------|--------|--------|-----------------------------|--------|
|                                                     |   | **2007**                          |   |   | **2006**                    |   |
|                                                     |   | **(In                thousands)** |   |
|                                                     |   |                              |   |   |                        |   |
| **Other                Current Liabilities:**            |   |                              |   |   |                        |   |
| Third                Quarter 2001 restructuring actions  |   | $                                 | -      |   |                        | $      | 1,366 |   |
| 2003                restructuring actions                |   |                              | -      |   |                        |   | 6 |   |
| 2004                restructuring actions                |   |                              | 111    |   |                        |   | 77 |   |
| 2005                restructuring actions                |   |                              | 84     |   |                        |   | 219 |   |
| 2006                restructuring actions                |   |                              | 18     |   |                        |   | 205 |   |
| Total                                                    |   | $                                 | 213    |   |                        | $      | 1,873 |   |
|                                                     |   |                              |   |   |                        |   |   |   |
| **Fixed                Asset Reserves:**                 |   |                              |   |   |                        |   |   |   |
| 2003                restructuring                actions |   | $                                 | -      |   |                        | $      | 114 |   |
| 2005                restructuring                actions |   |                              | 64     |   |                        |   | 131 |   |
| Total                                                    |   | $                                 | 64     |   |                        | $      | 245 |   |

*2006      Restructuring Actions*

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*2006      Restructuring Actions (Continued)*

|                                             |   | **Balance**                       |   |   |          |   |   | **Utilized** |   |   | **Foreign****Currency** |   |   | **Balance** |    |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|--------------|--------|--------|-------------------------|--------|--------|-------------|---------|
|                                             |   | **4/1/07**                        |   |   | **Reversals** |   |   | **Cash**     |   |   | **Non-Cash**            |   |   | **Changes** |    |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2006                Restructuring Actions:**   |   |                              |   |   |          |   |   |         |   |   |                    |   |   |        |    |   |   |   |
| Severance                and benefits (a)        |   | $                                 | 1      |   |          | $      | (1     | )            |   | $      | -                       |   |   | $           | – |   |   | $ | - |   |   | $ | - |   |
| Lease                termination costs (a)       |   |                              | 44     |   |          |   | (19    | )            |   |   | (19                     | )      |   |        | – |   |   |   | - |   |   |   | 6 |   |
| Miscellaneous                liabilities (a)     |   |                              | 13     |   |          |   | (1     | )            |   |   | -                       |   |   |        | -       |   |   |   | – |   |   |   | 12 |   |
|                                             |   | $                                 | 58     |   |          | $      | (21    | )            |   | $      | (19                     | )      |   | $           | -       |   |   | $ | - |   |   | $ | 18 |   |
|                                             |   |                              |   |   |          |   |   |         |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |         |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 58     |   |          | $      | (21    | )            |   | $      | (19                     | )      |   | $           | -       |   |   | $ | - |   |   | $ | 18 |   |

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

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*2006      Restructuring Actions (Continued)*

|                                             |   | **Balance**                       |   |   |          |   |   | ** Utilized ** |   |   | **Foreign****Currency** |   |   | **Balance** |    |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|--------------------------|--------|--------|-------------------------|--------|--------|-------------|---------|
|                                             |   | **12/31/06**                      |   |   | **Reversals** |   |   | **Cash**                 |   |   | **Non-Cash**            |   |   | **Changes** |    |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2006                Restructuring Actions:**   |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |
| Severance                and benefits (a)        |   | $                                 | 133    |   |          | $      | (39    | )                        |   | $      | (95                     | )      |   | $           | – |   |   | $ | 1 |   |   | $ | - |   |
| Lease                termination costs (a)       |   |                              | 58     |   |          |   | (19    | )                        |   |   | (33                     | )      |   |        | – |   |   |   | - |   |   |   | 6 |   |
| Miscellaneous                liabilities (a)     |   |                              | 14     |   |          |   | (1     | )                        |   |   | (1                      | )      |   |        | -       |   |   |   | – |   |   |   | 12 |   |
|                                             |   | $                                 | 205    |   |          | $      | (59    | )                        |   | $      | (129                    | )      |   | $           | -       |   |   | $ | 1 |   |   | $ | 18 |   |
|                                             |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |                     |   |   |                    |   |   |        |    |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 205    |   |          | $      | (59    | )                        |   | $      | (129                    | )      |   | $           | -       |   |   | $ | 1 |   |   | $ | 18 |   |

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

*2005      Restructuring Actions*

** **

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*2005      Restructuring Actions (Continued)*

|                                             |   | **Balance**                       |   |   |          |   |    | **Utilized** |   |   | **Balance**  |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|---------|--------------|--------|--------|--------------|--------|
|                                             |   | **4/1/07**                        |   |   | **Reversals** |   |    | **Cash**     |   |   | **Non-Cash** |   |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2005                Restructuring Actions:**   |   |                              |   |   |          |   |    |         |   |   |         |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 132    |   |          | $      | -       |         |   | $      | (48          | )      |   | $ | – |   |   | $ | 84 |   |
| Lease                related assets (b)          |   |                              | 93     |   |          |   | – |         |   |   | –      |   |   |   | (29 | ) |   |   | 64 |   |
|                                             |   | $                                 | 225    |   |          | $      | -       |         |   | $      | (48          | )      |   | $ | (29 | ) |   | $ | 148 |   |
|                                             |   |                              |   |   |          |   |    |         |   |   |         |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |    |         |   |   |         |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 132    |   |          | $      | -       |         |   | $      | (48          | )      |   | $ | – |   |   | $ | 84 |   |
| Fixed                asset reserves (b)          |   |                              | 93     |   |          |   | – |         |   |   | –      |   |   |   | (29 | ) |   |   | 64 |   |
|                                             |   | $                                 | 225    |   |          | $      | -       |         |   | $      | (48          | )      |   | $ | (29 | ) |   | $ | 148 |   |

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

|                                             |   | **Balance**                       |   |   |          |   |    | **Utilized** |   |   | **Balance**  |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|---------|--------------|--------|--------|--------------|--------|
|                                             |   | **12/31/06**                      |   |   | **Reversals** |   |    | **Cash**     |   |   | **Non-Cash** |   |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2005                Restructuring Actions:**   |   |                              |   |   |          |   |    |         |   |   |         |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 219    |   |          | $      | (81     | )            |   | $      | (54          | )      |   | $ | – |   |   | $ | 84 |   |
| Lease                related assets (b)          |   |                              | 131    |   |          |   | – |         |   |   | –      |   |   |   | (67 | ) |   |   | 64 |   |
|                                             |   | $                                 | 350    |   |          | $      | (81     | )            |   | $      | (54          | )      |   | $ | (67 | ) |   | $ | 148 |   |
|                                             |   |                              |   |   |          |   |    |         |   |   |         |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |    |         |   |   |         |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 219    |   |          | $      | (81     | )            |   | $      | (54          | )      |   | $ | – |   |   | $ | 84 |   |
| Fixed                asset reserves (b)          |   |                              | 131    |   |          |   | – |         |   |   | –      |   |   |   | (67 | ) |   |   | 64 |   |
|                                             |   | $                                 | 350    |   |          | $      | (81     | )            |   | $      | (54          | )      |   | $ | (67 | ) |   | $ | 148 |   |

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

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*2004      Restructuring Actions*

** **

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*2004      Restructuring Actions (Continued)*

** **

|                                             |   | **Balance**                       |   |   |          |   |   |          |   |   | **Utilized ** |   |   | **                                               Balance** |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                             |   | **4/1/07**                        |   |   | **Additions** |   |   | **Reversals** |   |   | **Cash**           |   |   | **Non-Cash**                                                                                                                                                                                                          |   |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2004                Restructuring Actions:**   |   |                              |   |   |          |   |   |          |   |   |               |   |   |                                                                                                                                                                                                                  |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 165    |   |          | $      | -      |          |   | $      | (6                 | )      |   | $                                                                                                                                                                                                                     | (48    | ) |   | $ | – |   |   | $ | 111 |   |
|                                             |   |                              |   |   |          |   |   |          |   |   |               |   |   |                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |          |   |   |               |   |   |                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 165    |   |          | $      | -      |          |   | $      | (6                 | )      |   | $                                                                                                                                                                                                                     | (48    | ) |   | $ | – |   |   | $ | 111 |   |

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

|                                             |   | **Balance**                       |   |   |          |   |   |          |   |   | **Utilized ** |   |   | **                                               Balance** |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                             |   | **12/31/07**                      |   |   | **Additions** |   |   | **Reversals** |   |   | **Cash**           |   |   | **Non-Cash**                                                                                                                                                                                                          |   |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2004                Restructuring Actions:**   |   |                              |   |   |          |   |   |          |   |   |               |   |   |                                                                                                                                                                                                                  |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 77     |   |          | $      | 88     |          |   | $      | (6                 | )      |   | $                                                                                                                                                                                                                     | (48    | ) |   | $ | – |   |   | $ | 111 |   |
|                                             |   |                              |   |   |          |   |   |          |   |   |               |   |   |                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |          |   |   |          |   |   |               |   |   |                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 77     |   |          | $      | 88     |          |   | $      | (6                 | )      |   | $                                                                                                                                                                                                                     | (48    | ) |   | $ | – |   |   | $ | 111 |   |

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

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*2003      Restructuring Actions*

|                                             |   | **Balance**                       |   |   | **Utilized ** |   |   |         |   |   | **Balance**   |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|--------------------|--------|--------|--------------|--------|--------|---------------|--------|
|                                             |   | **4/1/07**                        |   |   | **Cash**           |   |   | **Non-Cash** |   |   | **Reversals** |   |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2003                Restructuring Actions:**   |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 5      |   |               | $      | -      |         |   | $      | –       |   |   | $ | (5 | ) |   | $ | - |   |
|                                             |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 5      |   |               | $      | -      |         |   | $      | –       |   |   | $ | (5 | ) |   | $ | - |   |

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

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*2003      Restructuring Actions (Continued)*

|                                             |   | **Balance**                       |   |   | **Utilized ** |   |    |         |   |   | **Balance**   |   |
|--------------------------------------------------|--------|-----------------------------------|--------|--------|--------------------|--------|---------|--------------|--------|--------|---------------|--------|
|                                             |   | **12/31/06**                      |   |   | **Cash**           |   |    | **Non-Cash** |   |   | **Reversals** |   |   | **7/1/07** |   |
|                                             |   | **(In                thousands)** |   |
| **2003                Restructuring Actions:**   |   |                              |   |   |               |   |    |         |   |   |          |   |   |   |   |
| Lease                termination costs (a)       |   | $                                 | 6      |   |               | $      | (1      | )            |   | $      | –       |   |   | $ | (5 | ) |   | $ | - |   |
| Furniture                (b)                     |   |                              | 114    |   |               |   | – |         |   |   | (114          | )      |   |   | - |   |   |   | - |   |
|                                             |   | $                                 | 120    |   |               | $      | (1      | )            |   | $      | (114          | )      |   | $ | (5 | ) |   | $ | - |   |
|                                             |   |                              |   |   |               |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**       |   |                              |   |   |               |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a) |   | $                                 | 6      |   |               | $      | (1      | )            |   | $      | –       |   |   | $ | (5 | ) |   | $ | - |   |
| Fixed                asset reserves (b)          |   |                              | 114    |   |               |   | – |         |   |   | (114          | )      |   |   | - |   |   |   | - |   |
|                                             |   | $                                 | 120    |   |               | $      | (1      | )            |   | $      | (114          | )      |   | $ | (5 | ) |   | $ | - |   |

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

| (b)   | Amounts                represent primarily non-cash                charges. |
|-----------------|-----------------------------------------------------------------------------|

*Third      Quarter 2001 Restructuring Actions*

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*Third      Quarter 2001 Restructuring Actions (Continued)*

|                                                         |   | **Balance**                       |   |   | **Utilized ** |   |   |         |   |   | **Balance**   |   |
|--------------------------------------------------------------|--------|-----------------------------------|--------|--------|--------------------|--------|--------|--------------|--------|--------|---------------|--------|
|                                                         |   | **4/1/07**                        |   |   | **Cash**           |   |   | **Non-Cash** |   |   | **Reversals** |   |   | **7/1/07** |   |
|                                                         |   | **(In                thousands)** |   |
| **Third                Quarter 2001 Restructuring Actions:** |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |
| Lease                cancellations (a)                       |   | $                                 | 12     |   |               | $      | -      |         |   | $      | –       |   |   | $ | (12 | ) |   | $ | - |   |
|                                                         |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**                   |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a)             |   | $                                 | 12     |   |               | $      | -      |         |   | $      | –       |   |   | $ | (12 | ) |   | $ | - |   |

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

|                                                         |   | **Balance**                       |   |   | **Utilized ** |   |   |         |   |   | **Balance**   |   |
|--------------------------------------------------------------|--------|-----------------------------------|--------|--------|--------------------|--------|--------|--------------|--------|--------|---------------|--------|
|                                                         |   | **12/31/06**                      |   |   | **Cash**           |   |   | **Non-Cash** |   |   | **Reversals** |   |   | **7/1/07** |   |
|                                                         |   | **(In                thousands)** |   |
| **Third                Quarter 2001 Restructuring Actions:** |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |
| Lease                cancellations (a)                       |   | $                                 | 1,366  |   |               | $      | (1,354 | )            |   | $      | –       |   |   | $ | (12 | ) |   | $ | - |   |
|                                                         |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Breakout:**                   |   |                              |   |   |               |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Accrued                restructuring charges (a)             |   | $                                 | 1,366  |   |               | $      | (1,354 | )            |   | $      | –       |   |   | $ | (12 | ) |   | $ | - |   |

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

**(5)  Commitments      and Contingencies**

*Litigation*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

**(6)  Stockholders’      Equity**

*Share-Based      Compensation Plans*

*Stock      Option Plans*

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*Stock      Option Activity and Weighted Average Prices*

|                                               |   |       |             |   | **Weighted** |                              |
|----------------------------------------------------|--------|------------|------------------|--------|--------------|-----------------------------------|
|                                               |   | **Shares** |             |   | **Average**  |                              |
|                                               |   | ** ** | **(000’s** | **)**  |         | **Exercise                Price** |   |
|                                               |   |       |             |   |         |                              |   |
| Outstanding                at beginning of year    |   |       | 3,060            |   |         | $                                 | 3.90 |   |
| Granted                                            |   |       | 161              |   |         |                              | 4.14 |   |
| Exercised                                          |   |       | (11              | )      |         |                              | 2.73 |   |
| Forfeited                / Cancelled / Expired     |   |       | (56              | )      |         |                              | 5.32 |   |
| Outstanding                at July 1, 2007         |   |       | 3,154            |   |         |                              | 3.89 |   |
| Options                exercisable at July 1, 2007 |   |       | 1,233            |   |         |                              | 5.11 |   |

**(7)  Other      Matters**

*Other      Intangible Assets*

|                                                |   | **July                1,**** 2007** |   |   | **Dec.                31,**** 2006** |   |
|-----------------------------------------------------|--------|------------------------------------------|--------|--------|-------------------------------------------|--------|
|                                                |   | **(In                thousands)**        |   |
| **Other                Intangible Assets:**         |   |                                     |   |   |                                      |   |
| Gross                value                          |   | $                                        | 1,127  |   |                                      | $      | 1,127 |   |
| Accumulated                amortization             |   |                                     | (202   | )      |                                      |   | (84 | ) |
| Net                intangible                assets |   | $                                        | 925    |   |                                      | $      | 1,043 |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

** (Unaudited)**

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

*Goodwill      Impairment*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Overview**

** **

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Overview      (Continued)**

**Application      of Critical Accounting Policies**

**Seasonality**

**Results      of Operations**

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Sales**

|                                                     |   | **For                the Three Months Ended** |   |
|----------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                     |   | **July                1,**                    |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                                     |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                     |   | **(In                thousands, except %)**   |   |
| **Sales:**                                               |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                        |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions |   | $                                             | 40,088 |   |   | $ | 20,150 |   |   | $ | 19,938 |   |   |   | 99 | % |
| Zip                Products                              |   |                                          | 3,763  |   |   |   | 7,793 |   |   |   | (4,030 | ) |   |   | (52 | ) |
| Total                Consumer                Products    |   |                                          | 43,851 |   |   |   | 27,943 |   |   |   | 15,908 |   |   |   | 57 |   |
| Business                Products:                        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                              |   |                                          | 9,203  |   |   |   | 8,889 |   |   |   | 314 |   |   |   | 4 |   |
| Network                Storage                Systems    |   |                                          | 4,816  |   |   |   | 3,395 |   |   |   | 1,421 |   |   |   | 42 |   |
| Services                                                 |   |                                          | 1,353  |   |   |   | 146 |   |   |   | 1,207 |   |   |   | 827 |   |
| Total                Business                Products    |   |                                          | 15,372 |   |   |   | 12,430 |   |   |   | 2,942 |   |   |   | 24 |   |
| Other                Products                            |   |                                          | 96     |   |   |   | 279 |   |   |   | (183 | ) |   |   | (66 | ) |
| Total                Sales                               |   | $                                             | 59,319 |   |   | $ | 40,652 |   |   | $ | 18,667 |   |   |   | 46 | % |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Sales      (Continued)**

|                                             |   | **For                the Three Months Ended** |   |
|--------------------------------------------------|--------|-----------------------------------------------|--------|
|                                             |   | **July                1,**                    |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                             |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                             |   | **(In                thousands, except %)**   |   |
| **Sales                Dollars:**                |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Europe                                           |   | $                                             | 38,389 |   |   | $ | 19,957 |   |   | $ | 18,432 |   |   |   | 92 | % |
| Americas                (includes Latin America) |   |                                          | 18,110 |   |   |   | 17,678 |   |   |   | 432 |   |   |   | 2 |   |
| Asia                Pacific                      |   |                                          | 2,820  |   |   |   | 3,017 |   |   |   | (197 | ) |   |   | (7 | ) |
| Total                                            |   | $                                             | 59,319 |   |   | $ | 40,652 |   |   | $ | 18,667 |   |   |   | 46 | % |
|                                             |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Percent                of Total Sales:**       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Europe                                           |   |                                          | 65     | % |   |   | 49 | % |   |   |   |   |   |   |   |   |
| Americas                (includes Latin America) |   |                                          | 30     |   |   |   | 44 |   |   |   |   |   |   |   |   |   |
| Asia                Pacific                      |   |                                          | 5      |   |   |   | 7 |   |   |   |   |   |   |   |   |   |
| Total                                            |   |                                          | 100    | % |   |   | 100 | % |   |   |   |   |   |   |   |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Sales      (Continued)**

|                                                     |   | **For                the Six Months Ended** |    |
|----------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                     |   | **July                1,**                  |    |   | **July                2,** |   |   |   |   |   |   |   |
|                                                     |   | **2007**                                    |    |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                     |   | **(In                thousands, except %)** |    |
| **Sales:**                                               |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                        |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions |   | $                                           | 92,577  |   |   | $ | 51,682 |   |   | $ | 40,895 |   |   |   | 79 | % |
| Zip                Products                              |   |                                        | 9,281   |   |   |   | 19,436 |   |   |   | (10,155 | ) |   |   | (52 | ) |
| Total                Consumer                Products    |   |                                        | 101,858 |   |   |   | 71,118 |   |   |   | 30,740 |   |   |   | 43 |   |
| Business                Products:                        |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                              |   |                                        | 20,407  |   |   |   | 19,668 |   |   |   | 739 |   |   |   | 4 |   |
| Network                Storage                Systems    |   |                                        | 9,554   |   |   |   | 8,251 |   |   |   | 1,303 |   |   |   | 16 |   |
| Services                                                 |   |                                        | 3,245   |   |   |   | 261 |   |   |   | 2,984 |   |   |   | 1143 |   |
| Total                Business                Products    |   |                                        | 33,206  |   |   |   | 28,180 |   |   |   | 5,026 |   |   |   | 18 |   |
| Other                Products                            |   |                                        | 239     |   |   |   | 435 |   |   |   | (196 | ) |   |   | (45 | ) |
| Total                Sales                               |   | $                                           | 135,303 |   |   | $ | 99,733 |   |   | $ | 35,570 |   |   |   | 36 | % |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Sales      (Continued)**

|                                             |   | **For                the Six Months Ended** |    |
|--------------------------------------------------|--------|---------------------------------------------|---------|
|                                             |   | **July                1,**                  |    |   | **July                2,** |   |   |   |   |   |   |   |
|                                             |   | **2007**                                    |    |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                             |   | **(In                thousands, except %)** |    |
| **Sales                Dollars:**                |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Europe                                           |   | $                                           | 89,802  |   |   | $ | 49,015 |   |   | $ | 40,787 |   |   |   | 83 | % |
| Americas                (includes Latin America) |   |                                        | 40,109  |   |   |   | 44,045 |   |   |   | (3,936 | ) |   |   | (9 | ) |
| Asia                Pacific                      |   |                                        | 5,392   |   |   |   | 6,673 |   |   |   | (1,281 | ) |   |   | (19 | ) |
| Total                                            |   | $                                           | 135,303 |   |   | $ | 99,733 |   |   | $ | 35,570 |   |   |   | 36 | % |
|                                             |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Percent                of Total Sales:**       |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Europe                                           |   |                                        | 66      | % |   |   | 49 | % |   |   |   |   |   |   |   |   |
| Americas                (includes Latin America) |   |                                        | 30      |   |   |   | 44 |   |   |   |   |   |   |   |   |   |
| Asia                Pacific                      |   |                                        | 4       |   |   |   | 7 |   |   |   |   |   |   |   |   |   |
| Total                                            |   |                                        | 100     | % |   |   | 100 | % |   |   |   |   |   |   |   |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Gross      Margin**

|                                        |   | **For                the Three Months Ended** |   |
|---------------------------------------------|--------|-----------------------------------------------|--------|
|                                        |   | **July                1,**                    |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                        |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                        |   | **(In                thousands, except %)**   |   |
|                                        |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Total                Gross Margin (dollars) |   | $                                             | 12,139 |   |   | $ | 6,793 |   |   | $ | 5,346 |   |   |   | 79 | % |
| Total                Gross Margin (%)       |   |                                          | 20.5   | % |   |   | 16.7 | % |   |   |   |   |   |   |   |   |

----

Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Gross      Margin (Continued)**

|                                        |   | **For                the Six Months Ended** |   |
|---------------------------------------------|--------|---------------------------------------------|--------|
|                                        |   | **July                1,**                  |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                        |   | **2007**                                    |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                        |   | **(In                thousands, except %)** |   |
|                                        |   |                                        |   |   |   |   |   |   |   |   |   |   |
| Total                Gross Margin (dollars) |   | $                                           | 26,442 |   |   | $ | 18,594 |   |   | $ | 7,848 |   |   |   | 42 | % |
| Total                Gross Margin (%)       |   |                                        | 19.5   | % |   |   | 18.6 | % |   |   |   |   |   |   |   |   |

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Product      Segment Operating Income (Loss)**

|                                                        |   | **For                the Three Months Ended** |   |
|-------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                        |   | **July                1,**                    |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                                        |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                        |   | **(In                thousands, except %)**   |   |
| **Product                Operating Income (Loss):**         |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                             | 50     |   |   | $ | (4,723 | ) |   | $ | 4,773 |   |   |   | 101 | % |
| Zip                Products                                 |   |                                          | 225    |   |   |   | 48 |   |   |   | 177 |   |   |   | 369 |   |
| Total                Consumer                Products       |   |                                          | 275    |   |   |   | (4,675 | ) |   |   | 4,950 |   |   |   | 106 |   |
| Business                Products:                           |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                          | (274   | ) |   |   | (3,759 | ) |   |   | 3,485 |   |   |   | 93 |   |
| Network                Storage                Systems       |   |                                          | (764   | ) |   |   | 33 |   |   |   | (797 | ) |   |   | (2,415 | ) |
| Services                                                    |   |                                          | (535   | ) |   |   | 125 |   |   |   | (660 | ) |   |   | (528 | ) |
| Total                Business                Products       |   |                                          | (1,573 | ) |   |   | (3,601 | ) |   |   | 2,028 |   |   |   | 56 |   |
| Other                Products                               |   |                                          | 207    |   |   |   | 981 |   |   |   | (774 | ) |   |   | (79 | ) |
| Restructuring                (charges) reversals            |   |                                          | 44     |   |   |   | (4,291 | ) |   |   | 4,335 |   |   |   | 101 |   |
| Total                Operating Income                (Loss) |   | $                                             | (1,047 | ) |   | $ | (11,586 | ) |   | $ | 10,539 |   |   |   | 91 | % |
|                                                        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

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

|                                                        |   | **For                the Six Months Ended** |   |
|-------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                        |   | **July                1,**                  |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                                        |   | **2007**                                    |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                        |   | **(In                thousands, except %)** |   |
| **Product                Operating Income (Loss):**         |   |                                        |   |   |   |   |   |   |   |   |   |   |
| Consumer                Products:                           |   |                                        |   |   |   |   |   |   |   |   |   |   |
| Consumer                Storage                Solutions    |   | $                                           | 404    |   |   | $ | (9,922 | ) |   | $ | 10,326 |   |   |   | 104 | % |
| Zip                Products                                 |   |                                        | 580    |   |   |   | 1,107 |   |   |   | (527 | ) |   |   | (48 | ) |
| Total                Consumer                Products       |   |                                        | 984    |   |   |   | (8,815 | ) |   |   | 9,799 |   |   |   | 111 |   |
| Business                Products:                           |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REV                Products                                 |   |                                        | 30     |   |   |   | (5,375 | ) |   |   | 5,405 |   |   |   | 101 |   |
| Network                Storage                Systems       |   |                                        | (355   | ) |   |   | 420 |   |   |   | (775 | ) |   |   | (185 | ) |
| Services                                                    |   |                                        | (1,055 | ) |   |   | 227 |   |   |   | (1,282 | ) |   |   | (565 | ) |
| Total                Business                Products       |   |                                        | (1,380 | ) |   |   | (4,728 | ) |   |   | 3,348 |   |   |   | 71 |   |
| Other                Products                               |   |                                        | 389    |   |   |   | 936 |   |   |   | (547 | ) |   |   | (58 | ) |
| Non-Restructuring                Charges                    |   |                                        | -      |   |   |   | (995 | ) |   |   | 995 |   |   |   | 100 |   |
| Restructuring                (charges) reversals            |   |                                        | 82     |   |   |   | (4,569 | ) |   |   | 4,651 |   |   |   | 102 |   |
| Total                Operating Income                (Loss) |   | $                                           | 75     |   |   | $ | (18,171 | ) |   | $ | 18,246 |   |   |   | 100 | % |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

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

**Operating      Expenses**

|                                                              |   | **For                the Three Months Ended** |   |
|-------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                              |   | **July                1,**                    |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                                              |   | **2007**                                      |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                              |   | **(In                thousands, except %)**   |   |
| **Operating                Expenses:**                            |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and                administrative |   | $                                             | 10,397 |   |   | $ | 10,510 |   |   | $ | (113 | ) |   |   | (1 | )% |
| Research                and                development            |   |                                          | 1,784  |   |   |   | 2,475 |   |   |   | (691 | ) |   |   | (28 | ) |
| Restructuring                charges                (reversals)   |   |                                          | (44    | ) |   |   | 4,291 |   |   |   | (4,335 | ) |   |   | (101 | ) |
| Goodwill                impairment                charge          |   |                                          | 1,253  |   |   |   | 2,341 |   |   |   | (1,088 | ) |   |   | (46 | ) |
| License                and patent fee                income       |   |                                          | (102   | ) |   |   | (1,085 | ) |   |   | 983 |   |   |   | 91 |   |
| Bad                debt                credit                     |   |                                          | (102   | ) |   |   | (153 | ) |   |   | 51 |   |   |   | 33 |   |
| Total                Operating                Expenses            |   | $                                             | 13,186 |   |   | $ | 18,379 |   |   | $ | (5,193 | ) |   |   | (28 | )% |

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Operating      Expenses (Continued)**

|                                                              |   | **For                the Six Months Ended** |   |
|-------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                              |   | **July                1,**                  |   |   | **July                2,** |   |   |   |   |   |   |   |
|                                                              |   | **2007**                                    |   |   | **2006** |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                              |   | **(In                thousands, except %)** |   |
| **Operating                Expenses:**                            |   |                                        |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and                administrative |   | $                                           | 20,781 |   |   | $ | 23,092 |   |   | $ | (2,311 | ) |   |   | (10 | )% |
| Research                and                development            |   |                                        | 3,523  |   |   |   | 5,042 |   |   |   | (1,519 | ) |   |   | (30 | ) |
| Restructuring                charges                (reversals)   |   |                                        | (82    | ) |   |   | 4,569 |   |   |   | (4,651 | ) |   |   | (102 | ) |
| Goodwill                impairment                charge          |   |                                        | 2,963  |   |   |   | 5,422 |   |   |   | (2,459 | ) |   |   | (45 | ) |
| License                and patent fee                income       |   |                                        | (452   | ) |   |   | (1,085 | ) |   |   | 633 |   |   |   | 58 |   |
| Bad                debt                credit                     |   |                                        | (366   | ) |   |   | (275 | ) |   |   | (91 | ) |   |   | (33 | ) |
| Total                Operating                Expenses            |   | $                                           | 26,367 |   |   | $ | 36,765 |   |   | $ | (10,398 | ) |   |   | (28 | )% |

*Selling,      General and Administrative Expenses*

*Research      and Development Expenses*

**40**

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Table            of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Operating      Expenses (Continued)**

*Goodwill      Impairment Charges*

*License      and Patent Fee Income*

*Bad      Debt Credit*

**Restructuring      Charges**

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Interest      Income**

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

**Income      Taxes**

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Income      Taxes (Continued)**

**Liquidity      and Capital Resources**

|                                                                                                                   |   | **July                1,**                  |   |   | **Dec.                31,** |   |   |                        |   |   |                        |   |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------|--------|
|                                                                                                                   |   | **2007**                                    |   |   | **2006**                    |   |   | **$                Change** |   |   | **%                Change** |   |
|                                                                                                                   |   | **(In                thousands, except %)** |   |
|                                                                                                                   |   |                                        |   |   |                        |   |   |                        |   |   |                        |   |
| Total                cash, cash equivalents and temporaryinvestments                for the U.S.                entity |   | $                                           | 4,024  |   |                        | $      | 2,653  |                        |   | $      | 1,371                       |   |   |   | 52 | % |
| Total                cash, cash equivalents and temporaryinvestments for non-U.S. entities                (1)          |   |                                        | 71,104 |   |                        |   | 65,495 |                        |   |   | 5,609                       |   |   |   | 9 |   |
| Total                consolidated cash, cash equivalentsand temporary                investments                       |   | $                                           | 75,128 |   |                        | $      | 68,148 |                        |   | $      | 6,980                       |   |   |   | 10 |   |
|                                                                                                                   |   |                                        |   |   |                        |   |   |                        |   |   |                        |   |   |   |   |   |
| Working                capital                                                                                         |   | $                                           | 87,808 |   |                        | $      | 79,273 |                        |   | $      | 8,535                       |   |   |   | 11 | % |

| (1)   | Of                the $71.1 million in total cash, cash equivalents and temporary                investments for non-U.S. entities, $0.1 million was restricted at                July 1,                2007.  At December 31, 2006, $0.1 million of the non-U.S. entity                cash was restricted. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Liquidity      and Capital Resources (Continued)**

** **

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF**

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

**Other      Matters **

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**ITEM      4.  CONTROLS ANDPROCEDURES:**

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION**

**ITEM      1.  LEGAL PROCEEDINGS**

**ITEM      1A.  RISK FACTORS**

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Risk      Factors (Continued)**

*Zip      Drives and Disks*

*REV      Products*

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

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

| ·   | Failure                to achieve significant OEM adoption of the                products; |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Intense                competition; |
|--------------------|-------------------------------------|

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

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

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

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

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

*Consumer      Storage Solutions Products*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Risk      Factors (Continued)**

*Consumer      Storage Solutions Products (Continued)*

*U.S.      Sales*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Risk      Factors (Continued)**

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

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

*Internal      Control Reporting Compliance Efforts*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Risk      Factors (Continued)**

*Product      Manufacturing and Procurement*

*Outsourced      Distribution and Logistics*

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

*Concentration      of Credit Risk*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Risk      Factors (Continued)**

*Company      Operations, Component Supplies and Inventory*

*Company      Operations, Component Supplies and Inventory (Continued)*

*Intellectual      Property Risks*

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Risk      Factors (Continued)**

*International      Operations*

*Legal      Risks*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

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

**Risk      Factors (Continued)**

*Uncertain      Tax Positions*

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

*Other      Risk Factors*

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Table          of Contents

**IOMEGA        CORPORATION AND SUBSIDIARIES**

**PART        II – OTHER INFORMATION**

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

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

| **Proposal**                                                       | **         For** | ** Against/Withheld**          | **Abstain**                                                               | **Broker                Non-Votes**                                                                                             |
|--------------------------------------------------------------------|---------------------------------------------------------------|-------------------------------------|---------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| 1.                Election of eight directors,                     |                                                          |                                |                                                                      |                                                                                                                            |
|     each                for a term of one year |                                                          |                                |                                                                      |                                                                                                                            |
| Robert                P.                Berkowitz                  | 43,114,654                                                    | 5,293,525                           |             - |                      - |
| Reynolds                C. Bish                                    | 47,870,796                                                    |                   537,383 |             - |                      - |
| Bruce                B. Darling                                    | 42,220,669                                                    | 6,187,510                           |             - |                      - |
| Stephen                N. David                                    | 42,224,691                                                    | 6,183,488                           |             - |                      - |
| Margaret                L.                Hardin                   | 43,118,614                                                    | 5,289,565                           |             - |                      - |
| Jonathan                S.                Huberman                 | 47,873,894                                                    |    534,285           |             - |                      - |
| Daniel                R. Maurer                                    | 43,121,932                                                    | 5,286,247                           |             - |                      - |
| John                E. Nolan                                       | 42,218,494                                                    | 6,189,685                           |             - |                      - |
|                                                               |                                                          |                                |                                                                      |                                                                                                                            |
| 2.                To approve the 2007 Stock                        |                                                          |                                |                                                                      |                                                                                                                            |
|     Incentive                Plan              | 30,185,282                                                    | 1,209,080                           | 225,917                                                                   |      16,787,904                                                                                        |
|                                                               |                                                          |                                |                                                                      |                                                                                                                            |
| 3.                To ratify the selection of BDO                   |                                                          |                                |                                                                      |                                                                                                                            |
|     Seidman                LLP as independent  |                                                          |                                |                                                                      |                                                                                                                            |
|     accountants                                | 48,022,209                                                    |                   279,287 | 106,685                                                                   |                      - |

**ITEM      6.  EXHIBITS:**

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**IOMEGACORPORATION        AND SUBSIDIARIES**

**SIGNATURES**

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

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**IOMEGA        CORPORATION AND SUBSIDIARIES**

**EXHIBIT        INDEX**

| 31.5 | Section                302 certification letter from Jonathan S. Huberman, Vice Chairman                and                Chief |
|------|----------------------------------------------------------------------------------------------------------------------------------|

31.6

32.5

32.6 

| (1) | Incorporated                herein by reference to the Exhibit A of Iomega’s Proxy Statement for the                2006 Annual Meeting of Stockholders (File No.                1-12333). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|