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

                                    FORM 10-Q

          [X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly period ended JUNE 29, 1997

                                       OR

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

                                _______________

                         COMMISSION FILE NUMBER 1-12333

                               IOMEGA CORPORATION
             (Exact name of registrant as specified in its charter)

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

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

                                 (801) 778-1000
              (Registrant's telephone number, including area code)

                                _______________

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

                            Yes [X]      No [ ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of September 28, 1997.

Common Stock, par value $.03 1/3                         129,932,285
   (Title of each class)                              (Number of shares)


<PAGE>

                               IOMEGA CORPORATION
                                TABLE OF CONTENTS
                                                                        Page
                          PART I - FINANCIAL STATEMENTS

      
Item 1.  Financial Statements

    Condensed consolidated balance sheets at September 28, 1997
         and December 31, 1996......................................       2

    Condensed consolidated statements of operations for the three months
         ended September 28, 1997 and September 29, 1996............       4

    Condensed consolidated statements of operations for the nine months
         ended September 28, 1997 and September 29, 1996............       5

    Condensed consolidated statements of cash flows for the nine months
         ended September 28, 1997 and September 29, 1996............       6

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


Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations...................      13


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings..........................................      21

Item 2.  Changes in Securities and Use of Proceeds..................      23

Item 6.  Exhibits and Reports on 8-K................................      24

Signatures.........................................................       25

Exhibit Index.......................................................      26



This  Quarterly  Report  on Form  10-Q  contains  a  number  of  forward-looking
statements,  including  statements  relating to the sufficiency of cash and cash
equivalent balances and available sources of financing;  projected effective tax
rates;  expected  further  declines in component and  manufacturing  costs;  the
impact on gross  margins of the sales mix  between  disks and drives and the mix
between OEM sales and sales through other channels; anticipated expenditures for
selling, general and administrative and research and development activities; the
possible  effects on future sales due to supplier  quality  issues and component
shortages;  the  possible  effects of an adverse  outcome in legal  proceedings,
described  in Item 1 of Part  II,  and the  Company's  efforts  to  protect  its
intellectual  property  rights.  Any  statements  contained  herein that are not
statements of historical  fact may be deemed to be  forward-looking  statements.
Without limiting the foregoing,  the words "believes",  "anticipates",  "plans",
"expects"  and similar  expressions  are  intended  to identify  forward-looking
statements.  There are a number of  important  factors  that could cause  actual
events or the Company's actual results to differ materially from those indicated
by such forward-looking  statements.  These factors include, without limitation,
those set forth under, and in the paragraph immediately  preceding,  the caption
"Factors  Affecting  Future  Operating  Results"  included  under  "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  in
Item 2 of Part I of this  Quarterly  Report on Form 10-Q, and those set forth in
Item 1 of Part II of this Quarterly Report on Form 10-Q.

                                      - 1 -
<PAGE>


                               IOMEGA CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                     ASSETS

                                 (In thousands)
<TABLE>
<CAPTION>
                                                                       September 28,          December 31,
                                                                                1997                  1996
                                                                         (Unaudited)
<S>                                                                         <C>                   <C>

CURRENT ASSETS:

     Cash and cash equivalents                                              $166,024              $108,312
     Trade receivables, net                                                  264,184               210,733
     Inventories                                                             188,424               171,920
     Deferred tax assets                                                      39,572                38,059
     Other current assets                                                     11,648                27,644
                                                                            --------              --------


         Total current assets                                                669,852               556,668
                                                                            --------              --------

PROPERTY, PLANT AND EQUIPMENT, at cost                                       241,440               187,125
     Less:  Accumulated depreciation and amortization                        (86,377)              (61,083)
                                                                            --------              --------

     Net property, plant and equipment                                       155,063               126,042
                                                                            --------              --------

OTHER ASSETS                                                                   3,259                 3,432
                                                                            --------              --------

                                                                            $828,174              $686,142
                                                                            ========              ========

</TABLE>

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

                                     - 2 -

<PAGE>


                               IOMEGA CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                        (In thousands, except share data)
<TABLE>
<CAPTION>

                                                                       September 28,          December 31,
                                                                                1997                  1996
                                                                         (Unaudited)
<S>                                                                      <C>                    <C>
CURRENT LIABILITIES:

     Current portion of notes payable                                    $         -            $   33,770
     Accounts payable                                                        206,257               145,844
     Accrued payroll, vacation and bonus                                      22,216                17,731
     Deferred revenue                                                         25,098                15,677
     Other accrued liabilities                                               101,736                69,847
     Current portion of capitalized lease obligations                          5,465                 4,114
                                                                           ---------             ---------

         Total current liabilities                                           360,772               286,983
                                                                           ---------             ---------

CAPITALIZED LEASE OBLIGATIONS,
     net of current portion                                                    4,437                 5,711
                                                                           ---------             ---------

NOTES PAYABLE, net of current portion                                              -                13,465
                                                                           ---------             ---------

CONVERTIBLE SUBORDINATED NOTES,
     6.75%, due 2001                                                          45,683                45,733
                                                                           ---------             ---------

STOCKHOLDERS' EQUITY:
     Preferred Stock, $.01 par value; authorized 4,750,000
         shares, none issued                                                       -                     -
     Series C, Junior Participating Preferred Stock,
         authorized 250,000 shares, none issued                                    -                     -
     Common Stock, $.03 1/3 par value;  authorized  400,000,000  shares,  
         issued 260,693,780 and 256,554,852 shares at September 28, 
         1997 and December 31, 1996, respectively                              8,690                 8,552
     Additional paid-in capital                                              269,297               264,149
     Less:  829,210 and 600,000 Common Stock treasury shares
         at September 28, 1997 and December 31, 1996, respectively, 
         at cost                                                              (6,099)              (4,363)
     Deferred compensation                                                      (418)                (669)
     Retained earnings                                                       145,812               66,581
                                                                           ---------             --------

         Total stockholders' equity                                          417,282              334,250
                                                                           ---------             ---------

                                                                            $828,174             $686,142
                                                                            ========             ========

</TABLE>

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


                                     - 3 -
<PAGE>


                               IOMEGA CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)

<TABLE>
<CAPTION>


                                                                         For the Three Months Ended
                                                                   September 28,             September 29,
                                                                            1997                      1996
                                                                   -------------             -------------
                                                                                 (Unaudited)
<S>                                                                    <C>                      <C>
SALES                                                                  $ 431,700                $ 310,085

COST OF SALES                                                            291,373                  228,424
                                                                       ---------                ---------

     Gross margin                                                        140,327                   81,661
                                                                       ---------                ---------

OPERATING EXPENSES:
     Selling, general and administrative                                  72,631                   50,323
     Research and development                                             22,571                   10,475
                                                                       ---------                ---------

         Total operating expenses                                         95,202                   60,798
                                                                       ---------                ---------

OPERATING INCOME                                                          45,125                   20,863

     Interest and other income (expense), net                              1,055                       71
                                                                       ---------                ---------

INCOME BEFORE INCOME TAXES                                                46,180                   20,934

     Provision for income taxes                                          (16,172)                  (8,168)
                                                                       ---------                ---------

NET INCOME                                                             $  30,008                $  12,766
                                                                       =========                =========

NET INCOME PER COMMON SHARE                                            $    0.11                $    0.05
                                                                       =========                =========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Includes effects of stock split (See Note 1)                             274,070                  274,054
                                                                       =========                =========
</TABLE>



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

                                     - 4 -
<PAGE>


                               IOMEGA CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                          For the Nine Months Ended
                                                                   September 28,             September 29,
                                                                            1997                      1996
                                                                   -------------             -------------
                                                                                (Unaudited)
<S>                                                                  <C>                        <C>
SALES                                                                 $1,193,206                $ 815,711

COST OF SALES                                                            828,141                  597,955
                                                                      ----------                ---------

     Gross margin                                                        365,065                  217,756
                                                                      ----------                ---------

OPERATING EXPENSES:
     Selling, general and administrative                                 187,807                  122,605
     Research and development                                             54,295                   29,008
                                                                      ----------                ---------

         Total operating expenses                                        242,102                  151,613
                                                                      ----------                ---------

OPERATING INCOME                                                         122,963                   66,143

     Interest and other income (expense), net                             (1,219)                  (5,329)
                                                                      ----------                ---------

INCOME BEFORE INCOME TAXES                                               121,744                   60,814

     Provision for income taxes                                          (42,513)                 (23,845)
                                                                      ----------                ---------

NET INCOME                                                           $    79,231                $  36,969
                                                                     ===========                =========

NET INCOME PER COMMON SHARE                                          $      0.29                $    0.14
                                                                     ===========                =========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Includes effects of stock split (See Note 1)                             272,794                  264,178
                                                                     ===========                =========
</TABLE>


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

                                     - 5 -

<PAGE>


                               IOMEGA CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)
<TABLE>
<CAPTION>


                                                                           For the Nine Months Ended
                                                                       September 28,         September 29,
                                                                                1997                  1996
                                                                       -------------         -------------
                                                                                   (Unaudited)
<S>                                                                      <C>                    <C>
Cash Flows from Operating Activities:
     Net Income                                                          $    79,231            $   36,969
     Non-Cash Revenue and Expense Adjustments:
         Depreciation and amortization expense                                26,701                16,532
         Deferred income tax benefit                                          (1,513)              (27,142)
         Other                                                                    19                   681
     Changes in Assets and Liabilities:
         Trade receivables, net                                              (53,451)              (91,751)
         Inventories                                                         (16,504)              (79,332)
         Other current assets                                                 15,996                (7,546)
         Accounts payable                                                     60,413                48,279
         Accrued liabilities                                                  45,795                54,543
                                                                         -----------            ----------
         Net cash provided by (used in) operating activities                 156,687               (48,767)
                                                                         -----------            ----------

Cash Flows from Investing Activities:
     Purchase of property, plant and equipment                               (52,094)              (62,765)
     Net decrease in other assets                                                173                   271
                                                                         -----------            ----------
         Net cash used in investing activities                               (51,921)              (62,494)
                                                                         -----------            ----------

Cash Flows from Financing Activities:
     Proceeds from sales of Common Stock                                       2,564                 1,825
     Proceeds from issuance of notes payable
         and capitalized lease obligations                                    87,295               745,864
     Payments on notes payable and capitalized lease
         obligations                                                        (137,793)             (771,668)
     Purchase of Common Stock                                                 (1,736)               (4,363)
     Tax benefit from dispositions of employee stock                           2,616                 6,755
     Net proceeds from public offering of Common Stock                             -               191,146
     Net proceeds from issuance of convertible
       subordinated notes                                                          -                43,131
                                                                         -----------            ----------

         Net cash provided by (used in) financing activities                 (47,054)              212,690
                                                                         -----------            ----------

Net Increase in Cash and Cash Equivalents                                     57,712               101,429

Cash and Cash Equivalents at Beginning of Period                             108,312                 1,023
                                                                         -----------            ----------

Cash and Cash Equivalents at End of Period                                 $ 166,024            $  102,452
                                                                           =========            ==========
</TABLE>


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

                                     - 6 -
<PAGE>


                               IOMEGA CORPORATION

            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd.)

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                           For the Nine Months Ended
                                                                       September 28,         September 29,
                                                                                1997                  1996
                                                                       -------------         -------------
                                                                                   (Unaudited)
<S>                                                                     <C>                   <C>
Supplemental Schedule of Non-Cash
Investing and Financing Activities:

     Property, plant and equipment financed under
         capitalized lease obligations                                  $      3,342          $     28,367
                                                                        ============          ============

     Conversion of Subordinated Notes to Common Stock                   $         50          $        267
                                                                        ============          ============
</TABLE>







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


                                     - 7 -
<PAGE>


                               IOMEGA CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)       SUBSEQUENT  EVENT - STOCK SPLIT 

          On November  11, 1997,  the  Company's  Board of Directors  declared a
          two-for-one  stock  split which will be effected in the form of a 100%
          stock dividend.  The dividend will be distributed on or about December
          22, 1997 to  stockholders  of record on December 1,  1997.  This stock
          split has been retroactively  reflected in the accompanying  condensed
          consolidated  financial  statements  and  management's  discussion and
          analysis. In connection with the stock split, proportional adjustments
          will  be made to  outstanding  stock  options  and  other  outstanding
          obligations of the Company to issue shares of Common Stock.

(2)      SIGNIFICANT ACCOUNTING POLICIES

         In the opinion of management,  the accompanying  condensed consolidated
         financial statements reflect all adjustments (consisting only of normal
         recurring  adjustments)  which are  necessary  to  present  fairly  the
         financial   position  of  Iomega   Corporation  and  subsidiaries  (the
         "Company") as of September 28, 1997 and December 31, 1996,  the results
         of operations for the three- and nine-month periods ended September 28,
         1997 and September 29, 1996, and cash flows for the nine-month  periods
         ended September 28, 1997 and September 29, 1996.

         The results of operations for the three- and  nine-month  periods ended
         September 28, 1997 are not necessarily  indicative of the results to be
         expected for the entire year or for any future period.

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

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

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

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

                                     - 8 -

<PAGE>
                              IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


         In addition to reserves for returns,  the Company defers recognition of
         revenue on estimated  excess  inventory in the  distribution and retail
         channels. For this purpose, excess inventory is the amount of inventory
         which  exceeds  the  channels'  30 day  requirements  as  estimated  by
         management.  The gross margin  associated  with deferral of revenue for
         returns and estimated  excess channel  inventory  totaled $25.1 million
         and  $15.7  million  at  September  28,  1997 and  December  31,  1996,
         respectively.

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

         In addition,  the Company records  reserves at the time of shipment for
         estimated  volume rebates.  These reserves for volume rebates and price
         protection credits totaled $25.2 million and $17.0 million at September
         28, 1997 and December 31, 1996,  respectively,  and are netted  against
         accounts receivable in the accompanying  condensed consolidated balance
         sheets.

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

         Cash  Equivalents  and  Temporary  Investments  - For  purposes  of the
         statements of cash flows, the Company  considers all highly liquid debt
         instruments  purchased  with  maturities of three or fewer months to be
         cash equivalents. Instruments with maturities in excess of three months
         are  classified  as  temporary  investments.  There  were  no  material
         temporary  investments at September 28, 1997 or December 31, 1996. Cash
         equivalents  primarily  consist of  investments  in money market mutual
         funds,  commercial  paper,  option  rate  preferred  stock and  taxable
         municipal bonds and notes and are recorded at cost, which  approximates
         market.

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

                                      September 28,              December 31,
                                           1997                      1996

         Raw materials                 $   102,158                $   88,728
         Work-in-process                    29,094                    14,004
         Finished goods                     57,172                    69,188
                                        ----------                ----------

                                        $  188,424                $  171,920
                                        ==========                ==========

                                     - 9 -

<PAGE>

                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

          Net Income Per Common  Share - Net income per common share is based on
          the  weighted  average  number of shares of Common  Stock and dilutive
          common stock equivalent shares outstanding  during the period.  Common
          stock equivalent shares consist primarily of stock options that have a
          dilutive   effect  when  applying  the  treasury  stock  method.   The
          outstanding  shares and earnings per share have been  restated for all
          periods to reflect the impact of the stock split described in Note 1.

         Recent  Accounting  Pronouncements  - In February  1997,  the Financial
         Accounting  Standards Board released Statement of Financial  Accounting
         Standards  No. 128,  "Earnings  per Share" (SFAS 128).  This  statement
         specifies the computation,  presentation,  and disclosure  requirements
         for earnings per share (EPS) for  financial  statements  issued for all
         periods ending after December 15, 1997. SFAS 128 replaces the standards
         for  computing  EPS  previously  found  in APB  Opinion  No.  15 with a
         presentation of Basic EPS and Diluted EPS. The following represents the
         Company's pro forma  earnings per share as computed  under the rules of
         SFAS 128:

<TABLE>
<CAPTION>

                                               For the Three Months Ended            For the Nine Months Ended
                                            Sept. 28, 1997    Sept. 29, 1996    Sept. 28, 1997   Sept. 29, 1996
                                            --------------    --------------    --------------   --------------
             <S>                                 <C>               <C>             <C>               <C> 
             Pro Forma Basic EPS                 $0.12             $0.05           $0.31             $0.15

             Pro Forma Diluted EPS               $0.11             $0.05           $0.29             $0.14
</TABLE>


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

         The  Company is  required  to adopt SFAS 128 in its  December  31, 1997
         financial statements.  The Company plans to adopt SFAS 130 and SFAS 131
         in its December 31, 1998 financial statements.

                                     - 10 -

<PAGE>


                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


 (3)     INCOME TAXES

         Income  taxes for the nine months  ended  September  28, 1997 have been
         provided for at an effective  rate of 35% compared to an effective rate
         of 39% for the year ended December 31, 1996.  This tax rate is based on
         the Company's  projected mix of domestic and foreign pre-tax income for
         1997.  The decrease in the effective tax rate is due to tax  advantages
         associated with the relocation of the Company's  manufacturing capacity
         to Malaysia and the move of the Company's  European  headquarters  from
         Germany to Switzerland.

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

         Cash paid for income taxes was $16.9 million for the first nine months
         of 1997 and $37.5 million for the corresponding period in 1996.

 
(4)      NOTES PAYABLE

         Line of Credit - On March 11,  1997,  the Company  entered  into a $200
         million Senior Secured Credit Facility ("Credit  Facility") with Morgan
         Guaranty Trust Company of New York,  Citibank,  N.A. and a syndicate of
         other lenders.  The Credit  Facility is a three-year  revolving line of
         credit secured by U.S. and Canadian accounts receivable and a pledge of
         66% of the stock of certain of the Company's  subsidiaries.  Borrowings
         under the Credit  Facility are limited to the lesser of 70% of eligible
         accounts  receivable or $200 million.  Under the Credit  Facility,  the
         Company  may  borrow at a base  rate,  which is the  higher of prime or
         federal funds plus a margin of 0.0% to 0.5%, depending on the Company's
         debt-to-equity  ratio,  or at  LIBOR  plus a  margin  of 1.0% to  2.0%,
         depending on the Company's  debt-to-equity  ratio.  Total  availability
         under the Credit Facility at September 28, 1997 was $184.9 million, and
         there were no borrowings  outstanding.  Among other  restrictions,  the
         Credit  Facility treats a change of control (as defined) as an event of
         default and requires the  maintenance of minimum levels of consolidated
         tangible net worth and earnings.

         Capital  Leases - The Company has entered  into various  agreements  to
         obtain   capital   lease   financing   for  the   purchase  of  certain
         manufacturing   equipment,   software,   office   furniture  and  other
         equipment.  The leases have  36-month  to 60-month  terms and mature at
         various  dates from July 1998 to March  2000.  Principal  and  interest
         payments are payable  monthly and  quarterly.  Interest rates are fixed
         and range from 7.1% to 10.2%.  The leases are secured by the underlying
         leased equipment, software and furniture.

         Promissory  Note on  Malaysian  Manufacturing  Facility - In  September
         1996, the Company entered into an agreement with Quantum Corporation to
         finance a portion of the  purchase  price of a building  and  equipment
         associated  with a  manufacturing  facility  in Penang,  Malaysia.  The
         amount financed under this agreement totaled $18 million.  During April
         1997, the Company elected to prepay the entire $18 million plus accrued
         interest.

                             - 11 -
<PAGE>



                               IOMEGA CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                      

         Financing  of  European  Receivables  and Other Term Notes - During the
         first quarter of 1997, an agreement with a German commercial bank which
         involved the factoring of a portion of the Company's  European accounts
         receivable expired and the Company repaid all amounts outstanding under
         the  agreement.  During  the  second and third  quarters  of 1997,  the
         Company paid off all remaining  other term notes  relating to equipment
         purchases.

        
(5)      OTHER MATTERS

         Increase  in  Authorized  Shares  - On  April  20,  1997,  stockholders
         approved  an  amendment  to  the  Company's  Restated   Certificate  of
         Incorporation  increasing  the  number of  authorized  shares of Common
         Stock from 150 million to 400 million.

         Significant  Customers - During the three  months and nine months ended
         September  28,  1997,  sales  to  Ingram  Micro,  Inc.   accounted  for
         approximately  12% of consolidated  sales.  During the three months and
         nine months ended  September  29,  1996,  sales to Ingram  Micro,  Inc.
         accounted for 20% and 17%,  respectively,  of  consolidated  sales.  No
         other  single  customer  accounted  for more than 10% of the  Company's
         sales for these periods.

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

         At September 28, 1997  outstanding  forward  exchange sales  (purchase)
         contracts, which all mature in December 1997, were as follows:

                                                                   Contracted
         Currency                           Amount                 Forward Rate

          British Pound                    (675,000)                    .62
          Dutch Guilder                  (3,200,000)                   1.98
          French Franc                    1,000,000                    5.92
          German Mark                    (5,700,000)                   1.76
          Japanese Yen                   75,000,000                  118.32    
          Malaysian Ringgit              (6,750,000)                   3.07
          Singapore Dollar               (1,400,000)                   1.51
          Swiss Franc                    (1,675,000)                   1.44

         The contracts are revalued at the month-end spot rate. Gains and losses
         on foreign  currency  contracts  intended to be used to hedge operating
         requirements  are  reported  currently  in income.  Gains and losses on
         foreign  currency  contracts  intended  to meet  firm  commitments  are
         deferred  and are  recognized  as part  of the  cost of the  underlying
         transaction  being hedged.  At September 28, 1997, all of the Company's
         foreign   currency   contracts  were  being  used  to  hedge  operating
         requirements.  The Company's  theoretical risk in these transactions is
         the cost of replacing,  at current market rates, these contracts in the
         event of default by the counterparty.

                                     - 12 -
<PAGE>

                               IOMEGA CORPORATION

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


SUBSEQUENT  EVENT - STOCK SPLIT 

On November 11, 1997,  the Company's  Board of Directors  declared a two-for-one
stock split which will be  effected  in the form of a 100% stock  dividend.  The
dividend will be distributed on or about  December 22, 1997 to  stockholders  of
record on December 1, 1997. This stock split has been retroactively reflected in
the accompanying  condensed  consolidated  financial statements and management's
discussion  and  analysis.  In  connection  with the stock  split,  proportional
adjustments  will be made to  outstanding  stock  options and other  outstanding
obligations of the Company to issue shares of Common Stock.


RESULTS OF OPERATIONS

The Company reported sales of $431.7 million and net income of $30.0 million, or
$0.11 per share,  in the third quarter of 1997. This compares to sales of $310.1
million  and net  income  of $12.8  million,  or $0.05 per  share,  in the third
quarter of 1996. For the first nine months of 1997,  sales were $1.2 billion and
net income was $79.2  million,  or $0.29 per share,  compared to sales of $815.7
million and net income of $37.0 million,  or $0.14 per share, for the first nine
months of 1996.

SALES

Sales for the three months ended September 28, 1997 increased by $121.6 million,
or 39%, when compared to the  corresponding  period of 1996.  The primary reason
for the increase was higher sales of Zip and Jaz products.  The increased  sales
reflect  higher  sales  volumes of both drives and media,  which were  partially
offset by lower prices.  Combined Zip and Jaz sales totaled $406.0  million,  or
94% of sales,  in the third quarter of 1997, as compared to $269.0  million,  or
87% of sales, in the third quarter of 1996. Sales of Zip drives to OEM customers
increased to just over 35% of total Zip drive unit sales in the third quarter of
1997,  as  compared to  approximately  10% in the third  quarter of 1996.  Ditto
product sales decreased in the third quarter of 1997 to $26.0 million,  or 6% of
sales,  as compared to $32.5 million,  or 10% of sales,  in the third quarter of
1996.

Sales for the nine months ended  September 28, 1997 increased by $377.5 million,
or 46%, when compared to the  corresponding  period of 1996.  The primary reason
for the increase was higher sales of Zip and Jaz products.  The increased  sales
reflect  higher  sales  volumes of both drives and media,  which were  partially
offset by lower prices.  Combined Zip and Jaz sales totaled $1.1 billion, or 92%
of sales,  in the first nine months of 1997, as compared to $700.8  million,  or
86% of sales, in the  corresponding  period of 1996.  Sales of Zip drives to OEM
customers  increased  to 30% of total Zip drive  unit  sales for the first  nine
months  of  1997,  as  compared  to 5% of  total  Zip  drive  unit  sales in the
corresponding  period of 1996. Ditto product sales totaled $90.5 million,  or 8%
of sales, in the first nine months of 1997, as compared to $88.5 million, or 11%
of sales, in the corresponding period of 1996.

                                     - 13 -
<PAGE>


                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Sales in Europe were $108.2 million, or 25% of total sales, in the third quarter
of 1997, as compared to $50.7 million,  or 16% of sales, in the third quarter of
1996. For the first nine months of 1997, sales in Europe were $323.0 million, or
27% of sales, as compared to $169.5 million, or 21% of sales, for the first nine
months of 1996.  Sales in Asia were $36.8 million,  or 8% of sales, in the third
quarter of 1997,  as compared  to $29.3  million,  or 9% of sales,  in the third
quarter of 1996.  For the first nine  months of 1997,  sales in Asia were $109.6
million,  or 9% of sales, as compared to $83.3 million, or 10% of sales, for the
first nine months of 1996.


GROSS MARGIN

The  Company's  overall  gross margin was 32% in the third  quarter of 1997,  as
compared to 26% in the third quarter of 1996.  This increase in gross margin was
due primarily to continued  reductions in component  material costs and per unit
manufacturing  overhead costs for the Zip and Jaz product lines, combined with a
significant  increase  in the  ratio of disk  sales to drive  sales  for the Jaz
product line. This higher ratio was driven  primarily by "catch up" shipments of
Jaz disks  resulting from an earlier Jaz disk recall  (discussed  below) and the
temporary  inventory  shortage  that was created  while  replacing the defective
disks and integrating a new supplier.  These  improvements were partially offset
by price reductions enacted in the second quarter of 1997 for Zip, Jaz and Ditto
drives,  as well as increased sales of Zip drives to OEMs at gross margins lower
than drives sold to distribution and retail channels.

Overall  gross margin  percentage  for the first nine months of 1997 was 31%, as
compared to 27% for the first nine months of 1996. This increase in gross margin
was primarily the result of reductions in component  material costs and per unit
manufacturing overhead costs for the Zip and Jaz product lines and higher ratios
of disk sales to drive sales for the Zip,  Jaz and Ditto  product  lines.  These
improvements  were partially  offset by the second quarter 1997 price reductions
for Zip, Jaz and Ditto, as well as increased sales of Zip drives to OEMs.  While
the  "catch  up" of Jaz disk  shipments  benefited  gross  margins  in the third
quarter of 1997,  the Jaz disk  recall  (discussed  below)  negatively  impacted
overall gross margins during the second quarter and first nine months of 1997.

In April 1997,  the  Company  announced  the recall of a batch of  approximately
75,000 Jaz disks  manufactured  within the period of March 13, 1997 to April 20,
1997 at one of the  Company's  facilities.  The recall was  announced  after the
Company's ongoing reliability testing revealed that the batch of disks contained
a component that did not conform over time to Iomega's reliability requirements.
The  Company  contacted  its  distributors  and  channel  partners to remove the
affected  disks from their  inventories  and took steps to replace any  affected
disks  purchased  by  customers.  The direct costs  associated  with this recall
totaled  approximately  $3.1 million  during the second quarter of 1997 and were
included in cost of sales.

                                     - 14 -
<PAGE>


                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and  administrative  expenses  increased by $22.3  million and
$65.2 million in the third quarter and first nine months of 1997,  respectively,
when  compared  to  the  corresponding  periods  of  1996,  and  increased  as a
percentage of sales to 17% and 16% in the third quarter and first nine months of
1997, respectively, from 16% and 15%, respectively, in each of the corresponding
periods  of 1996.  The  increases  were  primarily  the result of  increases  in
headcount  throughout  the  world,  predominantly  in the  sales  and  marketing
functions,  advertising  expenses  incurred to increase market awareness of Zip,
Jaz and  Ditto  products  and  variable  selling  expenses.  Management  expects
selling,  general and administrative  expenses to increase further in the fourth
quarter of 1997 in absolute  dollars due primarily to increased  advertising and
promotional  expenses  throughout the world,  including  planned costs for a new
"Zip built-in"  campaign  developed to generate  greater consumer demand for OEM
Zip drives,  as well as increased  variable selling expenses and increased fixed
administrative expenses.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses for the third quarter and first nine months of
1997  increased  by  $12.1  million,   or  115%,  and  $25.3  million,  or  87%,
respectively,  when compared to the corresponding  periods of 1996. Research and
development  also  increased as a percentage of sales to 5% in the third quarter
and  first  nine  months  of  1997,  as  compared  to 3% and 4% of  sales in the
corresponding  periods of 1996,  respectively.  The increases were primarily the
result of expenditures  related to the continued  development and enhancement of
Zip, Jaz and Ditto products,  as well as continued  development expenses related
to the Company's n-hand, Buz and other products.  Management expects to maintain
the level of spending for research and development  during the remainder of 1997
to support planned product development and enhancement.

OTHER

The Company  recorded  interest  income of $2.2  million and $4.7 million in the
third quarter and first nine months of 1997,  respectively,  as compared to $1.6
million and $2.2 million in the corresponding periods of 1996, respectively, due
to increased  available cash balances in 1997. Interest expense was $1.4 million
and  $5.1  million  in  the  third  quarter  and  first  nine  months  of  1997,
respectively,  as compared to $1.8 million and $6.4 million in the corresponding
periods of 1996,  respectively.  The decrease in interest  expense was primarily
due to decreased  average  borrowings  outstanding  during the third  quarter of
1997,  resulting in large part from the  repayment of amounts  borrowed  under a
financing  agreement (which involved the factoring of a portion of the Company's
European  accounts  receivable),  and the  repayment  of other term notes during
1997.

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

                                     - 15 -
<PAGE>


                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


INCOME TAXES

For the first nine months of 1997, the Company  recorded an income tax provision
of  $42.5  million,  representing  an  effective  income  tax  rate of 35%.  The
effective  tax rate  decreased  from 39% in the first nine months of 1996 due to
tax  advantages  associated  with the  relocation of  manufacturing  capacity to
Malaysia and the relocation of the Company's European  headquarters from Germany
to  Switzerland.  Differences  between the currently  anticipated mix of foreign
income  versus  domestic  income,  and the actual mix, may have an impact on the
effective tax rate that is recorded during the remainder of 1997.

SEASONALITY

The  Company's  Ditto,  Zip and Jaz  products  are sold  primarily to the retail
consumer market. This market is generally  seasonal,  with a substantial portion
of total sales  occurring  in the fourth  quarter and sales  slowdowns  commonly
occurring  during  the summer  months.  In light of the  seasonal  nature of the
market  for the  Company's  products,  revenues  for any prior  quarter  are not
necessarily indicative of the revenues to be expected in any future quarter.

LIQUIDITY AND CAPITAL RESOURCES

At  September  28,  1997,  the Company had cash and cash  equivalents  of $166.0
million,  working  capital of $309.1  million,  and a ratio of current assets to
current  liabilities  of 1.9 to 1.  During  the first nine  months of 1997,  the
Company generated $156.7 million of cash from operating activities.  The primary
sources of cash  provided by  operating  activities  were net  income,  non-cash
expenses,  reductions in other current assets, and increases in accounts payable
and  accrued  liabilities.  These  sources  of cash  were  partially  offset  by
increases in accounts receivables and inventory.  Other current assets decreased
by $16.0  million,  due  primarily to the  collection  of  value-added  taxes in
Europe,  partially  offset  by higher  prepaid  advertising  expenses.  Accounts
payable  increased  by $60.4  million,  due  primarily  to timing  of  inventory
receipts and related payments to vendors. Accrued liabilities increased by $45.8
million and included,  among other changes,  an $23.4 million increase in income
taxes payable, an $11.4 million increase in marketing and advertising  accruals,
and a $9.4  million  increase in deferred  revenue.  These  sources of cash were
offset by a $53.4 million increase in net accounts receivable,  due primarily to
increased  sales and the timing of sales and  collections  during the respective
quarters and a $16.5  million  increase in inventory due primarily to a build in
inventories  going into the fourth  quarter.  The Company used $51.9  million of
cash in investing activities during the first nine months of 1997, primarily for
the purchase of property, plant and equipment. Cash used in financing activities
totaled $47.0 million  during the first nine months of 1997,  and included $50.5
million of net payments on notes payable and capitalized  lease  obligations and
$1.7  million  to  repurchase  229,210  shares of the  Company's  Common  Stock,
partially  offset by a $2.6  million tax benefit  for  dispositions  of employee
stock and proceeds of $2.6 million from sales of Common Stock to option holders.

                                     - 16 -
<PAGE>

                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


On March 11, 1997, the Company entered into a $200 million Senior Secured Credit
Facility  ("Credit  Facility")  with Morgan  Guaranty Trust Company of New York,
Citibank,  N.A.  and a  syndicate  of other  lenders.  The Credit  Facility is a
three-year  revolving  line of credit  secured  by U.S.  and  Canadian  accounts
receivable  and a  pledge  of 66% of  the  stock  of  certain  of the  Company's
subsidiaries.  Borrowings under the Credit Facility are limited to the lesser of
70% of eligible accounts receivable or $200 million.  Under the Credit Facility,
the Company  may borrow at a base rate,  which is the higher of prime or federal
funds plus a margin of 0.0% to 0.5%,  depending on the Company's  debt-to-equity
ratio,  or at LIBOR plus a margin of 1.0% to 2.0%,  depending  on the  Company's
debt-to-equity  ratio. Total availability under the Credit Facility at September
28, 1997 was $184.9  million,  and there were no borrowings  outstanding.  Among
other restrictions,  the Credit Facility treats a change of control (as defined)
as an event of  default  and  requires  the  maintenance  of  minimum  levels of
consolidated tangible net worth and earnings.

The current and long-term portions of capitalized lease obligations at September
28, 1997 were $5.5  million  and $4.4  million,  respectively.  During the first
quarter of 1997, the Company repaid all amounts  outstanding under its agreement
with a German  commercial  bank which involved the factoring of a portion of the
Company's European accounts  receivable.  During the second quarter of 1997, the
Company paid the entire $18 million obligation,  plus accrued interest, relating
to the purchase of its Malaysian manufacturing facility. In addition, during the
second and third quarters of 1997, the Company paid off all remaining other term
notes relating to equipment purchases.

The Company had $45.7 million of convertible  subordinated  notes outstanding at
September  28, 1997,  which bear  interest at 6.75% per year and mature on March
15,  2001.  Additions  to property,  plant and  equipment  during the first nine
months of 1997  totaled  $55.4  million,  partially  offset by $3.3  million  in
proceeds from capital leases.

The Company expects that its balance of cash and cash equivalents, together with
current and future  sources of available  financing,  will be sufficient to fund
the Company's  operations during the next twelve months.  The precise amount and
timing of the Company's  future financing needs, if any, cannot be determined at
this time,  and will depend on a number of factors,  including the market demand
for the  Company's  products,  the  availability  of  critical  components,  the
progress  of the  Company's  product  development  efforts,  the  success of the
Company in managing its inventory, accounts receivable and accounts payable.

                                     - 17 -

<PAGE>

                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

FACTORS AFFECTING FUTURE OPERATING RESULTS

Because the Company is relying on its Zip and Jaz products  for the  substantial
majority of its sales in 1997,  the  Company's  future  operating  results  will
depend in large  part on the  ability  of those  products  to attain  widespread
market  acceptance.  Although the Company  believes  there is market  demand for
removable  data  storage  solutions  for  personal  computers,  there  can be no
assurance that the Company will be successful in establishing Zip and Jaz as the
preferred  solutions  for that  market  need.  The  extent  to which Zip and Jaz
achieve a  significant  market  presence  will  depend upon a number of factors,
including  the  price,   performance  and  other  characteristics  of  competing
solutions  (existing or announced)  introduced by other  vendors,  including the
LS-120 (product of the consortium of Compaq Computer, Imation and MKE) and SyJet
1.5 GB, EZ Flyer 230 and SparQ 1.0GB (products of Syquest Technology, Inc.), the
Shark 250 (product of Avatar  Peripherals,  Inc.),  and the  recently  announced
200MB  high-capacity 3.5 inch floppy disk system being developed jointly by Sony
Corporation  and Fuji Photo Film Co., Ltd. which they announced is planned to be
introduced in the spring of 1998; the success of the Company in meeting targeted
availability dates for new or enhanced  products;  the success of the Company in
establishing and maintaining OEM  arrangements  and meeting OEM quality,  supply
and  other  requirements;  the  willingness  of OEMs  to  promote  the  products
containing the Company's drives; the ability of the Company to create demand for
Zip and Jaz, including demand from leading personal computer manufacturers;  the
success of the Company in educating  consumers  about the existence and possible
uses of Zip  and Jaz  products  as  storage  devices;  and  the  success  of the
Company's plans to improve customer service and satisfaction.  In addition,  any
component  problems,  shortages,  quality issues or other factors  affecting the
supply of the  Company's  products,  and any  inability  of the  Company  to add
manufacturing  capacity as needed could limit the Company's sales and provide an
opportunity for competing  products to achieve market  acceptance.  For example,
sales were adversely  affected  during the second and third quarters of 1997 due
to a shortage of certain integrated circuits for Zip drives and supplier quality
problems,  and may also be adversely  affected for these and similar  reasons in
future quarters.

The Company's  business strategy is substantially  dependent on maximizing sales
of its  proprietary  Zip and Jaz  disks,  which  generate  significantly  higher
margins than its disk drives. If this strategy is not successful, either because
the Company does not establish a  sufficiently  large  installed base of Zip and
Jaz  drives,  because  the sales mix  between  disks and drives is below  levels
anticipated by the Company,  because  another party succeeds in producing  disks
that are compatible with Zip and/or Jaz drives without  infringing the Company's
proprietary  rights,  or for any other  reason,  the  Company's  sales  would be
adversely  affected,  and its net income would be  disproportionately  adversely
affected.  See "Legal  Proceedings"  with respect to the  introduction  by Nomai
S.A., a French  company,  of a disk product  claimed to be  compatible  with the
Company's Zip drives and Nomai's plans to introduce a disk product claimed to be
compatible with the Company's Jaz drives.

                                     - 18 -
<PAGE>

                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Future  market  demand  for the  Company's  products  cannot be  predicted  with
certainty.  Sales of Zip and Jaz  products  in 1996 and the first nine months of
1997 were the primary reasons for the Company's revenue growth in these periods.
However,  these sales may not be  indicative  of the  long-term  demand for such
products.  Accordingly,  the sales growth experienced by the Company in 1996 and
in the first nine  months of 1997 should not be assumed to be an  indication  of
future sales.  In addition,  the Company has  experienced  and may in the future
experience   significant   fluctuations  in  its  quarterly  operating  results.
Moreover, because the Company's expense levels are based in part on expectations
of future  sales  levels,  a  shortfall  in  expected  sales  could  result in a
disproportionate decrease in the Company's net income.

In addition  to the risks  surrounding  existing  products,  the  Company  faces
development,  manufacturing,  demand and market  acceptance risks with regard to
recently introduced and future products,  including ZipPlus, the 15mm and 12.7mm
notebook Zip drives,  the Jaz 2GB drive, the Ditto Max multiple  capacity drive,
n-hand and Buz. The Company's  future  operating  results will depend in part on
its  success  in  introducing   enhanced  and  new  products  in  a  timely  and
competitively  effective manner,  and will also depend on intellectual  property
matters including the possibility that infringement claims asserted from time to
time against the Company  could  require the Company to pay royalties to a third
party in order to continue to market and distribute one or more of the Company's
current or future products or require the Company to devote unplanned  resources
to develop non-infringing modifications to its products.

The Company has significant  international  operations  with sales  transactions
generally  denominated  in U.S.  dollars.  Fluctuation  in the value of  foreign
currencies  relative  to the U.S.  dollar  that are not  sufficiently  hedged by
foreign  customers  could  result in lower  sales and have an adverse  effect on
future operating results.

A significant portion of the Company's revenues are currently being generated in
Europe and Asia.  The Company's  existing  infrastructure  outside of the United
States is significantly  less mature and developed than in the United States. In
particular,  the Company's relocation of its European operations from Germany to
Switzerland  and the  Netherlands,  combined with the expansion of the Company's
Asian  headquarters and sales offices,  could adversely impact sales momentum in
these international markets.

The  Company  continues  to refine the design of its Zip and Jaz  products in an
effort to  improve  product  performance  and  reduce  manufacturing  costs.  In
addition,  the Company depends on independent parties for the supply of critical
components for its Zip and Jaz products. As a result of these and other factors,
the Company may experience  problems relating to the quality and/or  reliability
of certain of its  products.  For example,  in the second  quarter of 1997,  the
Company  recalled a limited  number of its Jaz disks and in the third quarter of
1997 the Company experienced interruptions due to supplier quality problems. Any
product availability, quality or reliability problems experienced by the Company
could have an adverse  effect on the Company's  sales and net income,  result in
damage to the  Company's  reputation  in the  marketplace,  and/or  subject  the
Company to damage claims from its customers.

                                     - 19 -

<PAGE>

                               IOMEGA CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONCLUDED)


In addition,  the Company is in the process of  identifying  anticipated  costs,
problems and  uncertainties  associated  with making the Company's  internal-use
software  applications Year 2000 compliant.  In general,  the Company expects to
resolve Year 2000 issues through planned replacement or upgrades of its software
applications.  Although  management  does not expect  Year 2000 issues to have a
material impact on its business or future results of operations, there can be no
assurance  that  there  will  not  be   interruptions  of  operations  or  other
limitations  of  system  functionality  or  that  the  Company  will  not  incur
significant costs to avoid such interruptions or limitations.

Other  factors  that  could  cause  actual  events or actual  results  to differ
materially from those indicated by any  forward-looking  statements  include the
ability of  management to manage growth and an  increasingly  complex  business,
market demand for personal computers with which the Company's products are used,
transportation issues, product and component pricing, competition,  intellectual
property  rights,  litigation  (see "Legal  Proceedings")  and general  economic
conditions.




                                     - 20 -
<PAGE>


                               IOMEGA CORPORATION

                           PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

As previously  reported in the Company's Annual Report on Form 10-K for 1996 and
its  quarterly  reports on Form 10-Q for the first and second  quarters of 1997,
the Company has inititated  litigation in France and Germany against Nomai S.A.,
a French company,  in connection  with Nomai's  planned XHD disk product,  which
Nomai claims to be  compatible  with the  Company's  Zip drives.  On October 15,
1997, Nomai and its United States subsidiary Nomus,  Inc., filed a complaint for
declaratory  relief against the Company in the United States  District Court for
the Northern District of California. In its complaint, Nomai seeks a declaratory
judgment of  non-infringement  and  invalidity of certain  United States patents
issued to the Company, non-infringement of trade dress, trademark and copyright,
non-unfair competition,  and  non-misappropriation of trade secrets. The Company
does not believe  these  claims are  meritorious.  In support of its standing to
seek declaratory relief from a United States federal court, Nomus claims to have
offered  Nomai  XHD  cartridges  for  sale  in the  United  States  and to be in
apprehension  that Iomega will  initiate suit against it and Nomai in the United
States.  The Company was granted an extension  of time until  November 21, 1997,
within  which to respond to the  complaint  filed by Nomai.  The Company has not
licensed  Nomai to  manufacture  or sell Zip products  and believes  Nomai's XHD
product infringes the Company's United States and foreign intellectual  property
rights and constitutes unfair competition.

With respect to the ongoing European  litigation  between the Company and Nomai,
Nomai's XHD disk  product was  formally  announced  by Nomai in a press  release
issued on September 12, 1997.  XHD disks were offered for sale at the Apple Expo
exhibition in Paris,  France,  beginning on September 17, 1997. On September 30,
1997,  the Company  filed a complaint  in the District  Court in Paris  charging
Nomai with  unfair  competition,  parasitism  and  violations  of the  Company's
copyrights,  disk design patent and trademarks. The Paris Court granted an early
fixed date  hearing on Friday,  November  28,  1997,  at which time the  charges
asserted by the Company  will be heard by a panel of three  judges.  The Company
also filed a separate  complaint in Paris on September  30, 1997,  claiming that
Nomai is infringing on several Iomega patent applications  pending in Europe. No
hearing date has been set on these separate patent claims.

In support of certain of the Company's claims scheduled to be heard by the Paris
District Court on November 28, 1997, the Company filed with the Court reports of
two independent  laboratories retained by the Company to test Nomai's XHD disks.
One  independent  laboratory  tested  the XHD disks for  compatibility  with the
Company's Zip drives.  Its test results showed that the XHD disk had a very high
rejection rate in PC and Macintosh notebook Zip drives. In addition, five out of
twenty  randomly  selected Nomai XHD disk cartridges were found to be inoperable
with certain internal Zip drives and the XHD cartridges tested with external Zip
drives  exhibited  abnormal  clicking  sounds not exhibited by the tested Iomega
cartridges. 100% of the tested Iomega Zip cartridges were accepted by all models
of Zip drives used in the tests. In  correspondence  between English  solicitors
for the Company and solicitors for Nomai,  Nomai's solicitors claim that Nomai's
own tests of the XHD cartridge with  commercially  available Zip drives have not
shown any  incompatibility  problems.  Nomai claims it has had no opportunity to
test XHD  cartridges  with  notebook  Zip drives  which were first  released for
commercial availability on November 11, 1997.

                                     - 21 -

<PAGE>

                               IOMEGA CORPORATION

                     PART II - OTHER INFORMATION (CONTINUED)


A second independent  laboratory  retained by the Company tested Nomai XHD disks
for drop  resistance  and media wear.  Its test results showed that two of three
randomly  selected  XHD  cartridges  failed a drop  test  while  three  randomly
selected  Iomega Zip  cartridges  passed  the test.  In  accelerated  media wear
testing conducted by this independent laboratory,  two of five randomly selected
Nomai  XHD  cartridges  failed,  exhibiting  severe  abrasions  of the type that
frequently result in data loss and drive head contamination. In addition, 40% of
the Zip drives tested by the second  laboratory  with XHD  cartridges  exhibited
head  damage that the  laboratory  concluded  will render the drive  inoperable.
Finally,  one of the drives damaged by an XHD cartridge in this independent
testing caused unrecoverable data loss not only in the XHD cartridge that caused
the damage, but also in a known good Iomega Zip cartridge which was subsequently
inserted.

Nomai claims that the XHD disk it is currently  selling was modified in order to
not violate a partial preliminary  injunction  previously granted to the Company
on June 20, 1997, by the Paris District Court.  That injunction  prohibits Nomai
from manufacturing or selling XHD disks that duplicate certain aspects of Iomega
Zip disks.  Notwithstanding Nomai's modification of its disk, Nomai has appealed
the June 20  preliminary  injunction.  In response,  the Company  also  appealed
certain  rulings of the Paris  District  Court,  including  the Court's  partial
denial of the Company's motion for preliminary injunctive relief. The hearing on
these appeals  occurred on November 6, 1997,  and a decision is  anticipated  in
December 1997.

The ex parte  preliminary  injunction  obtained  by the  Company  in March  1997
against Nomai from the Hanover Landgericht (or District) Court was lifted by the
Court  following a hearing on Nomai's  opposition  held on August 26, 1997.  The
Company has  appealed  the  decision  lifting  this  preliminary  injunction.  A
separate ex parte  preliminary  injunction,  obtained  by the  Company  from the
Landgericht Frankental  Court in  Ludwighafen,  Germany against Emtec Magnetics
GmbH,  a proposed  reseller of Nomai's XHD disks,  remains in force but is being
opposed by Emtec.  The hearing on Emtec's  opposition  is scheduled for December
11, 1997.

On October 29, 1997, the Company  petitioned the High Court of Justice  Chancery
Division  in London  for a  preliminary  order  prohibiting  Nomai and its chief
executive, Mr. Frouin, from using the words "100% Iomega Zip compatible" or "Zip
compatible" or words to similar effect in relation to the XHD cartridge and from
importing into the United Kingdom,  manufacturing,  selling or offering for sale
any XHD cartridges  which have the word Iomega written on the magnetic medium of
(or otherwise  marked on) such cartridges in any other  location.  The Company's
petition was based on claims of  trademark  infringement,  malicious  falsehood,
passing off and copyright  infringement.  On October 31, 1997, the High Court of
Justice  granted an order  temporarily  prohibiting  Nomai  from  manufacturing,
importing,   advertising,   offering  for  sale,  selling  or  distributing  any
cartridges  claimed by Nomai to be  compatible  with the Company's Zip drives or
described  as a Zip disk.  The  temporary  order will  remain in effect  until a
further hearing on the matter is held before the High Court of Justice.

                                     - 22 -
<PAGE>

                               IOMEGA CORPORATION

                    PART II - OTHER INFORMATION (CONTINUED)

On  November  6,  1997,  the  Presidents  of the  District  Courts  of Albi  and
Avranches,  France,  authorized seizures,  on the premises of Nomai in Avranches
and on the  premises of a Nomai  affiliate  in Albi,  of  materials  relating to
Nomai's  stated  intention  to  introduce  a disk  product  compatible  with the
Company's  Jaz drives.  These  seizures were carried out on November 7, 1997. On
the premises of Nomai in Avranches,  numerous documents, and a single nonworking
specimen or prototype  Nomai cartridge  labeled as being  compatible with Iomega
Jaz drives, were seized. On November 12, 1997, the Company served a complaint on
Nomai in France alleging copyright,  design,  trademark and patent infringement,
parasitism  and unfair  competition,  and seeking  injunctive  relief as well as
damages.

An adverse outcome in any of the  proceedings  referred to above could result in
the sale or continuing  sale by Nomai in one or more countries of a disk product
claimed to be compatible with Zip drives,  and could result in the  introduction
and sale by Nomai of a disk product  claimed to be compatible with the Company's
Jaz drives.  Any such  introduction  of a disk  product  claimed to be Jaz drive
compatible  or sales or  continuing  sales of a disk  product  claimed to be Zip
drive  compatible  could have a material  adverse effect on the Company's future
sales and operating results.

On July 29,  1997,  the Company  filed suit  against  SyQuest  Technology,  Inc.
("SyQuest")  in the United  States  District  Court for the District of Delaware
claiming patent  infringement  and unfair  competition with respect to SyQuest's
SyJet  product.  The  Company is  seeking  injunctive  relief and  damages in an
unspecified amount. Discovery is underway in the litigation and a trial date has
been set by the Court for January 1999.

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

As reported in a press release  issued July 23, 1997, the Company has been named
as a defendant in Cox v. Iomega Corporation, a purported class action suit filed
in the  Chancery  Court of the State of  Delaware  on July 16,  1997.  The named
plaintiff,  who  purchased  a Zip drive in 1996,  purports  to  represent  other
similarly  situated  consumers who have purchased Zip, Jaz or Ditto products for
household  purposes since July 16, 1994. The complaint alleges violations of the
Magnuson-Moss  Consumer Products  Warranties Act and the Delaware Consumer Fraud
Act based on, among other things, the Company's imposition,  beginning in August
1996, of per-incident  support charges  applicable to certain support  requests,
alleged difficulties in reaching the Company's technical support call center and
alleged  difficulties in installing Zip drives, as well as an alleged failure by
the Company to specify whether certain of its warranties are "Full" or "Limited"
within the meaning of the Magnuson-Moss  Consumer  Products  Warranties Act. The
relief sought in the complaint  includes  injunctive  relief,  restitution in an
unspecified  amount for  charges  paid by  consumers  for  certain  calls to the
Company's technical support line and reasonable  attorneys' fees. The Company is
assessing  the  maintainability  of this suit as a class  action and  intends to
defend itself vigorously against the claims asserted in the lawsuit.


Item 2.           Change in Securities and Use of Proceeds

During the third  quarter of 1997,  the  Company  issued 101 shares  (not giving
effect  to the stock  split)  of Common  Stock  upon  conversion  of its  6-3/4%
Convertible  Subordinated  Notes due 2001 in reliance  upon the  exemption  from
registration set forth in Section 3(a)(9) of the Securities Act. No underwriters
were engaged in  connection  with such  issuances.  The Company did not sell any
other  equity  securities  during  the  third  quarter  of 1997  that  were  not
registered under the Securities Act.


                                     - 23 -

<PAGE>


                               IOMEGA CORPORATION

                     PART II - OTHER INFORMATION (CONTINUED)


Item 6.           Exhibits and Reports on Form 8-K

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

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





                                     - 24 -


<PAGE>


                                   SIGNATURES



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




                                                        IOMEGA CORPORATION
                                                           (Registrant)




                                          /s/ Kim B. Edwards
                                          -----------------------
Dated:   November 12, 1997                Kim B. Edwards
                                          President and Chief Executive Officer



                                          /s/ Leonard C. Purkis
                                          -----------------------
Dated:  November 12, 1997                 Leonard C. Purkis
                                          Senior Vice President, Finance
                                          and Chief Financial Officer



                                     - 25 -



<PAGE>

                                  EXHIBIT INDEX


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

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

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



                                     - 26 -