UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 26, 2000

                         COMMISSION FILE NUMBER 1-12333

                                [GRAPHIC OMITTED]
                               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) 332-1000
              (Registrant's telephone number, including area code)

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

                                  Yes X   No

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of March 26, 2000.

Common Stock, par value $.03 1/3                          270,610,590
(Title of each class)                                 (Number of shares)


<PAGE>

                               IOMEGA CORPORATION

                                TABLE OF CONTENTS

                                                                            Page

                          PART I - FINANCIAL STATEMENTS

Item 1.  Financial Statements

         Condensed consolidated balance sheets at March 26, 2000
              and December 31, 1999.....................................       3

         Condensed consolidated statements of operations for the quarters
              ended March 26, 2000 and March 28, 1999...................       5

         Condensed consolidated statements of cash flows for the quarters
              ended March 26, 2000 and March 28, 1999...................       6

         Notes to condensed consolidated financial statements...........       7

Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations.......................      19

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....      33

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings..............................................      34

Item 2.  Changes in Securities and Use of Proceeds......................      37

Item 4.  Submission of Matters to a Vote of Security Holders............      37

Item 6.  Exhibits and Reports on Form 8-K...............................      37

Signatures..............................................................      38

Exhibit Index...........................................................      39

This  Quarterly  Report  on Form  10-Q  contains  a  number  of  forward-looking
statements,  including,  without limitation,  statements  referring to: expected
increases in selling,  general and  administrative  expenses and in research and
development expenses; the impact on gross margins of the sales volumes of disks,
sales mix between  disks and drives,  the sales mix between OEM and  aftermarket
channels  and the  sales  mix  between  the  Company's  products;  the  expected
sufficiency of cash, cash  equivalent and temporary  investment  balances,  cash
flows  from  operations  and  available  sources  of  financing;  the  impact of
Clik!(TM), Zip(R) 250MB, ZipCD(TM) and other new products introduced or expected
to  be  introduced   during  1999  or  2000;   the  impact  of  new   accounting
pronouncements;  the  timing and impact of  restructuring  activities  and other
organizational   changes;   expected  sales  levels  due  to  seasonal   demand;
anticipated hedging strategies;  and, the possible effects of an adverse outcome
in legal  proceedings  described in Item 1 of Part II. 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," "intends" and similar expressions
are  intended  to  identify   forward-looking   statements,   although  not  all
forward-looking  statements contain these words. 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  the  captions
"Liquidity and Capital Resources,"  "Factors Affecting Future Operating Results"
and "Disclosures About Market Risk" 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.  The  factors  discussed  herein do not
reflect  the   potential   future  impact  of  any  mergers,   acquisitions   or
dispositions.  The  Company  does  not  assume  any  obligation  to  update  any
forward-looking statements made herein.

----------------------------------
Copyright  (C)  2000  Iomega  Corporation.   Iomega,  Zip,  Jaz,  ZipCD,  Clik!,
Bernoulli,  iomegadirect  and  the  stylized  "I"  logo  are  either  registered
trademarks or trademarks of Iomega  Corporation in the United state and/or other
countries.  Certain  other  product  names,  brand names and company name may be
trademarks or designations of their respective owners.

                                       1
<PAGE>


                               IOMEGA CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                 (In thousands)

                                                   March 26,       December 31,
                                                        2000               1999
                                                -------------------------------
                                                  (Unaudited)

Current Assets:

    Cash and cash equivalents                    $  190,927          $  172,706
    Temporary investments                            82,502              38,209
    Trade receivables, less allowance for
      doubtful accounts of  $14,430 and
      $15,908, respectively                         160,340             188,482
    Inventories                                      84,588              94,626
    Income taxes receivable                          29,201              19,910
    Other current assets                             16,773              21,585
                                                -----------         -----------
       Total current assets                         564,331             535,518
                                                -----------         -----------

Property, plant and equipment, at cost              350,841             365,036
    Less:  Accumulated depreciation
           and amortization                        (230,176)           (227,336)
                                                -----------         -----------
    Net property, plant and equipment               120,665             137,700
                                                -----------         -----------

Intangibles, net                                     29,871              31,743
                                                -----------         -----------

Other assets                                          2,597               2,848
                                                -----------         -----------

                                                 $  717,464          $  707,809
                                                ===========         ===========














                                       3

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



<PAGE>


                               IOMEGA CORPORATION

                CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                        (In thousands, except share data)

                                                   March 26,       December 31,
                                                        2000               1999
                                                 -----------        -----------
                                                 (Unaudited)

Current liabilities:

    Accounts payable                              $  111,020         $  135,615
    Other current liabilities (Note 1)               180,498            198,993
    Current portion of capitalized
      lease obligations                                4,784              5,542
    Convertible subordinated notes,
      6.75%, due 2001                                 45,505                  -
                                                 -----------        -----------
      Total current liabilities                      341,807            340,150
                                                 -----------        -----------

Capitalized lease obligations,
    net of current portion                             1,058              1,366
                                                 -----------        -----------

Convertible subordinated notes,
    6.75%, due 2001                                        -             45,505
                                                 -----------        -----------

Commitments and contingencies (Note 7)

Stockholders' equity:

    Preferred Stock, $0.01 par value;
      authorized 4,350,000 shares;
      none issued                                          -                  -
    Series A Junior Participating
      Preferred Stock; authorized
      400,000 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 271,420,132 and 270,831,769
      shares at March 26, 2000 and
      December 31, 1999, respectively                  9,047              9,027
    Additional paid-in capital                       295,592            293,627
    Less:  809,542 Common Stock
           treasury shares, at cost                   (6,088)            (6,088)
    Retained earnings                                 76,048             24,222
                                                 -----------        -----------
       Total stockholders' equity                    374,599            320,788
                                                 -----------        -----------

                                                  $  717,464         $  707,809
                                                 ===========        ===========






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


<PAGE>




                               IOMEGA CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)

                                                     For the Quarter Ended
                                                 -----------------------------
                                                   March 26,          March 28,
                                                        2000               1999
                                                 -----------        -----------
                                                 (Unaudited)

Sales                                              $ 344,897          $ 386,212
Cost of sales                                        216,990            292,476
                                                 -----------        -----------
Gross margin                                         127,907             93,736
                                                 -----------        -----------

Operating expenses:
    Selling, general and administrative               65,246             69,941
    Research and development                          11,130             20,713
                                                 -----------        -----------
      Total operating expenses                        76,376             90,654
                                                 -----------        -----------

Operating income                                      51,531              3,082
    Interest and other income (expense), net           1,233             (2,205)
                                                 -----------        -----------

Income before income taxes                            52,764                877
    Provision for income taxes                          (938)              (308)
                                                 -----------        -----------

Net income                                         $  51,826          $     569
                                                 ===========        ===========

Net income per common share:

    Basic                                          $    0.19         $     0.00
                                                 ===========        ===========
    Diluted                                        $    0.19         $     0.00
                                                 ===========        ===========

Weighted average common
shares outstanding (Note 1)                          270,448            268,390
                                                 ===========        ===========

Weighted average common
shares outstanding - assuming
  dilution (Note 1)                                  281,235            273,087
                                                 ===========        ===========






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





<PAGE>


                               IOMEGA CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)

                                                       For the Quarter Ended
                                                  ------------------------------
                                                   March 26,          March 28,
                                                        2000               1999
                                                 -----------         -----------
                                                 (Unaudited)

Cash Flows from Operating Activities:

    Net income                                     $  51,826          $     569
    Non-Cash Revenue and Expense Adjustments:
      Depreciation and amortization                   23,739             22,271
      Deferred income taxes                                -              5,030
      Bad debts                                       (1,478)             1,800
      Tax benefit from dispositions
        of employee stock                                841                688
      Other                                            1,035                804
                                                 -----------         -----------
                                                      75,963             31,162
    Changes in Assets and Liabilities:
      Trade receivables                               29,620              4,302
      Inventories                                     10,038              7,114
      Other current assets                             4,812               (383)
      Accounts payable                               (24,595)           (16,776)
      Other current liabilities                      (18,495)           (12,163)
      Income taxes                                    (9,291)             2,150
                                                  -----------        -----------
Net cash provided by operating activities             68,052             15,406
                                                  -----------        -----------

Cash Flows from Investing Activities:

    Purchase of property, plant and equipment         (5,867)            (8,881)
    Purchase of temporary investments                (74,852)                  -
    Sale of temporary investments                     30,559                   -
    Net decrease (increase) in other assets              251             (3,647)
                                                  -----------        -----------
Net cash used in investing activities                (49,909)           (12,528)
                                                  -----------        -----------

Cash Flows from Financing Activities:

    Proceeds from sale of Common Stock                 1,144              2,681
    Payments on capitalized lease obligations         (1,066)            (1,868)
                                                  -----------        -----------
Net cash provided by financing activities                 78                813
                                                  -----------        -----------

Net Increase in Cash and Cash Equivalents              18,221             3,691
Cash and Cash Equivalents at Beginning of Period      172,706            90,273
                                                  -----------        -----------
Cash and Cash Equivalents at End of Period         $  190,927        $   93,964
                                                  ===========        ===========





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


<PAGE>


                               IOMEGA CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)






(1)      SIGNIFICANT ACCOUNTING POLICIES

         In the opinion of the Company's management, the accompanying unaudited,
         condensed,  consolidated  financial  statements reflect all adjustments
         (consisting only of normal recurring  adjustments)  which are necessary
         to present fairly the financial position of the Company as of March 26,
         2000 and December 31, 1999,  the results of operations  for the quarter
         ended  March 26, 2000 and March 28, 1999 and cash flows for the quarter
         ended March 26, 2000 and March 28, 1999.

         The results of operations  for the quarter ended March 26, 2000 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 those estimates.

         Principles of Consolidation - These unaudited, 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  ("OEMs"), end users,  retailers,  distributors
         and value-added  manufacturers.  Some retail and distribution  customer
         agreements  have  provisions  that allow the customer to return product
         under certain conditions within specified time periods.  Revenue,  less
         reserves for  returns,  is generally  recognized  upon  shipment to the
         customer.

         In addition to reserves for returns,  the Company defers recognition of
         revenue on estimated  excess  inventory in the  distribution and retail
         channels. For this purpose, excess inventory is the amount of inventory
         that  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 $19.4 million
         and  $29.8   million  at  March  26,  2000  and   December   31,  1999,
         respectively,  and is included in "Other  current  liabilities"  in the
         accompanying condensed consolidated balance sheets.

         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


<PAGE>


         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 $29.2 million and $37.8 million at March 26,
         2000 and  December  31,  1999,  respectively,  and are  netted  against
         accounts receivable in the accompanying  condensed consolidated balance
         sheets.

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

         Cash  and  Cash  Equivalents  - For the  purposes  of the  consolidated
         statements  of cash  flows,  cash  and  cash  equivalents  include  all
         marketable  securities  purchased  with  maturities  of  three or fewer
         months.  Cash  equivalents  consist  primarily of  investments in money
         market  mutual funds,  commercial  paper,  auction  rate,  money market
         preferred stock  investments,  taxable and non-taxable  municipal bonds
         and notes and are recorded at cost, which approximates fair value.

         Temporary  Investments - Investments with maturities in excess of three
         months are classified as temporary  investments.  Temporary investments
         at March 26, 2000 and December 31, 1999 primarily  consist of municipal
         notes, common bonds and paper, government securities,  commercial paper
         and corporate notes,  bonds and paper. The Company minimizes its credit
         risk associated with temporary  investments by using investment  grade,
         highly  liquid  securities.  At March 26,  2000,  the Company has $72.6
         million of its temporary investments as  available-for-sale  securities
         and the remaining $9.9 million as held-to-maturity. Due to the grade of
         the  investments,  the adjusted  cost basis and the market value of the
         investments  was not  materially  different  at March  26,  2000 and no
         comprehensive  income or loss was  recorded  for the first  quarter  of
         2000. At December 31, 1999 the Company  classified $18.3 million of its
         temporary   investments  as   available-for-sale   securities  and  the
         remaining  $19.9  million  as  held-to-maturity.  Due to the  timing of
         purchases  (all  available-for-sale  securities  were  purchased  after
         December 28, 1999) and the grade of the  investments,  no comprehensive
         income or loss was recorded in 1999.

         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:
<TABLE>

                                            March 26,              December 31,
                                                 2000                      1999
                                   ------------------         ------------------
                                                   (In thousands)
                  <S>                    <C>                       <C>
                  Raw materials           $    23,309               $    27,254
                  Work-in-process               4,803                     7,958
                  Finished goods               56,476                    59,414
                                          -----------               -----------

                                          $    84,588               $    94,626
                                          ===========               ===========
</TABLE>

<PAGE>




         Other Current  Liabilities - Other current  liabilities  consist of the
following:
<TABLE>

                                            March 26,              December 31,
                                                 2000                      1999
                                   ------------------         ------------------
                                                   (In thousands)
     <S>                                  <C>                      <C>
      Accrued payroll, vacation
        and bonus                         $    15,819               $    13,189
      Deferred revenue                         19,390                    29,832
      Accrued warranty                         18,242                    17,211
      Accrued advertising                      36,433                    36,971
      Accrued restructuring charges            12,455                    17,843
      Purchase commitments                     14,463                    19,734
      Other accrued liabilities                63,696                    64,213
                                          -----------               -----------

                                           $  180,498                $  198,993
                                          ===========               ===========
</TABLE>

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

         Net Income Per Common Share - Basic net income per common share ("Basic
         EPS")  excludes  dilution and is computed by dividing net income by the
         weighted average number of common shares outstanding during the period.
         Diluted  net income per  common  share  ("Diluted  EPS")  reflects  the
         potential dilution that could occur if stock options or other contracts
         to issue common stock were  exercised or converted  into common  stock.
         Diluted EPS for the quarter ended March 26, 2000 was  determined  under
         the assumption that the convertible  subordinated  notes were converted
         on January  1, 2000.  The  computation  of Diluted  EPS does not assume
         exercise or conversion of  securities  that would have an  antidilutive
         effect on net income per common share.

         Following is a reconciliation of the numerator and denominator of Basic
         EPS to the  numerator  and  denominator  of Diluted EPS for all periods
         presented:
<TABLE>

                                                              Net Income             Shares           Per Share
                                                              (Numerator)        (Denominator)          Amount
                                                              -----------        -------------          ------
                                                                    (In thousands, except per share data)
         <S>                                               <C>                 <C>                 <C>>

         For the Quarter Ended:

         March 26, 2000

         Basic EPS                                             $  51,826              270,448            $  0.19
             Effect of options                                         -                1,571
             Effect of convertible subordinated notes                753                9,216
                                                             -----------          -----------
         Diluted EPS                                           $  52,579              281,235            $  0.19
                                                             ===========          ===========

         March 28, 1999

         Basic EPS                                             $     569              268,390            $  0.00
             Effect of options                                         -                4,697
             Effect of convertible subordinated notes                  -                    -
                                                             -----------          -----------
         Diluted EPS                                           $     569              273,087            $  0.00
                                                             ===========          ===========
</TABLE>

         For the quarter ended March 28, 1999,  convertible  subordinated  notes
         were not included in the  calculation of diluted EPS as their inclusion
         would be antidilutive.  For the quarters ended March 26, 2000 and March
         28, 1999,  there were  outstanding  options to purchase  9,045,814  and
         6,314,873 shares, respectively, that had an exercise price greater than
         the  average  market  price of the  common  shares  for the  respective
         quarters.

         Recent  Accounting   Pronouncements  -  In  June  1998,  the  Financial
         Accounting  Standards  Board  ("FASB")  issued  Statement  of Financial
         Accounting  Standards No. 133,  "Accounting for Derivative  Instruments
         and  Hedging   Activities"  ("SFAS  133").  SFAS  133  establishes  new
         accounting and reporting  standards for companies to report information
         about derivative instruments,  including certain derivative instruments
         embedded in other contracts (collectively referred to as "derivatives")
         and for hedging activities.  In June 1999, the FASB issued Statement of
         Financial  Accounting  Standards No. 137,  "Accounting  for  Derivative
         Instruments and Hedging  Activities - Deferral of the Effective Date of
         FASB Statement No. 133." This  statement  amended the effective date of
         SFAS  133.  SFAS 133 will now be  effective  for  financial  statements
         issued for all fiscal quarters of fiscal years beginning after June 15,
         2000. The Company does not expect SFAS 133 to have a material impact on
         the Company's results of operations, financial position or liquidity.

         In December 1999, the Securities and Exchange  Commission  issued Staff
         Accounting  Bulletin  No.  101  ("SAB  101")  "Revenue  Recognition  in
         Financial  Statements".  SAB 101 provides  guidance on the recognition,
         presentation,  and  disclosure  of  revenue  in  financial  statements.
         Implementation  of SAB 101 is required  in the second  quarter of 2000.
         All  registrants  are expected to apply the  accounting  and disclosure
         requirements  described in SAB 101. The Company is currently  assessing
         the impact, if any, of SAB 101 on its financial statements.

(2)      INCOME TAXES

         For the quarter  ended March 26, 2000,  the Company  recorded an income
         tax provision of $21.0 million on pre-tax income, partially offset by a
         $20.1  million  decrease in the  valuation  allowance  for net deferred
         income taxes. The significant  components of the Company's deferred tax
         assets and liabilities are as follows:
<TABLE>


                                             March 26, 2000   December 31, 1999
                                             ---------------  -----------------
                                                       (In thousands)
        <S>                                 <C>                   <C>

         Total deferred tax assets               $  108,610          $  125,361
         Total deferred tax liabilities             (43,076)            (37,347)
                                                -----------         -----------
         Net deferred tax assets                     65,534              88,014
         Less: valuation allowance                  (65,534)            (88,014)
                                                -----------         -----------

         Total net deferred taxes                $        -          $        -
                                                ===========         ===========
</TABLE>

         During the first  quarter of 2000,  the Company  decreased its deferred
         tax asset  valuation  allowance by  approximately  $20 million,  to $66
         million.  The Company  evaluates the  realizability of its net deferred
         tax assets on a quarterly  basis.  If the net  deferred  tax assets are
         reduced in the future, if the Company is substantially  profitable,  or
         if a portion or all of the  valuation  allowance is no longer deemed to
         be necessary,  reductions in the valuation allowance will reduce future
         income tax provisions.

         As of March 26, 2000,  the Company had  approximately  $12.7 million of
         deferred   tax   assets   related  to  foreign   net   operating   loss
         carryforwards,  which  reflected  the  benefit of  approximately  $29.8
         million in future tax deductions, for which the Company had established
         a valuation  allowance.  These  carryforwards  expire at various  dates
         beginning in 2004.

         As of March 26, 2000,  the Company had  approximately  $22.3 million of
         deferred   tax  assets   related  to  domestic   net   operating   loss
         carryforwards,  which  reflected  the  benefit of  approximately  $57.2
         million in future tax deductions, for which the Company had established
         a valuation  allowance.  These  carryforwards  expire at various  dates
         beginning in 2020.

         Additionally, as of March 26, 2000, the Company had approximately $30.5
         million of domestic  deferred  tax assets net of deferred  liabilities,
         which  reflected the benefit of  approximately  $78.2 million in future
         tax deductions.

         Cash paid for income  taxes was $0.9 million for the first three months
         of 2000 and $1.1 million for the corresponding period in 1999.

         U.S. taxes have not been provided for unremitted  foreign  earnings of
         approximately  $112 million,  which are  considered to be permanently
         invested in non-U.S.  operations.  The residual U.S. tax liability,  if
         such amounts were remitted, would be approximately $43.6 million.

 (3)     DEBT

         Notes  Payable - On March 11,  1997,  the Company  entered  into a $200
         million  Senior  Secured  Credit  Facility with Morgan  Guaranty  Trust
         Company of New York,  Citibank,  N.A. and a syndicate of other lenders.
         During 1998 and 1999,  the  Company  and the lenders  agreed to several
         amendments to and waivers under the Senior Secured Credit Facility, the
         most recent of which was entered into on October 14, 1999, (the "Credit
         Facility").  As a  result  of the most  recent  amendment,  the  Credit
         Facility was reduced to $75  million.  The Credit  Facility  expires on
         July  14,  2000  and  is  secured  by  accounts  receivable,   domestic
         inventory,   domestic  intellectual   property,   general  intangibles,
         equipment,  personal property,  investment property and a pledge of 65%
         of the stock of certain of the Company's subsidiaries. Under the Credit
         Facility, the Company may borrow at a base rate, which is the higher of
         prime or the sum of the Federal funds rate plus 2.75%, or at LIBOR plus
         3.25%.  Borrowing availability under the Credit Facility is based on an
         agreed upon advance rate on receivables and inventory not to exceed $75
         million. Among other restrictions,  the Credit Facility treats a change
         in  control  (as  defined)  as an event of  default  and  requires  the
         maintenance  of  minimum  levels of  consolidated  tangible  net worth,
         earnings  before   interest,   taxes,   depreciation  and  amortization
         ("EBITDA") and certain other covenants. There were no borrowings on the
         Company's  Credit Facility during the first quarter of 2000. There were
         no borrowings  outstanding  at March 26, 2000. The Company is currently
         evaluating  whether  or not to  replace  the  Credit  Facility  when it
         expires in July.

         Capital  Leases - The Company has entered  into various  agreements  to
         obtain   capital   lease   financing   for  the   purchase  of  certain
         manufacturing   equipment,   software,   office   furniture  and  other
         equipment.  The  leases  have  terms  ranging  from 36 to 60 months and
         mature at various  dates  through  April 2002.  Principal  and interest
         payments under the various agreements are payable monthly or quarterly.
         Interest  rates are fixed and range from 7.1% to 10.2%.  The leases are
         secured by the underlying leased equipment, software and furniture.

         Cash paid for interest was $2.0 million and $2.3 million, respectively,
         for the first quarters of 2000 and 1999,  including interest on capital
         leases.  Included in interest expense for the first quarter of 2000 and
         1999, was $0.5 million and $0.4 million,  respectively, of amortization
         of deferred charges associated with obtaining the debt.

(4)      BUSINESS SEGMENT INFORMATION

         The Company has four reportable  segments based primarily on the nature
         of the Company's customers and products:  Zip, Jaz(R), ZipCD and Clik!.
         The Zip segment involves the development, manufacture, distribution and
         sales of personal storage products and applications, including Zip disk
         and drive systems to retailers,  distributors  and OEMs  throughout the
         world.  The  Jaz  segment   involves  the   development,   manufacture,
         distribution   and  sales  of   professional   storage   products   and
         applications,  including Jaz disk and drive systems to distributors and
         retailers  throughout the world.  The Company's ZipCD segment  involves
         the distribution  and sales of CD-RW drives to retailers,  distributors
         and resellers  throughout  the world and includes  ZipCD disc and drive
         systems, which began shipping in limited quantities in August 1999. The
         Clik! segment involves the development,  manufacture,  distribution and
         sales of Clik!  mobile drives,  Clik! PC Card drives,  Clik! OEM drives
         and Clik!  disks for use with portable digital products such as digital
         cameras,   handheld  personal   computers  and  notebook  computers  to
         retailers, distributors, OEMs and resellers throughout the world. Clik!
         products began shipping in limited quantities during the fourth quarter
         of 1998.  The  Company's  restructuring  charge in the third quarter of
         1999 included charges relating to refocusing the Clik! product platform
         from the Clik!  Mobile Drive to the newer Clik! PC Card and OEM drives.
         The  Company  recorded  other  non-restructuring  charges  to reflect a
         reduction in the estimated net realizable value of Clik!  inventory and
         equipment and accruals for purchasing  commitments  in connection  with
         Clik!  PC Card  drives and disks in the fourth  quarter of 1999 and the
         first quarter of 2000. The "Other" category  includes  products such as
         Bernoulli(R),  Ditto,  floppy disks and other Nomai  products and other
         miscellaneous items.

         The accounting policies of the segments are the same as those described
         in  Note  1  "Significant  Accounting  Policies."  Intersegment  sales,
         eliminated in  consolidation,  are not material.  The Company evaluates
         performance  based on product  profit margin for each segment.  Product
         profit margin is defined as sales and other income directly  related to
         a  segment's  operations,  less both fixed and  variable  manufacturing
         costs,  research and  development  expenses  and  selling,  general and
         administrative  expenses  directly  related to a segment's  operations.
         When such costs and  expenses  exceed sales and other  income,  product
         profit margin is referred to as product loss. The expenses attributable
         to corporate activity are not allocated to the operating segments.

         The  information  in the following  table is derived  directly from the
         segments' internal financial  information used for corporate management
         purposes.


<PAGE>


         Reportable Operating Segment Information:
<TABLE>

                                                      For the Quarter Ended
                                                   ----------------------------
                                                   March 26,          March 28,
                                                        2000               1999
                                                 -----------        -----------
                                                          (In millions)

         <S>                                     <C>                <C>
          Sales:
             Zip                                   $     278          $     302
             Jaz                                          52                 63
             ZipCD                                        11                  -
             Clik!                                         2                  5
             Other                                         2                 16
                                                 -----------        -----------

          Total sales                              $     345          $     386
                                                 ===========        ===========

          Product profit margin (loss):

             Zip                                  $       88         $       51
             Jaz                                          12                 (3)
             ZipCD                                         -                  -
             Clik!                                       (16)               (13)
             Other                                        (2)                (7)
                                                 -----------        -----------
          Total product profit margin                     82                 28
                                                 -----------        -----------

          Common:

             General corporate expenses                  (30)               (25)
             Interest and other income
              (expense), net                               1                 (2)
                                                 -----------        -----------
          Income before income taxes               $      53          $       1
                                                 ===========        ===========
</TABLE>

(5)      RESTRUCTURING CHARGES

         During the quarter ended June 27, 1999, the Company  recorded a pre-tax
         restructuring  charge of $41.9 million as a result of steps the Company
         was  taking  to  organize   along   functional   lines  (for   example,
         manufacturing,  sales, etc.) as opposed to product lines. These actions
         included   the   exit  of   facilities,   headcount   reductions,   the
         discontinuance of certain products and development  projects related to
         enhancements  and accessories  associated with the Jaz product platform
         and consolidation of the Company's magnetic technology expertise at its
         headquarters in Roy, Utah. These actions included closing the Company's
         facilities  in  Milpitas,  California  and San Diego,  California.  The
         restructuring  charge was  comprised of $20.2  million for fixed assets
         and inventory  related to the  discontinuance  of certain  products and
         development projects related to enhancements and accessories associated
         with the Jaz product  platform;  $9.7 million for  workforce  reduction
         costs;  $4.3 million for excess leasehold  improvements,  furniture and
         fixtures  formerly  utilized in the Milpitas and San Diego  facilities;
         $3.0  million for lease  termination  costs for  facilities  located in
         Milpitas and San Diego;  $4.7 million for  workforce  reduction  costs,
         contract cancellation and other exit costs to consolidate the Company's
         operations in France and Scotland.  This restructuring charge consisted
         of cash and  non-cash  charges of  approximately  $18  million  and $24
         million,   respectively.   There  were  no   indications  of  permanent
         impairment of the assets prior to the restructuring actions.

         In connection  with the  Company's  second  quarter 1999  restructuring
         actions,  the Company  terminated 466 regular and temporary  employees,
         consisting  primarily of operations and product  development  employees
         located in Milpitas, San Diego and Roy. The Company pays severance on a
         continuous basis as opposed to a lump sum payment. In addition, several
         of the  employees  were offered  retention  packages into the third and
         fourth  quarters of 1999,  and therefore,  their  severance pay did not
         begin until later in 1999. The majority of the fixed assets  associated
         with the  discontinued  products and projects are tooling items,  which
         are located outside of the United States.  Due to various  requirements
         in these countries, it is taking longer than expected to dispose of the
         assets.  However,  the Company still expects that the implementation of
         the second quarter 1999  restructuring plan will be complete by the end
         of June 2000.

         Restructuring  reserves are  included in the  Company's  other  current
         liabilities,  inventory and  property,  plant and equipment as of March
         26, 2000. Utilization of the second quarter 1999 restructuring reserves
         during the quarter ended March 26, 2000 is summarized below:
<TABLE>


                                                 Balance                        Utilized                 Balance
                                            December 31, 1999             Cash          Non-Cash      March 26, 2000
                                            -----------------          -----------     ----------    ----------------
                                                                              (In thousands)


        <S>                                       <C>             <C>                <C>              <C>
         Second Quarter 1999
         Restructuring Actions:
         Discontinued Products/Projects:
             Fixed assets (a)                      $     7,699      $         -        $        -       $     7,699
             Purchase commitments (b)                      717               (1)                -               716
             Inventory (a)                                 756                -              (224)              532

         Severance and benefits (b)                      1,594             (604)                -               990
         Other fixed asset charges (a)                   3,096               -                  -             3,096
         Lease terminations (b)                          2,368             (520)                -             1,848

         France/Scotland Consolidation:
             Contract cancellation (b)(c)                1,526             (112)                -             1,414
             Severance and benefits (b)                     40                -                 -                40
             Lease cancellations (a)                       169              (12)                -               157
             Fixed assets (a)                              217                -                 -               217
             Other exit costs (a)                           35                -                 -                35
                                                   -----------      -----------       -----------       -----------
                                                   $    18,217      $    (1,249)      $      (224)      $    16,744
                                                   ===========      ===========       ===========       ===========

         Balance Sheet Breakout:
             Inventory reserves                    $       756      $         -       $      (224)      $       532
             Fixed asset reserves                       10,674                -                 -            10,674
             Liabilities                                 6,787           (1,249)                -             5,538
                                                   -----------      -----------       -----------       -----------

                                                   $    18,217      $    (1,249)      $      (224)      $    16,744
                                                   ===========      ===========       ===========       ===========
             <FN>

             (a)  Amounts represent primarily non-cash charges.
             (b)  Amounts represent primarily cash charges.
             (c ) Amounts relate to commitments associated with the
                  manufacturing of floppy drives.
             </FN>
</TABLE>


         During the third quarter ended September 26, 1999, the Company recorded
         a  pre-tax  restructuring  charge  of  $20.5  million  as a  result  of
         restructuring   actions   initiated  to   consolidate   worldwide  disk
         manufacturing and refocus the Clik! product platform on the newer Clik!
         PC Card and OEM drives.  An additional charge of $5.4 million primarily
         for  severance  and  benefits  was  taken  in  the  fourth  quarter  in
         connection with these actions.  These  restructuring  charges  included
         reserves of $10.2  million  relating  to certain  assets and exit costs
         such  as   cancellation   fees   associated   with  the   cessation  of
         manufacturing  in  Avranches,  France;  $11.5  million of inventory and
         fixed asset reserves associated with the older Clik! products; and $2.7
         million for write-offs of intangibles and other miscellaneous  charges.
         These  restructuring  charges consisted of cash and non-cash charges of
         approximately $9 million and $17 million, respectively. There can be no
         assurance  that the  Company  will cease  manufacturing  operations  in
         France without incurring significant legal or other costs that have not
         been accrued for in the restructuring charge. In addition,  the Company
         has been  notified of a tax audit to be conducted in France.  There can
         be no assurance  that the Company will not incur claims or  assessments
         from this audit that have not been accrued.

         In  connection  with  the  Company's  1999  second  half  restructuring
         actions,  the  Company  had a  workforce  reduction  of 123 regular and
         temporary  employees,  consisting  primarily of operations employees in
         Avranches,  France  and  product  development  employees  in  Longmont,
         Colorado.  The  Company  anticipates  that  the  implementation  of the
         restructuring  actions  within the United States will be  substantially
         complete by the end of June 2000, with the remainder being completed in
         the third quarter of 2000.  However,  the legal  requirements in France
         relating to  workforce  reductions  are very strict and the social plan
         approved  for  the  workforce  can  take  up  to  two  years  to  fully
         administrate.   Therefore,   the  restructuring   reserves  related  to
         manufacturing cessation will take longer to utilize. There were not any
         indications  of  permanent  impairment  of  the  assets  prior  to  the
         restructuring actions.


<PAGE>



         Restructuring  reserves are  included in the  Company's  other  current
         liabilities,  inventory and  property,  plant and equipment as of March
         26, 2000.  Utilization of the second half 1999  restructuring  reserves
         during the quarter ended March 26, 2000 is summarized below:
<TABLE>


                                                      Balance                    Utilized                Balance
                                                 December 31, 1999        Cash          Non-Cash     March 26, 2000
                                                ------------------       ------        -----------   ----------------
                                                                         (In thousands)

        <S>                                    <C>                  <C>              <C>               <C>
         Second Half 1999
         Restructuring Actions:
         Clik! Streamlining:
             Fixed assets (a)                        $    2,121       $         -      $       (55)      $     2,066
             Purchase commitments (b)                     1,508                 -                -             1,508

         Manufacturing Cessation:
             Fixed assets (a)                             2,845                 -             (380)            2,465
             Other assets (a)                               275                 -                -               275
             Other commitments (b)                        2,940              (231)               -             2,709
             Severance and benefits (b)                   3,753            (2,007)               -             1,746

         Severance and benefits (b)                         125              (100)               -                25
                                                    -----------       -----------      -----------       -----------
                                                    $    13,567       $    (2,338)     $      (435)      $    10,794
                                                    ===========       ===========      ===========       ===========
         Balance Sheet Breakout:
             Fixed asset reserves (a)               $     4,966       $         -      $      (435)      $     4,531
             Other (a)                                       47                 -                -                47
             Inventory reserves (a)                         228                 -                -               228
             Liabilities (b)                              8,326            (2,338)               -             5,988
                                                    -----------        -----------      -----------       -----------
                                                    $    13,567       $    (2,338)     $      (435)      $    10,794
                                                    ===========       ===========      ===========       ===========
         <FN>

         (a) Amounts represent primarily non-cash charges.
         (b) Amounts represent primarily cash charges.
        </FN>
</TABLE>

(6)      OTHER NON-RESTRUCTURING CHARGES

         During  the  first  quarter  of  2000,   the  Company   recorded  other
         non-restructuring charges of $7.4 million as cost of sales. The charges
         were  comprised of $3.7 million for excess  Clik!  media  manufacturing
         capacity,  $2.8  million to reflect a reduction  in the  estimated  net
         realizable  value of Clik!  PC Card drive  inventory,  $0.6 million for
         excess Clik! PC Card drive manufacturing  capacity and $0.3 million for
         Clik! PC Card drive purchase commitments.

(7)      COMMITMENTS AND CONTINGENCIES

         As previously disclosed in the Company's Annual Report on Form 10-K for
         the year ended  December 31, 1999,  on September  10, 1998, a purported
         class action lawsuit,  Rinaldi et al. v. Iomega Corporation,  was filed
         against  the  Company in the  Superior  Court of  Delaware,  New Castle
         County.  The suit  alleges  that a defect in the  Company's  Zip drives
         causes an abnormal  clicking noise that may indicate  damage to the Zip
         drive or disks.  The  plaintiffs  sought  relief  pursuant to claims of
         breach of warranty,  violation of the Delaware  Consumer Fraud Act, and
         negligent  design,  manufacture  and failure to warn.  On  September 3,
         1999,  the  Court  dismissed  the  claims of  breach  of  warranty  and
         violation  of the  Consumer  Fraud Act,  granting  the  plaintiffs  the
         opportunity  to amend the  latter  claim.  On  January  31,  2000,  the
         plaintiffs filed an amended  complaint,  reasserting  their claim under
         the Delaware  Consumer  Fraud Act and on February 28, 2000, the Company
         moved to dismiss this amended  claim.  With respect to this motion,  on
         April 10, 2000,  the Attorney  General of the State of Delaware filed a
         brief in opposition. The Court has not yet decided the motion. On April
         25, 2000, the plaintiffs  moved to further amend their complaint to add
         an  additional  plaintiff who is a Delaware  resident.  The Company has
         opposed that motion which has not yet been decided.  In connection with
         the same matter,  on February 28, 2000, two of the plaintiffs served on
         the  Company a "Notice of Claim"  under  Section  17.46(b) of the Texas
         Deceptive  Trade Practices Act asserting  allegations  similar to those
         made in connection  with the  plaintiffs'  Delaware  Consumer Fraud Act
         claim (the "Texas Claim").  The Texas Claim purports to be on behalf of
         the two  plaintiffs  and a class of others  similarly  situated  in the
         State of Texas, and demands relief of $150 for each Zip drive purchased
         by a class member, $100 for mental anguish damages to each class member
         and attorneys' fees and costs. Formal litigation in connection with the
         Texas Claim has not been  commenced.  The Company intends to vigorously
         defend against this suit and the Texas claim. Although the Company does
         not  expect  this suit or the Texas  claim to have a  material  adverse
         effect on the  Company's  ongoing  business,  results of  operations or
         financial  condition,  an adverse  judgment or settlement  could have a
         material  adverse  effect  on the  operating  results  reported  by the
         Company for the period in which any such adverse judgment or settlement
         occurs.

(8)      OTHER MATTERS

         Significant  Customers - During the quarter ended March 28, 1999, sales
         to Ingram Micro,  Inc.  accounted for 14.3% of  consolidated  sales. No
         other  single  customer  accounted  for more than 10% of the  Company's
         sales for the quarters ended March 26, 2000 or March 28, 1999.

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

         At March  26,  2000,  outstanding  forward  exchange  sales  (purchase)
         contracts, which all mature in June 2000, were as follows:


<TABLE>
                                                       Contracted          Spot
                  Currency              Amount        Forward Rate         Rate
                  -----------         -----------    --------------       ------
                 <S>                 <C>            <C>                  <C>

                  Australian Dollar       160,000               .61          .61
                  European Euro        12,900,000              1.03         1.02
                  Japanese Yen       (565,000,000)           105.35       106.99
                  Singapore Dollar      2,090,000              1.70         1.72
                  Swiss Franc          (3,360,000)             1.66         1.62
</TABLE>

         The contracts are revalued at the month-end spot rate. Gains and losses
         on foreign  currency  contracts  intended to be used to hedge operating
         requirements  are  reported  currently  in income.  Gains and losses on
         foreign  currency  contracts  intended  to meet  firm  commitments  are
         deferred  and are  recognized  as part  of the  cost of the  underlying
         transaction  being  hedged.  At March 26,  2000,  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 counter-party.

 (9)     SUBSEQUENT EVENT

         In March 2000, the FASB issued  Interpretation  No. 44, "Accounting for
         Certain  Transactions  Involving Stock Compensation" which is effective
         July 1, 2000.  Interpretation  44 establishes  accounting and reporting
         standards  for companies to report  information  about certain types of
         stock compensation  programs,  particularly those that require variable
         plan accounting.

         On April 19,  2000,  the  Company's  shareholders  approved an Employee
         Stock Option  Exchange  Program (the "Exchange  Program"),  pursuant to
         which the  Company  is  granting  new stock  options  in  exchange  for
         currently  outstanding stock options which have an exercise price above
         $3.59.  Under  Interpretation  No. 44,  new  options  issued  under the
         Exchange  Program will be subject to variable  plan  accounting.  Under
         variable  plan  accounting,   the  Company  is  required  to  recognize
         compensation expense in its statement of operations for any increase in
         the market  price of the  Company's  Common  Stock  above the  repriced
         exercise  price.  This  compensation  expense  must  be  recorded  on a
         quarterly  basis until the option is  exercised,  forfeited  or expires
         unexercised.  Any  subsequent  decreases  in the  market  value  of the
         Company's  Common  Stock  would  result in a reversal  of  compensation
         expense  previously  recognized.  Compensation  expense can be reversed
         only to the extent previously recognized for each option. For exchanged
         options that are not vested,  the increase or decrease in value, as the
         case may be, is recorded as deferred  compensation  and amortized  into
         income over the new option's  vesting  period based on the ratio of the
         number of periods outstanding over the vesting period. This calculation
         requires  that the  beginning  period in the ratio  equal the  original
         option grant date,  thereby  decreasing  the amount to be deferred into
         later periods. The charges will be non-cash items.

         The impact of the new options granted under the Exchange Program on the
         Company's  financial  statements  will  depend on the number of options
         exchanged,  quarterly  fluctuations in the Company's Common Stock price
         and the dates of exercises,  forfeitures  or  cancellations  of the new
         options by employees.  Depending on these factors, the Company could be
         required to record significant compensation expense during the next ten
         years. Moreover, because the precise amount of the compensation expense
         will depend on the market  price of the common stock at the end of each
         quarterly  period,  the Company will not be able to forecast in advance
         the amount of compensation expense that it will incur in any period.


<PAGE>


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

BUSINESS SEGMENT INFORMATION

The Company has four  reportable  segments based  primarily on the nature of the
Company's  customers and products:  Zip, Jaz,  ZipCD and Clik!.  The Zip segment
involves  the  development,  manufacture,  distribution  and  sales of  personal
storage  products  and  applications,  including  Zip disk and drive  systems to
retailers,  distributors and OEMs throughout the world. The Jaz segment involves
the development,  manufacture,  distribution  and sales of professional  storage
products and applications,  including Jaz disk and drive systems to distributors
and retailers  throughout the world.  The Company's  ZipCD segment  involves the
distribution and sales of CD-RW drives to retailers,  distributors and resellers
throughout  the world and  includes  ZipCD disc and drive  systems,  which began
shipping in limited  quantities in August 1999. The Clik!  segment  involves the
development,  manufacture,  distribution and sales of Clik! mobile drives, Clik!
PC Card drives,  Clik! OEM drives and Clik!  disks for use with portable digital
products  such as digital  cameras,  handheld  personal  computers  and notebook
computers to retailers,  distributors,  OEMs and resellers throughout the world.
Clik! products began shipping in limited quantities during the fourth quarter of
1998. The Company's  restructuring  charge in the third quarter of 1999 included
charges relating to refocusing the Clik!  product platform from the Clik! Mobile
Drive to the newer Clik!  PC Card and OEM drives.  The  Company  recorded  other
non-restructuring charges to reflect a reduction in the estimated net realizable
value of Clik!  inventory and equipment and accruals for purchasing  commitments
in connection  with Clik! PC Card drives and disks in the fourth quarter of 1999
and the first quarter of 2000. The "Other"  category  includes  products such as
Bernoulli,  Ditto, floppy disks and other Nomai products and other miscellaneous
items.

The accounting  policies of the segments are the same as those described in Note
1  "Significant   Accounting  Policies."   Intersegment  sales,   eliminated  in
consolidation,  are not material.  The Company  evaluates  performance  based on
product  profit  margin for each  segment.  Product  profit margin is defined as
sales and other income  directly  related to a segment's  operations,  less both
fixed and variable  manufacturing  costs,  research and development expenses and
selling,  general and  administrative  expenses  directly related to a segment's
operations.  When such costs and expenses exceed sales and other income, product
profit  margin is referred to as product  loss.  The  expenses  attributable  to
corporate activity are not allocated to the operating segments.

The  information in the following  table is derived  directly from the segments'
internal financial information used for corporate management purposes.


<PAGE>




Reportable Operating Segment Information:
<TABLE>

                                                      For the Quarter Ended
                                                   ----------------------------
                                                   March 26,          March 28,
                                                        2000               1999
                                                 -----------        -----------
                                                          (In millions)

         <S>                                     <C>                <C>
          Sales:
             Zip                                   $     278          $     302
             Jaz                                          52                 63
             ZipCD                                        11                  -
             Clik!                                         2                  5
             Other                                         2                 16
                                                 -----------        -----------

          Total sales                              $     345          $     386
                                                 ===========        ===========

          Product profit margin (loss):

             Zip                                  $       88         $       51
             Jaz                                          12                 (3)
             ZipCD                                         -                  -
             Clik!                                       (16)               (13)
             Other                                        (2)                (7)
                                                 -----------        -----------
          Total product profit margin                     82                 28
                                                 -----------        -----------

          Common:

             General corporate expenses                  (30)               (25)
             Interest and other income
              (expense), net                               1                 (2)
                                                 -----------        -----------
          Income before income taxes               $      53          $       1
                                                 ===========        ===========
</TABLE>

RESULTS OF OPERATIONS

The Company reported sales of $344.9 million and net income of $51.8 million, or
$0.19 per diluted  share,  for the first quarter of 2000,  which  included $20.1
million, or $.07 per diluted share,  attributable to a decrease in the valuation
allowance for net deferred tax assets.  This compares to sales of $386.2 million
and net income of $0.6 million, or $0.00 per diluted share, in the first quarter
of 1999.

SALES

Sales for the quarter ended March 26, 2000 decreased by $41.3 million, or 10.7%,
when compared to the corresponding period of 1999. This decrease was primarily a
result of reduced Zip drive and disk volumes, discontinued Ditto drive sales and
reduced Jaz drive volumes,  offset in part by sales of recently introduced ZipCD
products.  Total drive sales of $194.6 million decreased by 17.2% as compared to
the first  quarter of 1999.  Total drive unit  shipments  for the quarter  ended
March 26, 2000  decreased  by 14.5% as  compared  to the first  quarter of 1999.
Total disk sales of $149.6  million  decreased  by 1.3% as compared to the first
quarter of 1999.  Total disk unit shipments for the quarter ended March 26, 2000
decreased by 5.1% as compared to the first quarter of 1999.

Zip  product  sales  in the  first  quarter  of  2000  totaled  $278.5  million,
representing  a decrease  of 7.7% from the first  quarter of 1999.  Sales of Zip
products  represented  80.8% of  total  sales  for the  first  quarter  of 2000,
compared to 78.1% in the  corresponding  period of 1999. The Company's Zip drive
unit shipments decreased by 20.8% from the first quarter of 1999, while Zip disk
unit  shipments  decreased  by 5.0%.  The  Company's  Zip drive  unit  shipments
decreased  primarily  as a result  of lower  demand  for Zip  drives  in the OEM
channel.  Sales of Zip OEM drives (excluding licensee  shipments)  accounted for
approximately  37% of total Zip drive  shipments  in the first  quarter of 2000,
compared to 48% in the first quarter of 1999.

Jaz  product  sales  in  the  first  quarter  of  2000  totaled  $51.8  million,
representing  a decrease of 18.1% from the first  quarter of 1999.  Sales of Jaz
products  represented  15.0% of  total  sales  for the  first  quarter  of 2000,
compared to 16.2% in the corresponding  period of 1999. Jaz drive unit shipments
decreased by 36.4% as compared to the first quarter of 1999, while Jaz disk unit
shipments increased by 5.0%.

ZipCD product sales in the first quarter of 2000 totaled $10.8 million,  or 3.1%
of total sales. The Company began shipping ZipCD products in limited  quantities
in August 1999.

Clik!  product  sales in the first  quarter of 2000 totaled  $2.1  million,
representing  a decrease of $3.0  million,  or 59.7%,  from the first quarter of
1999.  Sales of Clik!  products  represented  0.6% of total  sales in the  first
quarter of 2000,  compared to 1.3% in the  corresponding  period of 1999.  Clik!
drive unit  shipments  decreased  by 41.7% as compared  to the first  quarter of
1999, while Clik! disk shipments increased by 129.8%.

Geographically,  sales in the Americas totaled $217.5 million, or 63.1% of total
sales,  in the first quarter of 2000,  as compared to $250 million,  or 64.7% of
total sales,  in the first  quarter of 1999.  This decrease was primarily due to
decreased Zip and Jaz sales,  partially  offset by ZipCD sales.  Sales in Europe
totaled $95.0 million, or 27.5% of total sales, in the first quarter of 2000, as
compared to $103.3  million,  or 26.7% of total sales,  in the first  quarter of
1999. This decrease was primarily due to decreased Zip sales,  partially  offset
by increased Jaz and ZipCD sales.  Sales in Asia totaled $32.5 million,  or 9.4%
of total sales,  in the first quarter of 2000, as compared to $32.9 million,  or
8.5% of total sales, in the first quarter of 1999.

GROSS MARGIN

The Company's  overall gross margin was $127.9  million,  or 37.1%, in the first
quarter of 2000, as compared to $93.7 million, or 24.3%, in the first quarter of
1999.  This  increase in gross margin was due primarily to increased Zip and Jaz
gross  margins as a result of an increased mix of higher margin Zip 250MB drives
(most of which are sold as higher margin  aftermarket  products),  Jaz disks and
lower  manufacturing and operating costs in Zip and Jaz during the first quarter
of 2000.

Future gross margin  percentage will be impacted by the sales mix between retail
and OEM channels,  as OEM sales generally provide lower gross margins than sales
through other  channels,  and by the sales mix of Zip 100MB and Zip 250MB drives
and disks.  Gross  margins for the  remainder  of 2000 will also depend on sales
volumes of Zip and Jaz disks, which generate  significantly higher gross margins
than the corresponding  drives,  and on the mix between disks and drives and the
mix between Zip, Jaz, ZipCD and Clik! products.

SEGMENT PRODUCT PROFIT MARGIN

Zip  segment  product  profit  margin of $87.9  million,  or 31.6% of Zip sales,
increased by $36.7 million, or 71.7%, in the first quarter of 2000 when compared
to Zip segment product profit margin of $51.2 million, or 17.0% of Zip sales, in
the first  quarter of 1999.  This increase was primarily due to an increased mix
of higher  margin  Zip  250MB  drives,  a higher  mix of  aftermarket  sales and
decreased  Zip   manufacturing  and  operating   expenses.   The  first  quarter
improvements  were partially  offset by a decrease in shipments of higher margin
Zip disks and lower overall volume shipments of drives and disks.

Jaz  segment  product  profit  margin of $12.4  million,  or 24.0% of Jaz sales,
increased  by $15.5  million in the first  quarter of 2000 when  compared to Jaz
segment product loss of $3.0 million in the first quarter of 1999. This increase
was primarily due to decreased manufacturing and operating costs and an increase
in Jaz disk shipments.

ZipCD segment  product loss was $0.1 million for the first quarter of 2000.  The
Company began shipping ZipCD products in limited quantities during August 1999.

Clik! segment product loss of $16.3 million increased by approximately $3.2
million in the first quarter of 2000 when compared to Clik! segment product loss
of $13.0 million in the first quarter of 1999. The Clik! segment product loss in
the first  quarter  of 2000  included  a charge  of $7.4  million  to  reflect a
reduction in the  estimated  net  realizable  value of inventory  and  equipment
associated  with the Clik!  PC Card  drive  and Clik!  media.  This  charge  was
partially offset by lower operating expenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and  administrative  expenses  of $65.2  million for the first
quarter of 2000 decreased by $4.7 million  primarily due to decreased  sales and
product  management costs,  when compared to the corresponding  quarter of 1999.
However,  selling, general and administrative expenses increased as a percentage
of sales to 18.9% for the first quarter of 2000, from 18.1% in the corresponding
quarter of 1999,  primarily  as a result of a decrease in sales during the first
quarter  of  2000.  Management  expects  selling,   general  and  administrative
expenses, in absolute dollars, to increase from first quarter 2000 levels during
the  remainder of 2000 due to planned  additional  advertising  and  promotional
expenses in the United States, Europe, Asia and Latin America.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses of $11.1 million for the first quarter of 2000
decreased by $9.6 million, or 46.3%, when compared to the first quarter of 1999,
and  decreased  as a percentage  of sales to 3.2% in the first  quarter of 2000,
from 5.4% in the first  quarter 1999.  The decrease in research and  development
expenses for the first quarter of 2000 was due  primarily to decreased  spending
for development of Zip, Jaz and Clik!  products,  which was partially  offset by
increased  spending for ZipCD products and other new product  development in the
first quarter of 2000.  Management expects research and development expenses, in
absolute  dollars,  to  increase  from  first  quarter  2000  levels  during the
remainder of 2000 as a result of planned increases in resources dedicated to new
product development and existing product enhancements.

INTEREST AND OTHER INCOME/EXPENSE

Interest income of $3.5 million in the first quarter of 2000 increased from $1.1
million  in the  first  quarter  of 1999.  Higher  average  cash and  investment
balances  during the first  quarter  2000  resulted  in an  increase in interest
income when compared to the corresponding quarter of 1999.

Interest expense of $1.4 million during the first quarter of 2000 decreased from
$2.8 million in the first  quarter of 1999.  In July 1998,  the Company  entered
into a debt  agreement with Idanta  Partners Ltd. and another entity  affiliated
with David J. Dunn,  Chairman of the Company's  Board of Directors,  under which
the Company  borrowed  $40  million  pursuant  to a series of three  notes.  The
Company repaid the principal and interest associated with these notes upon their
maturity on March 31, 1999.

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

INCOME TAXES

For the  quarter  ended  March 26,  2000,  the  Company  recorded  an income tax
provision  of $21.0  million  on  pre-tax  income,  partially  offset by a $20.1
million decrease in the valuation allowance for net deferred income taxes.

During the first quarter of 2000,  the Company  decreased its deferred tax asset
valuation  allowance by approximately $20 million,  to $66 million.  The Company
evaluates the realizability of its net deferred tax assets on a quarterly basis.
If the net  deferred  tax assets are  reduced in the  future,  if the Company is
substantially  profitable,  or if a portion or all of the valuation allowance is
no longer deemed to be necessary,  reductions  in the valuation  allowance  will
reduce future income tax provisions.

As of March 26, 2000,  the Company had  approximately  $12.7 million of deferred
tax assets related to foreign net operating loss carryforwards,  which reflected
the benefit of approximately  $29.8 million in future tax deductions,  for which
the Company had established a valuation allowance. These carryforwards expire at
various dates beginning in 2004.

As of March 26, 2000,  the Company had  approximately  $22.3 million of deferred
tax assets related to domestic net operating loss carryforwards, which reflected
the benefit of approximately  $57.2 million in future tax deductions,  for which
the Company had established a valuation allowance. These carryforwards expire at
various dates beginning in 2020.

Additionally,  as of March 26, 2000, the Company had approximately $30.5 million
of domestic deferred tax assets net of deferred liabilities, which reflected the
benefit of approximately $78.2 million in future tax deductions.

SEASONALITY

The Company sells its products primarily through computer product  distributors,
retailers and OEMs.  The  Company's  Zip products are targeted  primarily to the
retail  consumer  and  enterprise  markets and to personal  computer  OEMs.  The
Company's  Jaz  products are  targeted  primarily  to the business  professional
market.  The Company's  ZipCD  products are targeted to the retail  consumer and
enterprise markets.  The Company's Clik! products are targeted to the enterprise
market and to various consumer electronics device OEMs.

Management  believes  the  markets  for the  Company's  products  are  generally
seasonal,  with a higher  proportional  share of total  sales  occurring  in the
fourth quarter and sales slowdowns  commonly  occurring during the first quarter
and summer months. Accordingly,  revenues and growth rates for any prior quarter
are not necessarily indicative of revenues or growth rates to be expected in any
future quarter.

LIQUIDITY AND CAPITAL RESOURCES

At March  26,  2000,  the  Company  had cash,  cash  equivalents  and  temporary
investments  of $273.4  million  compared to $210.9 at  December  31,  1999,  an
increase of $62.5 million.  Working capital of $222.5 million increased by $27.1
million when compared to $195.4  million at December 31, 1999,  primarily due to
increases in cash, cash  equivalents and temporary  investments and decreases in
accounts payable and other current liabilities, partially offset by decreases in
trade receivables and the  classification of convertible  subordinated  notes to
current   liabilities.   The  Company's  ratio  of  current  assets  to  current
liabilities of 1.7 to 1 increased  slightly compared to 1.6 to 1 at December 31,
1999.  During the  quarter  ended March 26,  2000,  cash  provided by  operating
activities  amounted to $68.1 million.  The primary  components were net income,
non-cash expense  adjustments,  reductions in accounts receivable and inventory,
partially offset by decreases in accounts payable and other current  liabilities
and an  increase  in  income  taxes  receivable.  This  cash was used in part to
purchase property, plant and equipment of $5.9 million and pay notes payable and
leases of $1.1 million.

The decrease in accounts receivable was due primarily to the timing of sales and
collections  during the quarter  and the  decrease  in sales  volume  during the
quarter.  The decrease in inventory was due to the write-down of Clik! inventory
and improved  management of foreign inventory  levels.  The decrease in accounts
payable was due primarily to timing of inventory  receipts and related  payments
to vendors.  The decrease in other current  liabilities was due to a combination
of decreases in deferred  revenue,  accrued  restructuring  charges and purchase
commitments  that were  partially  offset by  increases  in accrued  payroll and
various other accrued  liabilities.  The increase in income taxes receivable was
due primarily to refundable foreign withholdings on dividends.

On March 11, 1997, the Company entered into a $200 million Senior Secured Credit
Facility with Morgan  Guaranty Trust Company of New York,  Citibank,  N.A. and a
syndicate of other  lenders.  During 1998 and 1999,  the Company and the lenders
agreed to several  amendments  to and waivers  under the Senior  Secured  Credit
Facility,  the most recent of which was entered into on October 14,  1999,  (the
"Credit  Facility").  As a  result  of the most  recent  amendment,  the  Credit
Facility  was  reduced to $75  million  and  certain  financial  covenants  were
amended. The Credit Facility expires on July 14, 2000 and is secured by accounts
receivable,   domestic  inventory,   domestic  intellectual  property,   general
intangibles,  equipment,  personal property, investment property and a pledge of
65% of the stock of  certain  of the  Company's  subsidiaries.  Under the Credit
Facility, the Company may borrow at a base rate, which is the higher of prime or
the sum of the Federal funds rate plus 2.75%, or at LIBOR plus 3.25%.  Borrowing
availability  under the Credit  Facility is based on an agreed upon advance rate
on   receivables   and  inventory  not  to  exceed  $75  million.   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, EBITDA and certain other covenants. There were no borrowings
on the Company's Credit Facility during the first quarter of 2000. There were no
borrowings  outstanding at March 26, 2000.  The Company is currently  evaluating
whether or not to replace the Credit Facility when it expires in July.

The current and long-term portions of capitalized lease obligations at March 26,
2000 were $4.8 million and $1.1 million, respectively. In July 1998, the Company
borrowed a total of $40 million from Idanta  Partners  Ltd.  and another  entity
affiliated  with David J. Dunn,  Chairman of the  Company's  Board of Directors,
pursuant to a series of three senior  subordinated  notes. The proceeds of these
notes were used for the cash  purchase  of Nomai.  The Company  used  internally
generated  funds to repay the principal and interest  associated  with the notes
upon their maturity on March 31, 1999.

The Company had $45.5 million of convertible  subordinated  notes outstanding at
March 26,  2000,  which bear  interest at 6.75% per year and mature on March 15,
2001.  These notes have been  classified  as  short-term at March 26, 2000 since
they mature in less than a year.

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

OTHER MATTERS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and Hedging  Activities"  ("SFAS 133").  SFAS 133  establishes  new
accounting  and reporting  standards for companies to report  information  about
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts  (collectively  referred to as  "derivatives")  and for hedging
activities.  In June 1999,  the FASB issued  Statement of  Financial  Accounting
Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities
- Deferral of the  Effective  Date of FASB  Statement  No. 133." This  statement
amended  the  effective  date of SFAS 133.  SFAS 133 will now be  effective  for
financial  statements  issued for all fiscal  quarters of fiscal years beginning
after June 15,  2000.  The  Company  does not expect SFAS 133 to have a material
impact on the Company's results of operations, financial position or liquidity.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101") "Revenue Recognition in Financial Statements".  SAB
101  provides  guidance on the  recognition,  presentation,  and  disclosure  of
revenue in financial  statements.  Implementation  of SAB 101 is required in the
second quarter of 2000. All registrants are expected to apply the accounting and
disclosure requirements described in SAB 101. The Company is currently assessing
the impact, if any, of SAB 101 on its financial statements.

FACTORS AFFECTING FUTURE OPERATING RESULTS

The Company's future operating  results will depend in large part on the success
of its Zip, Jaz,  ZipCD and Clik!  products in the market.  Although the Company
believes  there is market  demand  for  removable  data  storage  solutions  for
personal computers and other devices, there can be no assurance that the Company
will be successful in establishing  its products as the preferred  solutions for
those market needs.  The extent to which Zip, Jaz,  ZipCD and Clik!  achieve and
maintain a  significant  market  presence  will depend upon a number of factors,
including:  the price,  performance,  quality and other  characteristics  of the
Company's  products  and  of  competing   solutions   (existing,   announced  or
unannounced)  introduced by other vendors,  including,  without limitation,  the
LS-120  (or  SuperDisk)  (product  co-developed  by  the  consortium  of  Compaq
Computer,  Imation,  O.R. Technology and MKE), the HiFD (product co-developed by
Sony  Corporation  and Fuji Photo Film Co.,  Ltd.),  the "it" drive  (product in
development  by Caleb  Technology  Corporation),  the Orb (product  developed by
Castlewood  Systems,  Inc.),  the  Pro-FD  (product  in  development  by Samsung
Electro-Mechanics  Co., Ltd.),  the Microdrive  (product  developed by IBM), the
Memory Stick  (product  developed by Sony  Corporation),  Compact Flash (product
developed by Sandisk),  SmartMedia  (product developed by Toshiba),  CD-R, CD-RW
and DVD drives and media and  announced  products  in  development  by  Terastor
Corporation;  the success of any third party in creating  and  marketing  media,
compatible with the Company's  proprietary  media, and intended for use with the
Company's  drive  products;  the  success of the  Company  in  meeting  targeted
availability dates for new and 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  computer and other
products  containing the Company's drives;  the ability of the Company to create
demand for Zip, Jaz,  ZipCD and Clik!,  including  demand from leading  personal
computer and other  manufacturers;  the success of the Company's efforts to make
continued  improvements  to  customer  service  and  satisfaction;   the  public
perception  of the  Company  and  its  products,  including  statements  made by
industry  analysts  or  consumers  and  adverse  publicity  resulting  from such
statements or from litigation filed against the Company;  and the overall market
demand for  personal  computers  and other  products  with  which the  Company's
products can be used.

The Company's  business strategy is substantially  dependent on maximizing sales
of its  proprietary  Zip and Jaz  disks,  which  generate  significantly  higher
margins than the related  drives.  If this  strategy is not  successful,  either
because the Company does not establish a  sufficiently  large  installed base of
Zip and Jaz  drives,  because  the sales mix  between  disks and drives is below
levels  anticipated by the Company,  because another party succeeds in producing
or marketing  disks that are compatible with any of the Company's drive products
without infringing the Company's proprietary rights or for any other reason, the
Company's sales would be adversely affected, and its results of operations would
be disproportionately adversely affected.

Sales of Zip products in 1999 and in the first  quarter of 2000  accounted for a
significant majority of the Company's revenues.  However, these sales may not be
indicative of the  long-term  demand for Zip  products.  Accordingly,  the sales
levels  experienced  by the Company in 1999 and the first quarter of 2000 should
not be assumed to be an  indication  of future sales  levels.  In addition,  the
Company  has   experienced  and  may  in  the  future   experience   significant
fluctuations in its quarterly operating results. Moreover, because the Company's
expense levels  (including  budgeted  selling,  general and  administrative  and
research and  development  expenses) are based in part on expectations of future
sales levels,  a shortfall in expected sales could result in a  disproportionate
adverse  effect on the  Company's  net income and cash flow.  In  addition,  the
Company's stock price, like other high technology companies' stock prices, could
be subject  to changes in  analysts'  earning  estimates,  announcements  of new
products or developments by the Company or its competitors, market conditions in
the information  technology industry, as well as general economic conditions and
other factors external to the Company.

Sales of Zip drives to OEM customers  accounted for  approximately  37% of total
Zip drive  shipments in the first quarter of 2000 and over 51% during the entire
year of 1999.  The level of future  sales of Zip  drives to OEM  customers  will
depend in great part on the Company's  ability to further reduce the cost of Zip
drives and on the extent to which the  incorporation of CD-RW or  DVD-Recordable
drives into OEM  products  results in a reduction in the demand for OEM products
also incorporating a built-in Zip drive.

The Company  does not  anticipate  major sales  growth in the future for the Jaz
product  platform  as a result of  replacement  products  entering  the  market,
including   products   introduced   by  the  Company,   and  changing   customer
requirements.  The  Company  took  actions  in 1999 to better  position  the Jaz
product platform for future  profitability,  including the cancellation of a Jaz
development project and downsizing of Jaz facilities and workforce.  The Company
anticipates  introducing  additional Jaz product  interfaces and enhancements to
support the needs of its customers.  In addition,  the Company is making a small
investment to sustain and revitalize  the Jaz business.  The process of managing
Jaz and  maximizing  its  profitability  is  different  than  managing a growing
product   platform,   and  involves   maintaining  the  size  of  the  product's
infrastructure and monitoring vendor commitments and inventory levels to prevent
inventory  write-offs and cancellation costs. There can be no assurance that the
Company  will  be  successful  in  managing  the  Jaz  product  platform  and in
maximizing its profitability in the future.

The Company's  ZipCD drive  represents the Company's first CD-RW product and its
initial entry into the optical  storage market.  Market  acceptance of the ZipCD
product,  which began shipping in limited  quantities in August 1999, is not yet
known. In addition, the impact of ZipCD on the Company's other storage solutions
has not yet been  determined  and may have an  adverse  impact on future  sales.
Moreover,  the  Company's  business  strategy  for ZipCD is  different  from its
strategy for its other products because ZipCD does not include proprietary media
and thus has lower overall margins.  Therefore, the success of ZipCD will depend
on margin  contributions from the drive products which the Company purchases for
resale  from a  third  party  manufacturer.  The  CD-RW  drive  market  is  very
competitive  and  includes a number of  established  participants.  Accordingly,
there are additional  risks that the ZipCD product will not achieve  significant
market acceptance or otherwise be successful.

The Company's  Clik!  products  represent the Company's first products which are
targeted to digital camera and other portable consumer electronics manufacturers
in addition to the personal  computer  markets.  The Company does not have prior
experience  in  consumer  electronics  channels;  and,  accordingly,  there  are
additional  risks that the Clik!  products will not achieve  significant  market
presence or otherwise be successful.  The Company has introduced  four different
models of the Clik!  drive in  addition  to a Clik!  OEM  drive.  Three of these
models, the Clik! drive for Digital Cameras,  the Clik! Drive Plus and the Clik!
Drive for Mobile Computers,  each of which began shipping in limited  quantities
in December 1998,  were marketed as add-on storage  solutions to digital cameras
that use various formats of flash memory.  The Company began shipping the fourth
model,  the Clik!  PC Card drive,  in limited  quantities  in June 1999,  and is
currently  marketing this product to notebook and  sub-notebook  computer users.
The impact of the Clik! PC Card drive on the Company's  other storage  solutions
has not yet been  determined  and may have an  adverse  impact on future  sales.
During the third quarter of 1999, the Company  recorded a  restructuring  charge
that included costs to refocus the Clik!  product platform on the newer Clik! PC
Card  and  OEM  drives,  which  began  shipping  in the  second  half  of  1999.
Additionally,  the Company took charges in the fourth  quarter of 1999  totaling
$47.3  million  relating  to the Clik!  platform  to  reflect  estimates  of net
realizable  value of inventory and  equipment and accruals for related  purchase
commitments.  The Company took  additional  charges of $7.4  million  during the
first  quarter of 2000 to reflect a reduction in the  estimated  net  realizable
value of inventory  and  equipment  associated  with the Clik! PC Card drive and
Clik!  media.  After these charges,  net assets and  commitments  related to the
Clik! platform were approximately $10 million as of March 26, 2000. Although the
Company is making  significant  efforts to  develop  applications  for the Clik!
platform  and believes the products  have  potential in the  enterprise  and OEM
markets,  there is no  assurance  the Company will not take  additional  charges
associated  with the Clik!  platform in the future.  Market  acceptance of Clik!
products as a storage solution for digital cameras and other electronic  devices
is dependent upon obtaining a significant  market presence and  establishing OEM
relationships  with digital camera  manufacturers,  who produce  digital cameras
incorporating  built-in Clik!  drives,  and other portable  consumer  electronic
manufacturers.  To date,  only  one  digital  camera  incorporating  Clik!  as a
built-in drive, which the Company refers to as an OEM drive, has been introduced
and begun shipping.

Management of the  Company's  inventory  levels is very  complex.  The Company's
customers  frequently  adjust  their  ordering  patterns  in response to various
factors  including:  perceptions  of the Company's  ability to meet demand;  the
Company's  and  competitors'  inventory  supply in the retail  and  distribution
channel; timing of new product introductions; seasonal fluctuations; Company and
customer promotions; the consolidation of customer distribution centers; pricing
considerations;  and the  attractiveness  of the Company's  products as compared
with  competing  products.   Customers  may  increase  orders  during  times  of
shortages,  cancel  orders if the  channel is filled  with  currently  available
products,  or delay orders in  anticipation  of new products.  Any excess supply
could result in price reductions and inventory  writedowns,  which in turn could
adversely affect the Company's results of operations.

The Company's  business  includes a significant  volume of OEM sales.  In an OEM
business,  a high proportion of sales are  concentrated  among a small number of
customers.  Although the Company believes its  relationships  with OEM customers
are generally  good, a relatively  small number of customers  could  represent a
business  risk that loss of one or more  accounts  could  adversely  affect  the
Company's financial condition or operating results.  The Company's customers are
generally not obligated to purchase any minimum volume and are generally able to
terminate  their  relationship  with the Company at will. If changes in purchase
volume or customer  relationships resulted in decreased demand for the Company's
drives,  whether  by  loss of or  delays  in  orders,  the  Company's  financial
condition or operating results could be adversely affected.

The Company believes that in order to compete  successfully  against current and
future  sources of  competition,  it will be  necessary  to  further  reduce the
manufacturing  costs of its  products,  thus  enabling  the  Company to sell its
products  at lower  prices.  During the past  several  years,  the  Company  has
implemented a number of programs, including Six Sigma quality initiatives, which
have  resulted  in  substantial  product and process  quality  improvements  and
reduced costs.  Through these and other  programs,  the Company is continuing to
focus on reducing the manufacturing  costs of its products by: reducing the cost
of  parts  and  components  used  in the  Company's  products  through  improved
inventory management and product design modifications and by taking advantage of
industry-wide  reductions in costs; increasing manufacturing  efficiencies;  and
decreasing  defect  rates.  This is  particularly  true  for the  Company's  OEM
business,  as OEM  customers  are  particularly  price  sensitive.  As  new  and
competing  removable-media storage solutions are introduced, it is possible that
any such solution that achieves a significant  market  presence or establishes a
number of significant OEM  relationships  will emerge as an industry standard or
achieve a leading market position.  If such is the case, the Company's  products
may not be commercially successful.

The Company has, and may again in the future,  experience  problems  relating to
the quality,  reliability  and/or  availability of certain of its products.  For
example, the Company has recalled certain products and experienced manufacturing
interruptions  due to  supplier  quality  problems.  Any  product  availability,
quality or  reliability  problems  experienced  by the Company,  or claims filed
against the Company as a result of these problems,  could have an adverse effect
on the  Company's  sales and net  income,  result  in  damage  to the  Company's
reputation in the marketplace, and subject the Company to damage claims from its
customers. In addition,  component problems,  shortages, quality issues or other
factors  affecting  the  supply  of the  Company's  products  could  provide  an
opportunity for competing products to increase their market share.

The factors described above for Zip, Jaz, ZipCD and Clik!  products are, or will
be, relevant to any other products currently sold by the Company or new products
introduced  by the  Company  in the  future.  In  addition,  the  Company  faces
development,  manufacturing,  demand and market  acceptance risks with regard to
recently introduced and future products.  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.  Future operating results will also
depend  on the  Company's  ability  to  effectively  manage  obsolescence  risks
associated  with  products  that are  phased  out and its  success in ramping to
volume  production of new or enhanced  products.  Future operating  results will
also  depend on  intellectual  property  and  antitrust  matters  including  the
possibility  that  infringement  claims  asserted  from time to time against the
Company  could require the Company to pay royalties to a third party in order to
continue to market and distribute one or more of the Company's current or future
products and also includes the possibility that the Company would be required to
devote  unplanned  resources  to  developing  modifications  to its  products or
marketing programs.

The Company depends on independent parties for the supply of critical components
for its products. Many components incorporated or used in the manufacture of the
Company's  products  are  currently  available  only from  single or sole source
suppliers.  In  particular,  media used in Zip 250MB  disks and Clik!  disks are
currently obtained exclusively from Fuji Photo Film, certain integrated circuits
used in Zip drives are obtained  exclusively from L.S.I.  Logic  Corporation and
Texas  Instruments,  media used in Jaz disks is currently  obtained  exclusively
from  HMT  Technology,  motors  used  in  Jaz  and  Clik!  drives  are  obtained
exclusively from Nidec  Corporation,  head stack  assemblies  (HSAs) used in Jaz
drives are obtained  exclusively from Read Rite  International  and HSAs used in
Zip notebook and Clik! drives are obtained  exclusively from SAE Magnetics.  The
Company has experienced difficulty in the past, and may experience difficulty in
the future,  in obtaining a sufficient supply of many key components on a timely
basis.   The  Company   continues  to  develop   relationships   with  qualified
manufacturers with the goal of securing high-volume  manufacturing  capabilities
and controlling the cost of current and future models of the Company's products;
however,  there can be no  assurance  that the Company  will be able to obtain a
sufficient supply of components on a timely and cost effective basis.  Sales may
be adversely affected for all of these or similar reasons in the future.

The  Company  purchases  a  portion  of its  single,  sole  and  limited  source
components  pursuant to purchase orders without guaranteed supply  arrangements.
The inability to obtain sufficient components and equipment to obtain or develop
alternative  sources of supply at  competitive  prices  and  quality or to avoid
manufacturing  delays  could  prevent  the  Company  from  producing  sufficient
quantities  of its  products  to satisfy  market  demand  (or,  in the case of a
component  purchased  exclusively  from  one  supplier,  the  Company  could  be
prevented  from  producing  any quantity of the affected  product(s)  until such
component  becomes  available  from  an  alternative   source),   delay  product
shipments,  increase the Company's  material or manufacturing  costs or cause an
imbalance  in the  inventory  levels of certain  components.  For  example,  the
Company's  Zip  drive  shipments,  revenue  and  profitability  were  negatively
impacted by an ASIC chip storage  during the second and third  quarters of 1999.
The ASIC chip is supplied by a sole source supplier.  Moreover,  difficulties in
obtaining  sufficient  components  may cause the Company to modify the design of
its  products  to  use a more  readily  available  component,  and  such  design
modifications may result in product  performance  problems.  Any or all of these
problems  could in turn result in the loss of customers,  provide an opportunity
for competing  products to achieve  market  acceptance  and otherwise  adversely
affect the Company's business and financial results.

As mentioned  above,  the Company  purchases  the majority of its  components on
purchase  orders.  These purchase orders generally extend one to two quarters in
the  future  or less  based  on the lead  times  associated  with  the  specific
component.  The  quantities on the purchase  order are based on estimated  sales
requirements.  In the case of new products or products with declining  sales, it
can be  difficult  to  estimate  demand  and  therefore  could  result in excess
capacity and purchase commitments.

The Company  has  experienced  increased  difficulties  in hiring and  retaining
employees,  due in part to the Company's financial performance and restructuring
actions.  The  Company's  success  depends in large part upon the  services of a
number of key employees and the loss of the services of one or more of these key
employees could have a material  adverse effect on the Company.  Many members of
the  Company's  senior  management  team  have  been  serving  in their  current
positions for only a short period of time,  including  Bruce R.  Albertson,  who
joined the Company as President and Chief Operating Officer in November 1999 and
assumed the role of President and Chief  Executive  Officer on January 20, 2000;
Philip G.  Husby,  who joined the Company as Chief  Financial  Officer in August
1999;  and John L. Conely,  Sr., who was promoted to Executive  Vice  President,
Global  Operations  in June 1999.  In  addition,  a number of senior  management
positions,  including  Executive Vice President,  Product  Management and Global
Marketing;  Executive Vice President,  International  Business Units;  Executive
Vice President,  Sales;  Vice  President,  Global Human  Resources;  and General
Counsel,  have only recently been filled.  The Company's  success will depend in
part on its ability to attract highly  skilled  personnel to fill vacancies in a
timely  manner and on the success of the  Company's  senior  management  team in
learning  to work  effectively  as a team.  There can be no  assurance  that the
Company will be successful in attracting and/or retaining new employees.

During the second and third  quarters of 1999,  the Company  announced  plans to
consolidate manufacturing and other facilities; discontinue certain products and
development  projects;  organize along functional lines and to refocus the Clik!
product  platform.  These actions  specifically  included  closing the Company's
facilities  in  Milpitas,  California  and San  Diego,  California  and  ceasing
manufacturing  operations in Avranches,  France.  There can be no assurance that
the  Company  will  close the  facilities  in the U.S.  and cease  manufacturing
operations in France  without  incurring  significant  legal or other costs that
have not been accrued for in the restructuring charges.

The Company  has  implemented  Six Sigma  quality  initiatives  intended to make
substantial product and process quality improvements and reduce costs.  However,
there  can be no  assurance  that  the  Company's  quality  initiatives  will be
successful  in providing  substantial  product and process  improvements  and in
reducing costs.

Significant portions of the Company's revenues are generated in Europe and Asia.
The  Company's  existing  infrastructure  outside of the  United  States is less
mature and developed than in the United States.  Consequently,  future sales and
operating  income  from these  regions are less  predictable  than in the United
States. In addition,  operating expenses may increase as those operations mature
and  increase  in size.  The  Company's  international  sales  transactions  are
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 (see "Disclosures About Market Risk" below).

The Company  intends to expand its  international  operations into Latin America
during  2000.   This  will  require  the  Company  to  add  at  least  some  new
infrastructure in Latin America  resulting in an increase in operating  expenses
that will not  necessarily be offset by an increase in revenue or gross margins.
In addition,  the Latin  America  economy is not as mature as the economy in the
countries  that the Company  currently  does  business.  This could result in an
increased exposure associated with the collectibility of customer accounts.

On January 1, 1999,  eleven  countries of the European Union  established  fixed
conversion rates between their existing currencies and adopted the Euro as their
new common  legal  currency.  As of that date,  the Euro has traded on  currency
exchanges,  with  the  legacy  currencies  remaining  as  legal  tender  in  the
participating  countries  for a transition  period  between  January 1, 1999 and
January 1, 2002.  During the  transition  period,  parties  can elect to pay for
goods and  services  and  transact  business  using  either the Euro or a legacy
currency.  Between January 1, 2002 and July 1, 2002, the participating countries
will introduce  Euro bills and coins and withdraw all legacy  currencies so that
they will no longer be available.  The Euro  conversion may affect  cross-border
competition  by  creating  cross-border  price  transparency.   The  Company  is
assessing the  competitiveness  of its  pricing/marketing  strategy in a broader
European  market.  The  Company  is  also  assessing  whether  certain  existing
contracts  may require  modification  in addition to assessing  its  information
technology  systems to allow for  transactions  to take place in both the legacy
currencies and the Euro and the eventual  elimination of the legacy  currencies.
The Company's currency risks and risk management for operations in participating
countries may be reduced as the legacy currencies are converted to the Euro. The
Company will continue to evaluate  issues  involving  introduction  of the Euro.
Based on the Company's assessment from current information, the Company does not
expect the Euro  conversion to have a material  adverse  effect on the Company's
business or financial condition.  There can be no assurance,  however,  that the
Euro  conversion  will not  have a  material  adverse  effect  on the  Company's
European sales or otherwise adversely affect the Company's business,  results of
operations or financial condition.

On April 19, 2000, the Company's  shareholders approved an Employee Stock Option
Exchange  Program  (the  "Exchange  Program"),  pursuant to which the Company is
granting new stock options in exchange for currently  outstanding  stock options
which have an exercise  price above  $3.59.  The new  options  issued  under the
Exchange  Program will be subject to variable plan  accounting.  Under  variable
plan accounting,  the Company is required to recognize  compensation  expense in
its  statement  of  operations  for any  increase  in the  market  price  of the
Company's  Common Stock above the repriced  exercise  price.  This  compensation
expense  must be recorded on a  quarterly  basis until the option is  exercised,
forfeited or expires  unexercised.  The impact of the new options  granted under
the Exchange  Program on the Company's  financial  statements will depend on the
number of options  exchanged,  quarterly  fluctuations  in the Company's  Common
Stock price and the dates of exercises,  forfeitures or cancellations of the new
options by employees.  Depending on these factors, the Company could be required
to record significant  compensation expense during the next ten years. Moreover,
because the precise amount of the compensation expense will depend on the market
price of the common stock at the end of each quarterly period,  the Company will
not be able to forecast in advance the amount of  compensation  expense  that it
will incur in any period.

Factors  other than those  discussed  above 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  increasing  volumes of
production and an increasingly complex business,  transportation issues, product
and component pricing, competition, technological changes and advances, adoption
of  technology or  communications  standards  affecting the Company's  products,
intellectual property rights, litigation,  general economic conditions,  changes
or slowdowns in overall market demand for personal computer products.

Disclosures About Market Risk

The Company is exposed to various  interest rate and foreign  currency  exchange
rate risks  that  arise in the normal  course of  business.  If  necessary,  the
Company  primarily uses borrowings  comprised  normally of variable rate debt to
finance  its  operations.   The  Company  did  not  have  any  significant  debt
outstanding at March 26, 2000 except for $45 million in convertible subordinated
notes (fixed rate of 6.75%).

The Company has international  operations  resulting in receipts and payments in
currencies  that  differ  from  the  functional  currency  of the  Company.  The
Company's functional currency is the U.S. dollar. The Company attempts to reduce
foreign  currency  exchange  rate  risks  by  utilizing  financial  instruments,
including derivative transactions pursuant to Company policies. The Company uses
forward  contracts  to  hedge  those  net  assets  and  liabilities  that,  when
re-measured  according to generally accepted accounting  principles,  impact the
consolidated statement of operations.  All forward contracts entered into by the
Company are  components  of hedging  programs  and are entered into for the sole
purpose  of  hedging an  existing  or  anticipated  currency  exposure,  not for
speculation  or trading  purposes.  The  contracts  are  primarily  in  European
currencies,  the Singapore  dollar and the Japanese yen. The contracts  normally
have maturities  that do not exceed three months.  The Company has a substantial
presence in Malaysia.  In September 1998, the ruling party in Malaysia fixed the
Malaysian Ringgit to the U.S. dollar. The Company  experienced a loss related to
the fixing of the currency. The Company has material amounts of accounts payable
denominated in Ringgit.  Currently,  the foreign  currency markets are closed to
hedging  alternatives in Ringgit.  When the foreign currency markets re-open for
the Ringgit,  the Company plans to re-evaluate its hedging  strategy for Ringgit
exposure.

When hedging balance sheet exposure,  all gains and losses on forward  contracts
are  recognized  in other income and expense in the same period as the gains and
losses  on  re-measurement  of  the  foreign  currency  denominated  assets  and
liabilities  occur. All gains and losses related to foreign  exchange  contracts
are  included  in cash  flows  from  operating  activities  in the  consolidated
statement of cash flows.

The fair value of the  Corporation's  long-term  debt and forward  contracts are
subject to change as a result of  potential  changes in market rates and prices.
The Company has performed a sensitivity  analysis  assuming a  hypothetical  10%
adverse  movement in foreign  exchange  rates and interest  rates applied to the
forward  contracts and underlying  exposures  described  above.  As of March 26,
2000,  the  analysis  indicated  that  such  market  movements  would not have a
material effect on the Company's  consolidated  financial  position,  results of
operations  or cash flows.  Factors that could impact the  effectiveness  of the
Company's hedging programs include  volatility of the currency and interest rate
markets,  availability  of  hedging  instruments  and the  Company's  ability to
accurately project net asset or liability positions.  Actual gains and losses in
the  future may differ  materially  from the  Company's  analysis  depending  on
changes in the timing and amount of  interest  rate and  foreign  exchange  rate
movements and the Company's actual exposure and hedges.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

A discussion  of the  Company's  exposure  to, and  management  of,  market risk
appears in Item 2 of this Form 10-Q under the heading  "Disclosures About Market
Risk".


<PAGE>



IOMEGA CORPORATION

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Except as set forth below or in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999, in management's opinion,  there are no significant
legal proceedings, to which the Company or any of its subsidiaries is a party or
to which any of their  property  is  subject.  The  Company is involved in other
lawsuits and claims generally incidental to its business.

As previously disclosed in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, on May 27, 1998, Scott D. Ora filed a complaint against
the Company and other parties. The action,  captioned Ora v. Iomega Corporation,
et al., was filed in Superior Court of the State of California for the County of
Los  Angeles and  alleged  that the  Company and certain of its former  officers
violated  certain  federal and state  securities  laws and  alleged  that Kim B.
Edwards,  former Chief Executive  Officer and director of the Company,  breached
his duties as a director of the Company.  The Company  successfully  removed the
action  to  the  United  State  District  Court  for  the  Central  District  of
California.  On February 9, 1999,  the Court  dismissed  five of the  complaints
original  seven causes of action.  On August 18, 1999,  the Court  dismissed the
remaining two causes of action,  but gave Ora the opportunity to file an amended
complaint  with respect to those two counts.  On November 1, 1999,  Ora filed an
amended  complaint  repleading the two causes of action  dismissed on August 18,
1999 and  bringing  two new  related  conspiracy  causes of action.  The amended
complaint  seeks an  unspecified  amount of damages.  On December 15, 1999,  the
Company  and the  individual  defendants  filed a motion to dismiss  the amended
complaint.  On April 12, 2000, the Court dismissed the amended  complaint in its
entirety,  entering  judgement in the Company's  favor. The plaintiff has thirty
days from the entry of  judgment  in which to request  an appeal of the  Court's
decision.  The Company  intends to defend  vigorously  against  this suit should
there be an appeal.

As previously disclosed in the Company's Annual Report on Form 10-K for the year
ended  December 31,  1999,  on  September  10,  1998,  a purported  class action
lawsuit, Rinaldi et al. v. Iomega Corporation,  was filed against the Company in
the  Superior  Court of  Delaware,  New Castle  County.  The suit alleges that a
defect in the Company's Zip drives  causes an abnormal  clicking  noise that may
indicate damage to the Zip drive or disks. The plaintiffs sought relief pursuant
to claims of breach of warranty,  violation of the Delaware  Consumer Fraud Act,
and negligent design, manufacture and failure to warn. On September 3, 1999, the
Court  dismissed  the claims of breach of warranty and violation of the Consumer
Fraud Act, granting the plaintiffs the opportunity to amend the latter claim. On
January 31, 2000, the plaintiffs filed an amended  complaint,  reasserting their
claim under the  Delaware  Consumer  Fraud Act and on  February  28,  2000,  the
Company  moved to dismiss this amended  claim.  With respect to this motion,  on
April 10, 2000,  the Attorney  General of the State of Delaware filed a brief in
opposition.  The Court has not yet decided the motion.  On April 25,  2000,  the
plaintiffs moved to further amend their complaint to add an additional plaintiff
who is a Delaware  resident.  The Company has opposed  that motion which has not
yet been decided.  In connection with the same matter, on February 28, 2000, two
of the  plaintiffs  served  on the  Company a "Notice  of Claim"  under  Section
17.46(b)  of the Texas  Deceptive  Trade  Practices  Act  asserting  allegations
similar to those made in connection with the plaintiffs' Delaware Consumer Fraud
Act claim (the "Texas  Claim").  The Texas Claim purports to be on behalf of the
two plaintiffs and a class of others  similarly  situated in the State of Texas,
and demands relief of $150 for each Zip drive purchased by a class member,  $100
for mental anguish  damages to each class member and attorneys'  fees and costs.
Formal litigation in connection with the Texas Claim has not been commenced. The
Company  intends to  vigorously  defend  against  this suit and the Texas claim.
Although  the  Company  does not expect  this suit or the Texas  claim to have a
material adverse effect on the Company's ongoing business, results of operations
or financial condition,  an adverse judgment or settlement could have a material
adverse effect on the operating  results  reported by the Company for the period
in which any such adverse judgment or settlement occurs.

As previously disclosed in the Company's Annual Report on Form 10-K for the year
ended  December  31, 1999,  on July 6, 1999,  the Company  initiated  litigation
against  Castlewood  Systems,   Inc.   ("Castlewood"),   Iomega  Corporation  v.
Castlewood Systems, Inc., in the United States District Court in the District of
Utah for infringing the Company's U.S. Patent No.  4,458,273 and U.S. Patent No.
5,854,719 and for  infringing and diluting the Company's  registered  trademarks
"Iomega",  "Zip" and "Jaz".  The complaint  further  alleged that Castlewood had
engaged in federal unfair competition,  common law unfair competition and common
law unjust  enrichment.  The complaint  requests monetary damages and injunctive
relief  enjoining  Castlewood  from  further  infringement.  On August 18, 1999,
Castlewood filed an answer and  counterclaims,  denying the Company's claims and
requesting a declaratory  judgment that the  Company's  patents are invalid.  On
September 9, 1999, the Company filed a reply to the counterclaims,  denying that
the patents are invalid.  On  September  17,  1999,  the Company also  initiated
litigation  against  Castlewood in the Paris  District  Court based on claims of
copyright and patent  infringement.  Additionally,  on September  20, 1999,  the
Company  initiated  litigation  against Motek, a French retailer of Castlewood's
products, in the Paris District Court. On November 15, 1999, Castlewood filed an
amended answer and  counterclaims,  adding  several  affirmative  defenses.  The
Company  filed a reply to this amended  answer and  counterclaims  on January 5,
2000.  On  April  11,  2000,  the  Company  also  initiated  litigation  against
Castlewood  in the United  States  District  Court for the  District of Utah for
infringement of the Company's U.S. Patent No. 6,049,444. The Company's complaint
requests  monetary  damages and  injunctive  relief  enjoining  Castlewood  from
further infringement. Castlewood's response to the complaint is due on or before
June 6, 2000. The Company continues to be committed to vigorously protecting and
enforcing its intellectual property rights and to attacking unfair competition.

As previously disclosed in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, on February 18, 2000, Maitre Jean-Jacques Savenier, the
Commissaire a  l'execution  du Plan  (bankruptcy  trustee) filed a complaint
against the Company's  subsidiary,  Nomai. Maitre  Jean-Jacques  Savenier claims
that Nomai has not complied with investments and employment related  commitments
made by Nomai's former  management before the Commercial Court in 1997. In 1997,
Nomai acquired certain assets from RPS Media SA in bankruptcy,  with the consent
and under the  supervision of the Commercial  Court of Albi,  pursuant to French
bankruptcy law provisions.  The action seeks a daily penalty against Nomai of FF
100,000 (approximately $15,000) until Nomai invests FF 48,000,000 (approximately
$7.4 million) and hires 100 people.  The Company  intends to  vigorously  defend
against the lawsuit. On February 22, 2000, the Company demanded  indemnification
on this claim against Nomai from the principal shareholders of Nomai pursuant to
the Stock  Purchase  Agreement  with the Company.  The  submission of this claim
against the principal  shareholders  increases  the Company's  claim against the
escrow account and individual shareholders from $11 million to approximately $19
million.  At an April  18,  2000  hearing,  the  court  declined  to rule on the
bankruptcy  trustee's demand for performance of the alleged commitments and took
the matter under advisement.

It is the opinion of management,  after  discussions  with legal counsel,  that,
except as discussed  above,  the  ultimate  dispositions  of these  lawsuits and
claims  will not have a  material  adverse  effect  on the  Company's  financial
position or results of operations.


<PAGE>


ITEM 2.  CHANGE IN SECURITIES AND USE OF PROCEEDS:

The Company did not sell any equity  securities during the first quarter of 2000
that were not registered under the Securities Act of 1933.

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

The Company's  Annual  Meeting of  Stockholders  was held on April 19, 2000. The
following proposals were adopted by the vote specified below:
<TABLE>


Proposal                                           For            Against/Withheld       Abstain      Broker Non-Votes
------------------------------               ------------        ------------------   -------------   ------------------
<S>                                         <C>                 <C>                  <C>             <C>
1. Election of Directors:
     Robert P. Berkowitz                      239,455,544                4,669,086               -              -
     John R. Myers                            239,434,206                4,690,424               -              -

2. Approval of the Employee
   Stock Option Exchange Program              225,550,944               16,966,570       1,607,114              -

3. Ratification of Arthur Andersen LLP
   as Independent Auditors                    240,890,998                2,323,463         910,159              -
</TABLE>

In  addition  to the two  directors  listed  above who were  elected  at the
meeting, the terms of the following directors continued after the meeting: Bruce
R. Albertson,  Jonathan S. Huberman,  David J. Dunn,  James E. Sierk and John M.
Seidl.

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.


<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/ Bruce R. Albertson
                                           -------------------------------------
Dated:  May 9, 2000                        Bruce R. Albertson
                                           Chief Executive Officer and President



                                          /s/ Philip G. Husby
                                          --------------------------------------
Dated:   May 9, 2000                      Philip G. Husby
                                          Senior Vice President, Finance and
                                          Chief Financial Officer


<PAGE>



                                  EXHIBIT INDEX

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

Exhibit No.     Description
-----------     -----------
   27           Financial Data Schedule (only filed as part of electronic copy).