Iomega Announces Additional Actions to Improve Profitability; Company Anticipates Third-Quarter Loss Including Charges and an Increase in its Tax Valuation Allowance.

ROY, Utah--(BUSINESS WIRE)--Oct. 4, 1999--

Iomega Corporation (NYSE: IOM) today announced a series of actions designed to accelerate the Company's return to profitability and enhance shareholder value.

The actions are the result of the Company's recent reviews of product lines and development efforts and are expected to result in a pre-tax restructuring charge ranging from $25 million to $30 million, of which approximately $15 million is non-cash. A significant portion of this charge, approximately $20 million, is expected to be recorded in the third quarter ended September 26, 1999 and the remainder is expected to be recorded in the fourth quarter, ending December 31, 1999.

In addition, in light of cumulative losses incurred by Iomega in 1998 and 1999, including those expected to be incurred in the third quarter of 1999, the Company said it expects to increase the valuation allowance for its deferred tax assets. This increase in the valuation allowance of the deferred tax assets is anticipated to be approximately $50 million and will be recorded in the third quarter of 1999 as a non-cash expense.

The actions announced today follow those taken by the Company in the second quarter and are intended to accelerate Iomega's goal of achieving profitability, including profitability for each of its product platforms, Zip(R), ZipCD(TM), Jaz(R) and Clik!(TM). These actions include:

-- Consolidating Iomega's worldwide media manufacturing, including

cessation of production in Avranches, France, -- Refocusing the Company's Clik! product platform from the Clik!

Mobile Bundle to the newer Clik! platform, the Clik! PC Card

Drive, and -- Consolidating leasehold facilities in Utah and Colorado.

The Company indicated that it expects the actions described above to affect approximately 140 employees, most of whom are located outside the United States.

"The actions we're announcing today are more than just cost cutting measures," said David Dunn, Iomega's chairman and CEO. "Based on our recent business reviews we are allocating resources to our most promising products and believe we are building a foundation for achieving sustained profitability and growth. I continue to have great enthusiasm for the value of Iomega's products and software solutions."

Based on preliminary analysis to date and excluding the restructuring charge and the increase in the valuation allowance for its deferred tax assets described above, Iomega also said that it expects a pre-tax loss for the quarter ended September 26, 1999 of approximately $5 million on revenues expected to be slightly higher than the $349 million reported in the second quarter of 1999. The expected third quarter pre-tax loss of approximately $5 million, while excluding the restructuring charge and increase in valuation allowance, does include pre-tax, non-cash charges not directly related to the restructuring actions above of approximately $12 million. These other charges are expected to be recorded in order to reflect current estimates of the net realizable value of inventory, equipment, and other assets.

In addition, Iomega said that it has not borrowed any funds under its $150 million Senior Secured Credit Facility during 1999 and that its cash balances are expected to increase from $89 million at the end of the second quarter to over $130 million at the end of the third quarter. The Company said it has initiated discussions with its lenders regarding amendments to its Credit Facility, including a reduction in the amount of the Credit Facility and a reduction in certain financial covenants, in order to more appropriately reflect Iomega's reduced financing needs and its expected net loss for the third quarter of 1999.

The Company normally announces its quarterly results on the third Thursday following the close of the quarter. Accordingly, the Company plans to announce third quarter results on Thursday, October 14, 1999 after the close of the market. Iomega cautioned that the amount of restructuring and other charges, the increase in the valuation allowance for its deferred tax assets, its actual third quarter results, cash balances at the end of the third quarter, and the amount of restructuring charges to be recorded in the fourth quarter could be higher or lower than the amounts indicated above.

Iomega Corporation (NYSE: IOM) manufactures and markets the award-winning Zip(R), Jaz(R) and Clik!(TM) drives and disks and markets ZipCD(TM) drives and discs that help people to organize, manage, create, exchange and share their important information. Used in homes, businesses, government, education and by creative professionals everywhere, Iomega storage solutions are the enabling technologies preferred by millions. The Company can be reached at 1-800-MY-STUFF (800-697-8833), or on the Web at http://www.iomega.com.

Special Note: The statements in this release related to Iomega recording restructuring and other charges and increasing the valuation allowance for its deferred tax assets, the amounts of such charges and increase in valuation allowance, the expected cash and non-cash portion of such charges and increase in valuation allowance, the periods in which such charges and increase in valuation allowance will be recorded, the number of employees to be affected by the restructuring actions, the Company's expected net loss and revenues for the third quarter of 1999, and the expected quarter ending cash balances are forward looking statements. There are a number of important factors that could cause actual results to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, additional facts learned by the Company as it completes its quarter end accounting process, local law requirements impacting actions taken or expected to be taken in affected jurisdictions, market acceptance of and demand for the Company's storage solutions, the success of the Company in reducing costs, the impact of competition from other suppliers of data storage products, the impact of the Company's change to a functional organization and recent management changes, the timing and impact of headcount reductions and facility consolidations, the Company's ability to maintain stringent quality assurance standards and enhanced customer services, the availability of product components that meet the Company's requirements, the success of the Company's marketing and product cost-reduction activities, manufacturing and inventory issues, production costs, intellectual property rights, general economic and/or industry specific conditions and the other factors described in Iomega's Annual Report to Stockholders for 1998 on Form 10-K, filed March 26, 1999 and its most recent quarterly reports filed with the SEC.

Iomega, Zip, Jaz, and the stylized "i" logo are registered trademarks of, and Clik! and ZipCD are trademarks of, Iomega Corporation. All other products and brand names are the property of their respective owners. For maximum reliability, use only genuine Zip disks featuring the genuine Zip symbol in your Zip drive.