Iomega Press Releases

IOMEGA REPORTS FOURTH QUARTER FINANCIAL RESULTS

Media please contact:

Chris Romoser, Iomega Corporation, +1 (858) 314-7148 romoser@iomega.com

FOR IMMEDIATE RELEASE

IOMEGA REPORTS FOURTH QUARTER FINANCIAL RESULTS

SAN DIEGO , February 1, 2007 - Iomega Corporation (NYSE: IOM) today reported net revenue of $76.2 million and a net profit of $4.9 million, or $0.09 per diluted share, for the quarter ended December 31, 2006. In comparison, fourth quarter 2005 net revenue was $70.0 million with a net profit of $1.9 million, or $0.04 per diluted share, and third quarter 2006 net revenue was $53.6 million with a net profit of $0.9 million, or $0.02 per diluted share. Fourth quarter net revenue increased $6.2 million, or 9%, from the same quarter last year primarily due to increases in Consumer Storage Solutions products of $11.9 million, partially offset by the expected decrease in Zip® revenue of $6.8 million. Additionally, fourth quarter 2006 net revenue increased $22.6 million, or 42%, from third quarter 2006 revenue primarily due to an increase in Consumer Storage Solutions sales as a result of both widespread market success of Iomega’s new external HDD products and normal seasonality.

Gross margin for fourth quarter 2006 was $15.4 million, or 20.2%, as compared to fourth quarter 2005 gross margin of $14.8 million, or 21.2%, and third quarter 2006 gross margin of $12.2 million, or 22.8%. The decrease of 100 basis points from fourth quarter 2005 is primarily due to the expected decline in Zip revenue, partially offset by new lower cost external HDD products, supply chain improvements and other cost reduction actions. The decrease of 260 basis points from the immediately preceding quarter is primarily due to a product mix shift toward Consumer Storage Solutions products, partially offset by improved gross margins on external HDD products.

Pre-tax profit from continuing operations for fourth quarter 2006 was $4.3 million. Excluding a restructuring benefit of $0.8 million and a goodwill impairment charge of $0.8 million, fourth quarter 2006 non-GAAP pre-tax profit from continuing operations remained at $4.3 million. This compares to fourth quarter 2005 non-GAAP pre-tax profit from continuing operations of $0.8 million, when excluding $0.8 million of restructuring charges. Further, this compares to third quarter 2006 non-GAAP pre-tax profit from continuing operations of $2.2 million, when excluding a restructuring benefit of $0.2 million, a goodwill impairment charge of $2.5 million and a benefit of $1.1 million from the dissolution of an inactive European subsidiary.

Cash, cash equivalents and temporary investments at year-end amounted to $68.1 million, a decrease of $1.7 million from the end of third quarter 2006. This decrease is a result of increased inventory in transit as of year-end to satisfy existing backlog that has already been shipped to customers at this time as well as payments associated with previous restructuring actions.

During the fourth quarter, we received a final payment of $0.4 million from an escrow account related to the prior sale of Iomega’s equity interest in a private company, ByteTaxi, Inc. This is presented on the income statement as income from discontinued operations, net of taxes, of $0.3 million.

“I am pleased with our financial and operational results in the fourth quarter. We achieved each and every goal we set for ourselves” said Jonathan Huberman, Vice Chairman and CEO. “Since the new management team took the helm during first quarter 2006 and we set out a new strategic path, we have increased revenues and returned the company to profitability. We achieved significant sequential revenue growth and, for the first time in many years, year over year growth. While we were benefited by fourth quarter seasonality, the key business drivers of this growth were our new HDD product line, improved supply chain and the launch of our next generation REV drive. Between these actions and the cost reduction initiatives we took in April, we’ve posted two consecutive quarterly profits with strong revenue growth as well.”

Mr. Huberman continued, “As we look into 2007, our goals are:

1. To continue to grow and deliver sustained profitability,


2. To further increase the size of our external HDD business,


3. To continue to penetrate the high-growth NAS market with new products,


4. To ramp the REV 70GB Backup Drive and push for broad market adoption,


5. To grow our managed service business, and


6. Continue to seek opportunities to leverage Iomega’s assets.”

Conference Call Information

As previously announced, Iomega will host a conference call with simultaneous audio webcast beginning at 4:30 p.m. Eastern Time today to discuss Iomega's fourth quarter financial results and management’s goals and outlook. The webcast may be accessed at http://www.iomega.com/about/investor/ and will be available for replay through the close of business on February 15, 2007.

About Iomega

Iomega Corporation, headquartered in San Diego, is a worldwide leader in innovative storage and network security solutions for small and mid-sized businesses, consumers and others. The Company has sold more than 400 million digital storage drives and disks since its inception in 1980. Today, Iomega’s product portfolio includes industry leading network attached storage products, external hard drives, and our award-winning removable storage technology, the REV ® Backup Drive. OfficeScreen ®, Iomega’s managed security services, available in the U.S. and select markets in Europe, provides enterprise quality perimeter security and secure remote network access for SMBs, which help protect small enterprises from data theft and liability. To learn about all of Iomega’s digital storage products and managed services solutions, please go to the Web at www.iomega.com. Resellers can visit Iomega at www.iomega.com/ipartner.

Special Note Regarding Forward-Looking Statements

Statements contained in this release regarding the Company’s business goals for 2007; and any other statements that are not purely historical are forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such statements are based upon information available to us as of February 1, 2007; and we disclaim any intention or obligation to update any such statements. Actual results could differ materially from current expectations. Factors that could cause or contribute to such differences include losses of key personnel; lower than anticipated sales of our products; any inability or failure to improve REV product sales, stabilize or improve HDD product gross margins; unexpected technical, manufacturing, or supply issues with our products; our inability to achieve a competitive cost structure; competition; our inability to maintain stringent quality assurance standards and customer satisfaction; difficulties in identifying and completing strategic opportunities to grow our business; intellectual property disputes; adverse final judgments in litigation; general economic and/or industry-specific conditions including significant changes in the landscape of data storage demand, pricing, or competition; faster than expected declines in Zip product sales and gross margins; and the other risks and uncertainties identified in the reports filed from time to time by Iomega with the U.S. Securities and Exchange Commission, including Iomega's most recent Annual Report on Form 10-K and quarterly report on Form 10-Q. Obtain a copy of Iomega's Q4/2006 Financial Statements.

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