3PAR Reports Financial Results for First Quarter of Fiscal 2009 and Announces Stock Repurchase Program

FREMONT, CA, Jul 31 (MARKET WIRE) --
3PAR Inc. (NYSE: PAR), the leading global provider of utility storage,
today reported results for the first quarter of fiscal year 2009, which
ended June 30, 2008. Revenue for the first fiscal quarter was $43.0
million, an increase of 80% compared to revenue of $23.8 million for the
same period a year ago and an increase of 21% compared to $35.5 million
in the prior quarter, which ended March 31, 2008.

For the first fiscal quarter, GAAP net income was $678,000 or $0.01 per
share compared to GAAP net loss of $4.7 million or ($0.26) per share for
the same period in the prior year. Non-GAAP net income, which excludes the
impact of stock-based compensation expense, for the first fiscal quarter
of 2009 was $2.0 million or $0.03 per share compared to non-GAAP net loss
of $4.1 million or ($0.23) per share for the same period in the prior
year.

This quarter, 3PAR benefited from the recognition of certain product
revenue that had previously been recognized on a ratable basis. As a
result of establishing fair value during this quarter for the support
services bundled with these transactions back in March 2007, 3PAR
recognized $2.2 million of deferred revenue that relates to the product
portion of the March 2007 transactions. Excluding this one-time revenue
recognition, product revenue would have been $37.7 million, total revenue
would have been $40.7 million, and 3PAR would have reported a GAAP net
loss of $827,000 or ($0.01) per share. Also, excluding this one-time
revenue recognition, 3PAR's non-GAAP net income would have been $460,000
or $0.01 per share.

"We are pleased to see 3PAR deliver another strong quarter of improved
revenue growth and operating leverage," said David Scott, President and
Chief Executive Officer for 3PAR. "We are also delighted that, taking into
account the recognition of previously deferred revenue, we reached an
important milestone of profitability on a GAAP basis."

In addition, 3PAR also announced today that its Board of Directors has
approved the investment of up to $10 million for the purchase of shares of
3PAR common stock in the open market under a stock repurchase program. The
program will be conducted in accordance with applicable securities laws,
rules, and regulations. Repurchases under the program will be made at
3PAR's discretion and at times and in amounts deemed as appropriate based
on factors such as market conditions, legal requirements, and other
corporate considerations.

"The approval of this repurchase program by the Board of Directors
demonstrates 3PAR's commitment to increasing shareholder value," said
Scott.

Additional First Quarter Fiscal 2009 Financial Information

3PAR reports operating income (loss), net income (loss), and earnings
(loss) per share (EPS) on a GAAP and on a non-GAAP basis, which excludes
the impact of stock-based compensation expense. The non-GAAP measures are
described in greater detail below and are reconciled to the corresponding
GAAP measures in the accompanying financial tables. The following data
concerning GAAP operating results include the $2.2 million in deferred
revenue benefit described above.

-- GAAP operating income for the first quarter of fiscal 2009 was
$95,000, or 0% of revenue. This compares to GAAP operating loss of $2.4
million in the fourth quarter of fiscal 2008 or 7% of revenue. Non-GAAP
operating income in the first quarter of fiscal 2009 was $1.4 million or 3%
of revenue. This compares to non-GAAP operating loss of $1.1 million or 3%
of revenue in the fourth quarter of fiscal 2008. GAAP net income for the
first quarter of fiscal 2009 was $678,000 as compared to a net loss of $1.2
million in the fourth quarter of fiscal 2008. Non-GAAP net income in the
first quarter of fiscal 2009 was $2.0 million, compared to $60,000 in the
fourth quarter of fiscal 2008.

-- GAAP basic and diluted EPS for the first quarter of fiscal 2009 was
$0.01 on 60.2 million and 62.8 million weighted average basic and diluted
shares outstanding, respectively, compared to ($0.02) for the fourth
quarter of fiscal 2008 on 60.0 million weighted average shares outstanding.
Non-GAAP basic and diluted EPS in the first quarter of fiscal 2009 was
$0.03, compared to $0.00 in the fourth quarter of fiscal 2008.

-- Non-GAAP operating loss, non-GAAP net income (loss), and non-GAAP EPS
are computed net of stock-based compensation. In the first quarter of
fiscal 2009 and fourth quarter of fiscal 2008, the charge related to stock-
based compensation was $1.3 million and $1.2 million, respectively.

Reconciliations of Non-GAAP measures to GAAP operating income (loss),
net income (loss), and EPS are included at the end of this release.

Webcast and Conference Call Information

3PAR will host a conference call for analysts and investors to discuss its
fiscal first quarter results today at 4:30 p.m. Eastern Time (1:30 p.m.
Pacific Time). A live Webcast of the conference call will also be
accessible from the "Investors" section of 3PAR's Website at www.3PAR.com.

Following the live Webcast, an archived version will be available on the
Website for twelve months. To listen to the replay, parties in the United
States and Canada should call 888-286-8010 and enter passcode 90695526.
International parties can access the replay at +1-617-801-6888 by entering
passcode 90695526.

About 3PAR Inc.

3PAR(R) (NYSE: PAR) is the leading global provider of utility storage, a
category of highly virtualized, tightly-clustered, and dynamically-tiered
storage arrays built for utility computing. Organizations use utility
computing to build cost-effective virtualized IT infrastructures for
flexible workload consolidation. 3PAR Utility Storage gives customers an
alternative to traditional arrays by delivering resilient infrastructure
with increased agility at a lower total cost to meet their rapidly
changing business needs. As a pioneer of thin provisioning -- a green
technology developed to address storage underutilization and
inefficiencies -- 3PAR offers products designed to minimize power
consumption and promote environmental responsibility. With 3PAR,
customers have reduced the costs of allocated storage capacity,
administration, and SAN infrastructure while increasing adaptability and
resiliency. 3PAR Utility Storage is built to meet the demands of open
systems consolidation, integrated data lifecycle management, and
performance-intensive applications. For more information, visit the 3PAR
Website at: www.3PAR.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Forward-looking
statements include, among others, statements concerning 3PAR's revenue
growth trends. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance, time frames or achievements to be materially different from
any future results, performance, time frames or achievements expressed or
implied by the forward-looking statements. Forward-looking statements are
based on management's current, preliminary expectations and are subject
to risks and uncertainties, including the potential for slower than
expected growth of the utility storage market or in customer adoption of
3PAR's storage solutions, particularly in light of substantial
uncertainty about macroeconomic trends in the United States and globally
and their potential impact on information technology spending; the impact
of competitive conditions, including the potential that competitors may
offer substantial pricing discounts or pursue aggressive competitive
tactics to attract and maintain customers and market share; the impact of
technological developments and competitive products and technologies;
3PAR's reliance on third-parties to sell its storage solution; whether
end users continue to adopt 3PAR's storage solutions; pricing and
availability of suppliers' products, which could result in variability in
3PAR's gross margins; general industry trends; and 3PAR's capital and
operating requirements to grow its business and changes in industry
standards and interfaces. Any one or more of these factors could cause
actual results to differ materially from the statements contained herein.
Further information on potential risk factors that could affect 3PAR's
business and its financial results are detailed in its Annual Report on
Form 10-K, as filed with the Securities and Exchange Commission on June
12, 2008, and in subsequent Quarterly Reports on Form 10-Q. Investors
should review these risk factors carefully. Undue reliance should not be
placed on forward-looking statements, which speak only as of the date
they are made. 3PAR undertakes no obligation to update publicly any
forward-looking statements to reflect new information, events or
circumstances after the date they were made, or to reflect the occurrence
of unanticipated events.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with
Generally Accepted Accounting Principles (GAAP), this press release and
the accompanying tables contain the following non-GAAP financial measures:
non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP
earnings (loss) per share (EPS). The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP.

Non-GAAP operating income (loss), net income (loss) and EPS. 3PAR defines
non-GAAP operating income (loss) and net income (loss) as operating income
(loss) and net income (loss) plus stock-based compensation expenses. 3PAR
defines non-GAAP EPS as non-GAAP net income (loss) divided by the weighted
average basic and diluted shares outstanding. 3PAR's management believes
that these non-GAAP financial measures provide meaningful supplemental
information regarding 3PAR's performance by excluding non-cash stock-based
compensation expenses. Because of varying available valuation
methodologies, subjective assumptions and the variety of award types that
companies can use under FAS 123R, 3PAR's management believes that
providing these non-GAAP financial measures allows investors to compare
these results with those of other companies, and provides management with
an important tool for financial and operational decision making and for
evaluating 3PAR's operating results (excluding the impact of these
non-cash charges) over different periods of time.

There are a number of limitations related to the use of non-GAAP operating
income (loss), net income (loss) and EPS versus operating income (loss),
net income (loss) and EPS calculated in accordance with GAAP. First, these
non-GAAP financial measures exclude stock-based compensation expenses that
are recurring. Stock-based expenses have been and will continue to be for
the foreseeable future a significant recurring expense in 3PAR's business.
Second, stock-based awards are an important part of 3PAR's employees'
compensation and impact their performance. Third, the components of the
costs that 3PAR excludes in its calculation of non-GAAP net income (loss)
may differ from the components that its peer companies exclude when they
report their results of operations. Management compensates for these
limitations by providing specific information regarding the GAAP amounts
excluded from these non-GAAP financial measures and evaluating these
non-GAAP financial measures together with their most directly comparable
financial measures calculated in accordance with GAAP. The accompanying
tables have more details on these non-GAAP financial measures, including
reconciliations between these financial measures and their most directly
comparable GAAP equivalents.

A copy of this press release can be found on the "Investors" page of
3PAR's Website at www.3PAR.com.

3PAR Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

June 30, March 31,
2008 2008
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 62,642 $ 97,585
Short-term investments 45,103 18,058
Accounts receivable, net 33,911 34,596
Inventory 23,216 18,057
Deferred cost 5,032 4,273
Prepaid and other current assets 2,226 2,077
------------ ------------
Total current assets 172,130 174,646
Property and equipment, net 14,948 14,781
Deferred cost, non-current - 251
Other non-current assets 157 156
------------ ------------
Total assets $ 187,235 $ 189,834
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ - $ 4,000
Accounts payable 12,526 12,527
Accrued liabilities 14,328 16,671
Deferred revenue 29,163 26,051
Accrued warranty 3,315 3,371
Current portion of notes payable 447 883
------------ ------------
Total current liabilities 59,779 63,503
Accrued warranty, non-current 2,771 2,813
Deferred revenue, non-current 5,235 5,945
Other long-term liabilities 1,129 1,173
------------ ------------
Total liabilities 68,914 73,434
Stockholders' equity 118,321 116,400
------------ ------------
Total liabilities and stockholders' equity $ 187,235 $ 189,834
============ ============

3PAR Inc.
Condensed Consolidated Statement of Operations
(On a GAAP basis)
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended
June 30,
------------------------
2008 2007
----------- -----------
Revenue:
Product $ 39,924 $ 23,123
Support 3,029 685
----------- -----------
Total revenue 42,953 23,808
Cost of revenue:
Product 14,021 8,110
Support 1,006 216
----------- -----------
Total cost of revenue (1) 15,027 8,326
----------- -----------
Gross profit 27,926 15,482
Operating expenses:
Research and development (1) 10,157 7,807
Sales and marketing (1) 14,301 10,457
General and administrative (1) 3,373 2,054
----------- -----------
Total operating expenses 27,831 20,318
----------- -----------
Income (loss) from operations 95 (4,836)
Interest and other income, net 753 182
----------- -----------
Income (loss) before provision for income taxes 848 (4,654)
Provision for income taxes (170) (30)
----------- -----------
Net income (loss) $ 678 $ (4,684)
=========== ===========
Net income (loss) per common share, basic $ 0.01 $ (0.26)
=========== ===========
Net income (loss) per common share, diluted $ 0.01 $ (0.26)
=========== ===========
Shares used to compute basic net income (loss)
per common share 60,233 18,335
=========== ===========
Shares used to compute diluted net income (loss)
per common share 62,762 18,335
=========== ===========
(1) Includes stock-based compensation as follows:
Cost of revenues $ 48 $ 43
Research and development 453 255
Sales and marketing 555 146
General and administrative 231 96

3PAR Inc.
Condensed Consolidated Statement of Operations
(GAAP to non-GAAP reconciliation)
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended
June 30,
------------------------
2008 2007
----------- -----------
GAAP operating income (loss) $ 95 $ (4,836)
Plus:
Stock-based compensation 1,287 540
----------- -----------
Non-GAAP operating income (loss) $ 1,382 $ (4,296)
=========== ===========
GAAP net income (loss) $ 678 $ (4,684)
Plus:
Stock-based compensation 1,287 540
----------- -----------
Non-GAAP net income (loss) $ 1,965 $ (4,144)
=========== ===========
GAAP net income (loss) per common share $ 0.01 ($ 0.26)
Plus:
Stock-based compensation 0.02 0.03
----------- -----------
Non-GAAP net income (loss) per common share
basic $ 0.03 ($ 0.23)
=========== ===========
Non-GAAP net income (loss) per common share
diluted $ 0.03 ($ 0.23)
=========== ===========
Shares used in computing basic non-GAAP net
income (loss) per common share 60,233 18,335
=========== ===========
Shares used in computing diluted non-GAAP net
income (loss) per common share 62,762 18,335
=========== ===========

Contact:
Adriel Lares
Vice President of Finance and
Chief Financial Officer
(510) 413-5999

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