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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    April 30, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file number:
    001-33923
  ArcSight, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

52-2241535(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)   5 Results
    Way
    Cupertino, California 95014 (Address
    of Principal Executive Offices, including Zip
    Code)
  (408) 864-2600 (Registrants
    Telephone Number, including Area Code) Securities
    registered pursuant to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.00001 per share

NASDAQ Global Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





FISCAL
    2009 ANNUAL REPORT ON
    FORM 10-K
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


12Item 1B.


Unresolved Staff Comments


29Item 2.


Properties


29Item 3.


Legal Proceedings


29Item 4.


Submission of Matters to a Vote of Security
    Holders


29PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


30Item 6.


Selected Financial Data


33Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


35Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


58Item 8.


Financial Statements and Supplementary Data


59Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


96Item 9A.


Controls and Procedures


96Item 9B.


Other Information


98PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


98Item 11.


Executive Compensation


98Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


98Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


98Item 14.


Principal Accounting Fees and Services


98PART IVItem 15.


Exhibits and Financial Statement Schedules


99Signatures





100EX-10.16EX-21.1EX-23.1EX-31.01EX-31.02EX-32.01EX-32.02   2




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Forward
    Looking Statements
  Form 10-K Form 10-K Form 10-K.
 PART I  Item 1.
    Business  Overview
         3




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Our
    Strategy
    
    grow our customer base by further penetrating the Global 2000,
    expanding into new geographies and reaching into the mid-market;
    further penetrate our existing customers by expanding their use
    of our platform across the enterprise and extending their use of
    our products to new use cases;
    extend and broaden our partner network and improve the
    effectiveness of our channel partners;
    extend our expertise in compliance and security best practices
    and launch new and innovative applications that open up
    additional markets or address specific compliance and security
    needs and use cases; and
    extend our value proposition to additional event sources and
    business use cases beyond traditional compliance and IT security.  Our
    Solutions and Products
    
    Enterprise-Class Technology and
    Architecture.  We design our solutions to serve
    the needs of the largest organizations, which typically have
    highly complex, geographically dispersed and heterogeneous
    business and technology infrastructures. We deliver
    enterprise-class solutions by providing interoperability,
    flexibility, scalability and efficient archiving.
    Intelligent Correlation.  Our correlation
    engine intelligently distills millions of events occurring daily
    into information that allows customers to identify, analyze,
    prioritize and respond to specific threats, compliance
    violations and other events of interest.
    Cost-Effective Storage.  Our log management
    suite provides easy, scalable, cost-effective storage and
    enables customers to demonstrate the integrity and availability
    of log data both in transit and at rest, facilitating automated
    compliance reporting and reducing the cost of audits.
    Reporting and Visualization.  We present
    threat, compliance risk and other event information through a
    rich and intuitive graphical user interface, through which
    customers can view risk across their organization in a variety
    of ways, address internal and external compliance requirements
    and communicate the value and effectiveness of the
    organizations security operations.  002-009.
 4




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002-009.
  ArcSight ESM.
  
    ArcSight Manager.  ArcSight Manager is
    server-based software that manages event aggregation and
    storage, controls the various elements of our platform and
    provides the engine for high-speed real-time correlation and
    incident response workflow. In 2008, we made an appliance
    version of ArcSight Manager available to facilitate procurement
    and provide turnkey deployment to address the needs of some
    mid-market customers. ArcSight Manager comes with standard rules
    that address common compliance and security issues and business
    risks. It also provides an intuitive system that enables
    customers to write customized rules that apply an
    organizations compliance and security policies into the
    real-time analytics of the correlation engine as well as
    seamless integration with rules generated by our ArcSight
    Pattern Discovery product. ArcSight Manager enables real-time
    collaboration and case management among security analysts, to
    track risk-prioritized response and remediation. In addition, it
    provides case resolution metrics to demonstrate compliance and
    security process and control effectiveness. Our case management
    system also can integrate with third-party trouble ticketing
    systems, such as BMC Software. Our architecture was designed to
    allow customers to scale from a single centralized deployment to
    a distributed, global deployment by deploying additional
    Managers that work in concert.
    ArcSight Console, ArcSight Web and ArcSight
    Viewer.  ArcSight Console is the primary user
    interface to interact with and control ArcSight ESM. Through its
    intuitive interface, the Console provides administrators,
    analysts and operators with graphical data summaries and an
    intuitive interface to perform tasks ranging from real-time
    monitoring and analysis to incident investigation and response
    to system administration and authoring of new content. The
    Console is highly configurable to reflect individual customer
    environments and can display threat and risk information in a
    wide variety of formats including by geography, by division or
    line of business, by type of threat, and by compliance or policy
    initiative. With ArcSight Console, customers can run a wide
    variety of reports to answer internal and external compliance
    audits and communicate the value and effectiveness of the
    organizations security operations. We also provide an
    authoring system that customers can use to create new reports to
    meet their specific business needs. ArcSight ESM contains
    hundreds of standard report templates that immediately address
    common compliance, security and business risk reporting
    requirements. To facilitate remote access for IT administrators
    as well as provide a portal for
    line-of-business
    viewing of status summaries and scheduled reports, our ArcSight
    Web product provides browser-based access to all Console
    functions and content, except administration and authoring, and
    our ArcSight Viewer product provides browser-based read-only
    access to all Console content.  ArcSight Logger. peer-to-peer
 5




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ArcSight Express.
  ArcSight Connectors.
  ArcSight Compliance Insight Packages. 002-009, 800-53)
  ArcSight IdentityView. off-the-shelf
 6




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ArcSight Discovery Modules.
  
    Our ArcSight Pattern Discoverysoftware is a powerful
    complement to our correlation engine. It is an advanced pattern
    identification engine that retrospectively examines large
    amounts of security events previously collected and processed by
    ArcSight ESM to discover patterns of activity that may be
    characteristic of threats, such as emerging worms, new worm
    variants, self-concealing malware, and low profile, slowly
    developing attacks. ArcSight Pattern Discovery proactively
    alerts the security operations analyst about existing or
    emerging patterns that are not comprehended by any rules in our
    correlation engine, and provides the customer the option to
    classify the patterns and also to optionally or automatically
    generate new rules for our ESM products that will detect and
    respond to similar threatening patterns in the future.
    Our ArcSight Interactive Discoveryvisualization software
    helps IT security professionals pan, zoom and switch
    perspectives across complex technical data to perform in-depth
    analysis of security data as well as featuring visuals and
    drill-down capabilities that enable non-technical employees to
    see relevant threat information in a non-technical format.  ArcSight TRM (Threat Response
    Manager). out-of-policy
  ArcSight NCM (Network Configuration
    Manager).
  Maintenance
    and Professional Services
  24-hour
 7




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Product
    Development and Technology
    
    Multi-Vector Correlation.  The strengths of our
    correlation engine are its contextual analysis, mathematical
    correlation, identity correlation and timestamp and time window
    analysis techniques, which together lead to meaning and
    significance in addition to identification of threats and
    compliance violations.
    Scalable Architecture.  We designed the
    architecture of our ESM products so that it can scale and adjust
    to the ongoing needs of an organization by offering
    cross-platform compatibility, utilizing a modular connector
    design, allowing for multi-Manager scaling and including
    in-memory correlation and concurrent, flexible storage.
    Vendor Agnostic.  We have developed proprietary
    technologies that are designed to enable deployment of our
    products in business and technology infrastructures with a wide
    range of event sources, including the creation and promotion of
    a common format for event sources to output their log data. Our
    architecture handles the complex tasks of translation,
    categorization and normalization of event data produced in
    highly heterogeneous formats and taxonomies. To further
    facilitate interoperability, we publish and promote an open
    event data format standard called Common Event Format, or CEF,
    including for products beyond traditional network security
    compliance-related devices and applications. As CEF adoption
    increases, the value of this standard increases and drives
    additional sales opportunities by accelerating event source
    compatibility and expanding the range of risks that our platform
    can address.  Research
    and Development
    Sales and
    Marketing
     8




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e-mail
  Competition
         9




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Intellectual
    Property
   10




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Patents and Patent Applications.
  Oracle License Agreement.
  and/or
  Employees
    Corporate
    History and Information
  (408) 864-2600.
     11




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Available
    Information
  Form 10-K, Form 10-Q, Form 8-K 1-800-SEC-0330
  Item 1A.
    Risk
    Factors  Risk
    Related to Our Business and Industry
  We
    operate in an emerging and evolving market and have a history of
    losses, and we are unable to predict the extent of any future
    losses.
   12




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Our
    future operating results may fluctuate significantly and our
    current operating results may not be a good indication of our
    future performance.
  period-to-period
    
    the timing of our sales during the quarter, particularly since a
    large portion of our sales occurs in the last few weeks of the
    quarter and loss or delay of a few large contracts may have a
    significant adverse impact on our operating results;
    changes in the mix of revenues attributable to higher-margin
    revenues from ESM products as opposed to lower-margin revenues
    from sales of our appliance products;
    the timing of satisfying revenue recognition criteria,
    including, for example, establishing (1) VSOE for new
    products and maintaining VSOE for maintenance and services,
    particularly where we accrue the associated commission expense
    in a different period, and (2) sufficient history with
    respect to our newly introduced appliance licensing model such
    that revenue recognition criteria would be met on shipment of
    our appliances, rather than delaying revenue recognition until
    payment for these transactions in which we will be required to
    do until such history is established;
    changes in the renewal rate of maintenance agreements;
    our ability to estimate warranty claims accurately;
    general economic conditions, both domestically and in our
    foreign markets, and economic conditions specifically affecting
    industries in which our customers participate, such as the
    impact of the recent and continuing severe deterioration in
    global and U.S. economic and financial market conditions on
    the financial services and retail industries; and
    the impact of FASB Interpretation No. 48, Accounting for
    Uncertainty in Income Taxes, an Interpretation of SFAS 109,
    or FIN 48, which requires us to establish reserves for
    uncertain tax positions and accrue potential tax penalties and
    interest. 13




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Our
    sales cycle is long and unpredictable, and our sales efforts
    require considerable time and expense. As a result, our revenues
    are difficult to predict and may vary substantially from quarter
    to quarter, which may cause our operating results to
    fluctuate.
      If we
    fail to further develop and manage our distribution channels,
    our revenues could decline and our growth prospects could
    suffer.
     14




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Because
    we derive a majority of our revenues from ArcSight ESM and
    related products and services, any failure of this product to
    satisfy customer demands or to achieve increased market
    acceptance will harm our business, operating results, financial
    condition and growth prospects.
  lower-than-expected Form 10-K.
  If we
    are unable to successfully develop and market new products, make
    enhancements to our existing products or expand our offerings
    into new markets, our business may not grow and our operating
    results may suffer.
    sub-version
   15




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If we
    are not able to maintain and enhance our brand, our business and
    operating results may be harmed.
      We
    face intense competition in our market, especially from larger,
    better-known companies, and we may lack sufficient financial or
    other resources to maintain or improve our competitive
    position.
       16




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e-Security
    
    greater name recognition and longer operating histories;
    larger sales and marketing budgets and resources;
    the capacity to leverage their sales efforts and marketing
    expenditures across a broader portfolio of products;
    broader distribution and established relationships with
    distribution partners;
    access to larger customer bases;
    greater customer support;
    greater resources to make acquisitions;
    lower labor and development costs; and
    substantially greater financial, technical and other resources.      We may
    not be able to compete effectively with companies that integrate
    or bundle products similar to ours with their other product
    offerings.
   17




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We
    have less experience with sale, manufacture, delivery, service
    and support of ArcSight Logger and our other appliance products
    and rely on a single contract manufacturer for manufacture and
    fulfillment of our appliance products, and as a result we may be
    unable to successfully forecast demand or fulfill orders for
    these appliance products.
    We
    face risks related to customer outsourcing to managed security
    service providers.
    Seasonality
    may cause fluctuations in our operating results.
   18




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
    the fiscal year end procurement cycles of both our government
    and commercial customers;
    the budgeting, procurement and work cycles of our customers,
    including customers in the public sector;
    the timing of our annual sales club for top
    performers and annual training for our entire sales force in our
    first fiscal quarter;
    seasonal reductions in business activity during the summer
    months in the United States, Europe and certain other regions;
    sales to customers with a standard December 31 fiscal year end
    that may positively impact our license revenue in the third
    quarter of our fiscal year; and
    the structure of our direct sales incentive and compensation
    program, which may reinforce the tendency of our direct sales
    team to book the largest volume of deals toward the end of our
    fiscal year.    Our
    business depends, in part, on sales to the public sector, and
    significant changes in the contracting or fiscal policies of the
    public sector could have a material adverse effect on our
    business.
    
    changes in fiscal or contracting policies or decreases in
    available government funding;
    changes in government programs or applicable requirements;
    the adoption of new laws or regulations or changes to existing
    laws or regulations;
    changes in political or social attitudes with respect to
    security issues; and
    potential delays or changes in the government appropriations
    process    Failure
    to comply with laws or regulations applicable to our business
    could cause us to lose U.S. government customers or our ability
    to contract with the U.S. government.
   19




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Our
    government contracts may limit our ability to move development
    activities overseas and to source components from some
    countries, which may impair our ability to optimize our product
    development costs and compete for non-government
    contracts.
    Real
    or perceived errors, failures or bugs in our products could
    adversely affect our operating results and growth
    prospects.
      day-to-day
   20




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Incorrect
    or improper use of our complex products, our failure to properly
    train customers on how to utilize our products or our failure to
    properly provide consulting and implementation services could
    result in customer dissatisfaction and negatively affect our
    results of operations and growth prospects.
  sub-optimal
    If we
    are unable to maintain effective relationships with our
    technology partners, we may not be able to support the
    interoperability of our software with a wide variety of security
    and other products and our business may be harmed.
  out-of-the-box
 21




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Our
    international sales and operations subject us to additional
    risks that can adversely affect our operating
    results.
    
    increased management, travel, infrastructure and legal
    compliance costs associated with having multiple international
    operations;
    longer payment cycles and difficulties in collecting accounts
    receivable, especially in emerging markets, and the likelihood
    that revenues from international resellers and customers may
    need to be recognized when cash is received, at least until
    satisfactory payment history has been established;
    the need to localize our products and licensing programs for
    international customers;
    differing regulatory and legal requirements and possible
    enactment of additional regulations or restrictions on the use,
    import or export of encryption technologies and our
    appliance-based products, which could delay or prevent the sale
    or use of our products in some jurisdictions;
    weaker protection of intellectual property rights in some
    countries; and
    overlapping of different tax regimes.    Our
    business in countries with a history of corruption and
    transactions with foreign governments increase the risks
    associated with our international activities.
    Failure
    to protect our intellectual property rights could adversely
    affect our business.
   22




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Confidentiality
    agreements with employees and others may not adequately prevent
    disclosure of trade secrets and other proprietary
    information.
    We may
    in the future be subject to intellectual property rights claims,
    which are extremely costly to defend, could require us to pay
    significant damages and could limit our ability to use certain
    technologies.
   23




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We
    rely on software licensed from other parties, the loss of which
    could increase our costs and delay software
    shipments.
    Some
    of our products contain open source software, and
    any failure to comply with the terms of one or more of these
    open source licenses could negatively affect our
    business.
   24




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Indemnity
    provisions in various agreements potentially expose us to
    substantial liability for intellectual property infringement and
    other losses.
    Changes
    or reforms in the law or regulatory landscape could diminish the
    demand for our solutions, and could have a negative impact on
    our business.
    If we
    are unable to attract and retain personnel, our business would
    be harmed.
        If we
    fail to manage future growth effectively, our business would be
    harmed.
   25




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Future
    acquisitions could disrupt our business and harm our financial
    condition and results of operations.
    
    an acquisition may negatively impact our results of operations
    because it may require us to incur charges and substantial debt
    or liabilities, may cause adverse tax consequences, substantial
    depreciation or deferred compensation charges, may result in
    acquired in-process research and development expenses or in the
    future may require the amortization, write-down or impairment of
    amounts related to deferred compensation, goodwill and other
    intangible assets, or may not generate sufficient financial
    return to offset acquisition costs;
    we may encounter difficulties or unforeseen expenditures in
    integrating the business, technologies, products, personnel or
    operations of any company that we acquire, particularly if key
    personnel of the acquired company decide not to work for us;
    an acquisition may disrupt our ongoing business, divert
    resources, increase our expenses and distract our management;
    an acquisition may result in a delay or reduction of customer
    purchases for both us and the company acquired due to customer
    uncertainty about continuity and effectiveness of service from
    either company;
    we may encounter difficulties in, or may be unable to,
    successfully sell any acquired products; and
    an acquisition may involve the entry into geographic or business
    markets in which we have little or no prior experience.  If we
    fail to maintain an effective system of internal controls, our
    ability to produce accurate financial statements or comply with
    applicable regulations could be impaired.
       26




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We may
    not be able to utilize a significant portion of our net
    operating loss carry-forwards, which could adversely affect our
    operating results.
    Governmental
    export or import controls could subject us to liability or limit
    our ability to compete in foreign markets.
    Risks
    Related to Ownership of Our Common Stock
  Our
    stock price may be volatile or may decline regardless of our
    operating performance.
    
    actual or anticipated fluctuations in our operating results;
    the financial projections we may provide to the public, any
    changes in these projections or our failure to meet these
    projections;
    failure of securities analysts to initiate or maintain coverage
    of us, changes in financial estimates by any securities analysts
    who follow our company, or our failure to meet these estimates
    or the expectations of investors; 27




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
    ratings or other changes by any securities analysts who follow
    our company or our industry;
    announcements by us or our competitors of significant technical
    innovations, acquisitions, strategic partnerships, joint
    ventures or capital commitments;
    changes in operating performance and stock market valuations of
    other technology companies generally, or those in our industry
    in particular;
    price and volume fluctuations in the overall stock market,
    including as a result of trends in the economy as a whole, such
    as the recent and continuing unprecedented volatility in the
    financial markets;
    lawsuits threatened or filed against us; and
    other events or factors, including those resulting from war,
    incidents of terrorism or responses to these events.    If
    securities or industry analysts do not publish research or
    publish inaccurate or unfavorable research about our business,
    our stock price and trading volume could decline.
    Delaware
    law, provisions in our restated certificate of incorporation and
    amended and restated bylaws and the concentration of our
    ownership could make a merger, tender offer or proxy contest
    difficult, thereby depressing the trading price of our common
    stock.
    
    our board of directors is classified into three classes of
    directors with staggered three-year terms;
    only our chief executive officer, our president, our lead
    independent director, a majority of our board of directors or
    our chairman of the board, if any (none currently), is
    authorized to call a special meeting of stockholders;
    our stockholders are only able to take action at a meeting of
    stockholders and not by written consent;
    vacancies on our board of directors are able to be filled only
    by our board of directors and not by stockholders; 28




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
    directors may be removed from office only for cause;
    our restated certificate of incorporation authorizes
    undesignated preferred stock, the terms of which may be
    established, and shares of which may be issued, without
    stockholder approval; and
    advance notice procedures will apply for stockholders to
    nominate candidates for election as directors or to bring
    matters before an annual meeting of stockholders.    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   29




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information for Common Stock
  intra-day
  Fiscal 2008

High

LowFourth Quarter (beginning February 14, 2008)

$
9.68


$
6.35   Fiscal 2009

High


LowFirst Quarter

$
11.74


$
7.19Second Quarter


13.00



5.25Third Quarter


10.00



4.17Fourth Quarter


16.10



7.70   Fiscal 2010

High


LowFirst Quarter (through July 6, 2009)

$
19.04


$
13.52   Stockholders
   30




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Stock
    Price Performance Graph
    COMPARISON
    OF 14 MONTH CUMULATIVE TOTAL RETURN* Among
    ArcSight, Inc., The NASDAQ Composite Index
    And The NASDAQ Computer & Data Processing Index
   
    Form 10-K,
  Dividend
    Policy
   31




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Equity
    Compensation Plan Information
    (a) Number of





(c) Number of SecuritiesSecurities to be





Remaining Available forIssued Upon





Future Issuance UnderExercise of


(b) Weighted-Average


Equity CompensationOutstanding


Exercise Price of


Plans (ExcludingOptions, Warrants


Outstanding Options,


Securities Reflected inPlan Category

and Rights(1)


Warrants and Rights


Column (a))Equity compensation plans approved by security holders


6,940,996


$
6.10



4,520,099Equity compensation plans not approved by security holders










Total


6,940,996


$
6.10



4,520,099     (1)
    
    Prior to our IPO, we issued securities under our 2002 Stock
    Plan, as amended, and our 2000 Stock Incentive Plan. Following
    our IPO, we issued securities under our 2007 Equity Incentive
    Plan (2007 Plan) and our 2007 Employee Stock
    Purchase Plan (ESPP).      Recent
    Sales of Unregistered Securities
    Use of
    Proceeds from Public Offering of Common Stock
  Form S-1 No. 333-145974)
      Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
   32




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Item 6.
    Selected
    Financial Data  Form 10-K. Form 10-K.
  Fiscal Year Ended April 30,Consolidated Statements of Operations Data:

2009


2008


2007


2006


2005(In thousands, except per share data)Revenues:Products

$
80,616


$
63,765


$
43,989


$
22,859


$
22,357Maintenance


38,521



27,607



18,762



11,473



5,947Services


17,031



10,173



7,082



5,103



4,518Total revenues


136,168



101,545



69,833



39,435



32,822Cost of revenues:Products


8,595



4,767



2,569



1,769



1,084Maintenance(1)


6,861



5,691



3,498



2,085



851Services(1)


9,875



5,800



3,521



2,942



2,559Total cost of revenues


25,331



16,258



9,588



6,796



4,494Gross profit


110,837



85,287



60,245



32,639



28,328Operating expenses(1):Research and development


22,537



19,762



14,535



12,154



7,583Sales and marketing


56,279



53,453



36,587



24,309



14,647General and administrative


20,278



13,422



9,453



12,978



8,725Total operating expenses


99,094



86,637



60,575



49,441



30,955Income (loss) from operations


11,743



(1,350
)


(330
)


(16,802
)


(2,627
)Other income (expense), net


734



472



462



219



(49
)Income (loss) before provision for income taxes


12,477



(878
)


132



(16,583
)


(2,676
)Provision for income taxes


2,564



1,131



389



163



137Net income (loss)

$
9,913


$
(2,009
)

$
(257
)

$
(16,746
)

$
(2,813
)Net income (loss) per common share, basic

$
0.32


$
(0.08
)

$
(0.03
)

$
(2.24
)

$
(0.46
)Net income (loss) per common share, diluted

$
0.30


$
(0.08
)

$
(0.03
)

$
(2.24
)

$
(0.46
)Shares used in computing basic net income (loss) per common share


31,233



25,936



10,042



7,469



6,162Shares used in computing diluted net income (loss) per common
    share


33,550



25,936



10,042



7,469



6,162     (1)
    
    Stock-based compensation expense is included above as follows:  Cost of maintenance revenues

$
216


$
106


$
3


$
5


$
4Cost of services revenues


142



115



14



5



3Research and development


1,342



1,356



501



1,950



1,642Sales and marketing


2,451



2,685



661



210



746General and administrative


1,994



664



350



5,948



4,838Total stock-based compensation expense

$
6,145


$
4,926


$
1,529


$
8,118


$
7,233  33




---



##### Table of Contents



period-to-period
  As of April 30,2009


2008


2007


2006


2005(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
90,467


$
71,946


$
16,917


$
16,443


$
13,493Working capital (deficit)


74,549



46,711



(3,811
)


5,377



11,606Total assets


141,161



118,579



48,990



32,926



26,541Current and long-term debt


















Convertible preferred stock










26,758



26,758



26,928Common stock and additional paid-in capital


113,781



101,574



23,479



19,383



11,301Total stockholders equity


76,673



54,769



5,130



1,433



9,713  34




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis should be read in
    conjunction with our Selected Consolidated Financial
    Data and consolidated financial statements and notes
    thereto included elsewhere in this Annual Report on
    Form 10-K.
    This Annual Report on
    Form 10-K
    contains forward-looking statements within the
    meaning of Section 27A of the Securities Act of 1933, as
    amended, or the Securities Act, and Section 21E of the
    Securities Exchange Act of 1934, as amended, or the Exchange
    Act. These statements are often identified by the use of words
    such as may, will, expect,
    believe, anticipate, intend,
    could, estimate, or
    continue, and similar expressions or variations.
    These statements are based on the beliefs and assumptions of our
    management based on information currently available to
    management. Such forward-looking statements are subject to
    risks, uncertainties and other factors that could cause actual
    results and the timing of certain events to differ materially
    from future results expressed or implied by such forward-looking
    statements. Factors that could cause or contribute to such
    differences include, but are not limited to, those identified
    herein, and those discussed in the section titled Risk
    Factors, set forth in Item 1A of this Annual Report
    on
    Form 10-K
    and in our other SEC filings. You should review these risk
    factors for a more complete understanding of the risks
    associated with an investment in our securities. We disclaim any
    obligation to update any forward-looking statements to reflect
    events or circumstances after the date of such statements.
  Overview
          Important
    Factors Affecting Our Operating Results and Financial
    Condition
    Sales of ESM Products and Appliance Products to New
    Customers.
 35




---



##### Table of Contents



Continued Sales to Our Installed Base.
  Development and Introduction of New
    Products. 002-009 all-in-one
  Development of Our Channel
    Network.
  Sources
    of Revenues, Cost of Revenues and Operating Expenses
    No. 97-2, Software Revenue Recognition SOP No. 98-9, Software Revenue Recognition with Respect to Certain
    Arrangements SOP 97-2,
   36




---



##### Table of Contents



Product
    Revenues
        
    the budgeting, procurement and work cycles of our customers,
    including customers in the public sector;
    the timing of our annual sales club for top
    performers and annual training for our entire sales force in our
    first fiscal quarter;
    seasonal reductions in business activity during the summer
    months in the United States, Europe and certain other regions;
    sales to customers with a standard December 31 fiscal year end
    that may positively impact our license revenue in the third
    quarter of our fiscal year; and
    the structure of our direct sales incentive and compensation
    program, which may reinforce the tendency of our direct sales
    team to book the largest volume of deals toward the end of our
    fiscal year. 37




---



##### Table of Contents



Maintenance
    Revenues
  24-hour
   38




---



##### Table of Contents



Services
    Revenues
  time-and-materials
    Cost
    of Revenues
          Operating
    and Non-Operating Expenses
  Research and Development Expenses.
 39




---



##### Table of Contents



Sales and Marketing Expenses.
  General and Administrative Expenses.
  Other Income (Expense), Net.
  Accounting for Income Taxes. Accounting for Income Taxes
      Critical
    Accounting Policies, Significant Judgments and
    Estimates
   40




---



##### Table of Contents



Revenue
    Recognition
  SOP 97-2.
  SOP 97-2,
  
    persuasive evidence of an arrangement exists;
    the fee is fixed or determinable;
    product delivery has occurred or services have been
    rendered; and
    collection is considered probable.     41




---



##### Table of Contents



SOP 97-2. and/or
        Stock-Based
    Compensation
  Accounting for Stock Issued to Employees Accounting for Stock Appreciation
    Rights and Other Variable Stock Option or Award Plans
  Accounting
    for Stock-Based Compensation
 42




---



##### Table of Contents



Business
    Combinations
  Business Combinations
 43




---



##### Table of Contents



Goodwill
    and Intangible Assets
  Goodwill and Other
    Intangible Assets
  Allowance
    for Doubtful Accounts
    Accounting
    for Income Taxes
    Accounting for Income Taxes
 44




---



##### Table of Contents



Accounting for
    Uncertainty in Income Taxes, an Interpretation of
    SFAS 109
       45




---



##### Table of Contents



Results
    of Operations
    Fiscal Year Ended April 30,2009


2008


2007Revenues:Products


59.2
%


62.8
%


63.0
%Maintenance


28.3



27.2



26.9Services


12.5



10.0



10.1Total revenues


100.0



100.0



100.0Cost of revenues:Products


6.3



4.7



3.7Maintenance


5.0



5.6



5.0Services


7.3



5.7



5.0Total cost of revenues


18.6



16.0



13.7Gross margin


81.4



84.0



86.3Operating expenses:Research and development


16.6



19.5



20.8Sales and marketing


41.3



52.6



52.4General and administrative


14.9



13.2



13.6Total operating expenses


72.8



85.3



86.8Income (loss) from operations


8.6
%


(1.3
)%


(0.5
)%   Comparison
    of Fiscal 2009 and Fiscal 2008
  Revenues
    Fiscal Year EndedApril 30,


Change in


Change in2009


2008


Dollars


PercentProducts

$
80,616


$
63,765


$
16,851



26.4
%Percentage of total revenues


59.2
%


62.8
%Maintenance


38,521



27,607



10,914



39.5
%Percentage of total revenues


28.3
%


27.2
%Services


17,031



10,173



6,858



67.4
%Percentage of total revenues


12.5
%


10.0
%Total revenues

$
136,168


$
101,545


$
34,623



34.1
%   Product Revenues.
 46




---



##### Table of Contents



Maintenance Revenues.
  Services Revenues.
  Geographic Regions.
  Fiscal Year EndedApril 30,


Change in


Change in2009


2008


Dollars


PercentAmericas

$
109,812


$
77,621


$
32,191



41.5
%Percentage of total revenues


80.6
%


76.4
%EMEA


19,409



18,447



962



5.2
%Percentage of total revenues


14.3
%


18.2
%Asia Pacific


6,947



5,477



1,470



26.8
%Percentage of total revenues


5.1
%


5.4
%Total revenues

$
136,168


$
101,545


$
34,623



34.1
%    47




---



##### Table of Contents



Cost
    of Revenues and Gross Margin
    Fiscal Year EndedApril 30,


Change in


Change in2009


2008


Dollars


PercentProducts

$
8,595


$
4,767


$
3,828



80.3
%Maintenance


6,861



5,691



1,170



20.6
%Services


9,875



5,800



4,075



70.3
%Total cost of revenues

$
25,331


$
16,258


$
9,073



55.8
%     Fiscal Year EndedApril 30,2009


2008Gross marginProducts

$
72,021


$
58,998Percentage of product revenues


89.3
%


92.5
%Maintenance

$
31,660


$
21,916Percentage of maintenance revenues


82.2
%


79.4
%Services

$
7,156


$
4,373Percentage of services revenues


42.0
%


43.0
%Total gross margin

$
110,837


$
85,287Percentage of total revenues


81.4
%


84.0
%   Cost of Product Revenues and Gross
    Margin.
  Cost of Maintenance Revenues and Gross
    Margin.
  Cost of Services Revenues and Gross
    Margin.
 48




---



##### Table of Contents



Operating
    Expenses
    Fiscal Year EndedApril 30,


Change in


Change in2009


2008


Dollars


PercentResearch and development

$
22,537


$
19,762


$
2,775



14.0
%Percentage of total revenues


16.6
%


19.5
%Sales and marketing


56,279



53,453



2,826



5.3
%Percentage of total revenues


41.3
%


52.6
%General and administrative


20,278



13,422



6,856



51.1
%Percentage of total revenues


14.9
%


13.2
%Total operating expenses

$
99,094


$
86,637


$
12,457



14.4
%Percentage of total revenues


72.8
%


85.3
%   Research and Development Expenses.
  Sales and Marketing Expenses.
  General and Administrative Expenses.
 49




---



##### Table of Contents



Non-Operating
    Expenses
    Fiscal Year EndedApril 30,


Change in


Change in2009


2008


Dollars


PercentInterest income

$
991


$
857


$
134



15.6
%Percentage of total revenues


0.7
%


0.8
%Other income (expense), net


(257
)


(385
)


128



(33.2
)%Percentage of total revenues


(0.2
)%


(0.4
)%Provision for income taxes


(2,564
)


(1,131
)


(1,433
)


(126.7
)%Percentage of total revenues


(1.9
)%


(1.1
)%Total non-operating expenses

$
(1,830
)

$
(659
)

$
(1,171
)


(177.7
)%Percentage of total revenues


(1.3
)%


(0.6
)%   Interest Income.
  Other Income (Expense), Net.
  Provision for Income Taxes.
 50




---



##### Table of Contents



Comparison
    of Fiscal 2008 and Fiscal 2007
  Revenues
    Fiscal Year EndedApril 30,


Change in


Change in2008


2007


Dollars


PercentProducts

$
63,765


$
43,989


$
19,776



45.0
%Percentage of total revenues


62.8
%


63.0
%Maintenance


27,607



18,762



8,845



47.1
%Percentage of total revenues


27.2
%


26.9
%Services


10,173



7,082



3,091



43.6
%Percentage of total revenues


10.0
%


10.1
%Total revenues

$
101,545


$
69,833


$
31,712



45.4
%   Product Revenues.
  Maintenance Revenues.
  Services Revenues.
  Geographic Regions.
  Fiscal Year EndedApril 30,


Change in


Change in2008


2007


Dollars


PercentAmericas

$
77,621


$
55,704


$
21,917



39.3
%Percentage of total revenues


76.4
%


79.8
%EMEA


18,447



9,408



9,039



96.1
%Percentage of total revenues


18.2
%


13.5
%Asia Pacific


5,477



4,721



756



16.0
%Percentage of total revenues


5.4
%


6.7
%Total revenues

$
101,545


$
69,833


$
31,712



45.4
%  51




---



##### Table of Contents



Cost
    of Revenues and Gross Margin
    Fiscal Year EndedApril 30,


Change in


Change in2008


2007


Dollars


PercentProducts

$
4,767


$
2,569


$
2,198



85.6
%Maintenance


5,691



3,498



2,193



62.7
%Services


5,800



3,521



2,279



64.7
%Total cost of revenues

$
16,258


$
9,588


$
6,670



69.6
%     Fiscal Year EndedApril 30,2008


2007Gross marginProducts

$
58,998


$
41,420Percentage of product revenues


92.5
%


94.2
%Maintenance

$
21,916


$
15,264Percentage of maintenance revenues


79.4
%


81.4
%Services

$
4,373


$
3,561Percentage of services revenues


43.0
%


50.3
%Total gross margin

$
85,287


$
60,245Percentage of total revenues


84.0
%


86.3
%   Cost of Product Revenues and Gross
    Margin.
  Cost of Maintenance Revenues and Gross
    Margin.
  Cost of Services Revenues and Gross
    Margin.
 52




---



##### Table of Contents



Operating
    Expenses
    Fiscal Year EndedApril 30,


Change in


Change in2008


2007


Dollars


PercentResearch and development

$
19,762


$
14,535


$
5,227



36.0
%Percentage of total revenues


19.5
%


20.8
%Sales and marketing


53,453



36,587



16,866



46.1
%Percentage of total revenues


52.6
%


52.4
%General and administrative


13,422



9,453



3,969



42.0
%Percentage of total revenues


13.2
%


13.5
%Total operating expenses

$
86,637


$
60,575


$
26,062



43.0
%Percentage of total revenues


85.3
%


86.7
%   Research and Development Expenses.
  Sales and Marketing Expenses.
  General and Administrative Expenses.
 53




---



##### Table of Contents



Non-Operating
    Expenses
    Fiscal Year EndedApril 30,


Change in


Change in2008


2007


Dollars


PercentInterest income

$
857


$
637


$
220



34.5
%Percentage of total revenues


0.8
%


0.9
%Other income (expense), net


(385
)


(175
)


(210
)


(120.0
)%Percentage of total revenues


(0.4
)%


(0.2
)%Provision for income taxes


(1,131
)


(389
)


(742
)


(190.7
)%Percentage of total revenues


(1.1
)%


(0.6
)%Total non-operating expenses

$
(659
)

$
73


$
(732
)


(1002.7
)%Percentage of total revenues


(0.6
)%


0.1
%   Interest Income.
  Other Income (Expense), Net.
  Provision for Income Taxes.
  Liquidity
    and Capital Resources
       54




---



##### Table of Contents



Fiscal Year Ended April 30,2009


2008


2007Net cash provided by operating activities

$
16,841


$
13,532


$
11,050Net cash used in investing activities


(2,007
)


(4,012
)


(10,233
)Net cash provided by (used in) financing activities

$
3,948


$
45,567


$
(359
)   Operating
    Activities
      
    the growth in our sales transactions and associated cash
    collections or growth in receivables;
    the level of our sales and marketing activities, including
    expansion into new territories;
    the timing and extent of spending to support product development
    efforts; and
    the timing of the growth in general and administrative expenses
    as we further develop our administrative infrastructure to
    support the business as a public company.       55




---



##### Table of Contents



Investing
    Activities
    Financing
    Activities
    Other
    Factors Affecting Liquidity and Capital Resources
    Off-Balance
    Sheet Arrangements
  Regulation S-K.
  Contractual
    Obligations and Commitments
   56




---



##### Table of Contents



Payments Due by PeriodTotal


FY 2010


FY 2011


FY 2012


FY 2013


Thereafter(In thousands)Operating lease obligations

$
9,521


$
2,196


$
1,988


$
2,068


$
2,151


$
1,118Accrued contractual obligations

$
106



33



33



33



7



Total

$
9,627


$
2,229


$
2,021


$
2,101


$
2,158


$
1,118     Recent
    Accounting Pronouncements
      No. 142-3, , FSP 142-3. FSP 142-3 FSP 142-3 , FSP 142-3 SFAS 142-3
     57




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Market Risk.
  Foreign Currency Exchange Risk.
  Interest Rate Risk.
 58




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Quarterly
    Results of Operations
  Form 10-K. Form 10-K.
  Three Months EndedJuly 31,


Oct. 31,


Jan. 31,


April 30,


July 31,


Oct. 31,


Jan. 31,


April 30,2007


2007


2008


2008


2008


2008


2009


2009(Unaudited, in thousands)Revenues:Products

$
12,205


$
15,670


$
17,698


$
18,192


$
15,802


$
19,169


$
21,775


$
23,870Maintenance


5,630



6,617



7,380



7,980



8,568



9,530



10,004



10,419Services


2,035



2,341



2,593



3,204



3,293



4,136



4,613



4,989Total revenues


19,870



24,628



27,671



29,376



27,663



32,835



36,392



39,278Cost of revenues:Products


684



1,130



1,487



1,466



1,655



1,844



2,637



2,459Maintenance(1)


1,246



1,381



1,456



1,608



1,631



1,663



1,637



1,930Services(1)


1,078



1,362



1,454



1,906



2,043



2,387



2,587



2,858Total cost of revenues


3,008



3,873



4,397



4,980



5,329



5,894



6,861



7,247Gross profit


16,862



20,755



23,274



24,396



22,334



26,941



29,531



32,031Operating expenses(1):Research and development


4,260



4,847



5,063



5,592



5,315



5,423



5,201



6,598Sales and marketing


11,919



12,688



12,760



16,086



14,868



14,355



12,298



14,758General and administrative


3,520



3,468



2,939



3,495



4,349



4,863



4,943



6,123Total operating expenses


19,699



21,003



20,762



25,173



24,532



24,641



22,442



27,479Income (loss) from operations


(2,837
)


(248
)


2,512



(777
)


(2,198
)


2,300



7,089



4,552Interest and other income (expense), net


19



21



98



334



305



340



157



(68
)Income (loss) before provision for income taxes


(2,818
)


(227
)


2,610



(443
)


(1,893
)


2,640



7,246



4,484Provision for income taxes


118



139



257



617



(563
)


795



2,183



149Net income (loss)

$
(2,936
)

$
(366
)

$
2,353


$
(1,060
)

$
(1,330
)

$
1,845


$
5,063


$
4,335     (1)
    
    Stock-based compensation expense as included in above:  Cost of maintenance revenues

$
8


$
30


$
24


$
44


$
46


$
54


$
56


$
60Cost of services revenues


8



38



23



46



33



39



34



36Research and development


157



490



293



416



339



334



322



347Sales and marketing


461



680



771



773



751



752



466



482General and administrative


81



180



171



232



234



346



786



628Total stock-based compensation expenses

$
715


$
1,418


$
1,282


$
1,511


$
1,403


$
1,525


$
1,664


$
1,553  59




---



##### Table of Contents



Three Months EndedJuly 31,


Oct. 31,


Jan. 31,


April 30,


July 31,


Oct. 31,


Jan. 31,


April 30,2007


2007


2008


2008


2008


2008


2009


2009(Unaudited)Revenues:Products


61.4
%


63.6
%


64.0
%


61.9
%


57.1
%


58.4
%


59.8
%


60.8
%Maintenance


28.3



26.9



26.6



27.2



31.0



29.0



27.5



26.5Services


10.3



9.5



9.4



10.9



11.9



12.6



12.7



12.7Total revenues


100.0



100.0



100.0



100.0



100.0



100.0



100.0



100.0Cost of revenues:Products


3.4



4.6



5.4



5.0



6.0



5.6



7.3



6.3Maintenance


6.3



5.6



5.3



5.5



5.9



5.1



4.5



4.9Services


5.4



5.5



5.2



6.5



7.4



7.3



7.1



7.3Total cost of revenues


15.1



15.7



15.9



17.0



19.3



18.0



18.9



18.5Gross margin


84.9



84.3



84.1



83.0



80.7



82.0



81.1



81.5Operating expenses:Research and development


21.4



19.7



18.3



19.0



19.2



16.5



14.3



16.8Sales and marketing


60.0



51.5



46.1



54.8



53.7



43.7



33.8



37.6General and administrative


17.7



14.1



10.6



11.9



15.7



14.8



13.5



15.6Total operating expenses


99.1



85.3



75.0



85.7



88.6



75.0



61.6



70.0Income (loss) from operations


(14.3
)%


(1.0
)%


9.1
%


(2.6
)%


(7.9
)%


7.0
%


19.5
%


11.5
%         Three Months EndedJuly 31,


Oct. 31,


Jan. 31,


April 30,


July 31,


Oct. 31,


Jan. 31,


April 30,2007


2007


2008


2008


2008


2008


2009


2009(Unaudited, in millions)Product revenues


0.8



0.6



1.0



0.3



0.2



0.2



0.3



0.2Maintenance revenues


0.1







0.1



















Services revenues






























Total revenues


0.9



0.6



1.1



0.3



0.2



0.2



0.3



0.2    60




---



##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReports of Ernst & Young LLP,
    Independent Registered Public Accounting Firm


62Consolidated Balance Sheets


63Consolidated Statements of Operations


64Consolidated Statements of Stockholders
    Equity


65Consolidated Statements of Cash Flows


66Notes to Consolidated Financial Statements


67  61




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                 62




---



##### Table of Contents



ARCSIGHT,
    INC.
  Consolidated
    Balance Sheets
  As of April 30,2009


2008(In thousands, exceptshare amounts andpar value)ASSETSCurrent assets:Cash and cash equivalents

$
90,467


$
71,946Accounts receivable, net of allowance for doubtful accounts of
    $262 and $133, as of April 30, 2009 and 2008, respectively


34,184



26,658Prepaid expenses and other current assets


3,861



5,565Total current assets


128,512



104,169Property and equipment, net


4,416



4,834Goodwill


5,746



5,746Acquired intangible assets, net


1,319



2,161Other long-term assets


1,168



1,669Total assets

$
141,161


$
118,579LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,432


$
3,115Accrued compensation and benefits


11,671



11,864Other accrued liabilities


4,700



5,967Deferred revenues, current


36,160



36,512Total current liabilities


53,963



57,458Deferred revenues, non-current


8,888



4,754Other long-term liabilities


1,637



1,598Total liabilities


64,488



63,810Commitments and contingencies (Note 6)Stockholders equity:Convertible preferred stock, $0.00001 par value per share,
    10,000,000 shares authorized as of April 30, 2009 and
    2008, respectively; no shares issued and outstanding as of
    April 30, 2009 and 2008, respectively






Common stock, $0.00001 par value per share;
    150,000,000 shares authorized as of April 30, 2009 and
    April 30, 2008, respectively; 32,248,116 and 31,022,190
    issued and outstanding as of April 30, 2009 and 2008,
    respectively






Additional paid-in capital


113,781



101,574Deferred stock-based compensation






(53
)Accumulated other comprehensive loss


(314
)


(45
)Accumulated deficit


(36,794
)


(46,707
)Total stockholders equity


76,673



54,769Total liabilities and stockholders equity

$
141,161


$
118,579    63




---



##### Table of Contents



ARCSIGHT,
    INC.
  Consolidated
    Statements of Operations
  Fiscal Year Ended April 30,2009


2008


2007(In thousands)Revenues:Products

$
80,616


$
63,765


$
43,989Maintenance


38,521



27,607



18,762Services


17,031



10,173



7,082Total revenues


136,168



101,545



69,833Cost of revenues:Products


8,595



4,767



2,569Maintenance(1)


6,861



5,691



3,498Services(1)


9,875



5,800



3,521Total cost of revenues


25,331



16,258



9,588Gross profit


110,837



85,287



60,245Operating expenses(1):Research and development


22,537



19,762



14,535Sales and marketing


56,279



53,453



36,587General and administrative


20,278



13,422



9,453Total operating expenses


99,094



86,637



60,575Income (loss) from operations


11,743



(1,350
)


(330
)Interest income


991



857



637Other income and expense, net


(257
)


(385
)


(175
)Income (loss) before provision for income taxes


12,477



(878
)


132Provision for income taxes


2,564



1,131



389Net income (loss)

$
9,913


$
(2,009
)

$
(257
)Net income (loss) per common share, basic

$
0.32


$
(0.08
)

$
(0.03
)Net income (loss) per common share, diluted

$
0.30


$
(0.08
)

$
(0.03
)Shares used in computing basic net income (loss) per common share


31,233



25,936



10,042Shares used in computing diluted net income (loss) per common
    share


33,550



25,936



10,042     (1)
    
    Stock-based compensation expense included in above (see
    Note 9):  Cost of maintenance revenues

$
216


$
106


$
3Cost of services revenues


142



115



14Research and development


1,342



1,356



501Sales and marketing


2,451



2,685



661General and administrative


1,994



664



350    64




---



##### Table of Contents



ARCSIGHT,
    INC.
  Consolidated
    Statements of Stockholders Equity
 For the
    Fiscal Years Ended April 2007, 2008 and 2009
  AccumulatedConvertible








Additional


Deferred


Other





TotalPreferred Stock


Common Stock


Paid-in


Stock-Based


Comprehensive


Accumulated


StockholdersShares


Amount


Shares


Amount


Capital


Compensation


Income (Loss)


Deficit


Equity(In thousands, except share amounts)Balance as of April 30, 2006


13,029,223



26,758



9,967,561







19,383



(396
)


(3
)


(44,309
)


1,433Issuance of common stock in connection with legal settlement










62,500







178















178Exercise of Series B preferred stock warrants


3,274































Issuance of common stock in connection with acquisition of Enira
    Technologies, LLC










253,038







1,538















1,538Reclassification of options exercised but not vested, net


















122















122Issuance of common stock upon exercise of stock options










225,326







582















582Repurchase of common stock subject to vesting










(21,263
)






(11
)














(11
)Amortization of deferred stock-based compensation, net of
    terminations


















(13
)


280











267Stock-based compensation under SFAS 123R  options


















892















892Issuance of restricted stock in connection with acquisition of
    Enira Technologies, LLC










132,879







808



(808
)










Amortization of restricted stock-based compensation






















370











370Comprehensive loss:Foreign currency translation adjustment


























16







16Net loss






























(257
)


(257
)Comprehensive loss


































(241
)Balance as of April 30, 2007


13,032,497



26,758



10,620,041







23,479



(554
)


13



(44,566
)


5,130Cumulative effect adjustment due to the adoption of FIN 48






























(132
)


(132
)Issuance of common stock upon exercise of stock options










402,260







923















923Reclassification of options exercised but not vested, net


















60















60Repurchase of common stock subject to vesting










(6,845
)






(3
)














(3
)Amortization of deferred stock-based compensation, net of
    terminations


















(6
)


97











91Amortization of restricted stock-based compensation






















404











404Stock-based compensation under SFAS 123R


















4,431















4,431Exercise of Series B preferred stock warrants


12,909































Exercise of common stock warrants










6,293























Conversion of preferred stock into common stock


(13,045,406
)


(26,758
)


14,000,441







26,758















Proceeds from initial public offering, net of issuance costs of
    $4,288










6,000,000







45,932















45,932Comprehensive loss:Foreign currency translation adjustment


























(58
)






(58
)Net loss






























(2,009
)


(2,009
)Comprehensive loss


































(2,067
)Balance as of April 30, 2008










31,022,190







101,574



(53
)


(45
)


(46,707
)


54,769Issuance of common stock under stock option and stock purchase
    plans










1,225,926







4,800















4,800Reclassification of options exercised but not vested, net


















24















24Amortization of deferred stock-based compensation, net of
    terminations






















19











19Amortization of restricted stock-based compensation






















34











34Stock-based compensation under SFAS 123R


















6,092















6,092Tax benefit from stock-based awards


















1,291















1,291Comprehensive income:Foreign currency translation adjustment


























(269
)






(269
)Net income






























9,913



9,913Comprehensive income


































9,644Balance as of April 30, 2009





$




32,248,116


$



$
113,781


$



$
(314
)

$
(36,794
)

$
76,673    65




---



##### Table of Contents



ARCSIGHT,
    INC.
  Consolidated
    Statements of Cash Flows
  Fiscal Year Ended April 30,2009


2008


2007(In thousands)Cash flows from operating activities:Net income (loss)

$
9,913


$
(2,009
)

$
(257
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization


2,471



1,945



1,414Amortization of acquired intangibles


842



573



476Loss (gain) on disposal of property and equipment


17



(6
)


3Stock-based compensation


6,145



4,926



1,529Excess tax benefit from stock-based compensation


(1,291
)






Provision for allowance for doubtful accounts


142



33



112Changes in operating assets and liabilities:Accounts receivable


(7,668
)


(11,137
)


(3,352
)Prepaid expenses and other assets


2,205



1,008



(725
)Accounts payable


(1,683
)


269



2,199Accrued compensation and benefits


(193
)


5,186



3,294Other accrued liabilities


2,159



1,066



1,386Deferred revenues


3,782



11,678



4,971Net cash provided by operating activities


16,841



13,532



11,050Cash flows from investing activities:Restricted cash










(842
)Acquisition of Enira Technologies, LLC










(7,209
)Purchase of property and equipment


(2,007
)


(4,031
)


(2,182
)Proceeds from sales of property and equipment






19



Net cash used in investing activities


(2,007
)


(4,012
)


(10,233
)Cash flows from financing activities:Initial public offering preparation costs






(3,669
)


(619
)Proceeds from initial public offering






50,220



Excess tax benefit from stock-based compensation


1,291







Proceeds from exercise of stock options, net of repurchases


4,800



920



571Payment of capital lease and software license obligations


(2,143
)


(1,904
)


(311
)Net cash provided by (used in) financing activities


3,948



45,567



(359
)Effect of exchange rate changes on cash


(261
)


(58
)


16Net increase in cash and cash equivalents


18,521



55,029



474Cash and cash equivalents at beginning of period


71,946



16,917



16,443Cash and cash equivalents at end of period

$
90,467


$
71,946


$
16,917Supplemental disclosure of cash flow information:Income taxes paid

$
1,669


$
331


$
583Interest expense paid

$
110


$
227


$
7Supplemental disclosure of non-cash investing and financing
    activities:Common stock issued to non-employee for settlement of
    Series B financing costs and for consulting services










178Issuance of restricted stock in connection with acquisition of
    Enira Technologies, LLC










808Common stock issued upon conversion of preferred stock






26,758



Common stock issued for acquisition










1,538Property and equipment acquired under capital lease


101







    66




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes
    to Consolidated Financial Statements
  1.
    Description
    of Business    Initial
    Public Offering
    2.
    Significant
    Accounting Policies  Basis
    of Presentation and Consolidation
    1-for-4
    Use of
    Estimates
   67




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Cash
    and Cash Equivalents
    Fair
    Value of Financial Instruments
    Foreign
    Currency Translation/Transactions
      Derivative
    Financial Instruments
   68




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Concentration
    of Credit Risk and Business Risk
          Revenue
    Recognition
  time-and-materials
  No. 97-2, (SOP 97-2), SOP No. 98-9, (SOP 98-9).
   69




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
               70




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  and/or SOP 97-2, SOP 98-9, SOP 97-2
  time-and-materials
      Allowance
    for Doubtful Accounts
   71




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      AdditionBalance at


Charged to





Balance atBeginning of


Costs and





End ofPeriod

Period


Expenses


Deductions(1)


Period2007

$
54


$
112


$
(43
)

$
1232008

$
123


$
33


$
(23
)

$
1332009

$
133


$
142


$
(13
)

$
262     (1)
    
    Uncollectible amounts written off, net of recoveries.  Restricted
    Cash
    Impairment
    of Long-Lived Assets
    Property
    and Equipment, Net
   72




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Business
    Combinations
      Goodwill
      Software
    Development Costs
    Research
    and Development Expenses
    Advertising
    Expenses
    Income
    Taxes
   73




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Stock-Based
    Compensation Expense
       74




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Comprehensive
    Income (Loss)
    Adoption
    of New Accounting Pronouncements
  SFAS No. 157-2, (FSP 157-2), FSP 157-2.
    
    Level 1  observable inputs such as
    unadjusted quoted prices in active markets for identical assets
    and liabilities;
    Level 2  observable inputs such as quoted
    prices for similar assets and liabilities in active markets that
    are observable either directly or indirectly; and
    Level 3  unobservable inputs in which
    there is little or no market data, which require the Company to
    develop its own assumptions.   75




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Level 1


Level 2


Level 3


TotalCash and cash equivalents

$
90,467






$



$
90,467Restricted cash


842











842Capital lease obligations





$
101







101Total

$
91,309


$
101


$



$
91,410   instrument-by-instrument
  SFAS No. 157-3, (FSP 157-3). FSP 157-3 FSP 157-3 FSP 157-3
  Recent
    Accounting Pronouncements
     76




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  SFAS No. 142-3, (FSP 142-3). FSP 142-3 FSP 142-3 FSP 142-3 SFAS 142-3
      3.
    Net
    Income (Loss) Per Common Share     77




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2009


2008


2007Numerator for basic and diluted net income (loss) per share:Net income (loss)

$
9,913


$
(2,009
)

$
(257
)Denominator for basic net income (loss) per share:Weighted-average common shares, net of weighted-average shares
    subject to repurchase, used in computing net income (loss) per
    common share-basic


31,233



25,936



10,042Denominator for diluted net income (loss) per share:Shares used above, basic


31,233



25,936



10,042Stock options


2,266







Shares subject to repurchase


51







Denominator for diluted net income (loss) per share:


33,550



25,936



10,042Net income (loss) per common share:Basic

$
0.32


$
(0.08
)

$
(0.03
)Diluted

$
0.30


$
(0.08
)

$
(0.03
)       Fiscal Year Ended April 30,2009


2008


2007Convertible preferred stock (as converted)






11,046



13,984Options to purchase common stock


1,354



2,484



2,519Common stock subject to repurchase






153



353Warrants to purchase common stock and convertible preferred
    stock (as converted)






13



22Total


1,354



13,696



16,878   4.
    Acquisition
    of Enira Technologies, LLC   78




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Cash consideration for members of Enira

$
7,000Fair value of common stock issued(1)


1,538Acquisition-related costs(2)


209Total consideration

$
8,747     (1)
    
    The members of Enira received $7.0 million in aggregate
    cash consideration and 253,038 shares of the Companys
    common stock. The fair value of the Companys shares issued
    was based on a per share value of $6.08, which was equal to its
    then deemed fair value.(2)
    
    The acquisition-related costs consist primarily of legal and
    accounting fees and other directly related costs.    No. 95-8,
    Accounts receivable

$
67Inventory


32Other assets


15Goodwill


5,746Intangible assets


3,210Liabilities


(323
)Total

$
8,747  79




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    EstimatedWeighted-AverageUseful LivesPurchase Price


in YearsCore and developed technologies

$
1,970



5.00Customer installed-base relationships


80



6.00Employee non-compete agreements


1,160



5.00Total

$
3,210         As of April 30, 2009Gross





NetCarrying


Accumulated


CarryingAmount


Amortization


AmountIntangible assets:Core and developed technologies

$
1,970


$
(960
)

$
1,010Customer installed-base relationships


80



(53
)


27Employee non-compete agreements


1,160



(878
)


282Total

$
3,210


$
(1,891
)

$
1,319Goodwill









$
5,746   As of April 30, 2008Gross





NetCarrying


Accumulated


CarryingAmount


Amortization


AmountIntangible assets:Core and developed technologies

$
1,970


$
(434
)

$
1,536Customer installed-base relationships


80



(37
)


43Employee non-compete agreements


1,160



(578
)


582Total

$
3,210


$
(1,049
)

$
2,161Goodwill









$
5,746    80




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    EstimatedAmortizationFiscal Year Ending April 30:

Expense2010

$
8892011


4252012


5Total

$
1,319   5.
    Balance
    Sheet Details  Property
    and Equipment, Net
    As of April 30,2009


2008Computers and equipment

$
7,064


$
6,135Furniture and fixtures


1,072



1,071Software


788



754Leasehold improvements


2,337



2,08011,261



10,040Less: accumulated depreciation and amortization


(6,845
)


(5,206
)Property and equipment, net

$
4,416


$
4,834     Accrued
    Compensation and Benefits
    As of April 30,2009


2008Accrued bonus

$
5,441


$
4,621Accrued commissions


2,807



3,997Accrued vacation


2,273



1,804Accrued payroll taxes


667



672Accrued ESPP


346



600Other compensation and benefits


137



170Total accrued compensation and benefits

$
11,671


$
11,864  81




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Deferred
    Revenues
    As of April 30,2009


2008Deferred product revenues

$
9,786


$
13,627Deferred maintenance revenues


32,408



24,256Deferred services revenues


2,854



3,383Total deferred revenues


45,048



41,266Less deferred revenues, current portion


(36,160
)


(36,512
)Deferred revenues, non-current

$
8,888


$
4,754   6.
    Commitments
    and Contingencies      Amount ofFiscal Year Ending April 30:

Payments2010

$
2,1962011


1,9882012


2,0682013


2,1512014


1,118Total future minimum lease payments

$
9,521     7.
    Indemnification
    and Warranties   82




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          8.
    Stockholders
    Equity  Common
    Stock
    Preferred
    Stock
      Shares IssuedAuthorized

andShares

OutstandingUndesignated


10,000,000



10,000,000



  83




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Common
    Stock Reserved for Issuance
    As of April 30, 2009Options available for future grant under the 2007 Equity
    Incentive Plan


4,520,099Options outstanding under the stock option plans


6,940,996Shares reserved for future issuance under the 2007 Employee
    Stock Purchase Plan


941,736Total shares reserved


12,402,831   Stock
    Plans
  2007 Equity Incentive Plan.
    2007 Employee Stock Purchase Plan.
 84




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2002 Stock Plan.
  2000 Stock Incentive Plan.
 85




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Stock
    Plan Activity
    Outstanding OptionsWeighted-


Weighted-Average


AverageShares





Exercise


Remaining


AggregateAvailable


Number of


Price


Contractual


Intrinsicfor Grant


Shares


per Share


Term (Years)


Value(In thousands)Options outstanding as of April 30, 2006


780,876



4,279,979



2.34Options authorized


2,591,860







Options granted


(2,208,347
)


2,208,347



6.87Options exercised






(225,326
)


2.58Options canceled


490,188



(490,188
)


3.66Shares repurchased


21,263



Options outstanding as of April 30, 2007


1,675,840



5,772,812



3.95



8.31


$
31,003Options authorized


4,000,000







Options granted


(1,731,313
)


1,731,313



9.78Options exercised






(402,260
)


2.30Options canceled


414,820



(414,820
)


6.10Shares repurchased


6,845



Options outstanding as of April 30, 2008


4,366,192



6,687,045



5.43



7.89



15,142Options authorized


1,260,416







Options granted


(1,752,950
)


1,752,950



7.73Options exercised






(852,793
)


2.40Options canceled


646,206



(646,206
)


8.42Shares repurchased


235



Options outstanding as of April 30, 2009


4,520,099



6,940,996



6.10



7.30



62,464Vested and expected to vest as of April 30, 2009, net of
    anticipated forfeitures






5,518,092



6.10



7.30



49,659Vested and exercisable as of April 30, 2009






3,810,499



4.56



6.56



40,166    86




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Options Outstanding


Options Vested and ExercisableWeighted-





Weighted-Average





AverageRemaining





ExerciseNumber


Contractual


Number of


Price perExercise Price

Outstanding


Life (Years)


Shares


Share$0.12-0.40


520,842



3.92



520,842


$
0.20$0.48-0.80


815,801



5.69



815,801



0.73$4.00


633,163



6.17



601,807



4.00$4.74-5.98


341,600



9.56







$6.08-6.80


1,896,331



7.52



1,226,255



6.55$7.17-8.95


1,290,272



7.97



69,554



8.05$9.00-9.95


283,202



8.45



115,122



9.20$10.00


1,084,585



8.43



461,118



10.00$11.08-15.74


75,200



9.54







Total


6,940,996



7.30



3,810,499


$
4.56     9.
    Stock-Based
    Compensation    Fiscal Year Ended April 30,2009


2008


2007Stock-based compensation under SFAS 123R

$
5,117


$
4,186


$
892Stock-based compensation under prospective transition method for
    option awards granted prior to the adoption of SFAS 123R


19



91



267Amortization of restricted stock awards in connection with the
    acquisition of Enira Technologies, LLC


34



404



370Stock-based compensation under Employee Stock Purchase Plan


975



245



Total

$
6,145


$
4,926


$
1,529   Adoption
    of SFAS 123R
     87




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##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Valuation
    and Expense Information under SFAS 123R
    Fiscal Year Ended April 30,2009


2008


2007Risk-free interest rate


3.13
%


4.22
%


5.00
%Expected volatility


52
%


55
%


66
%Expected life (years)


5.74



5.25



5.25    88




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fiscal Year Ended April 30,2009


2008


2007Cost of maintenance revenues

$
216


$
106


$
3Cost of services revenues


142



115



14SFAS 123R expense included in cost of revenues


358



221



17Operating expenses:Research and development


1,342



1,356



501Sales and marketing


2,451



2,685



661General and administrative


1,994



664



350SFAS 123R expense included in operating expenses


5,787



4,705



1,512SFAS 123R expense included in net loss

$
6,145


$
4,926


$
1,529         Employee
    Stock Purchase Plan
     89




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##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fiscal Year Ended April 30,2009


2008Risk-free interest rate


1.32
%


2.11
%Expected volatility


61
%


53
%Expected term (years)


0.52



0.58     APB 25
    Intrinsic Value Charges
      Restricted
    Stock Awards for Enira Acquisition
    10.
    Segment
    Information   90




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Fiscal Year Ended April 30,2009


2008


2007Total revenues by geography:United States:Products

$
58,189


$
40,021


$
32,782Maintenance


28,574



21,042



15,444Services


12,897



7,280



5,529Total


99,660



68,343



53,755EMEA:Products


11,432



12,923



6,462Maintenance


5,867



3,960



2,126Services


2,110



1,564



820Total


19,409



18,447



9,408Asia Pacific:Products


4,422



3,553



3,532Maintenance


1,872



1,305



701Services


653



619



488Total


6,947



5,477



4,721Other Americas:Products


6,573



7,267



1,214Maintenance


2,208



1,301



490Services


1,371



710



245Total


10,152



9,278



1,949Total revenues

$
136,168


$
101,545


$
69,833  91




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  11.
    Income
    Taxes    Fiscal Year Ended April 30,2009


2008


2007Current:Federal

$
11,804


$
(2,360
)

$
102Foreign


673



1,482



30Total

$
12,477


$
(878
)

$
132     Fiscal Year Ended April 30,2009


2008


2007Current:Federal

$
1,312


$
150


$
73State


731



185



91Foreign


371



512



225Total current


2,414



847



389Deferred:Federal


130



250



State


20



34



Total deferred


150



284



Total provision

$
2,564


$
1,131


$
389     Fiscal Year Ended April 30,2009


2008


2007U.S. federal taxes (benefit) at statutory rate

$
4,242


$
(298
)

$
45State tax expense, net


482



122



60Foreign taxes


1



512



225Net operating losses benefited


(969
)


(653
)


(231
)Alternative minimum tax






149



73Tax credits


(1,202
)






Stock option expense


746



905



214Meals and entertainment


131



101



92Amortization of tax deductible goodwill


150



284



Change in valuation allowance


(725
)






Other


(292
)


9



(89
)Total provision

$
2,564


$
1,131


$
389  92




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      As of April 30,2009


2008Deferred tax assets:Net operating losses

$
1,998


$
3,303Research credits


2,352



2,777Non-deductible reserves and accruals


1,403



1,705Non-deductible stock-based compensation


6,516



5,619Deferred revenues


3,097



4,377Foreign earnings


(70
)


230Intangibles


492



247Other


91



276Total deferred tax assets


15,879



18,534Valuation allowance


(15,879
)


(18,534
)Total deferred tax assets

$



$
Deferred tax liabilities:Amortization of tax deductible goodwill

$
(434
)

$
(284
)Total deferred tax liabilities

$
(434
)

$
(284
)Net deferred tax liabilities

$
(434
)

$
(284
)      93




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              Balance as of May 1, 2007

$
1,497Tax positions related to current year:Additions


615Balance as of April 30, 2008

$
2,112Tax positions related to current year:Additions for current year items


543Additions for prior year items


96Reductions for prior year items


(57
)Balance as of April 30, 2009

$
2,694    94




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    12.
    Related-Party
    Transactions    13.
    Employee
    Benefit Plan   95




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15
    Internal
    Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f). Internal Control  Integrated Framework
 96




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                 
    97




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f) Rule 15d-15(f) Form 10-K,
  Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance      Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Regulation S-K Regulation S-K
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   98




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Financial Statements: Form 10-K
    Exhibits. Form 10-K.
 99




---



##### Table of Contents



SIGNATURES  Form 10-K
  ARCSIGHT,
    INC.
  By:

/s/  Thomas
    J. ReillyThomas
    J. Reilly
    President and Chief Executive Officer
    (Principal Executive Officer)

By:

/s/  Stewart
    GriersonStewart
    Grierson
    Chief Financial Officer
    (Principal Financial Officer)   POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  Thomas
    J. ReillyThomas
    J. Reilly

President, Chief Executive Officer and Director
    (Principal Executive Officer)

July 8, 2009/s/  Stewart
    GriersonStewart
    Grierson

Chief Financial Officer
    (Principal Financial Officer)

July 8, 2009/s/  Sandra
    BergeronSandra
    Bergeron

Director

July 8, 2009/s/  William
    P. CrowellWilliam
    P. Crowell

Director

July 8, 2009/s/  E.
    Stanton McKee, Jr.E.
    Stanton McKee, Jr.

Director

July 8, 2009/s/  Craig
    RamseyCraig
    Ramsey

Director

July 8, 2009/s/  Scott
    A. RylesScott
    A. Ryles

Director

July 8, 2009/s/  Ted
    SchleinTed
    Schlein

Director

July 8, 2009/s/  Roger
    SiboniRoger
    Siboni

Director

July 8, 2009/s/  Ernest
    von SimsonErnest
    von Simson

Director

July 8, 2009  100




---



##### Table of Contents



EXHIBIT INDEX
  Incorporated by ReferenceExhibit









Filing

ProvidedNumber

Exhibit Description

Form

File No.

Exhibit

Date

Herewith3
.1

Restated Certificate of Incorporation of ArcSight, Inc., as
    currently in effect.

S-1/A

333-145974


3
.2

11/23/073
.2

Amended and Restated Bylaws of ArcSight, Inc., as currently in
    effect.

S-1/A

333-145974


3
.4

11/23/074
.1

Form of ArcSight, Inc. common stock certificate.

S-1/A

333-145974


4
.1

11/23/074
.2

Amended and Restated Investors Rights Agreement, dated as
    of October 24, 2002, between ArcSight, Inc. and certain
    security holders of ArcSight, Inc.

S-1/A

333-145974


4
.2

9/11/0710
.1

Form of Indemnity Agreement entered into between ArcSight, Inc.
    and its directors and executive officers.

S-1/A

333-145974


10
.1

10/29/0710
.2

2000 Stock Incentive Plan.

S-1/A

333-145974


10
.2

9/11/0710
.3

Forms of Stock Option Agreement and Stock Option Exercise
    Agreement under the 2000 Stock Incentive Plan.

S-1/A

333-145974


10
.3

9/11/0710
.4

2002 Stock Plan, as amended.

S-1/A

333-145974


10
.4

9/11/0710
.5

Forms of Stock Option Agreement and Stock Option Exercise
    Agreement under the 2002 Stock Plan.

S-1/A

333-145974


10
.5

9/11/0710
.6

2007 Equity Incentive Plan.

S-1/A

333-145974


10
.6

11/23/0710
.7

Form of Stock Option Agreement, Stock Option Exercise Agreement,
    Restricted Stock Agreement, Restricted Stock Units Award
    Agreement, Stock Appreciation Right Award Agreement, Performance
    Shares Award Agreement and Stock Bonus Award Agreement
    under the 2007 Equity Incentive Plan.

S-1/A

333-145974


10
.7

11/23/0710
.8

2007 Employee Stock Purchase Plan.

S-1/A

333-145974


10
.8

11/23/0710
.9

Form of Subscription Agreement under the 2007 Employee Stock
    Purchase Plan.

S-1/A

333-145974


10
.9

11/23/0710
.10

Offer Letter, dated June 1, 2000, between ArcSight, Inc.
    and Hugh S. Njemanze.

S-1/A

333-145974


10
.11

9/20/0710
.11

Offer Letter, dated January 24, 2003, between ArcSight,
    Inc. and Stewart Grierson, as amended.

S-1/A

333-145974


10
.12

11/23/0710
.12

Offer Letter, dated October 5, 2006, between ArcSight, Inc.
    and Thomas Reilly, as amended.

S-1/A

333-145974


10
.14

11/23/0710
.13

Offer Letter, dated May 6, 2007, between ArcSight, Inc. and
    Reed Henry, as amended.

10-K

001-33923


10
.19

7/22/0810
.14

Fiscal Year 2009 Management Bonus Plan.

S-1/A

333-145974


10
.19

1/22/0810
.15

Lease Agreement, dated April 24, 2007, between ArcSight,
    Inc. and ECI Two Results LLC.

S-1/A

333-145974


10
.17

9/11/0710
.16

Oracle PartnerNetwork Embedded Software License Distribution
    Agreement, dated May 31, 2009, as amended, between
    ArcSight, Inc. and Oracle USA,
    Inc.











X21
.1

Subsidiaries of ArcSight, Inc.











X 101




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##### Table of Contents



Incorporated by ReferenceExhibit









Filing

ProvidedNumber

Exhibit Description

Form

File No.

Exhibit

Date

Herewith23
.1

Consent of Independent Registered Public Accounting Firm.











X31
.01

Certification of Principal Executive Officer Pursuant to
    Securities Exchange Act
    Rule 13a-14(a).











X31
.02

Certification of Principal Financial Officer Pursuant to
    Securities Exchange Act
    Rule 13a-14(a).











X32
.01

Certification of Principal Executive Officer Pursuant to
    18 U.S.C. Section 1350 and Securities Exchange Act
    Rule 13a-14(b).*











X32
.02

Certification of Principal Financial Officer Pursuant to
    18 U.S.C. Section 1350 and Securities Exchange Act
    Rule 13a-14(b).*











X     
    
    Certain portions of this exhibit have been omitted and have been
    filed separately with the SEC pursuant to a request for
    confidential treatment under
    Rule 24b-2
    as promulgated under the Securities Exchange Act of 1934, as
    amended.*
    
    This certification is not deemed filed for purposes
    of Section 18 of the Securities Exchange Act, or otherwise
    subject to the liability of that section. Such certification
    will not be deemed to be incorporated by reference into any
    filing under the Securities Act of 1933 or the Securities
    Exchange Act of 1934, except to the extent that ArcSight, Inc.
    specifically incorporates it by reference. 102