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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2008ORo

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-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




---



##### 





FISCAL
    2008 ANNUAL REPORT ON
    FORM 10-K
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


1Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


26Item 2.


Properties


26Item 3.


Legal Proceedings


26Item 4.


Submission of Matters to a Vote of Security
    Holders


26PART IIItem 5.


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


26Item 6.


Selected Financial Data


30Item 7.


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


31Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


53Item 8.


Financial Statements and Supplementary Data


54Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


92Item 9A.


Controls and Procedures


92Item 9B.


Other Information


93PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


93Item 11.


Executive Compensation


93Item 12.


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


93Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


93Item 14.


Principal Accounting Fees and Services


94PART IVItem 15.


Exhibits and Financial Statement Schedules


94Signatures


95EXHIBIT 10.18EXHIBIT 10.19EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.01EXHIBIT 31.02EXHIBIT 32.01EXHIBIT 32.02




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Forward
    Looking Statements
  Form 10-K Form 10-K Form 10-K.
 PART I  Item 1.
    Business  Overview
          Our
    Strategy
    
    grow our customer base;
    deepen our penetration of existing customers;
    extend our partner network; 1




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
    extend our expertise in security best practices; and
    extend our value proposition to additional event sources and
    business use cases beyond traditional IT security.  Our
    Solutions and Products
    
    Enterprise-Class Technology and
    Architecture.  We design our solutions to serve
    the needs of even 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, prioritize
    and respond to specific threats or compliance violations.
    Reporting and Visualization.  We present threat
    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.    ArcSight ESM.
  
    ArcSight Connectors.  Connectors are software
    that collect event data streams from sources across an
    organizations business and technology infrastructure. Our
    connector software products are also available as an appliance.
    These connectors implement extensive normalization capabilities
    to restructure event data into a common taxonomy so events from
    hundreds of different sources can be compared meaningfully and
    queried systematically irrespective of which device is reporting
    the information. The normalized event data stream is then
    intelligently aggregated and compressed to eliminate irrelevant
    and duplicate messages and reduce bandwidth and storage
    consumption. Our SmartConnectors receive and translate event
    data streams from over 275 different devices and applications
    from approximately 100 vendors and in more than
    30 different solution categories. Further, using our
    FlexConnector toolkit, our customers can create custom
    connectors tailored to their environment, such as for new
    products, proprietary applications and mainframe and other
    legacy systems. Our connectors can be deployed on intermediate
    collection points, such as third-party management consoles,
    where available, avoiding the requirement to provision our
    connectors directly onto end devices. 2




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
    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. We recently made ArcSight Manager
    available as an appliance, to facilitate 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
    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 the ArcSight ESM
    platform. 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. Our
    ESM platform 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 Compliance Insight and Insider Threat
    Packages.
  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. 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 platform that will detect and respond to
    similar threatening patterns in the future. 3




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
    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 Logger.
    ArcSight TRM (Threat Response
    Manager).
  ArcSight NCM (Network Configuration
    Manager).
  Maintenance
    and Professional Services
  24-hour
 4




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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 platform 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 by 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 the adoption of
    CEF 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
     5




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e-mail
  Competition
    e-Security,
       6




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Intellectual
    Property
    Patents and Patent Applications.
 7




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Oracle License Agreement.
  and/or
  Employees
    Corporate
    History and Information
  (408) 864-2600.
     8




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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
    have a limited operating history in an emerging market and a
    history of losses, and we are unable to predict the extent of
    any future losses or when, if ever, we will achieve
    profitability in the future.
    Our
    future operating results may fluctuate significantly and may not
    be a good indication of our future performance.
   9




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
    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;
    changes in the renewal rate of maintenance agreements;
    our ability to estimate warranty claims accurately;
    the timing of satisfying revenue recognition criteria, including
    establishing VSOE for new products and maintaining VSOE for
    maintenance and services;
    the budgeting, procurement and work cycles of our customers,
    including customers in the public sector, which may cause
    seasonal variation as our business and the market for compliance
    and security management software solutions matures; and
    general economic conditions, both domestically and in our
    foreign markets, and economic conditions specifically affecting
    industries in which our customers participate, such as financial
    services and retail.  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.
     10




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If
    we fail to further develop and manage our distribution channels,
    our revenues could decline and our growth prospects could
    suffer.
      We
    have limited experience with sale, manufacture, delivery,
    service and support of Logger and our other appliance products,
    and we may be unable to successfully forecast demand or fulfill
    orders for these appliance products.
   11




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Because
    we derive a significant 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.
  Form 10-K.
  If
    we are unable to successfully market our recently introduced
    products, successfully develop 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.
       12




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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.
    e-Security).
   13




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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.
   14




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We
    face risks related to customer outsourcing to managed security
    service providers.
    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;
    potential delays or changes in the government appropriations
    process; and
    delays in the payment of our invoices by government payment
    offices    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.
   15




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Our
    government contracts may limit our ability to move development
    activities overseas, which may impair our ability to optimize
    our software 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.
           16




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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.
      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.
    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; 17




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
    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;
    reduced protection for 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.
     18




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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.
    We
    rely on software licensed from other parties, the loss of which
    could increase our costs and delay software
    shipments.
   19




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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.
    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.
   20




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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.
    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; 21




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
    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.
           22




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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; 23




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
    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;
    ratings changes by any securities analysts who follow our
    company;
    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;
    lawsuits threatened or filed against us; and
    other events or factors, including those resulting from war,
    incidents of terrorism or responses to these events.    A
    significant portion of our total outstanding shares may be sold
    into the market in the near future. If there are substantial
    sales of shares of our common stock, the price of our common
    stock could decline.
  and/or lock-up
  Date Available for Sale

Number of Shares andinto Public Market

% of Total OutstandingImmediately after the date of this Annual Report on
    Form 10-K

No shares, or 0%August 13, 2008, or 181 days after the date of the
    prospectus relating to our IPO, subject to deferral in some
    circumstances

24,188,887 shares, or 77.9%, of which
    10,473,461 shares, or 33.7%, will be subject to limitations
    under Rules 144 and 701   and/or lock-up and/or lock-up 180-day lock-up lock-up 180-day lock-up
   24




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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.
    Our
    directors, executive officers and principal stockholders have
    substantial control over us and could delay or prevent a change
    in corporate control.
    
    delaying, deferring or preventing a change in control of us;
    impeding a merger, consolidation, takeover or other business
    combination involving us; or
    discouraging a potential acquirer from making a tender offer or
    otherwise attempting to obtain control of us.  Delaware
    law and provisions in our restated certificate of incorporation
    and amended and restated bylaws 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 chairman of the board, our lead independent director,
    if any, our chief executive officer, our president or a majority
    of our board of directors 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;
    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. 25




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Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   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 Year Ended

High

LowFourth Quarter 2008 (beginning February 14, 2008)

$
9.68


$
6.35First Quarter 2009 (through July 15, 2008)

$
10.69


$
7.19   Stockholders
   26




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Stock
    Price Performance Graph
    COMPARISON
    OF 2 MONTH CUMULATIVE TOTAL RETURN*
    Among ArcSight, Inc., The NASDAQ Composite Index
    And The NASDAQ Computer & Data Processing Index
  
      Form 10-K,
  Dividend
    Policy
   27




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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


6,687,045


$
5.43



4,366,192Equity compensation plans not approved by security holders










Total


6,687,045


$
5.43



4,366,192     (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
      28




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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
   29




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K. Form 10-K.
  Consolidated Statements of

Fiscal Year Ended April 30,Operations Data:

2008


2007


2006


2005


2004(In thousands, except per share data)Revenues:Products

$
63,765


$
43,989


$
22,859


$
22,357


$
12,442Maintenance


27,607



18,762



11,473



5,947



1,931Services


10,173



7,082



5,103



4,518



926Total revenues


101,545



69,833



39,435



32,822



15,299Cost of revenues:Products


4,767



2,569



1,769



1,084



526Maintenance(1)


5,691



3,498



2,085



851



207Services(1)


5,800



3,521



2,942



2,559



565Total cost of revenues


16,258



9,588



6,796



4,494



1,298Gross profit


85,287



60,245



32,639



28,328



14,001Operating expenses(1):Research and development


19,762



14,535



12,154



7,583



4,068Sales and marketing


53,453



36,587



24,309



14,647



8,041General and administrative


13,422



9,453



12,978



8,725



3,480Total operating expenses


86,637



60,575



49,441



30,955



15,589Loss from operations


(1,350
)


(330
)


(16,802
)


(2,627
)


(1,588
)Other income (expense), net


472



462



219



(49
)


106Income (loss) before provision for income taxes


(878
)


132



(16,583
)


(2,676
)


(1,482
)Provision for income taxes


1,131



389



163



137



23Net loss

$
(2,009
)

$
(257
)

$
(16,746
)

$
(2,813
)

$
(1,505
)Net loss per common share, basic and diluted

$
(0.08
)

$
(0.03
)

$
(2.24
)

$
(0.46
)

$
(0.28
)Shares used in computing basic and diluted net loss per common
    share


25,936



10,042



7,469



6,162



5,372     (1)
    
    Stock-based compensation expense is included above as follows:  Cost of maintenance revenues

$
106


$
3


$
5


$
4


$
Cost of services revenues


115



14



5



3



1Research and development


1,356



501



1,950



1,642



143Sales and marketing


2,685



661



210



746



14General and administrative


664



350



5,948



4,838



425Total stock-based compensation expense

$
4,926


$
1,529


$
8,118


$
7,233


$
583  30




---



##### Table of Contents



As of April 30,2008


2007


2006


2005


2004(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
71,946


$
16,917


$
16,443


$
13,493


$
7,976Working capital (deficit)


46,711



(3,811
)


5,377



11,606



4,990Total assets


118,579



48,990



32,926



26,541



13,162Current and long-term debt


















Convertible preferred stock






26,758



26,758



26,928



26,362Common stock and additional paid-in capital


101,574



23,479



19,383



11,301



2,950Total stockholders equity

$
54,769


$
5,130


$
1,433


$
9,713


$
4,460   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 (Securities Act), and Section 21E of the Securities
    Exchange Act of 1934, as amended (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, including our final prospectus
    dated as of February 14, 2008. 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
   31




---



##### Table of Contents



Important
    Factors Affecting Our Operating Results and Financial
    Condition
    Sales of ESM Platform and Appliance Products to New
    Customers.
  Continued Sales to Our Installed Base.
  Development and Introduction of New
    Products.
  Development of an Expanded Channel Network for Our
    Products.
 32




---



##### Table of Contents



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,
        Product
    Revenues
   33




---



##### Table of Contents



Maintenance
    Revenues
  maintenancestandard 24-hour
   34




---



##### Table of Contents



Services
    Revenues
  time-and-materials
    Cost
    of Revenues
          Operating
    and Non-Operating Expenses
  Research and Development Expenses.
  Sales and Marketing Expenses.
 35




---



##### Table of Contents



General and Administrative Expenses.
  Other Income (Expense), Net.
  Provision for Income Taxes. Accounting for Income Taxes
    Critical
    Accounting Policies, Significant Judgments and
    Estimates
   36




---



##### 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.     37




---



##### 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
  Black-Scholes
 38




---



##### Table of Contents



Business
    Combinations
  Business Combinations
   39




---



##### Table of Contents



Goodwill
    and Intangible Assets
  Goodwill and Other
    Intangible Assets
  Allowance
    for Doubtful Accounts
    Accounting
    for Income Taxes
    Accounting for Income Taxes
     40




---



##### Table of Contents



Accounting for Uncertainty
    in Income Taxes, an Interpretation of SFAS 109
       41




---



##### Table of Contents



Results
    of Operations
    Fiscal Year Ended April 30,2008


2007


2006Revenues:Products


62.8
%


63.0
%


58.0
%Maintenance


27.2



26.9



29.1Services


10.0



10.1



12.9Total revenues


100.0



100.0



100.0Cost of revenues:Products


4.7



3.7



4.5Maintenance


5.6



5.0



5.3Services


5.7



5.0



7.4Total cost of revenues


16.0



13.7



17.2Gross margin


84.0



86.3



82.8Operating expenses:Research and development


19.5



20.8



30.8Sales and marketing


52.6



52.4



61.7General and administrative


13.2



13.6



32.9Total operating expenses


85.3



86.8



125.4Loss from operations


(1.3
)%


(0.5
)%


(42.6
)%   Comparison
    of Fiscal 2008 and Fiscal 2007
  Revenues
    Fiscal Year Ended April 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.
 42




---



##### Table of Contents



Maintenance Revenues.
  Services Revenues.
  Geographic Regions.
  Fiscal Year Ended April 30,


Change in


Change in2008


2007


Dollars


PercentAmericas

$
77,621


$
55,704


$
21,917



39.3
%Percentage of total revenues


76.4
%


79.8
%Europe-Middle East


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
%   Cost
    of Revenues and Gross Margin
    Fiscal Year Ended April 30,


Change in


Change in2008


2007


Dollars


PercentProducts

$
4,767


$
2,569


$
2,198



85.6
%Percentage of total revenues


4.7
%


3.7
%Maintenance


5,691



3,498



2,193



62.7
%Percentage of total revenues


5.6
%


5.0
%Services


5,800



3,521



2,279



64.7
%Percentage of total revenues


5.7
%


5.0
%Total cost of revenues

$
16,258


$
9,588


$
6,670



69.6
%  43




---



##### Table of Contents



Fiscal Year Ended April 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.
 44




---



##### Table of Contents



Operating
    Expenses
    Fiscal Year Ended April 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.
 45




---



##### Table of Contents



Non-Operating
    Expenses
    Fiscal Year Ended April 30,


Change in


Change in2008


2007


Dollars


PercentInterest income

$
857


$
637


$
220



34.5
%Percentage of total revenues


0.8
%


0.9
%Other 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.
  Comparison
    of Fiscal 2007 and Fiscal 2006
  Revenues
    Fiscal Year Ended April 30,


Change in


Change in2007


2006


Dollars


PercentProducts

$
43,989


$
22,859


$
21,130



92.4
%Percentage of total revenues


63.0
%


58.0
%Maintenance


18,762



11,473



7,289



63.5
%Percentage of total revenues


26.9
%


29.1
%Services


7,082



5,103



1,979



38.8
%Percentage of total revenues


10.1
%


12.9
%Total revenues

$
69,833


$
39,435


$
30,398



77.1
%   Product Revenues.
 46




---



##### Table of Contents



Maintenance Revenues.
  Services Revenues.
  Geographic Regions.
  Fiscal Year Ended April 30,


Change in


Change in2007


2006


Dollars


PercentAmericas

$
55,704


$
32,743


$
22,961



70.1
%Percentage of total revenues


79.8
%


83.0
%Europe-Middle East


9,408



4,668



4,740



101.5
%Percentage of total revenues


13.5
%


11.9
%Asia Pacific


4,721



2,024



2,697



133.3
%Percentage of total revenues


6.7
%


5.1
%Total revenues

$
69,833


$
39,435


$
30,398



77.1
%   Cost
    of Revenues and Gross Margin
    Fiscal Year Ended April 30,


Change in


Change in2007


2006


Dollars


PercentProducts

$
2,569


$
1,769


$
800



45.2
%Percentage of total revenues


3.7
%


4.5
%Maintenance


3,498



2,085



1,413



67.8
%Percentage of total revenues


5.0
%


5.3
%Services


3,521



2,942



579



19.7
%Percentage of total revenues


5.0
%


7.4
%Total cost of revenues

$
9,588


$
6,796


$
2,792



41.1
%  47




---



##### Table of Contents



Year Ended April 30,2007


2006Gross marginProducts

$
41,420


$
21,090Percentage of product revenues


94.2
%


92.3
%Maintenance


15,264



9,388Percentage of maintenance revenues


81.4
%


81.8
%Services


3,561



2,161Percentage of services revenues


50.3
%


42.3
%Total gross margin

$
60,245


$
32,639Percentage of total revenues


86.3
%


82.8
%   Cost of Product Revenues and Gross
    Margin.
  Cost of Maintenance Revenues and Gross
    Margin.
  Cost of Services Revenues and Gross
    Margin.
  Operating
    Expenses
    Fiscal Year Ended April 30,


Change in


Change in2007


2006


Dollars


PercentResearch and development

$
14,535


$
12,154


$
2,381



19.6
%Percentage of total revenues


20.8
%


30.8
%Sales and Marketing


36,587



24,309



12,278



50.5
%Percentage of total revenues


52.4
%


61.7
%General and administrative


9,453



12,978



(3,525
)


(27.2
)%Percentage of total revenues


13.5
%


32.9
%Total operating expenses

$
60,575


$
49,441


$
11,134



22.5
%Percentage of total revenues


86.7
%


125.4
%   Research and Development Expenses.
 48




---



##### Table of Contents



Sales and Marketing Expenses.
  General and Administrative Expenses.
  Non-Operating
    Expenses
    Fiscal Year Ended April 30,


Change in


Change in2007


2006


Dollars


PercentInterest income

$
637


$
435


$
202



46.4
%Percentage of total revenues


0.9
%


1.1
%Other expense, net


(175
)


(216
)


41



19.0
%Percentage of total revenues


(0.2
)%


(0.5
)%Provision for income taxes


(389
)


(163
)


(226
)


(138.7
)%Percentage of total revenues


(0.6
)%


(0.4
)%Total non-operating expenses

$
73


$
56


$
17



30.4
%Percentage of total revenues


0.1
%


0.1
%   Interest Income.
  Other Expense, Net.
  Provision for Income Taxes.
 49




---



##### Table of Contents



Liquidity
    and Capital Resources
          Fiscal Year Ended April 30,2008


2007


2006Net cash provided by operating activities

$
13,532


$
11,050


$
3,848Net cash used in investing activities


(4,012
)


(10,233
)


(1,431
)Net cash provided by (used in) financing activities

$
45,567



(359
)


538   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.   50




---



##### Table of Contents



Investing
    Activities
    Financing
    Activities
    Other
    Factors Affecting Liquidity and Capital Resources
   51




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
  Regulation S-K.
  Contractual
    Obligations and Commitments
      Payments Due by PeriodTotal


FY 2009


FY 2010


FY 2011


FY 2012


Thereafter(In thousands)Operating lease obligations

$
11,581


$
2,323


$
1,933


$
1,988


$
2,068


$
3,269Accrued contractual obligations

$
2,298



2,134



161



3







Total

$
13,879


$
4,457


$
2,094


$
1,991


$
2,068


$
3,269   Recent
    Accounting Pronouncements
        Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
 52




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Market Risk.
  Foreign Currency Exchange Risk.
  Interest Rate Risk.
 53




---



##### 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 30,2006


2006


2007


2007


2007


2007


2008


2008(Unaudited, in thousands)Revenues:Products

$
7,712


$
8,962


$
10,209


$
17,106


$
12,205


$
15,670


$
17,698


$
18,192Maintenance


3,631



4,137



4,611



6,383



5,630



6,617



7,380



7,980Services


1,614



1,663



1,914



1,891



2,035



2,341



2,593



3,204Total revenues


12,957



14,762



16,734



25,380



19,870



24,628



27,671



29,376Cost of revenues:Products


657



392



625



895



684



1,130



1,487



1,466Maintenance(1)


807



843



851



997



1,246



1,381



1,456



1,608Services(1)


954



930



847



790



1,078



1,362



1,454



1,906Total cost of revenues


2,418



2,165



2,323



2,682



3,008



3,873



4,397



4,980Gross profit


10,539



12,597



14,411



22,698



16,862



20,755



23,274



24,396Operating expenses(1):Research and development


3,358



3,575



3,636



3,966



4,260



4,847



5,063



5,592Sales and marketing


7,735



7,728



9,226



11,898



11,919



12,688



12,760



16,086General and administrative


1,757



2,104



2,125



3,467



3,520



3,468



2,939



3,495Total operating expenses


12,850



13,407



14,987



19,331



19,699



21,003



20,762



25,173Income (loss) from operations


(2,311
)


(810
)


(576
)


3,367



(2,837
)


(248
)


2,512



(777
)Interest and other income, net


113



71



131



147



19



21



98



334Income (loss) before provision for income taxes


(2,198
)


(739
)


(445
)


3,514



(2,818
)


(227
)


2,610



(443
)Provision for income taxes


98



97



97



97



118



139



257



617Net income (loss)

$
(2,296
)

$
(836
)

$
(542
)

$
3,417


$
(2,936
)

$
(366
)

$
2,353


$
(1,060
)     (1)
    
    Stock-based compensation expense as included in above:  Cost of maintenance revenues

$



$
1


$
1


$
1


$
8


$
30


$
24


$
44Cost of services revenues


2



2



3



7



8



38



23



46Research and development


91



131



136



143



157



490



293



416Sales and marketing


42



53



110



456



461



680



771



773General and administrative


80



92



97



81



81



180



171



232Total stock-based compensation expenses

$
215


$
279


$
347


$
688


$
715


$
1,418


$
1,282


$
1,511  54




---



##### Table of Contents



Three Months EndedJuly 31,


Oct. 31,


Jan. 31,


April 30,


July 31,


Oct. 31,


Jan. 31,


April 30,2006


2006


2007


2007


2007


2007


2008


2008(Unaudited)Revenues:Products


59.5
%


60.7
%


61.0
%


67.4
%


61.4
%


63.6
%


64.0
%


61.9
%Maintenance


28.0



28.0



27.6



25.1



28.3



26.9



26.6



27.2Services


12.5



11.3



11.4



7.5



10.3



9.5



9.4



10.9Total revenues


100.0



100.0



100.0



100.0



100.0



100.0



100.0



100.0Cost of revenues:Products


5.1



2.7



3.7



3.5



3.4



4.6



5.4



5.0Maintenance


6.2



5.7



5.1



3.9



6.3



5.6



5.3



5.5Services


7.4



6.3



5.1



3.1



5.4



5.5



5.2



6.5Total cost of revenues


18.7



14.7



13.9



10.6



15.1



15.7



15.9



17.0Gross margin


81.3



85.3



86.1



89.4



84.9



84.3



84.1



83.0Operating expenses:Research and development


25.9



24.2



21.7



15.6



21.4



19.7



18.3



19.0Sales and marketing


59.7



52.4



55.1



46.9



60.0



51.5



46.1



54.8General and administrative


13.6



14.3



12.7



13.7



17.7



14.1



10.6



11.9Total operating expenses


99.2



90.8



89.6



76.2



99.1



85.3



75.0



85.7Income (loss) from operations


(17.8
)%


(5.5
)%


(3.4
)%


13.3
%


(14.3
)%


(1.0
)%


9.1
%


(2.6
)%     Due to rounding to the nearest tenth of a percent, totals may
    not equal the sum of the line items in the table above.   55




---



##### Table of Contents



Three Months EndedJuly 31,


Oct. 31,


Jan. 31,


April 30,


July 31,


Oct. 31,


Jan. 31,


April 30,2006


2006


2007


2007


2007


2007


2008


2008(Unaudited, in millions)Product revenues

$




(0.2
)


(1.2
)


3.1



0.8



0.6



1.0



0.3Maintenance revenues


(0.3
)


(0.3
)


(0.3
)


1.0



0.1







0.1



Services revenues










(0.1
)


0.1















Total revenues


(0.3
)


(0.5
)


(1.6
)


4.2



0.9



0.6



1.1



0.3    56




---



##### 



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


58Consolidated Balance Sheets


59Consolidated Statements of Operations


60Consolidated Statements of Stockholders
    Equity


61Consolidated Statements of Cash Flows


63Notes to Consolidated Financial Statements


64   57




---



##### Table of Contents



Report of
    Ernst & Young LLP, Independent Registered Public
    Accounting Firm             Ernst &
    Young LLP
    58




---



##### Table of Contents



ARCSIGHT,
    INC.



Consolidated
    Balance Sheets

(In
    thousands, except share amounts and par value)  As of April 30,2008


2007AssetsCurrent assets:Cash and cash equivalents

$
71,946


$
16,917Accounts receivable, net of allowance for doubtful accounts of
    $133 and $123, as of April 30, 2008 and 2007, respectively


26,658



15,554Capitalized software licenses, current


1,900



249Other prepaid expenses and current assets


3,665



2,207Total current assets


104,169



34,927Restricted cash


842



842Income taxes receivable


391



761Property and equipment, net


4,834



2,753Goodwill


5,746



5,746Acquired intangible assets, net


2,161



2,734Capitalized software licenses, non-current


144



394Other long-term assets


292



833Total assets

$
118,579


$
48,990Liabilities and Stockholders EquityCurrent liabilities:Accounts payable

$
3,115


$
2,846Accrued compensation and benefits


11,864



6,678Obligations for software licenses


2,222



551Other accrued liabilities


3,745



3,869Deferred revenues, current


36,512



24,794Total current liabilities


57,458



38,738Deferred revenues, non-current


4,754



4,794Other long-term liabilities


1,598



328Total liabilities


63,810



43,860Commitments and contingencies (Note 6)Stockholders equity:Convertible preferred stock, $0.00001 par value per share,
    10,000,000 and 21,601,752 shares authorized as of
    April 30, 2008, and 2007, respectively; no shares and
    13,032,497 issued and outstanding as of April 30, 2008 and
    2007, respectively






26,758Common stock, $0.00001 par value per share; 150,000,000 and
    32,500,000 shares authorized as of April 30, 2008 and
    April 30, 2007, respectively; 31,022,190 and 10,620,041
    issued and outstanding as of April 30, 2008 and 2007,
    respectively






Additional paid-in capital


101,574



23,479Deferred stock-based compensation


(53
)


(554
)Accumulated other comprehensive (loss) income


(45
)


13Accumulated deficit


(46,707
)


(44,566
)Total stockholders equity


54,769



5,130Total liabilities and stockholders equity

$
118,579


$
48,990    59




---



##### Table of Contents



ARCSIGHT,
    INC.



Consolidated
    Statements of Operations

(In
    thousands)  Fiscal Year Ended April 30,2008


2007


2006Revenues:Products

$
63,765


$
43,989


$
22,859Maintenance


27,607



18,762



11,473Services


10,173



7,082



5,103Total revenues


101,545



69,833



39,435Cost of revenues:Products


4,767



2,569



1,769Maintenance(1)


5,691



3,498



2,085Services(1)


5,800



3,521



2,942Total cost of revenues


16,258



9,588



6,796Gross profit


85,287



60,245



32,639Operating expenses(1):Research and development


19,762



14,535



12,154Sales and marketing


53,453



36,587



24,309General and administrative


13,422



9,453



12,978Total operating expenses


86,637



60,575



49,441Loss from operations


(1,350
)


(330
)


(16,802
)Interest income


857



637



435Other income and expense, net


(385
)


(175
)


(216
)Income (loss) before provision for income taxes


(878
)


132



(16,583
)Provision for income taxes


1,131



389



163Net loss

$
(2,009
)

$
(257
)

$
(16,746
)Net loss per common share, basic and diluted

$
(0.08
)

$
(0.03
)

$
(2.24
)Shares used in computing basic and diluted net loss per common
    share


25,936



10,042



7,469     (1)
    
    Stock-based compensation expense included in above (see
    Note 9): Cost of maintenance revenues

$
106


$
3


$
5Cost of services revenues


115



14



5Research and development


1,356



501



1,950Sales and marketing


2,685



661



210General and administrative


664



350



5,948    60




---



##### Table of Contents



ARCSIGHT,
    INC.
    Consolidated Statements of Stockholders Equity
    For the Fiscal Years Ended April 2006, 2007 and 2008
    (In thousands, except share amounts)  Deferred


AccumulatedConvertible








Additional


Stock-


Other





TotalPreferred Stock


Common Stock


Paid-in


Based


Comprehensive


Accumulated


StockholdersShares


Amount


Shares


Amount


Capital


Compensation


Income (Loss)


Deficit


EquityBalance as of April 30, 2005


13,029,223


$
26,928



9,742,375






$
11,301


$
(955
)

$
2


$
(27,563
)

$
9,713Cost of dispute settlement regarding Series B preferred
    stock issuance






(170
)


























(170
)Issuance of common stock upon exercise of stock options










279,593







189















189Repurchase of common stock subject to vesting










(54,407
)






(18
)














(18
)Compensation expense related to stock options accounted for
    under variable accounting


















7,549















7,549Repayment of non-recourse notes by employees


















367















367Reclassification of options exercised but not vested, net


















(5
)


(10
)










(15
)Amortization of deferred stock-based compensation






















569











569Comprehensive loss:Foreign currency translation adjustment


























(5
)






(5
)Net loss






























(16,746
)


(16,746
)Comprehensive loss


































(16,751
)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 income: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
)


5,130 61




---



##### Table of Contents



ARCSIGHT,
    INC.
  Consolidated
    Statements of Stockholders
    Equity  (Continued)
 (In
    thousands, except share amounts)
  Deferred


AccumulatedConvertible








Additional


Stock-


Other





TotalPreferred Stock


Common Stock


Paid-in


Based


Comprehensive


Accumulated


StockholdersShares


Amount


Shares


Amount


Capital


Compensation


Income (Loss)


Deficit


EquityCumulative 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
)

$
54,769    62




---



##### Table of Contents



ARCSIGHT,
    INC.



Consolidated
    Statements of Cash Flows

(In
    thousands)  Fiscal Year Ended April 30,2008


2007


2006Cash flows from operating activities:Net loss

$
(2,009
)

$
(257
)

$
(16,746
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization


1,945



1,414



941Amortization of acquired intangibles


573



476



Loss (gain) on disposal of property and equipment


(6
)


3



1Stock-based compensation


4,926



1,529



8,118Provision for allowance for doubtful accounts


33



112



60Changes in operating assets and liabilities, net of the effects
    of the acquisition of Enira Technologies, LLC:Accounts receivable


(11,137
)


(3,352
)


(1,612
)Prepaid expenses and other assets


638



(984
)


(523
)Income taxes receivable


370



259



(870
)Accounts payable


269



2,199



(498
)Accrued compensation and benefits


5,186



3,294



719Other accrued liabilities


1,066



1,386



1,067Deferred revenues


11,678



4,971



13,191Net cash provided by operating activities


13,532



11,050



3,848Cash flows from investing activities:Restricted cash






(842
)


Acquisition of Enira Technologies, LLC






(7,209
)


Purchase of property and equipment


(4,031
)


(2,182
)


(1,431
)Proceeds from sales of property and equipment


19







Net cash used in investing activities


(4,012
)


(10,233
)


(1,431
)Cash flows from financing activities:Initial public offering preparation costs


(3,669
)


(619
)


Proceeds from initial public offering


50,220







Proceeds from exercise of stock options, net of repurchases


920



571



171Payment of capital lease and software license obligations


(1,904
)


(311
)


Net proceeds from repayment of stockholder notes










367Net cash provided by (used in) financing activities


45,567



(359
)


538Effect of exchange rate changes on cash


(58
)


16



(5
)Net increase in cash and cash equivalents


55,029



474



2,950Cash and cash equivalents at beginning of period


16,917



16,443



13,493Cash and cash equivalents at end of period

$
71,946


$
16,917


$
16,443Supplemental disclosure of cash flow information:Income taxes paid

$
331


$
583


$
1,470Supplemental disclosure of non-cash investing and financing
    activities:Accrual of cost of dispute settlement regarding Series B
    preferred stock issuance










170Common stock issued to non-employee for settlement of
    Series B financing costs and for consulting services






178



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






808



Common stock issued upon conversion of preferred stock


26,758







Common stock issued for acquisition






1,538



    63




---



##### 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
   64




---



##### 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
     65




---



##### 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).
 66




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                and/or
 67




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  SOP 97-2, SOP 98-9, SOP 97-2
  time-and-materials
      Allowance
    for Doubtful Accounts
   68




---



##### Table of Contents



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


Charged to





Balance atBeginning


Costs and





EndPeriod

of Period


Expenses


Deductions(1)


of Period2006

$
11


$
60


$
(17
)

$
542007

$
54


$
112


$
(43
)

$
1232008

$
123


$
33


$
(23
)

$
133     (1)
    
    Uncollectible amounts written off, net of recoveries.  Restricted
    Cash
    Capitalized
    Software Licenses
    Impairment
    of Long-Lived Assets
   69




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Property
    and Equipment, Net
    Business
    Combinations
      Goodwill
      Software
    Development Costs
    Research
    and Development Expenses
   70




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Advertising
    Expenses
    Income
    Taxes
      Stock-Based
    Compensation Expense
     71




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Comprehensive
    (Loss) Income
    Recent
    Accounting Pronouncements
         72




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    3.
    Net Loss
    Per Common Share        Fiscal Year Ended April 30,2008


2007


2006Numerator for basic and diluted net loss per share:Net loss

$
(2,009
)

$
(257
)

$
(16,746
)Weighted-average common shares, net of weighted-average shares
    subject to repurchase, used in computing net loss per common
    share-basic and diluted


25,936



10,042



7,469Net loss per common share, basic and diluted

$
(0.08
)

$
(0.03
)

$
(2.24
)       Fiscal Year Ended April 30,2008


2007


2006Convertible preferred stock (as converted)


11,046



13,984



13,970Options to purchase common stock


2,484



2,519



2,129Common stock subject to repurchase


153



353



618Warrants to purchase common stock and convertible preferred
    stock (as converted)


13



22



6Total


13,696



16,878



16,723  73




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  4.
    Acquisition
    of Enira Technologies, LLC        Cash consideration for members of Enira

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


1,538Estimated acquisition-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  74




---



##### 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, 2008GrossCarrying


Accumulated


Net 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   As of April 30, 2007GrossCarrying


Accumulated


Net CarryingAmount


Amortization


AmountIntangible assets:Core and developed technologies

$
1,970


$
(139
)

$
1,831Customer installed-base relationships


80



(19
)


61Employee non-compete agreements


1,160



(318
)


842Total

$
3,210


$
(476
)

$
2,734Goodwill









$
5,746    75




---



##### Table of Contents



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

Expense2009

$
8422010


8892011


4252012


5Total

$
2,161   5.
    Balance
    Sheet Details  Property
    and Equipment, Net
    As of April 30,2008


2007Computers and equipment

$
6,135


$
4,898Furniture and fixtures


1,071



451Software


754



576Leasehold improvements


2,080



64010,040



6,565Less: accumulated depreciation and amortization


(5,206
)


(3,812
)Property and equipment, net

$
4,834


$
2,753     Accrued
    Compensation and Benefits
    As of April 30,2008


2007Accrued commissions

$
3,997


$
2,016Accrued bonus


4,621



2,572Accrued payroll taxes


672



591Accrued vacation


1,804



1,296Accrued ESPP


600



Other compensation and benefits


170



203Total accrued compensation and benefits

$
11,864


$
6,678  76




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Deferred
    Revenues
    As of April 30,2008


2007Deferred product revenues

$
13,627


$
10,316Deferred maintenance revenues


24,256



17,051Deferred services revenues


3,383



2,221Total deferred revenues


41,266



29,588Less deferred revenues, current portion


(36,512
)


(24,794
)Deferred revenues, non-current

$
4,754


$
4,794   6.
    Commitments
    and Contingencies      Amount ofFiscal Year Ending April 30:

Payments2009

$
2,3232010


1,9332011


1,9882012


2,0682013


2,151Thereafter


1,118Total future minimum lease payments

$
11,581     7.
    Indemnification
    and Warranties   77




---



##### Table of Contents



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


andShares


OutstandingSeries A


3,681,913



3,681,909Series B


8,419,840



7,416,112Series C


2,000,000



1,934,476Undesignated


7,499,999



21,601,752



13,032,497     ApproximateConversion


Preferred


CommonPreferred Stock Series

Ratio


Stock Shares


Stock SharesSeries A


1.2582-for-1



3,681,909



4,632,724Series B


1-for-1



7,429,021



7,429,021Series C


1.0022-for-1



1,934,476



1,938,69613,045,406



14,000,441  78




---



##### Table of Contents



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


andShares


OutstandingUndesignated


10,000,000



10,000,000



   Common
    Stock Reserved for Issuance
    As of April 30,2008Options available for future grant under the 2002 Stock Plan and
    2007 Equity Incentive Plan


4,366,192Options outstanding under the stock option plans


6,687,045Conversion of convertible preferred stock


ESPP shares reserved for future issuance


1,000,000Warrants to purchase common stock


Total shares reserved


12,053,237   Stock
    Plans
  2007 Equity Incentive Plan.
 79




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007 Employee Stock Purchase Plan.
    2002 Stock Plan.
 80




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2000 Stock Incentive Plan.
  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, 2005


222,642



2,730,308


$
0.47Options authorized


2,333,091







Options granted


(2,114,431
)


2,114,431



4.45Options exercised






(279,593
)


0.67Options canceled


285,167



(285,167
)


1.81Shares repurchased


54,407



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



15,142Vested and expected to vest as of April 30, 2008, net of
    anticipated forfeitures






5,944,783



5.43



7.89



13,461Vested and exercisable as of April 30, 2008






3,310,418



3.18



6.97



14,917  81




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##### Table of Contents



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


Options Vested and ExercisableAverage





Weighted-Remaining





AverageNumber


Contractual


Number of


ExerciseExercise Price

Outstanding


Life (Years)


Shares


Price per Share$0.12


3,923



3.96



3,923


$
0.12$0.16


385,444



4.68



385,444



0.16$0.24


356,523



5.72



356,523



0.24$0.36


45,625



6.07



45,246



0.36$0.40


39,375



3.20



39,375



0.40$0.48


235,728



6.43



210,617



0.48$0.80


813,898



6.76



646,594



0.80$4.00


774,630



7.16



542,604



4.00$6.08


756,495



7.99



388,038



6.08$6.65-6.80


1,443,450



8.71



520,658



6.80$7.17-7.95


42,725



9.98







7.66$8.28-8.50


87,787



9.85







8.49$9.00-9.32


322,313



9.32



59,302



9.19$10.00


1,379,129



9.42



112,094



10.006,687,045



7.89



3,310,418


$
3.18     9.
    Stock-Based
    Compensation    Fiscal Year Ended April 30,2008


2007


2006Stock-based compensation under SFAS 123R

$
4,186


$
892


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


91



267



569Amortization of restricted stock awards in connection with the
    acquisition of Enira Technologies, LLC


404



370



Stock-based compensation under Employee Stock Purchase Plan


245







Stock-based compensation under variable accounting










7,549Total

$
4,926


$
1,529


$
8,118  82




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##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Adoption
    of SFAS 123R
         83




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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 30,2008


2007Risk-free interest rate


4.22
%


5.00
%Expected volatility


55
%


66
%Expected life (years)


5.25 years



5.25 years     Fiscal Year Ended April 30,2008


2007Cost of maintenance revenues

$
106


$
1Cost of services revenues


115



9SFAS 123R expense included in cost of revenues


221



10Operating expenses:Research and development


1,356



135Sales and marketing


2,685



583General and administrative


664



164SFAS 123R expense included in operating expenses


4,705



882SFAS 123R expense included in net loss

$
4,926


$
892SFAS 123R expense included in basic and diluted net loss
    per share

$
0.19


$
0.09        84




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##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Employee
    Stock Purchase Plan
      Fiscal Year EndedApril 30,2008Risk-free interest rate


2.11
%Expected volatility


53
%Expected term (in years)


0.58 years     APB 25
    Intrinsic Value Charges
     85




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##### Table of Contents



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


Exercise PriceSubject to


per Share


ReassessedOptions


and Original


per ShareGrant Date

Granted


Fair Value


Fair ValueMay 25, 2004


341,251


$
0.36


$
0.48August 12, 2004


147,188



0.48



0.64October 6, 2004


669,375



0.48



0.64November 11, 2004


160,750



0.48



0.72February 3, 2005


911,524



0.80



1.88   Restricted
    Stock Awards for Enira Acquisition
    Variable
    Compensation
  No. 95-16,
    10.
    Segment
    Information       86




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##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fiscal Year Ended April 30,2008


2007


2006Total revenues by geography:United States:Products

$
40,021


$
32,782


$
17,442Maintenance


21,042



15,444



9,523Services


7,280



5,529



4,152Total


68,343



53,755



31,117EMEA:Products


12,923



6,462



2,754Maintenance


3,960



2,126



1,311Services


1,564



820



603Total


18,447



9,408



4,668Asia Pacific:Products


3,553



3,532



1,405Maintenance


1,305



701



390Services


619



488



229Total


5,477



4,721



2,024Other Americas:Products


7,267



1,214



1,259Maintenance


1,301



490



248Services


710



245



119Total


9,278



1,949



1,626Total revenues

$
101,545


$
69,833


$
39,435   11.
    Income
    Taxes    Fiscal Year Ended April 30,2008


2007


2006Current:Federal

$
(2,360
)

$
102


$
(16,769
)Foreign


1,482



30



186Total

$
(878
)

$
132


$
(16,583
)  87




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fiscal Year Ended April 30,2008


2007


2006Current:Federal

$
150


$
73


$
State


185



91



6Foreign


512



225



157Total Current


847



389



163Deferred:Federal


250







State


34







Total Deferred


284







Total provision

$
1,131


$
389


$
163       Fiscal Year Ended April 30,2008


2007


2006U.S. federal taxes (benefit) at statutory rate

$
(298
)

$
45


$
(5,638
)State tax expense, net


122



60



4Foreign taxes


512



225



157Net operating losses not benefited (benefited)


(653
)


(231
)


4,837Alternative minimum tax


149



73



Stock option expense


905



214



811Meals and entertainment


101



92



Amortization of tax deductible goodwill


284







Other


9



(89
)


(8
)Total provision

$
1,131


$
389


$
163      88




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##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    As of April 30,2008


2007Deferred tax assets:Net operating losses

$
3,303


$
6,282Research credits


2,777



3,329Non-deductible reserves and accruals


1,705



1,194Non-deductible stock-based compensation


5,619



4,768Deferred revenues


4,377



2,765Foreign earnings


230



175Intangibles


247



Other


276



437Total deferred tax assets


18,534



18,950Valuation allowance


(18,534
)


(18,814
)Total deferred tax assets

$



$
136Deferred tax liabilities:Amortization of tax deductible goodwill

$
(284
)

$
(136
)Total deferred tax liabilities

$
(284
)

$
(136
)Net deferred tax assets (liabilities)

$
(284
)

$
          89




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##### 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


615Reductions


Settlements


Lapse of statute of limitations


Balance as of April 30, 2008

$
2,112       12.
    Related-Party
    Transactions       90




---



##### Table of Contents



ARCSIGHT,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            13.
    Employee
    Benefit Plan   91




---



##### 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
  Form 10-K
  Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f) Rule 15d-15(f)
     92




---



##### Table of Contents



Share-Based Payment
    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    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    93




---



##### Table of Contents



Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Financial Statements: Form 10-K
    Exhibits. Form 10-K.
 94




---



##### Table of Contents



SIGNATURES  Form 10-K
  ARCSIGHT,
    INC.
  By: /s/  Robert
    W. Shaw

/s/  Stewart
    GriersonRobert W. Shaw
    Chief Executive Officer

Stewart Grierson
    Chief Financial Officer   POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  Robert
    W. ShawRobert
    W. Shaw

Chief Executive Officer and Chairman of the Board of Directors
    
    (Principal Executive Officer)

July 22, 2008/s/  Stewart
    GriersonStewart
    Grierson

Chief Financial Officer
    (Principal Accounting and 
    Financial Officer)

July 22, 2008/s/  Thomas
    ReillyThomas
    Reilly

President and Chief Operating Officer
    Director

July 22, 2008/s/  Sandra
    BergeronSandra
    Bergeron

Director

July 22, 2008/s/  William
    P. CrowellWilliam
    P. Crowell

Director

July 22, 2008/s/  E.
    Stanton McKee, Jr.E.
    Stanton McKee, Jr.

Director

July 22, 2008/s/  Craig
    RamseyCraig
    Ramsey

Director

July 22, 2008 95




---



##### Table of Contents



Signature

Title

Date/s/  Scott
    A. RylesScott
    A. Ryles

Director

July 22, 2008/s/  Ted
    SchleinTed
    Schlein

Director

July 22, 2008/s/  Ernest
    von SimsonErnest
    von Simson

Director

July 22, 2008  96




---



##### 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


Second Amended and Restated Employment Agreement, effective as
    of August 13, 2007, between ArcSight, Inc. and Robert W.
    Shaw.

S-1/A

333-145974


10.10


9/20/0710.11


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

S-1/A

333-145974


10.11


9/20/0710.12


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

S-1/A

333-145974


10.12


11/23/0710.13


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

S-1/A

333-145974


10.14


11/23/0710.14


Fiscal Year 2007 Management and Employee Bonus Plan.

S-1/A

333-145974


10.15


9/20/07 97




---



##### Table of Contents



Incorporated by ReferenceExhibit











Filing

ProvidedNumber


Exhibit Description

Form

File No.

Exhibit


Date

Herewith10.15


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 March 31, 2006, as amended, between
    ArcSight, Inc. and Oracle USA, Inc.

S-1/A

333-145974


10.18


9/20/0710.17


Fiscal Year 2008 Management Bonus Plan.

S-1/A

333-145974


10.19


1/22/0810.18


Sales Commission Plan  FY 2008 (Kevin Mosher) Plan.











X10.19


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











X21.1


Subsidiaries of ArcSight, Inc.











X23.1


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     *
    
    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. 98