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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
    December 31,
    2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file number
    001-35003
  RigNet, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

76-0677208(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1880 S. Dairy Ashford, Suite 300
    Houston, Texas(Address of principal
    executive offices)

77077-4760(Zip Code)   Registrants telephone number, including area code:
    (281) 674-0100
 Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value

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

Accelerated
    filer o

Non-accelerated
    filer þ

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




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1

Business


3Item 1A

Risk Factors


14Item 1B

Unresolved Staff Comments


29Item 2

Properties


29Item 3

Legal Proceedings


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


36Item 7A

Qualitative and Quantitative Disclosures about
    Market Risk


49Item 8

Financial Statements and Supplementary Data


49Item 9

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


49Item 9A

Controls and Procedures


49Item 9B

Other Information


51PART IIIItem 10

Directors, Executive Officers and Corporate
    Governance


51Item 11

Executive Compensation


51Item 12

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


51Item 13

Certain Relationships and Related Transactions,
    and Director Independence


52Item 14

Principal Accounting Fees and Services


52PART IVItem 15

Exhibits and Financial Statement Schedules


52EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1EX-99.2   2




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PART I  Item 1.
    Business  Overview
      
    managed services solutions offered at a per rig, per day
    subscription rate primarily through customer agreements with
    terms that typically range from one month to three years, with
    some customer agreement terms as long as five years;
    enhanced
    end-to-end
    IP/MPLS global network to ensure significantly greater network
    reliability, faster trouble shooting and service restoration
    time and quality of service for various forms of data traffic;
    enhanced
    end-to-end
    IP/MPLS network allows new components to be plugged into our
    network and be immediately available for use
    (plug-and-play);
    a network designed to accommodate multiple customer groups
    resident at a site, including rig owners, drillers, operators,
    service companies and
    pay-per-use
    individuals;
    value-added services, such as Wi-Fi hotspots, Internet kiosks
    and video conferencing, benefiting the multiple customer groups
    resident at a site;
    proactive network monitoring and management through a network
    operations center that actively manages network reliability at
    all times and serves as an in-bound call center for trouble
    shooting, 24 hours per day, 365 days per year;
    engineering and design services to determine the appropriate
    product and service solution for each customer;
    installation of
    on-site
    equipment designed to perform in extreme and harsh environments
    with minimal maintenance; and
    maintenance and support through locally-deployed engineering and
    service support teams and warehoused spare equipment inventories. 3




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end-to-end IP-based pay-per-use pay-per-use
  Form 10-K,
  Our
    Industry
      
    oil and gas companies rely on secure real-time data collection
    and transfer methods for the safe and efficient coordination of
    remote operations;
    technological advances in drilling techniques, driven by
    declining production from existing oil and gas fields and strong
    hydrocarbon demand, have enabled increased exploitation of
    offshore deepwater reserves and development of unconventional
    reserves (e.g. shales and tight sands) and require real time
    data access to optimize performance; and
    transmission of increased data volumes and real-time data
    management and access to key decision makers enable customers to
    maximize operational results, safety and financial performance.    Our
    Strategy
    
    expand our share of growing onshore and offshore drilling rig
    markets;
    increase secondary customer penetration;
    develop and market additional value-added products and
    services; and 4




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
    extend our market presence into complementary remote
    communications segments through organic growth strategic
    acquisitions.  Expand our share of growing onshore and offshore drilling rig
    markets:
  Fixed and
    Floating Rigs Scheduled for Delivery
  
  Source: ODS-Petrodata RigBase
    Current Activity data as of February 21, 2011.
   5




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Global
    Average Active Onshore Rigs
  
  Source: Spears &
    Associates Outlook.
  Increase secondary customer penetration: pay-per-use
  Develop and market additional value-added products and
    services:
  Extend our market presence into complementary remote
    communications segments through organic growth and strategic
    acquisitions:
   6




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Competitive
    Strengths
    
    mission-critical services delivered by a trusted provider with
    global operations;
    high-quality customer support with full time monitoring and
    regional service centers;
    operational leverage and multiple paths to growth supported by a
    plug-and-play
    IP/MPLS global platform;
    scalable systems using standardized equipment that leverages our
    global infrastructure;
    flexible, provider-neutral technology platform; and
    long-term relationships with leading companies in the oil and
    gas industry.  Mission-critical services delivered by a trusted provider
    with global operations:
  High-quality customer support with full-time monitoring and
    regional service centers: end-to-end end-to-end same-day
  Operational leverage and multiple paths to growth supported
    by a
    plug-and-play
    IP/MPLS platform: plug-and-play pay-per-use Form 10-K.
 7




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Scalable systems using standardized equipment that leverages
    our global infrastructure: on-site
  Flexible, provider-neutral technology
    platform: best-in-class
  Long-term relationships with leading companies in the oil and
    gas industry:
  Operations
  Form 10-K.
  Eastern
    Hemisphere
    Western
    Hemisphere
   8




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U.S.
    Land
    Service
    Offerings
    voice-over-Internet-protocol,
  Video
    Conferencing Solutions
      TurboNet
    Solutions
   9




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Real-Time
    Data Management Solutions
    ® ® ®
    Wi-Fi
    Hotspot and Internet Kiosk
    SOIL
    (Secure Oil Information Link)
       10




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one-to-many easy-to-deploy point-to-point
      Customer
    Contracts
    Customers
    
    Aker Drilling ASA;
    Brunei Shell Petroleum Sdn Bhd;
    Ensco plc;
    Gulf Drilling International Ltd.;
    Hercules Offshore, Inc.;
    Noble Corporation;
    Rowan Companies, Inc.;
    Seadrill Limited;
    Statoil ASA; and
    Total SA.    Suppliers
   11




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Competition
        Government
    Regulation
    Employees
    Geographic
    Information
  Form 10-K
 12




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Other
    Information
  Corporate
    Structure and History
    Principal
    Executive Offices
  (281) 674-0100.
  Company
    Website
  www.rig.net Form 10-K, Form 10-Q, Form 8-K,
  Forward-Looking
    Statements
  Form 10-K
  
    potential impact of the recent rig explosion in the Gulf of
    Mexico and resulting oil spill;
    competition and competitive factors in the markets in which we
    operate;
    demand for our products and services;
    the advantages of our services compared to others;
    changes in customer preferences and our ability to adapt our
    product and services offerings;
    our ability to develop and maintain positive relationships with
    our customers;
    our ability to retain and hire necessary employees and
    appropriately staff our marketing, sales and distribution
    efforts;
    our cash needs and expectations regarding cash flow from
    operations;
    our ability to manage and grow our business and execute our
    business strategy;
    our strategy;
    our financial performance; and
    the costs associated with being a public company.  Form 10-K.
 13




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Form 10-K,
  Form 10-K Form 10-K.
  About
    Third-Party Information
    Item 1A.
    Risk
    Factors    We
    rely on customers from the oil and gas drilling industry for a
    significant portion of our revenue. New regulations, increases
    to the cost of drilling, delays in drilling permits or other
    changes in the industry could have adverse consequences on our
    future business.
    
    regulations may increase the cost of drilling and reduce
    drilling activity;
    rigs may be cold stacked due to prolonged delays, moratoria or
    suspensions of drilling; 14




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
    offshore drilling could be restricted reducing the demand for
    our services;
    rigs may be redeployed to other locations around the globe where
    we may not have resources or service capacity;
    service providers, such as us, may be required to incur costs to
    comply with new safety and insurance requirements;
    consolidation may occur within the drilling industry causing us
    to lose customers; and
    our contracts may be cancelled or not renewed.    Any
    loss of a rig on which our equipment is located will likely lead
    to a complete loss of our equipment on that rig and a loss of
    the revenue related to that rig.
  Aban Pearl Aban Pearl Transocean Horizon Aban Pearl
  Many
    of our contracts with customers may be terminated by our
    customers on short notice without penalty, which could harm our
    business, financial condition and results of
    operations.
    A
    significant portion of our revenue is derived from two customers
    and the loss of either of these customers would materially harm
    our business, financial condition and results of
    operations.
   15




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Our
    industry is highly competitive and if we do not compete
    successfully, our business, financial condition and results of
    operations will be harmed.
  and/or per-unit
  line-of-sight
  We
    rely on third parties to provide products and services for the
    operation of our business. Failures by third party providers
    could harm our business and reputation and result in loss of
    customers and revenue.
    
    telecommunications failures;
    saturation of communication connection points, networks and
    third-party facilities
    in-orbit risks for satellites including malfunctions, commonly
    referred to as anomalies, and collisions with meteoroids,
    decommissioned spacecraft or other space debris;
    satellite manufacturing or control system errors ; 16




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
    lack of communication service alternatives;
    providing access to faulty equipment;
    human error;
    natural disasters;
    unexpected equipment failure;
    power loss;
    unauthorized access or security risks; and
    sabotage or other intentional acts of vandalism.      Our
    networks and those of our third-party service providers may be
    vulnerable to security risks and any unauthorized access to our
    clients data or systems could harm our business, financial
    condition and results of operations.
    We
    compete for satellite capacity for our services and any capacity
    constraints could harm our business, financial condition and
    results of operations.
   17




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We
    depend on a limited number of suppliers to provide key portions
    of our equipment and the loss of any of these key suppliers
    could materially harm our ability to service our clients and
    could result in loss of customers and harm our reputation,
    business, financial condition and results of operations
    revenue.
    If we
    fail to upgrade our information technology systems effectively,
    we may not be able to accurately report our financial results or
    prevent fraud.
    We are
    subject to the volatility of the global oil and gas industry and
    our business is likely to fluctuate with the level of global
    activity for oil and natural gas exploration, development and
    production.
    
    the supply and demand for oil and natural gas;
    oil and natural gas prices and expectations about future prices;
    the expected rate of decline in production;
    the discovery rate of new oil and gas reserves;
    the ability of the Organization of Petroleum Exporting
    Countries, or OPEC, to influence and maintain production levels
    and pricing; 18




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
    the level of production in non-OPEC countries;
    the worldwide political and military environment, including
    uncertainty or instability resulting from an escalation or
    additional outbreak of armed hostilities or other crises in oil
    or natural gas producing areas of the Middle East and other
    crude oil and natural gas producing regions or further acts of
    terrorism in the United States, or elsewhere;
    the impact of changing regulations and environmental and safety
    rules and policies following oil spills and other pollution by
    the oil and gas industry;
    advances in exploration, development and production technology;
    the global economic environment;
    the political and legislative framework governing the activities
    of oil and natural gas companies; and
    the price and availability of alternative fuels.    Bad
    weather in the Gulf of Mexico or other areas where we operate
    could harm our business, financial condition and results of
    operations.
  and/or
  An
    increase in the size of our U.S. land segment relative to our
    other segments could decrease our margins and increase the
    volatility of our operating results.
    Geographic
    expansion may reduce our operating margins.
   19




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The
    loss of key personnel or the failure to attract and retain
    highly qualified personnel could compromise our ability to
    effectively manage our business and pursue our growth
    strategy.
        If we
    fail to manage our growth effectively, our business may
    suffer.
    We may
    need to raise additional funds to pursue our growth strategy or
    continue our operations, and if we are unable to do so, our
    growth may be impaired.
   20




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Our
    term loan agreement places financial restrictions and operating
    restrictions on our business, which may limit our flexibility to
    respond to opportunities and may harm our business, financial
    condition and results of operations.
      
    dispose of property;
    enter into a merger, consolidate or acquire capital in other
    entities;
    incur additional indebtedness;
    incur liens on the property secured by the term loan agreement;
    make certain investments;
    enter into transactions with affiliates;
    pay cash dividends;
    commit to make capital expenditures not in the ordinary course
    of business; and
    enter into sales and lease back transactions.      If we
    infringe or if third parties assert that we infringe third party
    intellectual property rights we could incur significant costs
    and incur significant harm to our business.
   21




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Most
    of our contracts are on a fixed price basis and if our costs
    increase, we may not be able to recover these cost
    increases.
    Many
    of our contracts are governed by
    non-U.S.
    law, which may make them more difficult or expensive to enforce
    than contracts governed by United States law.
  non-U.S. law, non-U.S. country
  Our
    industry is characterized by rapid technological change, and if
    we fail to keep up with these changes or if access to
    telecommunications in remote locations becomes easier or less
    expensive, our business, financial condition and results of
    operations will be harmed.
  Ka-band Ka-band
  Many
    of our potential clients are resistant to new solutions and
    technologies which may limit our growth.
    We may
    face difficulties in obtaining regulatory approvals for our
    provision of telecommunication services, and we may face changes
    in regulation, each of which could adversely affect our
    operations.
   22




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Changes
    in the regulatory framework under which we operate could
    adversely affect our business prospects or results of
    operations.
    non-U.S. governments
  Changes
    to the FCCs USF Regime or state universal service fund
    regimes or findings that we have not complied with USF
    requirements or state universal service fund regimes may
    adversely affect our financial condition.
     23




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We may
    be subject to a variety of federal and state regulatory actions
    that may affect our ability to operate.
    Our
    operations in Qatar have historically benefited from
    restrictions on telecommunication services that have kept many
    of our competitors from providing their services in Qatar, but
    the recent easing of these restrictions may increase competition
    and our business, financial condition and results of operations
    may be harmed.
    Our
    business operations in countries outside the United States are
    subject to a number of United States federal laws and
    regulations, including restrictions imposed by the Foreign
    Corrupt Practices Act as well as trade sanctions administered by
    the Office of Foreign Assets Control of the United States
    Department of Treasury and the United States Department of
    Commerce, which could adversely affect our operations if
    violated.
  non-U.S. governments
  Our
    international operations are subject to additional or different
    risks than our United States operations, which may harm our
    business and financial results.
    
    sometimes vague and confusing regulatory requirements that may
    be subject to unexpected changes or interpretations;
    import and export restrictions; 24




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
    tariffs and other trade barriers;
    difficulty in staffing and managing geographically dispersed
    operations and culturally diverse work forces and increased
    travel, infrastructure and legal compliance costs associated
    with multiple international locations;
    differences in employment laws and practices among different
    countries, including restrictions on terminating employees;
    differing technology standards;
    fluctuations in currency exchange rates;
    imposition of currency exchange controls;
    potential political and economic instability in some regions;
    legal and cultural differences in the conduct of business;
    less due process and sometimes arbitrary application of laws and
    sanctions, including criminal charges and arrests;
    difficulties in raising awareness of applicable United States
    laws to our agents and third party intermediaries;
    potentially adverse tax consequences;
    difficulties in enforcing contracts and collecting receivables;
    difficulties and expense of maintaining international sales
    distribution channels; and
    difficulties in maintaining and protecting our intellectual
    property.  non-U.S. jurisdictions non-U.S. country
       25




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Changes
    in effective tax rates or adverse outcomes resulting from
    examination of our income or other tax returns could adversely
    affect our operating results and financial
    condition.
    
    earnings being lower than anticipated in countries where we have
    lower statutory rates and higher than anticipated earnings in
    countries where we have higher statutory rates;
    changes in the valuation of our deferred tax assets;
    repatriation of cash; or
    expiration or non-utilization of net operating losses or credits.      We are
    subject to fluctuations in currency exchange rates and
    limitations on the expatriation or conversion of currencies,
    which may result in significant financial charges, increased
    costs of operations or decreased demand for our products and
    services.
  non-U.S. currencies, non-U.S. currencies,
   26




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non-U.S. exchange
  As a
    public company we incur additional cost and face increased
    demands on our management and key employees.
    In
    prior periods, we identified a material weakness in our internal
    controls that could result in material misstatements in our
    financial statements. Although no material weaknesses were
    identified for the year ended December 31, 2010, if we do
    not maintain adequate internal controls over financial
    reporting, it could impair our ability to comply with the
    accounting and reporting requirements applicable to public
    companies.
         27




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Some
    of our stockholders could together exert control over our
    Company.
    Sales
    of outstanding shares of our common stock into the market in the
    future could cause the market price of our common stock to drop
    significantly, even if our business is doing well.
  180-day lock-up lock-ups lock-up lock-ups
  lock-up
 28




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Provisions
    in our organizational documents and in the Delaware General
    Corporation Law may prevent takeover attempts that could be
    beneficial to our stockholders.
    If
    securities analysts do not publish research or reports about our
    business or if they publish negative evaluations of our stock,
    the price of our stock could decline.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  Facilities
    Item 3.
    Legal
    Proceedings   29




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    QUARTERLY
    COMMON STOCK SALES PRICE (HIGH & LOW SALES
    PRICE)
  High

LowYear Ended December 31, 2010Fourth Quarter (From December 15, 2010)

$
13.70


$
12.55     Dividends
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Form 10-K
 30




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Stockholder
    Return Performance Presentation
    Comparison
    of Cumulative Total Return
  
  ASSUMES
    $100 INVESTED ON DEC. 15, 2010
    ASSUMES DIVIDEND REINVESTED
    FISCAL YEAR ENDING DEC. 31, 2010
  12/15/2010


12/20/2010


12/27/2010


12/31/2010RigNet, Inc.


$
100



$
104



$
107



$
109
(1)NASDAQ Composite


$
100



$
101



$
102



$
101Oil Service Sector


$
100



$
102



$
102



$
104NASDAQ Telecommunications


$
100



$
101



$
102



$
102     (1)
    
    Based in the last reported sale price of the Companys
    stock as reported by NASDAQ on December 31, 2010.    Form 10-K
 31




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Use of
    Proceeds from Public Offering of Common Stock
  No. 333-169723)
     32




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Item 6.
    Selected
    Financial Data  four-for-one
      Year Ended December 31,2010


2009


2008


2007


2006(In thousands, except per share amounts)Consolidated Statements of Income (Loss) and Comprehensive
    Income (Loss) Data:Revenue

$
92,921


$
80,936


$
89,909


$
67,164


$
29,214Expenses:Cost of revenue


42,479



35,165



39,294



29,747



16,290Depreciation and amortization


14,983



12,554



10,519



9,451



5,863Impairment of goodwill






2,898











Selling and marketing


2,103



2,187



2,605



2,405



4,123General and administrative


20,756



16,444



21,277



20,338



9,540Total expenses


80,321



69,248



73,695



61,941



35,816Operating income (loss)


12,600



11,688



16,214



5,223



(6,602
)Interest expense


(1,618
)


(5,146
)


(2,464
)


(5,497
)


(1,401
)Other income (expense), net


(399
)


304



27



(63
)


26Change in fair value of preferred stock derivatives


(17,190
)


(21,009
)


2,461



(1,156
)


(7,657
)Income (loss) before income taxes


(6,607
)


(14,163
)


16,238



(1,493
)


(15,634
)Income tax expense


(8,669
)


(5,457
)


(5,882
)


(628
)


(115
)Net income (loss)


(15,276
)


(19,620
)


10,356



(2,121
)


(15,749
)Less: Net income (loss) attributable to:Non-redeemable, non-controlling interest


292



292



235



167



Redeemable, non-controlling interest


25



10



1,715



971



151Net income (loss) attributable to RigNet, Inc. stockholders

$
(15,593
)

$
(19,922
)

$
8,406


$
(3,259
)

$
(15,900
)Net income (loss) attributable to RigNet, Inc. common
    stockholders

$
(18,807
)

$
(22,118
)

$
(4,190
)

$
(3,931
)

$
(23,451
)Net income (loss) per share attributable to RigNet, Inc. common
    stockholders:Basic

$
(3.38
)

$
(4.16
)

$
(0.79
)

$
(0.74
)

$
(8.48
)Diluted

$
(3.38
)

$
(4.16
)

$
(0.79
)

$
(0.74
)

$
(8.48
)Weighted average shares outstanding:Basic


5,571



5,312



5,301



5,279



2,765Diluted


5,571



5,312



5,301



5,279



2,765Other Non-GAAP Data:Gross Profit

$
50,442


$
45,771


$
50,615


$
37,417


$
12,924Adjusted EBITDA

$
29,740


$
29,093


$
30,409


$
17,536


$
(471
)  33




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December 31,2010

2009

2008

2007

2006(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
50,435


$
11,379


$
15,376


$
6,862


$
3,096Restricted cash  current portion


2,500



2,500



775







Restricted cash  long-term portion


7,500



7,500











Total assets


129,785



88,810



89,517



72,925



65,485Current maturities of long-term debt


8,655



8,664



5,753



11,807



11,550Long-term deferred revenue


325



348



1,516



679



693Long-term debt


23,484



21,022



18,322



20,427



12,007Preferred stock derivatives






30,446



8,413



9,808



8,241Preferred stock






17,333



16,257



14,097



13,457   Non-GAAP Financial
    Measures
        
    Securities analysts use Adjusted EBITDA as a supplemental
    measure to evaluate the overall operating performance of
    companies, and we understand our investor and analyst
    presentations include Adjusted EBITDA;
    By comparing our Adjusted EBITDA in different periods, our
    investors may evaluate our operating results without the
    additional variations caused by items that we do not consider
    indicative of our core operating performance and which are not
    necessarily comparable from year to year; and
    Adjusted EBITDA is an integral component of the financial ratio
    covenants of our debt agreement.    
    To indicate profit contribution and cash flow availability for
    growth
    and/or debt
    retirement;
    For planning purposes, including the preparation of our annual
    operating budget and as a key element of annual incentive
    programs;
    To allocate resources to enhance the financial performance of
    our business; and
    In communications with our board of directors concerning our
    financial performance. 34




---



##### Table of Contents




    Adjusted EBITDA does not reflect our cash expenditures or future
    requirements for capital expenditures or other contractual
    commitments;
    Adjusted EBITDA does not reflect changes in, or cash
    requirements for, our working capital needs;
    Adjusted EBITDA does not reflect interest expense;
    Adjusted EBITDA does not reflect cash requirements for income
    taxes;
    Adjusted EBITDA does not reflect the stock based compensation
    component of employee compensation;
    Although depreciation and amortization are non-cash charges, the
    assets being depreciated or amortized will often have to be
    replaced in the future, and Adjusted EBITDA does not reflect any
    cash requirements for these replacements; and
    Other companies in our industry may calculate Adjusted EBITDA or
    similarly titled measures differently than we do, limiting its
    usefulness as a comparative measure.    Year Ended December 31,2010


2009


2008


2007


2006(In thousands)Reconciliation of Net Income (Loss) to Adjusted EBITDA:Net income (loss)

$
(15,276
)

$
(19,620
)

$
10,356


$
(2,121
)

$
(15,749
)Interest expense


1,618



5,146



2,464



5,497



1,401Depreciation and amortization


14,983



12,554



10,519



9,451



5,863Impairment of goodwill






2,898











(Gain) loss on retirement of property and equipment


294



111



(92
)


(27
)


Change in fair value of preferred stock derivatives


17,190



21,009



(2,461
)


1,156



7,657Stock-based compensation


437



277



231



169



242Initial public offering costs


1,825



1,261



3,510



2,783



Income tax expense


8,669



5,457



5,882



628



115Adjusted EBITDA (non-GAAP measure)

$
29,740


$
29,093


$
30,409


$
17,536


$
(471
)  35




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##### Table of Contents



Item 7.
    Managements
    Discussion And Analysis Of Financial Condition And Results Of
    Operations  General
  The following discussion should be read together with our
    consolidated financial statements and the related notes included
    elsewhere in this Annual Report on
    Form 10-K.
    This discussion contains forward-looking statements about our
    business and operations. Our future results may differ
    materially from those we currently anticipate as a result of the
    factors we describe under Risk Factors and elsewhere
    in this Annual Report on
    Form 10-K.
  Executive
    Overview
      Our
    Operations
        
    Eastern Hemisphere.  Our eastern hemisphere
    segment provides remote communications services for offshore
    drilling rigs, production facilities, energy support vessels and
    other remote sites. Our eastern hemisphere segment services are
    performed out of our Norway, Qatar, United Kingdom and Singapore
    based offices for customers and rig sites located on the eastern
    side of the Atlantic Ocean primarily off the coasts of the U.K.,
    Norway and West Africa, around the Indian Ocean in Qatar, Saudi
    Arabia and India, around the Pacific Ocean near Australia, and
    within the South China Sea.
    Western Hemisphere.  Our western hemisphere
    segment provides remote communications services for offshore
    drilling rigs, production facilities, energy support vessels and
    other remote sites. Our western hemisphere segment services are
    performed out of our United States and Brazil based offices for
    customers and rig sites located on the western side of the
    Atlantic Ocean primarily off the coasts of the United States,
    Mexico and Brazil, and within the Gulf of Mexico, but excluding
    land rigs and other land-based sites in North America. 36




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##### Table of Contents




    U.S. Land.Our U.S. land segment
    provides remote communications services for drilling rigs and
    production facilities located onshore in North America. Our
    U.S. land segment services are performed out of our
    Louisiana based office for customers and rig sites located in
    the continental United States.      Critical
    Accounting Policies
    Revenue
    Recognition
    Accounts
    Receivable
   37




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##### Table of Contents



Property
    and Equipment
    Derivatives
        Goodwill
       38




---



##### Table of Contents



Long-Term
    Debt
    Stock-Based
    Compensation
          
    Expected Volatility  based on peer group price
    volatility for periods equivalent to the expected term of the
    options
    Expected Term  expected life adjusted based on
    managements best estimate for the effects of
    non-transferability, exercise restriction and behavioral
    considerations
    Risk-free Interest Rate  risk-free rate, for
    periods within the contractual terms of the options, is based on
    the U.S. Treasury yield curve in effect at the time of grant
    Dividend Yield  expected dividends based on
    the Companys historical dividend rate at the date of grant 39




---



##### Table of Contents



Taxes
      New
    Accounting Pronouncements
  Form 10-K
 40




---



##### Table of Contents



Results
    of Operations
    Year Ended December 31,


Percentage Change2010


2009


2008


2009 to 2010


2008 to 2009(In thousands, except percentages)Revenue

$
92,921


$
80,936


$
89,909



14.8
%


(10.0
)%Expenses:Cost of revenue


42,479



35,165



39,294



20.8
%


(10.5
)%Depreciation and amortization


14,983



12,554



10,519



19.3
%


19.3
%Impairment of goodwill






2,898







(100.0
)%


*Selling and marketing


2,103



2,187



2,605



(3.8
)%


(16.0
)%General and administrative


20,756



16,444



21,277



26.2
%


(22.7
)%Total expenses


80,321



69,248



73,695



16.0
%


(6.0
)%Operating income


12,600



11,688



16,214



7.8
%


(27.9
)%Other income (expense), net


(19,207
)


(25,851
)


24



(25.7
)%


*Income (loss) before income taxes


(6,607
)


(14,163
)


16,238



(53.4
)%


(187.2
)%Income tax expense


(8,669
)


(5,457
)


(5,882
)


58.9
%


(7.2
)%Net income (loss)


(15,276
)


(19,620
)


10,356



(22.1
)%


(289.5
)%Less: Net income (loss) attributable to non-controlling interests


317



302



1,950



5.0
%


(84.5
)%Net income (loss) attributable to RigNet, Inc. stockholders

$
(15,593
)

$
(19,922
)

$
8,406



(21.7
)%


(337.0
)%Other Non-GAAP Data:Gross Profit

$
50,442


$
45,771


$
50,615



10.2
%


(9.6
)%Adjusted EBITDA

$
29,740


$
29,093


$
30,409



2.2
%


(4.3
)%     *
    
    Amount is greater than 1000%, therefore, it is not meaningful. 41




---



##### Table of Contents



Percentage ChangeYear Ended December 31,


2009 to


2008 to2010


2009


2008


2010


2009(In thousands, except percentages)Eastern Hemisphere:Revenue

$
61,390


$
60,917


$
54,586



0.8
%


11.6
%Cost of revenue


24,015



23,247



23,721



3.3
%


(2.0
)%Gross Profit (non-GAAP measure)


37,375



37,670



30,865



(0.8
)%


22.0
%Depreciation and amortization


8,020



6,894



5,186



16.3
%


32.9
%Selling, general and administrative


6,833



5,818



6,974



17.4
%


(16.6
)%Eastern hemisphere operating income

$
22,522


$
24,958


$
18,705



(9.8
)%


33.4
%Western Hemisphere:Revenue

$
19,012


$
11,222


$
12,225



69.4
%


(8.2
)%Cost of revenue


8,918



4,841



5,599



84.2
%


(13.5
)%Gross Profit (non-GAAP measure)


10,094



6,381



6,626



58.2
%


(3.7
)%Depreciation and amortization


3,973



2,428



1,994



63.6
%


21.8
%Selling, general and administrative


2,364



1,834



2,016



28.9
%


(9.0
)%Western hemisphere operating income

$
3,757


$
2,119


$
2,616



77.3
%


(19.0
)%U.S. Land:Revenue

$
12,845


$
9,850


$
23,047



30.4
%


(57.3
)%Cost of revenue


6,943



5,195



9,011



33.6
%


(42.3
)%Gross Profit (non-GAAP measure)


5,902



4,655



14,036



26.8
%


(66.8
)%Depreciation and amortization


3,122



3,204



3,325



(2.6
)%


(3.6
)%Impairment of goodwill






2,898







(100.0
)%


*Selling, general and administrative


2,580



2,749



4,166



(6.1
)%


(34.0
)%U.S. land operating income (loss)

$
200


$
(4,196
)

$
6,545



(104.8
)%


(164.1
)%     *
    
    Amount is greater than 1000%, therefore, it is not meaningful.  Years
    Ended December 31, 2010 and 2009
  Revenue.
  Cost of Revenue.
 42




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##### Table of Contents



Depreciation and Amortization.
  Selling and Marketing.
  General and Administrative.
  Other Income (Expense).
    Income Tax Expense. Form 10-K
  Years
    Ended December 31, 2009 and 2008
  Revenue.
 43




---



##### Table of Contents



Cost of Revenue.
  Depreciation and Amortization.
  Impairment of Goodwill.
  Selling and Marketing.
  General and Administrative.
  Other Income (Expense).
 44




---



##### Table of Contents



Income Tax Expense. Form 10-K
  Liquidity
    and Capital Resources
             45




---



##### Table of Contents



Year Ended December 31,2010


2009


2008(In thousands)Consolidated Statements of Cash Flows Data:Cash and cash equivalents, January 1,

$
11,379


$
15,376


$
6,864Net cash provided by operating activities


19,896



26,189



19,655Net cash used by investing activities


(13,449
)


(19,305
)


(9,363
)Net cash provided (used) by financing activities


33,480



(10,774
)


(1,669
)Changes in foreign currency translation


(871
)


(107
)


(111
)Cash and cash equivalents, December 31,

$
50,435


$
11,379


$
15,376   Operating
    Activities
        Investing
    Activities
   46




---



##### Table of Contents



Financing
    Activities
    Term
    Loan
          Off-Balance
    Sheet Arrangements
   47




---



##### Table of Contents



Contractual
    Obligations and Commercial Commitments
    2016 andTotal


2011


2012  2013


2014  2015


Beyond(In thousands)Contractual Obligations:Debt obligationsTerm loan

$
32,034


$
8,616


$
23,418


$



$
Equipment notes


105



39



66







Interest(1)


1,918



1,445



473







Operating leases


3,135



1,225



1,454



456



Other non-current liabilities


12,238







325







11,913Commercial Commitments:Satellite and network services


23,415



10,407



11,736



1,272



$
72,845


$
21,732


$
37,472


$
1,728


$
11,913     (1)
    
    Computed on the balance outstanding at December 31, 2010
    through the term of the loan, at the interest rate in effect at
    the time.  Adjusted
    EBITDA (Non-GAAP Measure)
      Year Ended December 31,2010


2009


2008(In thousands)Net income (loss)

$
(15,276
)

$
(19,620
)

$
10,356Interest expense


1,618



5,146



2,464Depreciation and amortization


14,983



12,554



10,519Impairment of goodwill






2,898



(Gain) loss on retirement of property and equipment


294



111



(92
)Change in fair value of preferred stock derivatives


17,190



21,009



(2,461
)Stock-based compensation


437



277



231Initial public offering costs


1,825



1,261



3,510Income tax expense


8,669



5,457



5,882Adjusted EBITDA (non-GAAP measure)

$
29,740


$
29,093


$
30,409    48




---



##### Table of Contents



Item 7A.
    Qualitative
    and Quantitative Disclosures about Market Risk    non-U.S. currencies.
    December 31,2010


2009(In thousands)Effect on Net Income (Loss) and Equity 
    Increase/Decrease:1% Decrease/increase in rate

$
323


$
2972% Decrease/increase in rate

$
646


$
5943% Decrease/increase in rate

$
970


$
891   Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
 49




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
    
    expanded our financial and accounting staff increasing the level
    of experience in public company accounting matters and
    disclosures;
    engaged outside consultants with extensive financial reporting
    experience to augment our current accounting resources;
    implemented a company-wide financial accounting and reporting
    system to account for all financial operations;
    established a common closing process throughout the organization;
    developed and implemented a process for documenting account
    reconciliations, journal entries and changes in estimates during
    our monthly, quarterly and annual close processes;
    implemented independent review and approval procedures for
    journal entries and application of accounting standards related
    to nonrecurring transactions;
    developed procedures to identify and track fixed asset changes,
    including additions, movements, sales and dispositions;
    implemented information technology monitoring controls over our
    financial accounting system; and
    implemented a disclosure committee review process.   50




---



##### Table of Contents



Managements
    Annual Report on Internal Control over Financial Reporting and
    Attestation Report of the Registered Accounting Firm
    Limitations
    of the Effectiveness of Internal Control
    Item 9B.
    Other
    Information   PART III  Form 10-K Form 10-K,
  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Code of
    Business Conduct and Ethics
    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   51




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##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (A)
    Consolidated
    Financial Statement  1.
    Consolidated Financial Statements. The consolidated financial
    statements listed in the accompanying Index to
    Consolidated Financial Information are filed as part of
    this Annual Report.2.
    Consolidated Financial Statement Schedules. All schedules have
    been omitted because the information required to be presented in
    them is not applicable or is shown in the financial statements
    or related notes.  (B)
    Exhibits  Form 10-K.
 52




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##### Table of Contents



SIGNATURES
    RIGNET, INC.
  By:
    /s/  MARK
    B. SLAUGHTER   Chief Executive Officer and President
      Name

Title

Date/s/  MARK
    B. SLAUGHTERMark
    B. Slaughter

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

March 30, 2011/s/  MARTIN
    L. JIMMERSON, JR.Martin
    L. Jimmerson, Jr.

Chief Financial Officer (Principal Financial & Accounting
    Officer)

March 30, 2011/s/  THOMAS
    M. MATTHEWSThomas
    M. Matthews

Chairman of the Board

March 30, 2011/s/  JAMES
    H. BROWNINGJames
    H. Browning

Director

March 30, 2011/s/  CHARLES
    L. DAVIS IVCharles
    L. Davis IV

Director

March 30, 2011/s/  KEVIN
    A. NEVEUKevin
    A. Neveu

Director

March 30, 2011/s/  KEVIN
    J. OHARAKevin
    J. OHara

Director

March 30, 2011/s/  KEITH
    OLSENKeith
    Olsen

Director

March 30, 2011/s/  BRENT
    K. WHITTINGTONBrent
    K. Whittington

Director

March 30, 2011  53




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##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets


F-3Consolidated Statements of Income (Loss) and
    Comprehensive Income (Loss)


F-4Consolidated Statements of Cash Flows


F-5Consolidated Statements of Stockholders
    Equity


F-6Notes to the Consolidated Financial Statements


F-7  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            
    F-2




---



##### Table of Contents



RIGNET,
    INC.
 CONSOLIDATED
    BALANCE SHEETS  December 31,2010


2009(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
50,435


$
11,379Restricted cash


2,500



2,500Accounts receivable, net


15,972



12,729Prepaid expenses and other current assets


3,419



4,358Total current assets


72,326



30,966Property and equipment, net


26,380



27,011Restricted cash


7,500



7,500Goodwill


13,841



13,887Intangibles


6,766



8,372Deferred tax and other assets


2,972



1,074TOTAL ASSETS

$
129,785


$
88,810LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
4,868


$
3,755Accrued expenses


6,624



5,926Current maturities of long-term debt


8,655



8,664Income taxes payable


4,751



6,027Deferred revenue


1,305



1,306Total current liabilities


26,203



25,678Long-term debt


23,484



21,022Deferred revenue


325



348Deferred tax liability


631



445Other liabilities


11,282



5,201Preferred stock derivatives






30,446Total liabilities


61,925



83,140Commitments and contingencies (Notes 8 and 11)Preferred stock






17,333Redeemable, non-controlling interest






4,576Stockholders equity:RigNet, Inc. stockholders equityCommon stock  $0.001 par value;
    190,000,000 shares authorized; 14,760,687 and
    5,318,316 shares issued and outstanding at
    December 31, 2010 and 2009, respectively


15



5Additional paid-in capital


110,118



9,521Accumulated deficit


(42,440
)


(26,847
)Accumulated other comprehensive income


5



941Total RigNet, Inc. stockholders equity


67,698



(16,380
)Non-redeemable, non-controlling interest


162



141Total stockholders equity


67,860



(16,239
)TOTAL LIABILITIES AND EQUITY

$
129,785


$
88,810    F-3




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##### Table of Contents



RIGNET,
    INC.
  CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
    COMPREHENSIVE INCOME (LOSS)
  Year Ended December 31,2010


2009


2008(In thousands, except per share amounts)Revenue

$
92,921


$
80,936


$
89,909Expenses:Cost of revenue


42,479



35,165



39,294Depreciation and amortization


14,983



12,554



10,519Impairment of goodwill






2,898



Selling and marketing


2,103



2,187



2,605General and administrative


20,756



16,444



21,277Total expenses


80,321



69,248



73,695Operating income


12,600



11,688



16,214Other income (expense):Interest expense


(1,618
)


(5,146
)


(2,464
)Other income (expense), net


(399
)


304



27Change in fair value of preferred stock derivatives


(17,190
)


(21,009
)


2,461Income (loss) before income taxes


(6,607
)


(14,163
)


16,238Income tax expense


(8,669
)


(5,457
)


(5,882
)Net income (loss)


(15,276
)


(19,620
)


10,356Less: Net income (loss) attributable to:Non-redeemable, non-controlling interest


292



292



235Redeemable, non-controlling interest


25



10



1,715Net income (loss) attributable to RigNet, Inc.
    stockholders

$
(15,593
)

$
(19,922
)

$
8,406COMPREHENSIVE INCOME (LOSS)Net income (loss)

$
(15,276
)

$
(19,620
)

$
10,356Foreign currency translation


(936
)


1,496



(848
)Total comprehensive income (loss)

$
(16,212
)

$
(18,124
)

$
9,508INCOME (LOSS) PER SHARE  BASIC AND DILUTEDNet income (loss) attributable to RigNet, Inc. stockholders

$
(15,593
)

$
(19,922
)

$
8,406Less: Preferred stock dividends


3,164



2,100



3,227Less: Adjustment to redeemable, non-controlling interest
    redemption value


50



96



9,369Net income (loss) attributable to RigNet, Inc. common
    stockholders

$
(18,807
)

$
(22,118
)

$
(4,190
)Net income (loss) per share attributable to RigNet, Inc. common
    stockholders, basic

$
(3.38
)

$
(4.16
)

$
(0.79
)Net income (loss) per share attributable to RigNet, Inc. common
    stockholders, diluted

$
(3.38
)

$
(4.16
)

$
(0.79
)Weighted average shares outstanding, basic


5,571



5,312



5,301Weighted average shares outstanding, diluted


5,571



5,312



5,301    F-4




---



##### Table of Contents



RIGNET,
    INC.
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Year Ended December 31,2010


2009


2008(In thousands)Cash flows from operating activities:Net income (loss)

$
(15,276
)

$
(19,620
)

$
10,356Adjustments to reconcile net income (loss) to net cash from
    operations:Change in fair value of preferred stock derivatives


17,190



21,009



(2,461
)Depreciation and amortization


14,983



12,554



10,519Impairment of goodwill






2,898



Stock-based compensation


437



277



231Write-off/amortization of deferred financing costs


147



352



Deferred taxes


(1,428
)


(818
)


(204
)(Gain) loss on retirement of property and equipment


294



111



(92
)Accrued and imputed interest on stockholder notes










309Changes in operating assets and liabilities:Accounts receivable


(3,243
)


3,717



(2,566
)Prepaid expenses and other assets


655



(633
)


231Accounts payable


933



609



(510
)Accrued expenses


(853
)


4,849



1,684Deferred revenue


(24
)


(509
)


71Other liabilities


6,081



1,393



2,087Net cash provided by operating activities


19,896



26,189



19,655Cash flows from investing activities:Capital expenditures


(13,481
)


(10,173
)


(8,680
)Proceeds from sale of property and equipment


32



93



92Increase in restricted cash






(9,225
)


(775
)Net cash used by investing activities


(13,449
)


(19,305
)


(9,363
)Cash flows from financing activities:Proceeds from issuance of common stock, net of cash issuance
    costs


36,398



137



16Payment of preferred stock dividends


(197
)






Subsidiary distributions to non-controlling interest


(271
)


(335
)


(496
)Redemption of redeemable, non-controlling interest


(4,651
)


(4,763
)


(6,745
)Proceeds from borrowings


11,067



35,000



9,868Repayments of long-term debt


(8,811
)


(40,440
)


(3,864
)Payments of financing fees


(55
)


(373
)


(448
)Net cash provided (used) by financing activities


33,480



(10,774
)


(1,669
)Net increase (decrease) in cash and cash equivalents


39,927



(3,890
)


8,623Cash and cash equivalents:Balance, January 1,


11,379



15,376



6,864Changes in foreign currency translation


(871
)


(107
)


(111
)Balance, December 31,

$
50,435


$
11,379


$
15,376Supplemental disclosures:Income taxes paid

$
4,444


$
2,243


$
1,124Interest paid  other

$
1,547


$
1,240


$
1,790Interest paid  stockholders

$



$
5,708


$
Non-cash investing  capital expenditures

$
1,162


$
1,657


$
1,337    F-5




---



##### Table of Contents



RIGNET,
    INC.
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
  TotalAdditional





Accumulated Other


RigNet, Inc.


Non-Redeemable,


TotalCommon Stock


Paid-In


Accumulated


Comprehensive


Stockholders


Non-Controlling


StockholdersShares


Amount


Capital


Deficit


Income (Loss)


Equity


Interest


Equity(In thousands)Balance, January 1, 2008


5,300


$
5


$
20,438


$
(21,987
)

$
293


$
(1,251
)

$
74


$
(1,177
)Issuance of common stock upon the exercise of stock options


3







16











16







16Preferred stock dividends










(3,227
)










(3,227
)






(3,227
)Stock-based compensation










231











231







231Foreign currency translation


















(848
)


(848
)






(848
)Adjustment to redemption value of non-controlling interest










(9,369
)










(9,369
)






(9,369
)Redemption of non-controlling interest














6,656







6,656







6,656Non-controlling owner distributions


























(236
)


(236
)Warrants issued










3,214











3,214







3,214Net income














8,406







8,406



235



8,641Balance, December 31, 2008


5,303



5



11,303



(6,925
)


(555
)


3,828



73



3,901Issuance of common stock upon the exercise of stock options


15







137











137







137Preferred stock dividends










(2,100
)










(2,100
)






(2,100
)Stock-based compensation










277











277







277Foreign currency translation


















1,496



1,496







1,496Adjustment to redemption value of non-controlling interest










(96
)










(96
)






(96
)Non-controlling owner distributions


























(224
)


(224
)Net income (loss)














(19,922
)






(19,922
)


292



(19,630
)Balance, December 31, 2009


5,318



5



9,521



(26,847
)


941



(16,380
)


141



(16,239
)Issuance of common stock upon the exercise of stock options and
    warrants


449



1



9











10







10Preferred stock dividends










(3,164
)










(3,164
)






(3,164
)Conversion of preferred stock


5,661



6



67,930











67,936







67,936Sale of common stock


3,333



3



35,435











35,438







35,438Stock-based compensation










437











437







437Foreign currency translation


















(936
)


(936
)






(936
)Adjustment to redemption value of non-controlling interest










(50
)










(50
)






(50
)Non-controlling owner distributions


























(271
)


(271
)Net income (loss)














(15,593
)






(15,593
)


292



(15,301
)Balance, December 31, 2010


14,761


$
15


$
110,118


$
(42,440
)

$
5


$
67,698


$
162


$
67,860    F-6




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Business
    and Summary of Significant Accounting Policies  Nature
    of Business
      Basis
    of Presentation
    Principles
    of Consolidation and Reporting
    Use of
    Estimates in Preparation of Financial Statements
    Cash
    and Cash Equivalents
    Restricted
    Cash
   F-7




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounts
    Receivable
    Property
    and Equipment
    Derivatives
        Intangibles
   F-8




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
          Long-Term
    Debt
    Revenue
    Recognition
   F-9




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock-Based
    Compensation
    Taxes
        Foreign
    Currency Translation
     F-10




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Reclassification
    Recently
    Issued Accounting Pronouncements
  Accounting for Assets Acquired and Liabilities Assumed in a
    Business Combination That Arise from Contingencies
  Consolidation
    of Variable Interest Entities
  Improving
    Disclosures about Fair Value Measurements, 820-10, Fair Value Measurement and
    Disclosures Overall
  Business
    Combinations  Disclosure of Supplementary Pro Forma
    Information for Business Combinations
  Note 2 
    Initial
    Public Offering, Reverse Stock Split, Preferred Stock and
    Warrants  Initial
    Public Offering
   F-11




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Reverse
    Stock Split
    Preferred
    Stock
      Warrants
   F-12




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010

2009

2008Expected volatility


47.5
%


60.0
%


42.0
%Expected term (in years)


0.3



1.5



3.0Risk-free interest rate


0.2
%


0.9
%


1.0
%Dividend yield










     WeightedNumber of


AverageUnderlying


ExerciseShares


Price(In thousands)Outstanding, January 1, 2008


1,242


$
5.91Issued


726


$
0.04Exercised





$
Outstanding, December 31, 2008


1,968


$
3.74Issued


7


$
0.04Exercised





$
Outstanding, December 31, 2009


1,975


$
3.73Issued


22


$
0.04Exercised


(432
)

$
0.04Outstanding, December 31, 2010


1,565


$
4.70     Note 3 
    Business
    and Credit Concentrations    Interest
    Rate Risk
    Foreign
    Currency Risk
   F-13




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Credit
    Risk
    Year Ended December 31,2010


2009


2008(In thousands)Accounts receivable

$
18,592


$
15,349


$
19,181Allowance for doubtful accounts, January 1,


(2,620
)


(2,735
)


(3,287
)Current year provision for doubtful accounts






(296
)


491Write-offs






411



61Allowance for doubtful accounts, December 31,


(2,620
)


(2,620
)


(2,735
)Accounts receivable, net

$
15,972


$
12,729


$
16,446     Liquidity
    Risk
    Note 4 
    Acquisitions  agreed-upon
     F-14




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Balance, January 1,

$
4,576


$
9,344


$
5,525Adjustment to redemption value


50



96



9,369Acquisition of non-controlling interest


(4,651
)


(4,763
)


(7,005
)Non-controlling owner distributions






(111
)


(260
)Net income


25



10



1,715Balance, December 31,

$



$
4,576


$
9,344   Note 5 
    Goodwill
    and Intangibles  Goodwill
    EasternHemisphere


U.S. Land


Total(In thousands)Balance, January 1, 2009

$
2,474


$
13,791


$
16,265Impairment of goodwill






(2,898
)


(2,898
)Foreign currency translation


520







520Balance, December 31, 2009


2,994



10,893



13,887Foreign currency translation


(46
)






(46
)Balance, December 31, 2010

$
2,948


$
10,893


$
13,841    F-15




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Intangibles
    CustomerRelation-Brand Name


ships


Software


Total(In thousands)Intangibles acquired

$
3,987


$
7,770


$
503


$
12,260Accumulated amortization and foreign currency translation,
    January 1, 2008


(1,299
)


(1,273
)


(99
)


(2,671
)Balance, January 1, 2008


2,688



6,497



404



9,589Acquisition of non-controlling interest


61



2,008







2,069Additions










301



301Amortization expense


(901
)


(810
)


(298
)


(2,009
)Foreign currency translation


(96
)


(138
)






(234
)Balance, December 31, 2008


1,752



7,557



407



9,716Additions










192



192Amortization expense


(1,043
)


(859
)


(118
)


(2,020
)Foreign currency translation


160



324







484Balance, December 31, 2009


869



7,022



481



8,372Additions










571



571Amortization expense


(860
)


(907
)


(170
)


(1,937
)Foreign currency translation


(9
)


(223
)


(8
)


(240
)Balance, December 31, 2010

$



$
5,892


$
874


$
6,766     2011

$
1,1552012


1,1552013


1,1552014


1,1552015


1,104Thereafter


1,042$
6,766  F-16




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6 
    Property
    and Equipment    Estimated


December 31,Lives


2010


2009(In years)


(In thousands)Telecommunication and computer equipment


1 - 5


$
72,597


$
59,830Furniture and other


5 - 7



2,027



2,22174,624



62,051Less: Accumulated depreciation






(48,244
)


(35,040
)$
26,380


$
27,011     Note 7 
    Long-Term
    Debt    December 31,2010


2009(In thousands)Term loan, net of unamortized deferred financing costs

$
32,034


$
29,681Equipment notes


105



532,139



29,686Less: Current maturities of long-term debt


(8,655
)


(8,664
)$
23,484


$
21,022   Term
    Loan
         F-17




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Equipment
    Notes
    Covenants
    and Restrictions
    Deferred
    Financing Costs
    Debt
    Maturities
    2011

$
8,6552012


23,4562013


28Total debt, including current maturities

$
32,139   Note 8 
    Operating
    Leases and Commercial Commitments  Operating
    Leases
    2011

$
1,2252012


7892013


6652014


3102015


146$
3,135  F-18




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Commercial
    Commitments
    2011

$
10,4072012


6,6942013


5,0422014


1,272Thereafter


$
23,415   Note 9 
    Related
    Party Transactions      Year Ended December 31,2009

2008(In thousands)Stockholder notes:Issuance of notes to other stockholders

$



$
2,786Repayment of notes to officers

$
200


$
Repayment of notes to other stockholders

$
8,379


$
Warrants:Exercise price of $0.04, expiring December 31, 2015Issuance of 11,853 warrants to officers

$



$
53Issuance of 706,897 warrants to other stockholders

$



$
3,161Interest expense related to stockholder notes:Accrued and imputed interest expense

$
3,214


$
309Payment of interest

$
5,708


$
   Note 10 
    Fair
    Value Measurements    
    Cash and Cash Equivalents Reported amounts
    approximate fair value.
    Restricted Cash Reported amounts approximate
    fair value. F-19




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Accounts Receivable Reported amounts, net of
    the allowance for doubtful accounts, approximate fair value.
    Accounts Payable, Including Income Taxes Payable and Accrued
    Expenses Reported amounts approximate fair value.
    Long-Term Debt The carrying amount of the
    Companys floating-rate debt approximates fair value since
    the interest rates paid are based on short-term maturities and
    recent quoted rates from financial institutions.
    Preferred Stock Derivatives Conversion and
    redemption rights associated with preferred stock, which were
    bifurcated based on an analysis of the features in relation to
    the preferred stock agreements (Series A, B, and C
    Preferred Stock), classified as non-current and reported at
    approximate fair value as of December 31, 2009. All
    preferred stock derivatives were settled immediately prior to
    the Companys IPO in December 2010 (see
    Note 2  Initial Public Offering, Reverse Stock
    Split, Preferred Stock and Warrants).  mark-to-market
  Level 1
  Level 2
  Level 3
   F-20




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Balance, January 1,

$
30,446


$
8,413


$
9,808Unrealized (gains) losses included in earnings


17,190



21,009



(2,461
)Derivative related to preferred stock dividends


2,108



1,024



1,066Conversion of preferred stock


(49,744
)






Balance, December 31,

$



$
30,446


$
8,413       Note 11 
    Commitments
    and Contingencies  Litigation
    Taxes
    Note 12 
    Stock-Based
    Compensation    2010
    Omnibus Incentive Plan
   F-21




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006
    Long-Term Incentive Plan
    2001
    Stock Option Plan
           F-22




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Expected Volatility  based on peer group price
    volatility for periods equivalent to the expected term of the
    options
    Expected Term  expected life adjusted based on
    managements best estimate for the effects of
    non-transferability, exercise restriction and behavioral
    considerations
    Risk-Free Interest Rate  risk-free rate, for
    periods within the contractual terms of the options, is based on
    the U.S. Treasury yield curve in effect at the time of grant
    Dividend Yield  expected dividends based on
    the Companys historical dividend rate at the date of grant    Year Ended December 31,2010


2009

2008Expected volatility


58
%

42% - 60%

35% - 42%Expected term (in years)


4


4

4Risk-free interest rate


2.7
%

2.2 - 3.1%

2.6 - 3.3%Dividend yield







     Year Ended December 31,2010


2009


2008Weighted





Weighted





WeightedNumber of


Average


Number of


Average


Number of


AverageUnderlying


Exercise


Underlying


Exercise


Underlying


ExerciseShares


Price


Shares


Price


Shares


Price(In thousands, except per share amounts)Balance, January 1,


743


$
6.79



604


$
7.43



534


$
6.97Granted


137


$
8.48



194


$
5.32



133


$
9.75Exercised


(17
)

$
0.57



(16
)

$
8.99



(3
)

$
5.67Forfeited


(53
)

$
7.85



(39
)

$
8.57



(60
)

$
8.56Expired





$







$







$
Balance, December 31,


810


$
7.13



743


$
6.79



604


$
7.43Exercisable, December 31,


416


$
6.92



287


$
6.51



177


$
5.94   Year Ended December 31,2010


2009


2008(In thousands)Intrinsic value of options exercised

$
197


$
32


$
1Fair value of options vested

$
332


$
234


$
212    F-23




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Weighted AverageNumber of


Grant Date FairUnderlying Shares


Value(In thousands)Unvested options, January 1, 2008


479


$
1.69Granted


133


$
1.22Vested


(129
)

$
1.65Forfeited


(58
)

$
1.49Unvested options, December 31, 2008


425


$
1.58Granted


194


$
2.92Vested


(147
)

$
1.59Forfeited


(16
)

$
1.49Unvested options, December 31, 2009


456


$
2.14Granted


137


$
3.91Vested


(167
)

$
1.99Forfeited


(32
)

$
2.06Unvested options, December 31, 2010


394


$
2.82   Note 13 
    Income
    (Loss) per Share   F-24




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Net income (loss) attributable to RigNet, Inc. stockholders

$
(15,593
)

$
(19,922
)

$
8,406Less: Dividends accrued on preferred stock


1,056



1,076



2,161Less: Derivatives related to preferred stock dividends (See
    Note 10-Fair
    Value Measurements)


2,108



1,024



1,066Less: Adjustment to redeemable, non-controlling interest
    redemption value (See
    Note 4-Acquisitions)


50



96



9,369Net income (loss) attributable to RigNet, Inc. common
    stockholders

$
(18,807
)

$
(22,118
)

$
(4,190
)Weighted average shares outstanding, basic


5,571



5,312



5,301Effect of dilutive securities










Weighted average shares outstanding, diluted


5,571



5,312



5,301     Note 14 
    Segment
    Information    
    Eastern Hemisphere.  Our eastern hemisphere
    segment provides remote communications services for offshore
    drilling rigs, production facilities, energy support vessels and
    other remote sites. Our eastern hemisphere segment services are
    performed out of our Norway, Qatar, United Kingdom and Singapore
    based offices for customers and rig sites located on the eastern
    side of the Atlantic Ocean primarily off the coasts of the U.K.,
    Norway and West Africa, around the Indian Ocean in Qatar, Saudi
    Arabia and India, around the Pacific Ocean near Australia, and
    within the South China Sea.
    Western Hemisphere.  Our western hemisphere
    segment provides remote communications services for offshore
    drilling rigs, production facilities, energy support vessels and
    other remote sites. Our western hemisphere segment services are
    performed out of our United States and Brazil based offices for
    customers and rig sites located on the western side of the
    Atlantic Ocean primarily off the coasts of the United States,
    Mexico and Brazil, and within the Gulf of Mexico, but excluding
    land rigs and other land-based sites in North America.
    U.S. Land.  Our U.S. land segment
    provides remote communications services for drilling rigs and
    production facilities located onshore in North America. Our
    U.S. land segment services are performed out of our
    Louisiana based office for customers and rig sites located in
    the continental United States.   F-25




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Eastern

Western



Corporate and

ConsolidatedHemisphere

Hemisphere

U.S. Land

Eliminations

Total(In thousands)2010Total revenue

$
61,390


$
19,012


$
12,845


$
(326
)

$
92,921Total expenses


38,868



15,255



12,645



13,553



80,321Interest expense






(10
)


(83
)


(1,525
)


(1,618
)Other income (expense), net


(119
)


(396
)


17



99



(399
)Income tax expense














(8,669
)


(8,669
)Net income (loss)


22,403



3,351



134



(41,164
)


(15,276
)Total assets


45,016



54,589



25,574



4,606



129,785Capital expenditures


6,532



5,515



963



81



13,0912009Total revenue

$
60,917


$
11,222


$
9,850


$
(1,053
)

$
80,936Total expenses


35,959



9,103



14,045



10,141



69,248Interest expense


(345
)






(455
)


(4,346
)


(5,146
)Other income (expense), net


342



(84
)


43



3



304Income tax expense














(5,457
)


(5,457
)Net income (loss)


24,711



2,205



(4,532
)


(42,004
)


(19,620
)Total assets


42,934



21,859



25,661



(1,644
)


88,810Capital expenditures


1,168



9,160



29



135



10,4922008Total revenue

$
54,586


$
12,225


$
23,047


$
51


$
89,909Total expenses


35,881



9,609



16,502



11,703



73,695Interest expense


(309
)






(1,356
)


(799
)


(2,464
)Other income (expense), net


(1,984
)


47



31



1,933



27Income tax expense














(5,882
)


(5,882
)Net income (loss)


16,506



2,569



5,220



(13,939
)


10,356Capital expenditures


5,749



2,390



1,308



2



9,449       Year Ended December 31,2010


2009


2008(In thousands)Domestic

$
25,957


$
18,045


$
33,953International


66,964



62,891



55,956Total

$
92,921


$
80,936


$
89,909  F-26




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 15 
    Income
    Taxes  Income
    Tax Expense
    Year Ended December 31,2010


2009


2008(In thousands)Current:Federal

$



$
42


$
93State


9



72



508Foreign


3,727



4,791



3,186Total current


3,736



4,905



3,787Deferred:Federal


3,046



(841
)


1,731State


157



(123
)


(53
)Foreign


1,730



1,516



417Total deferred


4,933



552



2,095Income tax expense

$
8,669


$
5,457


$
5,882     Year Ended December 31,2010


2009


2008(In thousands)Income (loss) before income taxes:United States

$
(25,314
)

$
(34,050
)

$
3,355Foreign


18,707



19,887



12,883$
(6,607
)

$
(14,163
)

$
16,238  F-27




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##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)United States statutory federal income tax rate

$
(2,312
)

$
(4,957
)

$
5,683Non-deductible expenses


910



3,021



1,617Non-deductible financial expenses


6,016



7,197



(862
)U.S. tax on foreign earnings, net of tax credits


5,376



1,756



Changes in valuation allowances


(2,927
)


705



624Tax credits


(1,081
)


(2,048
)


(2,442
)State taxes


(163
)


(129
)


450Effect of operating in foreign jurisdictions


(1,471
)


(714
)


1,072Non-controlling interest in U.S. subsidiary


(95
)


(4
)


(555
)Changes in prior year estimates


(88
)


(969
)


(1,811
)Changes in uncertain tax benefits


4,918



1,393



2,087Revisions of deferred tax accounts


(517
)






Other


103



206



19Income tax expense

$
8,669


$
5,457


$
5,882   Deferred
    Tax Assets and Liabilities
    December 31,2010


2009(In thousands)Deferred tax assets:Net operating loss carryforwards

$
56


$
110Federal, state and foreign tax credits


5,212



4,874Depreciation and amortization


5,593



1,180Allowance for doubtful accounts


1,375



503Accruals not currently deductible


683



1,253Other


155



541Valuation allowance


(4,941
)


(3,419
)Total deferred tax assets


8,133



5,042Deferred tax liabilities:Depreciation and amortization


(1,137
)


(2,341
)Tax on foreign earnings


(5,030
)


(1,756
)Other


(181
)


(386
)Total deferred tax liabilities


(6,348
)


(4,483
)Net deferred tax assets

$
1,785


$
559  F-28




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Uncertain
    Tax Benefits
   F-29




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Balance, January 1,

$
7,110


$
4,040


$
2,263Additions for the current year tax


1,394



3,070



2,350Additions related to prior years


2,453







Reductions related to prior years


(1,847
)






(573
)Balance, December 31,

$
9,110


$
7,110


$
4,040        F-30




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 16 
    Supplemental
    Quarterly Financial Information 
    (Unaudited)    2010 Quarter EndedMarch 31


June 30


September 30


December 31(In thousands, except per share data)Revenue

$
21,820


$
22,550


$
24,234


$
24,317Operating income

$
1,867


$
2,824


$
3,888


$
4,021Net income (loss)

$
(7
)

$
(11,052
)

$
482


$
(4,699
)Net income (loss) attributable to RigNet, Inc. common
    stockholders

$
(800
)

$
(11,941
)

$
(552
)

$
(5,514
)Net income (loss) per share attributable to RigNet, Inc. common
    stockholders, basic

$
(0.15
)

$
(2.24
)

$
(0.10
)

$
(0.87
)Net income (loss) per share attributable to RigNet, Inc. common
    stockholders, diluted

$
(0.15
)

$
(2.24
)

$
(0.10
)

$
(0.87
)Weighted average shares outstanding, basic


5,318



5,319



5,319



6,321Weighted average shares outstanding, diluted


5,318



5,319



5,319



6,321   2009 Quarter EndedMarch 31


June 30


September 30


December 31(In thousands, except per share data)Revenue

$
21,116


$
19,764


$
19,991


$
20,065Operating income

$
4,595


$
1,172


$
3,638


$
2,283Net loss

$
(1,334
)

$
(5,868
)

$
(5,573
)

$
(6,845
)Net loss attributable to RigNet, Inc. common stockholders

$
(1,922
)

$
(6,448
)

$
(6,240
)

$
(7,508
)Net loss per share attributable to RigNet, Inc. common
    stockholders, basic

$
(0.36
)

$
(1.21
)

$
(1.17
)

$
(1.41
)Net loss per share attributable to RigNet, Inc. common
    stockholders, diluted

$
(0.36
)

$
(1.21
)

$
(1.17
)

$
(1.41
)Weighted average shares outstanding, basic


5,303



5,312



5,316



5,317Weighted average shares outstanding, diluted


5,303



5,312



5,316



5,317      F-31




---



##### Table of Contents



RIGNET,
    INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 17 
    Subsequent
    Events   F-32




---



##### Table of Contents



INDEX TO
    EXHIBITS
  3
.1*

Amended and Restated Certificate of Incorporation3
.2*

Amended and Restated Bylaws4
.1*

Specimen certificate evidencing common stock4
.2*

Registration Rights Agreement dated effective as of June 20,
    2005 among the Registrant and the holders of our preferred stock
    party thereto10
.1+*

2006 Long-Term Incentive Plan10
.2+*

2010 Omnibus Incentive Plan10
.3+*

Form of Option Award Agreement under the 2006 Plan10
.4+*

Form of Incentive Stock Option Award Agreement under the 2010
    Plan10
.5+*

Form of Nonqualified Stock Option Award Agreement under the 2010
    Plan10
.6*

Form of Indemnification Agreement entered into with each
    director and executive officer10
.7+*

Employment Agreement between the Registrant and Mark Slaughter
    dated August 15, 2007, as amended10
.8+*

Employment Agreement between the Registrant and Martin Jimmerson
    dated August 15, 2007, as amended10
.9+*

Employment Agreement between the RigNet AS and Lars Eliassen
    dated June 1, 2010, as amended10
.10*

Lease Agreement between RigNet Inc., a Texas corporation, and
    KWI Ashford Westchase Buildings, L.P. dated as of June 17, 2003,
    as amended10
.11*

Credit Agreement dated as of May 29, 2009 among RigNet, Inc.,
    Bank of America Bank N.A., as administrative agent, and the
    lenders party thereto10
.12*

First Amendment to Credit Agreement dated as of June 10, 2010
    among RigNet, Inc., Bank of America, N.A., as administrative
    agent, and the lenders party thereto10
.13*

Second Amendment to Credit Agreement dated as of August 19, 2010
    among RigNet, Inc., Bank of America, N.A., as administrative
    agent, and the lenders party thereto10
.14*

Employment Agreement between the Registrant and William Sutton
    dated May 18, 2010, as amended10
.15*

Employment Agreement between the Registrant and Hector Maytorena
    dated May 18, 2010, as amended10
.16*

Third Amendment to Credit Agreement dated as of November 9, 2010
    among RigNet, Inc., Bank of America, N.A., as administrative
    agent, and the lenders party thereto21
.1

Subsidiaries of RigNet, Inc.23
.1

Consent of Deloitte & Touche LLP, independent registered
    public accounting firm31
.1

Certification of Chief Executive Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 200231
.2

Certification of Chief Financial Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 200232
.1

Certification of Chief Executive Officer Pursuant to Section 906
    of the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial Officer Pursuant to Section 906
    of the Sarbanes-Oxley Act of 200299
.1

Consent of ODS Petrodata, Inc. dated March 14, 201199
.2

Consent of Spears & Associates, Inc. dated March 14, 2011     *
    
    Incorporated by reference to exhibit filed with
    Registrants registration statement on
    Form S-1
    (File
    No. 333-169723),
    as amended.+
    
    Indicates management contract or compensatory plan.