<Page>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

/X/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the quarterly period ended September 30, 2001

                                       OR

/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the transition period from _____ to _____

Commission File Number: 0-21317

                           LIBERTY SATELLITE & TECHNOLOGY, INC.
                           ------------------------------------
                  (Exact name of Registrant as specified in its charter)

       STATE OF DELAWARE                               84-1299995
-------------------------------          ------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)

         12300 Liberty Boulevard
          Englewood, Colorado                             80112
----------------------------------------         ----------------------
(Address of principal executive offices)               (Zip Code)

       Registrant's telephone number, including area code: (720) 875-5400

           7600 E. Orchard Road, Suite 330-South, Englewood, Colorado
           ----------------------------------------------------------
                           Registrant's former address

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. |X| Yes |_| No

      The number of shares outstanding of Liberty Satellite & Technology, Inc.'s
common stock as of October 31, 2001, was:

                 Series A common stock - 67,531,018 shares; and
                    Series B common stock - 7,718,286 shares.

<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                      Condensed Consolidated Balance Sheets
                                   (unaudited)

<Table>
<Caption>
                                                                September 30,   December 31,
                                                                    2001            2000
                                                                -------------   ------------
                                                                    amounts in thousands
<S>                                                              <C>               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                     $   6,051         157,198
   Restricted cash (note 7)                                          4,300              --
   Receivables and prepaid expenses                                    897           1,166
                                                                 ---------       ---------
        Total current assets                                        11,248         158,364
                                                                 ---------       ---------
Investments in affiliates accounted for using the equity
   method (note 6)                                                 304,737         341,559
Investments in available-for-sale securities and other cost
   investments (note 7)                                            532,969         486,029
Support equipment and other assets, net                                 29             304
                                                                 ---------       ---------
                                                                 $ 848,983         986,256
                                                                 =========       =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses                         $   1,529             298
   Due to parent (note 9)
      Accrued interest                                                 268           1,703
      Other accrued expenses                                           130             470
   Income taxes payable                                              5,701              --
                                                                 ---------       ---------
        Total current liabilities                                    7,628           2,471
                                                                 ---------       ---------

Noncurrent amounts due to parent (note 9)                           54,089          54,982
Debt (note 10)                                                      67,503          35,003
Securities lending agreement (note 7)                                4,300              --
Put option liability (note 7)                                       38,537          31,729
                                                                 ---------       ---------
        Total liabilities                                          172,057         124,185
                                                                 ---------       ---------
Minority interests in equity of consolidated subsidiaries          407,827         534,301
Redeemable preferred stock                                         200,943         196,614

Stockholders' Equity:
   Series A common stock, $1 par value; authorized
      185,000,000 shares; issued 67,531,018 in 2001 and
      65,469,595 in 2000                                            67,531          65,470
   Series B common stock, $1 par value; authorized
      30,000,000 shares; issued 7,718,286 in 2001 and
      7,733,996 in 2000                                              7,718           7,734
   Additional paid-in capital                                      905,456         926,678
   Accumulated other comprehensive income                           12,653          12,860
   Accumulated deficit                                            (924,877)       (881,261)
                                                                 ---------       ---------
                                                                    68,481         131,481

   Series A common stock held in treasury, at cost
      (29,545 shares)                                                 (325)           (325)
                                                                 ---------       ---------
        Total stockholders' equity                                  68,156         131,156
                                                                 ---------       ---------
Commitments and contingencies (note 14)
                                                                 $ 848,983         986,256
                                                                 =========       =========
</Table>

See accompanying notes to condensed consolidated financial statements.


                                      I-1
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                 Condensed Consolidated Statements of Operations
                                   (unaudited)

<Table>
<Caption>
                                                Three months ended             Nine months ended
                                                   September 30,                 September 30,
                                              -----------------------       -----------------------
                                                2001           2000           2001           2000
                                              --------       --------       --------       --------
                                                              amounts in thousands,
                                                            except per share amounts
<S>                                           <C>             <C>           <C>             <C>
Management fee revenue (note 11)              $    105            120            315            340

Operating costs and expenses:
   Selling, general and administrative
      (notes 9 and 11)                           1,674            660          3,244          3,033
   Stock compensation (note 12)                     73            542            195         (2,245)
   Depreciation                                     22             29             84             69
                                              --------       --------       --------       --------
                                                 1,769          1,231          3,523            857
                                              --------       --------       --------       --------

         Operating loss                         (1,664)        (1,111)        (3,208)          (517)

Other income (expense):
   Interest income                                 263          3,055          1,404          7,289
   Interest expense-parent                        (864)        (1,292)        (2,784)        (2,732)
   Interest expense-other                         (586)          (514)        (1,977)          (963)
   Share of losses of affiliates                (7,554)        (2,394)      (173,650)        (4,500)
   Unrealized gains on financial
instruments, net (notes 2 and 7)                11,812             --         25,814             --
   Other-than-temporary decline in fair
      value of investments                          --             --        (37,814)            --
   Gain on sale of GM Hughes stock
      (note 7)                                      --             --             --         36,643
   Loss on GM Hughes share
      appreciation rights (note 7)                  --             --             --        (65,721)
   Loss on disposition (note 8)                   (188)            --           (188)            --
                                              --------       --------       --------       --------
                                                 2,883         (1,145)      (189,195)       (29,984)
                                              --------       --------       --------       --------

         Earnings (loss) before income
            taxes and minority interest          1,219         (2,256)      (192,403)       (30,501)

Income tax benefit (expense)                      (649)        (8,946)        (5,882)         6,456
Minority interest                                 (781)          (442)       154,669        (18,608)
                                              --------       --------       --------       --------

         Net loss                                 (211)       (11,644)       (43,616)       (42,653)

Accretion of redeemable preferred stock         (1,443)        (1,432)        (4,329)        (3,104)
Dividends on redeemable preferred stock         (7,500)        (7,500)       (22,500)       (16,233)
                                              --------       --------       --------       --------

         Net loss attributable to common
            stockholders                      $ (9,154)       (20,576)       (70,445)       (61,990)
                                              ========       ========       ========       ========

Basic and diluted loss per common share
   (note 4)                                   $   (.12)          (.29)          (.95)          (.86)
                                              ========       ========       ========       ========
</Table>

See accompanying notes to condensed consolidated financial statements.


                                      I-2
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

             Condensed Consolidated Statements of Comprehensive Loss
                                   (unaudited)

<Table>
<Caption>
                                                      Three months ended           Nine months ended
                                                         September 30,                September 30,
                                                     ---------------------       ---------------------
                                                       2001          2000          2001          2000
                                                     --------      --------      --------      --------
                                                                    amounts in thousands
<S>                                                  <C>           <C>           <C>           <C>
Net loss                                             $  (211)      (11,644)      (43,616)      (42,653)
                                                     -------       -------       -------       -------

Other comprehensive income, net of tax
   Unrealized holding gains (losses)                    (898)      (17,589)       (1,159)        6,114
   Less reclassification adjustment for
       losses (gains) included in earnings                --            --           952       (37,115)
   Unrealized loss on share appreciation rights
       liability                                          --            --            --       (22,708)
   Less reclassification adjustment for
       loss included in earnings                          --            --            --        65,291
                                                     -------       -------       -------       -------
       Other comprehensive income
           (loss)                                       (898)      (17,589)         (207)       11,582
                                                     -------       -------       -------       -------
           Comprehensive loss                        $(1,109)      (29,233)      (43,823)      (31,071)
                                                     =======       =======       =======       =======
</Table>

See accompanying notes to condensed consolidated financial statements.


                                      I-3
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

            Condensed Consolidated Statement of Stockholders' Equity

                      Nine months ended September 30, 2001
                                   (unaudited)

<Table>
<Caption>
                                                                                Accumulated
                                               Common Stock        Additional      other                                  Total
                                           --------------------     paid-in    comprehensive  Accumulated   Treasury   stockholders'
                                           Series A    Series B     capital        income       deficit      stock        equity
                                           --------    --------    ----------  -------------  -----------   --------   -------------
                                                                           amounts in thousands
<S>                                        <C>            <C>        <C>            <C>        <C>              <C>        <C>
Balance at January 1, 2001                 $ 65,470       7,734      926,678        12,860     (881,261)        (325)      131,156

  Net loss                                       --          --           --            --      (43,616)          --       (43,616)
  Other comprehensive loss                       --          --           --          (207)          --           --          (207)
  Accretion and dividends on
    redeemable preferred stock                   --          --      (26,829)           --           --           --       (26,829)
  Issuance of Series A common stock for
    preferred stock dividends                 2,045          --        5,455            --           --           --         7,500
  Recognition of stock compensation
    related to restricted stock awards,
    net of taxes                                 --          --          120            --           --           --           120
  Issuance of common stock by affiliate          --          --           32            --           --           --            32
  Series B common stock exchanged for
    Series A common stock                        16         (16)          --            --           --           --            --
                                           --------    --------     --------      --------     --------     --------      --------

Balance at September 30, 2001              $ 67,531       7,718      905,456        12,653     (924,877)        (325)       68,156
                                           ========    ========     ========      ========     ========     ========      ========
</Table>

See accompanying notes to condensed consolidated financial statements.


                                      I-4
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)

<Table>
<Caption>
                                                                                 Nine months ended
                                                                                   September 30,
                                                                            --------------------------
                                                                               2001            2000
                                                                            ----------      ----------
                                                                               amounts in thousands
                                                                                   (see note 5)
<S>                                                                         <C>              <C>
Cash flows from operating activities:
   Net loss                                                                 $ (43,616)        (42,653)
   Adjustments to reconcile net loss to net cash used by operating
      activities:
         Depreciation                                                              84              69
         Stock compensation                                                       195          (2,245)
         Payments for stock compensation                                           --          (2,436)
         Share of losses of affiliates                                        173,650           4,500
         Unrealized gain on financial instruments                             (25,814)             --
         Other-than-temporary decline in fair value of investments             37,814              --
         Gain on sale of GM Hughes stock                                           --         (36,643)
         Loss on GM Hughes share appreciation rights                               --          65,721
         Minority interest                                                   (154,669)         18,608
         Deferred tax expense (benefit)                                            33          (6,456)
         Other noncash charges                                                    210              94
         Changes in operating assets and liabilities, net
            of the effects of the Liberty transaction:
               Change in receivables and prepaid expenses                         225          (1,115)
               Change in accruals and payables                                  5,158             665
                                                                            ---------       ---------

                  Net cash used by operating activities                        (6,730)         (1,891)
                                                                            ---------       ---------

Cash flows from investing activities:

   Investments in and advances to affiliates                                 (191,580)       (148,345)
   Capital expended for support equipment                                         (20)            (52)
   Proceeds received in the Liberty transaction                                    --         249,620
   Net proceeds from sale of GM Hughes stock                                       --          74,243
   Payment of GM Hughes share appreciation rights                                  --         (65,721)
                                                                            ---------       ---------

                  Net cash provided (used) by investing activities           (191,600)        109,745
                                                                            ---------       ---------

Cash flows from financing activities:

   Borrowings of debt                                                          32,500          55,103
   Repayments of note payable to parent                                        (6,572)         (5,018)
   Contributions by minority owner                                             30,577          47,689
   Advances from minority owner                                                 5,678              --
   Payments of preferred stock dividends                                      (15,000)             --
   Proceeds from exercise of stock options                                         --             497
   Purchase of treasury stock                                                      --            (325)
                                                                            ---------       ---------

                  Net cash provided by financing activities                    47,183          97,946
                                                                            ---------       ---------

                  Net increase (decrease) in cash and cash equivalents       (151,147)        205,800

                  Cash and cash equivalents:
                     Beginning of period                                      157,198           2,473
                                                                            ---------       ---------

                     End of period                                          $   6,051         208,273
                                                                            =========       =========
</Table>

See accompanying notes to condensed consolidated financial statements.


                                      I-5
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

                               September 30, 2001
                                   (unaudited)

(1)   BASIS OF PRESENTATION

      The accompanying consolidated financial statements include the accounts of
      Liberty Satellite & Technology, Inc. and those of all majority-owned or
      controlled subsidiaries, including the LSAT Joint Ventures described in
      note 3 ("LSAT" or the "Company"). All significant inter-company
      transactions have been eliminated.

      LSAT, a consolidated subsidiary of Liberty Media Corporation ("Liberty
      Media") since March 2000, is currently a holding company. As a holding
      company, LSAT has no significant direct operations. The Company (i) incurs
      general and administrative expenses to manage its interests in other
      companies and maintain its status as a publicly traded company and (ii)
      provides management services to Phoenixstar, Inc.

      The Company currently is pursuing strategic opportunities worldwide in the
      distribution of internet data and other content via satellite and related
      businesses. The Company is actively seeking to develop and/or acquire
      operating businesses related to, or complementary with, such strategy.

      The accompanying interim condensed consolidated financial statements of
      the Company are unaudited. In the opinion of management, all adjustments
      (consisting only of normal recurring accruals) have been made that are
      necessary to present fairly the financial position of the Company as of
      September 30, 2001 and the results of its operations for the nine months
      ended September 30, 2001 and 2000. The results of operations for any
      interim period are not necessarily indicative of the results for the
      entire year. These condensed consolidated financial statements should be
      read in conjunction with the consolidated financial statements and related
      notes thereto included in the Company's December 31, 2000 Annual Report on
      Form 10-K.

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities at
      the date of the financial statements and the reported amounts of revenue
      and expenses during the reporting period. Actual results could differ from
      those estimates.

      Certain amounts have been reclassified for comparability with the 2001
      presentation.


                                      I-6
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

(2)   ACCOUNTING CHANGE

      Effective January 1, 2001, LSAT adopted Statement of Financial Accounting
      Standards No. 133, "Accounting for Derivative Instruments and Hedging
      Activities" ("Statement 133"), which establishes accounting and reporting
      standards for derivative instruments, including certain derivative
      instruments embedded in other contracts, and for hedging activities. All
      derivatives, whether designated in hedging relationships or not, are
      required to be recorded on the balance sheet at fair value. If the
      derivative is designated as a fair value hedge, the changes in the fair
      value of the derivative and of the hedged item attributable to the hedged
      risk are recognized in earnings. If the derivative is designated as a cash
      flow hedge, the effective portions of changes in the fair value of the
      derivative are recorded in other comprehensive earnings and are recognized
      in the statement of operations when the hedged item affects earnings.
      Ineffective portions of changes in the fair value of cash flow hedges are
      recognized in earnings. If the derivative is not designated as a hedge,
      changes in the fair value of the derivative are recognized in earnings.
      Derivative gains and losses included in other comprehensive earnings are
      reclassified into earnings at the time the sale of the hedged item or
      transaction is recognized. The adoption of Statement 133 had no impact on
      LSAT's financial statements as of January 1, 2001.

      The company uses equity collars and put spread collars to manage fair
      value risk associated with certain investments. Derivative instruments are
      generally not used for speculative purposes. The derivative instruments
      may involve elements of credit and market risk in excess of amounts
      recognized in the financial statements. The Company monitors its positions
      and the credit quality of counter-parties, consisting primarily of major
      financial institutions and does not anticipate nonperformance by any
      counter-party.

      For derivatives designated either as fair value or cash flow hedges,
      changes in the time value of the derivatives are excluded from the
      assessment of hedge effectiveness and are recognized in earnings. Hedge
      ineffectiveness, determined in accordance with Statement 133, had no
      impact on earnings for the nine months ended September 30, 2001. No fair
      value hedges or cash flow hedges were derecognized or discontinued during
      the nine months ended September 30, 2001.

      For the nine months ended September 30, 2001, unrealized gains on
      financial instruments include a $10,989,000 gain related to derivatives
      not designated as hedging instruments, a $21,633,000 gain related to
      changes in the time value of fair value hedges and a $6,808,000 loss
      related to the iBEAM put option.

(3)   LIBERTY TRANSACTIONS

      On March 16, 2000, the Company completed two transactions (collectively,
      the "Liberty Transactions") with Liberty Media. Pursuant to the terms of
      the first transaction, the Company acquired a beneficial interest in
      5,084,745 shares of Sprint Corporation PCS Group common stock ("Sprint PCS
      Stock") with an aggregate market value on the closing date of $300 million
      in exchange for 150,000 shares of LSAT Series A Preferred Stock with a
      liquidation value of $150 million and 150,000 shares of LSAT Series B
      Preferred Stock ("Series B Preferred Stock") with a liquidation value of
      $150 million. The shares of Series


                                      I-7
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

      B Preferred Stock have super voting rights which give Liberty Media voting
      control over the Company. Accordingly, since March 16, 2000, the Company
      has been a consolidated subsidiary of Liberty Media.

      Pursuant to the terms of the second transaction with Liberty Media, the
      Company (through its wholly-owned subsidiaries) became the managing member
      of two newly formed limited liability companies, Liberty Satellite, LLC
      ("LSAT LLC") and LSAT Astro LLC ("LSAT Astro," and together with LSAT LLC,
      the "LSAT Joint Ventures"). The Company contributed (i) its beneficial
      interest in 4,221,921 shares (as adjusted for a 3 for 1 stock split
      effective July 3, 2000) of General Motors Corporation Class H common stock
      ("GM Hughes Stock"), net of the GM Hughes Stock share appreciation right
      liability described in note 7, and (ii) its interest in JATO
      Communications Corp. to LSAT LLC in exchange for a 10.59% ownership
      interest in LSAT LLC. Liberty Media contributed cash and its interests in
      various satellite related assets, including an 86.01% ownership interest
      in LSAT Astro, to LSAT LLC in exchange for the remaining 89.41% ownership
      interest in LSAT LLC. As the Company is a consolidated subsidiary of
      Liberty Media, all of the assets contributed by the Company and Liberty
      Media to the LSAT Joint Ventures were recorded at their net book values at
      the date of contribution. In addition, LSAT acquired a 13.99% ownership
      interest in LSAT Astro in exchange for a $60 million note payable to
      Liberty Media.

      The Company operates and manages the activities of the LSAT Joint Ventures
      and has decision-making authority with respect to significant business
      transactions, including the purchase and sale of assets, entered into by
      such entities. Accordingly, the results of operations of the LSAT Joint
      Ventures have been included in the Company's consolidated financial
      statements since March 16, 2000.

(4)   LOSS PER COMMON SHARE

      The basic loss per common share is based on net loss attributable to
      common stockholders divided by the weighted average number of shares
      outstanding during the period of 75,249,000 and 74,022,000 for the three
      and nine months ended September 30, 2001 respectively; and 71,529,000 and
      71,456,000 for the three and nine months ended September 30, 2000,
      respectively. Excluded from the computation of diluted loss per common
      share for the nine months ended September 30, 2001 and 2000 are options
      and convertible securities to acquire 22,626,000 and 16,536,000 shares of
      LSAT common stock, respectively, because inclusion of such options and
      convertible securities would be anti-dilutive.

(5)   SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

      Cash paid for interest was $6,161,000 and $2,865,000 for the nine months
      ended September 30, 2001 and 2000, respectively. Cash paid for income
      taxes was not significant during the nine months ended September 30, 2001
      and 2000.


                                      I-8
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

      Significant non-cash investing and financing activities are as follows:

<Table>
<Caption>
                                                     Nine months ended
                                                       September 30,
                                                --------------------------
                                                   2001            2000
                                                ----------      ----------
                                                   amounts in thousands
<S>                                             <C>              <C>
      Cash received in Liberty Transactions:
        Value of investments received           $      --        (649,385)
        Debt issued                                    --          60,000
        Deferred tax liability assumed                 --         114,628
        Redeemable preferred stock issued              --         185,372
        Minority interests                             --         539,005
                                                ---------       ---------
                                                $      --         249,620
                                                =========       =========
</Table>

(6)   INVESTMENTS IN AFFILIATES

      The following table reflects the Company's carrying amount of its
      investments accounted for using the equity method:

<Table>
<Caption>
                                                     September 30,  December 31,
                                                          2001          2000
                                                     -------------  ------------
                                                         amounts in thousands
<S>                                                     <C>            <C>
      ASTROLINK International LLC ("Astrolink") (a)     $249,868       268,712
      Aerocast.com, Inc. ("Aerocast") (b)                 14,112        11,852
      Wildblue Communications, Inc. ("Wildblue") (c)      40,757        60,995
                                                        --------      --------
                                                        $304,737       341,559
                                                        ========      ========
</Table>

      The following table reflects the Company's share of losses of affiliates:

<Table>
<Caption>
                                                    Nine months ended
                                                      September 30,
                                              ----------------------------
                                                2001                2000
                                              --------            --------
                                                   amounts in thousands
<S>                                           <C>                    <C>
      Astrolink                               $167,334               4,379
      Aerocast                                   5,091                 121
      Wildblue                                   1,225                  --
                                              --------            --------
                                              $173,650               4,500
                                              ========            ========
</Table>

      At September 30, 2001, the aggregate carrying amount of the Company's
      investments in its affiliates exceeded the Company's proportionate share
      of such affiliates' net assets by $9,188,000. Such excess is being
      amortized over a useful life of five years. Amortization aggregated
      $2,054,000 for the nine months ended September 30, 2001, and is included
      in share of losses of affiliates.

      (a)   The Company owns a direct 13.99% interest in LSAT Astro and an
            indirect (through LSAT LLC) 86.01% interest in LSAT Astro. LSAT
            Astro


                                      I-9
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

            owns an approximate 31.5% ownership interest in Astrolink. Astrolink
            is currently in its developmental stages, but intends to build a
            telecom network using Ka-band geostationary satellites to provide
            broadband data communications services. Astrolink currently plans to
            launch two satellites in early 2003 and intends to serve customers
            in North America and Europe. Additional spacecraft, if launched,
            could extend the network worldwide or could provide in-orbit backup.

            During the second quarter of 2001, the Company determined that its
            investment in Astrolink experienced an other-than-temporary decline
            in value. Accordingly, the carrying amount of such investment was
            adjusted to its estimated fair value resulting in a realized loss of
            $155,000,000. Such loss is included in share of losses of
            affiliates.

            Astrolink's current business plan requires approximately $2.4
            billion in additional financing over the next several years,
            including approximately $830 million in 2002. Subsequent to
            September 30, 2001, one of the members of Astrolink informed
            Astrolink that it does not intend to provide any of Astrolink's
            required financing. In light of this decision, Astrolink is
            considering several alternatives with respect to its proposed
            business plan, including, but not limited to, seeking alternative
            funding sources, scaling back their proposed business plan, and
            liquidating the venture entirely. There can be no assurance that
            Astrolink will be able to obtain the necessary financing on
            acceptable terms, or that they will be able to fulfill the business
            plan as originally proposed, or at all. In the event that the
            venture is liquidated, LSAT anticipates that is would record an
            additional writedown of its investment.

            Summarized unaudited financial information for Astrolink is as
            follows:

<Table>
<Caption>
                                                       Nine months ended
                                                         September 30,
                                                   -----------------------
                                                     2001           2000
                                                   --------       --------
                                                     amounts in thousands
<S>                                                <C>             <C>
            COMBINED OPERATIONS
                Operating expense                  $(44,026)       (17,458)
                Depreciation and amortization          (580)          (337)
                Other income                          7,908          3,893
                                                   --------       --------
                      Net loss                     $(36,698)       (13,902)
                                                   ========       ========
</Table>

      (b)   During 2000, LSAT LLC invested $12.6 million in exchange for an
            ownership interest in Aerocast, and in March 2001, invested an
            additional $7.35 million increasing its ownership interest in
            Aerocast to approximately 45.5%. Aerocast is developing next
            generation streaming media technologies for broadband network
            operators and video content providers. Aerocast intends to utilize
            terrestrial and satellite platforms to distribute streaming media to
            businesses and consumers with high-speed internet access.

      (c)   The Company, through LSAT LLC, owns an approximate 16% interest in
            Wildblue. Wildblue plans to build a Ka-band satellite network that
            will


                                      I-10
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

            focus on providing broadband services to homes and small offices in
            North America and Latin America.

            During the first quarter of 2001, Wildblue announced that it was
            withdrawing its initial public offering due to continuing
            unfavorable conditions in the financial markets. As a result of such
            withdrawal, Wildblue is currently dependent upon its existing
            shareholders for the necessary funding to achieve its business plan.
            In light of the foregoing circumstances, the Company determined that
            Wildblue experienced an other than temporary decline in value. As a
            result, the Company's cost basis of Wildblue was adjusted to its
            estimated fair value. Such adjustment resulted in a realized loss of
            $19,500,000 and is included in impairment of investments in the
            accompanying condensed consolidated statement of operations. In
            addition, the Company began recording its share of Wildblue's
            losses in order to approximate changes in the value of the
            Company's investment.

      Summarized unaudited combined financial information for affiliates other
      than Astrolink is as follows:

<Table>
<Caption>
                                                     Nine months ended
                                                       September 30,
                                                 ------------------------
                                                   2001             2000
                                                 --------        --------
                                                   amounts in thousands
<S>                                              <C>                 <C>
      COMBINED OPERATIONS
        Operating expense                        $(13,377)           (732)
        Depreciation and amortization                (662)             --
        Other income                                8,601             201
                                                 --------        --------
          Net loss                               $ (5,438)           (531)
                                                 ========        ========
</Table>

      Aerocast and Wildblue are in the start up phase of their respective
      businesses. Accordingly, the Company anticipates that these equity
      affiliates will need additional financing to fund their respective
      business plans. In order to maintain its current ownership interest in
      each affiliate, the Company may be required to participate in such
      additional financing. If the Company is unable or unwilling to provide
      additional financing, its ownership interests may be diluted or it may
      forfeit certain voting or other shareholder rights. There is no assurance
      that the Company's equity affiliates will be able to obtain the necessary
      financing on acceptable terms. If they are unable to secure the necessary
      financing, the affiliates may be forced to alter their business plan or
      consider a plan of liquidation.


                                      I-11
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

(7)   INVESTMENT IN AVAILABLE-FOR-SALE SECURITIES AND OTHER COST INVESTMENTS
      Investments in available-for-sale securities and other cost investments
      are summarized as follows:

<Table>
<Caption>
                                                  September 30,  December 31,
                                                      2001          2000
                                                  -------------  ------------
                                                     amounts in thousands
<S>                                                 <C>             <C>
      Hughes Electronics Corporation (a)*           $ 40,273        47,011
      Sprint Corporation PCS Group (b)*              299,971       278,489
      Various Latin American satellite
        companies ("Sky Latin America") (c)          162,650       127,605
      XM Satellite Radio Holdings, Inc.
        ("XMSR") (d)*                                 27,075        26,924
      Other                                            3,000         6,000
                                                    --------      --------
                                                    $532,969       486,029
                                                    ========      ========
</Table>

      * Denotes an investment carried as an available-for-sale security.

      (a)   In April 1999 and in connection with its approval, as a stockholder
            of Phoenixstar, Inc. ("Phoenixstar"), of a sales agreement between
            Phoenixstar and Hughes Electronics Corporation ("Hughes"), a
            subsidiary of General Motors Corporation, and other matters, the
            Company received 4.221 million shares of GM Hughes Stock. All
            references herein to GM Hughes Stock reflect a 3-for-1 stock split
            effective July 3, 2000. As a condition to the receipt of the GM
            Hughes Stock, the Company issued Phoenixstar a share appreciation
            right (the "LSAT GMH SAR") granting Phoenixstar the right to any
            market price appreciation during the one-year period following the
            date of issuance, over an agreed strike price of $15.67. As noted
            above, LSAT contributed the shares of GM Hughes Stock to LSAT LLC,
            subject to the LSAT GMH SAR, in connection with the Liberty
            Transactions.

            Effective May 10, 2000, LSAT LLC sold 2.4 million shares of GM
            Hughes Stock for net cash proceeds of $74,243,000 (after fees and
            commissions of $717,000), and recognized a gain on sale of
            $36,643,000. LSAT LLC paid $65,721,000 of such cash proceeds to
            Phoenixstar to satisfy the LSAT GMH SAR, and recognized a loss of
            $65,721,000.

            The Company, through LSAT LLC, continues to hold 1,821,921 shares of
            GM Hughes Stock and accounts for such shares as available-for-sale.

            LSAT LLC has entered into a put spread collar with a financial
            institution with respect to its shares of GM Hughes Stock. The
            collar (i) provides LSAT LLC with a put option that gives it the
            right to require its counterparty to buy 1,821,921 shares of GM
            Hughes Stock from LSAT LLC in three tranches in October 2003 for a
            weighted average price of $26.64, and (ii) provides the counterparty
            with a put option that gives it the right to require LSAT LLC to
            repurchase the shares of GM Hughes Stock for a weighted average
            price of $14.80. LSAT LLC simultaneously sold a call option giving
            the counterparty the right to buy the same shares


                                      I-12
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

            of stock from LSAT LLC in three tranches in October 2003 for a
            weighted average price of $54.32 per share. The put and call options
            for this collar were equally priced, resulting in no cash cost to
            LSAT LLC. At September 30, 2001, the fair value of the GM Hughes put
            spread collar was approximately $15,986,000, which represented an
            increase of $10,989,000 from December 31, 2000. Such increase is
            included in unrealized gains on financial instruments in the
            accompanying condensed consolidated statement of operations.

      (b)   The Company acquired beneficial interest in 5,084,745 shares (the
            "Sprint PCS Shares") of Sprint PCS Stock as part of the Liberty
            Transactions. The Company accounts for such investment as an
            available-for-sale security.

            The trust holding the Sprint PCS Stock for LSAT's benefit has
            entered into an equity collar (the "Sprint PCS Collar") with a
            financial institution with respect to LSAT's Sprint PCS Stock. The
            collar provides the trust with a put option that gives it the right
            to require its counterparty to buy 5,084,745 shares of Sprint PCS
            Stock from the trust in seven tranches in March 2003 for a weighted
            average price of $59.71 per share. LSAT simultaneously sold a call
            option giving the counterparty the right to buy the same shares of
            stock from the trust in seven tranches in March 2003 for a weighted
            average price of $82.39 per share. The put and call options for this
            collar were equally priced, resulting in no cash cost to the trust
            or the Company. At September 30, 2001, the fair value of the PCS
            equity collar was approximately $166,293,000.

            Effective May 9, 2001, LSAT transferred (i) its beneficial interest
            in the Sprint PCS Shares, (ii) the PCS Collar and (iii) the PCS Loan
            Agreement to LSAT LLC in exchange for two secured demand promissory
            notes in the aggregate principal amount of $224,226,000. Such notes
            bear interest at a rate of 6.5% per annum and are due in March 2003.
            As LSAT LLC is a consolidated subsidiary of LSAT, there was no
            effect on the Company's consolidated balance sheet on the date of
            the transaction.

      (c)   Represents the aggregate book basis of a number of different
            satellite television operators located in Mexico, Brazil, Chile,
            Colombia and Argentina. LSAT LLC has a 10% beneficial interest in
            each of the Sky Latin America businesses.

            On September 27, 2000, Liberty Media and The News Corporation
            Limited ("News Corp") announced that they had reached an agreement
            pursuant to which, among other things, Liberty Media would transfer
            various assets to a subsidiary of News Corp, Sky Global Networks,
            Inc. ("SGN"), in exchange for shares of SGN common stock
            representing 4.76% of the outstanding shares of the class (the "SGN
            Transaction"). That percentage interest was subject to reduction
            upon the issuance of additional shares of that class by SGN. The
            assets to be transferred by Liberty Media to SGN were to consist of
            its interests in the partnerships operating the Sky Latin America
            businesses (the "Sky Latin America Interests") and a portion of
            Liberty Media's shares in Gemstar-TV Guide International Group, Inc.
            Liberty Media was obligated to contribute any


                                      I-13
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

            proceeds of the disposition of the Sky Latin America Interests to
            LSAT LLC. The SGN Transaction was subject to various conditions,
            including completion of SGN's initial public offering or an
            equivalent transaction by November 27, 2001 and receipt of required
            governmental and other material third party approvals. In November
            2001, News Corp. Advised Liberty Media and the Company that the SGN
            public offering condition would not occur within the required time
            period. Accordingly, neither News Corp. nor Liberty Media or the
            Company is currently under any obligation to consummate the SGN
            Transaction and there can be no assurance that the SGN Transaction,
            or that portion of the SGN Transaction relating to the Sky Latin
            America Interests, will occur.

      (d)   XMSR, a publicly traded company, offers 100 national audio channels
            of music, news, talk, sports and children's programming from two
            satellites directly to vehicle, home and portable radios. LSAT LLC
            currently owns 1,000,000 shares of XMSR common stock representing an
            approximate 2% interest.

            LSAT LLC has entered into an equity collar with a financial
            institution with respect to its shares of XMSR common stock. The
            collar provides LSAT LLC with a put option that gives it the right
            to require its counterparty to buy 1,000,000 shares of XMSR common
            stock from LSAT LLC in three tranches in November 2003, December
            2003 and February 2004 for a weighted average price of $28.55. LSAT
            LLC simultaneously sold a call option giving the counterparty the
            right to buy the same shares of stock from LSAT LLC in three
            tranches in November 2003, December 2003 and February 2004 for a
            weighted average price of $51.49 per share. The put and call options
            for this collar were equally priced, resulting in no cash cost to
            LSAT LLC. At September 30, 2001, the fair value of the XMSR equity
            collar was approximately $21,835,000.

            On June 27, 2001, LSAT LLC entered into an agreement to loan
            1,000,000 shares of XMSR to a third party. The obligation to return
            those shares is secured by cash collateral equal to 100% of the
            market value of that stock, which was $4,300,000 at September 30,
            2001. Such cash collateral is reported as restricted cash in the
            accompanying condensed consolidated balance sheet. During the period
            of the loan, which is terminable by either party at any time, the
            cash collateral is to be marked-to-market daily. Interest accrues on
            the cash collateral for the benefit of LSAT LLC at the rate of .15%
            per annum. As of September 30, 2001, 1,000,000 shares of XMSR had
            been lent under this agreement. The loan has no stated maturity
            date.

      As the Company's equity collars are designated to specific shares of stock
      held by the Company, and the changes in the fair value of the equity
      collars are correlated with changes in the fair value of the underlying
      securities, the equity collars function as hedges. Accordingly, changes in
      the fair value of the equity collars are recognized in earnings as
      unrealized gains or losses on financial instruments along with the changes
      in the fair value of the underlying securities. The Company's put spread
      collars do not function as hedges, and therefore changes in the fair value
      of the put spread collars are recorded as unrealized gains or losses on
      financial instruments in the Company's consolidated statements of
      operations.


                                      I-14
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

      During the three months ended March 31, 2001, the Company determined that
      its investments in XMSR and Netbeam, Incorporated experienced other than
      temporary declines in value. As a result, the cost bases of such
      investments were adjusted to their respective estimated fair values at
      March 31, 2001. Such adjustments resulted in a realized loss of
      $18,314,000 and are included in impairment of investments in the
      accompanying condensed consolidated statement of operations.

      Effective September 29, 2000 (the "iBEAM Closing Date"), LSAT LLC acquired
      a 1% managing common interest in a joint venture ("IB2 LLC") from a
      subsidiary of Liberty Digital, Inc. ("LDIG") for $652,000. LDIG, a
      consolidated subsidiary of Liberty Media, retained a preferred interest
      (the "Preferred Interest") in IB2 LLC, which owns approximately 360,000
      shares of iBEAM Broadcasting Corp. common stock ("iBEAM Stock"). The
      Preferred Interest has an initial liquidation value of $64,574,000 and is
      entitled to a return of 9% compounded annually. As part of the
      transaction, LSAT LLC granted LDIG the right to put the Preferred Interest
      to LSAT LLC for a purchase price equal to $26 million (the value of iBEAM
      Stock on the iBEAM Closing Date) plus 9% compounded annually (the "iBEAM
      Put Option"). LSAT LLC has the right to call LDIG's Preferred Interest at
      a price equal to the initial liquidation value plus 9% compounded
      annually. Both the put and call options are exercisable eight years from
      the iBEAM Closing Date. Under certain limited circumstances, LSAT LLC can
      force LDIG to exercise the iBEAM Put Option prior to the end of such eight
      year period.

      Changes in the fair market value of the iBEAM Put Option subsequent to the
      iBEAM Closing Date are recognized as unrealized gains (losses) on
      financial instruments in the Company's consolidated statements of
      operations. During the nine months ended September 30, 2001, LSAT LLC
      recorded an unrealized loss of $6,808,000 related to the iBEAM Put Option.

      Investments in available-for-sale securities (including related equity
      collars) are summarized below. Such amounts are in addition to the
      unrealized gains recognized in the consolidated statement of operations
      related to LSAT's put spread collar.

<Table>
<Caption>
                                              September 30,    December 31,
                                                  2001             2000
                                              -------------    ------------
                                                   amounts in thousands
<S>                                            <C>                <C>
      Equity securities
         Fair value                            $ 367,319          352,424
         Gross unrealized holding gains          188,128          200,553
         Gross unrealized holding losses        (193,888)        (224,794)
</Table>

(8)   DISPOSITION

      Effective September 14, 2001, the Company transferred its 80% ownership
      interest in TSAT Technologies, Inc. ("Technologies Sub") to Asvan
      Technology, LLC, ("Asvan"). LSAT and Asvan had previously entered into an
      agreement pursuant to which Asvan transferred certain assets and
      intellectual property to


                                      I-15
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

      Technologies Sub in exchange for a 20% equity interest in Technologies
      Sub. LSAT had agreed to provide Technologies Sub with a maximum of
      $5,000,000 (the "Funding Commitment") to develop technologies relating to
      the design of (i) a stable, low phase noise, remotely tunable transceiver,
      and (ii) an integrated receiver/decoder (IRD) service module for
      commercial premises and multiple dwelling units.

      In connection with the transfer of LSAT's 80% interest in Technologies Sub
      to Asvan, LSAT's obligations under the Funding Commitment were terminated.
      In addition, LSAT obtained the right to purchase from Technologies Sub
      hardware and software ("Products") developed using the aforementioned
      technologies at prices not to exceed 110% of Technologies Sub's direct
      cost to produce such Products. This pricing is to remain in effect until
      the aggregate cost to LSAT is $1 million less than that which would be
      paid by other Asvan customers. Thereafter, Asvan agreed to sell Products
      to LSAT at prices not to exceed the lowest price offered by Technologies
      Sub to any other buyer of similar quantities of the Products.

(9)   AMOUNTS DUE TO PARENT

      Certain general and administrative expenses are allocated to the Company
      by Liberty Media. Management believes the allocation method used is
      reasonable. Amounts allocated aggregated $356,000 for the nine months
      ended September 30, 2001. In addition, the Company reimburses Liberty
      Media for certain expenses paid by Liberty Media on behalf of the Company.
      Accrued expense allocations and reimbursements are non-interest bearing,
      aggregated $130,000 at September 30, 2001, and are generally repaid
      monthly.

      On March 16, 2000, the Company entered into a $60,000,000 promissory note
      payable to Liberty Media in exchange for its interest in LSAT Astro. The
      note bears interest at Libor plus 2% (5.40% at September 30, 2001).
      Interest payments are due semi-annually on the first day of March and
      September. The note, which allows for prepayments, matures on March 16,
      2003 at which time all unpaid principal and interest is due. Accrued
      interest aggregated $218,000 at September 30, 2001.

      During the third quarter of 2001, Liberty Media loaned $5,678,000 to LSAT
      LLC. LSAT LLC used the proceeds from these loans to fund capital calls
      from Sky Latin America. The loans bear interest at 8% and have no
      specified repayment date. Accrued interest on these loans aggregated
      $50,000 at September 30, 2001.

(10)  DEBT

      Effective September 29, 2000, the Company entered into a $35 million loan
      agreement, which was amended effective November 3, 2000 to allow for
      maximum borrowings of $303 million (the "PCS Loan Agreement"). The PCS
      Loan Agreement is secured by the Company's interest in the shares of
      Sprint PCS Stock the Company received in the Liberty Transactions and by
      the Sprint PCS equity collar described in note 7. Interest accrues at
      LIBOR (5.4% at September 30, 2001) and is payable monthly. The principal
      balance is due and payable March 10, 2003.

      The fair value of the Company's debt is estimated based upon the quoted
      market prices for the same or similar issues or on the current rates
      offered to


                                      I-16
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

      the Company for debt of the same remaining maturities. At September 30,
      2001, the fair value of the Company's debt approximated its carrying
      value.

(11)  TRANSACTIONS WITH RELATED PARTIES

      Effective February 1, 2000, the Company entered into a management
      agreement with Phoenixstar pursuant to which the Company is managing
      Phoenixstar's affairs in exchange for a monthly fee. Such fees aggregated
      $315,000 and $340,000 for the nine months ended September 30, 2001 and
      2000, respectively. In addition, the Company allocates certain general and
      administrative expenses, such as rent and computer support, to
      Phoenixstar. Under the current management agreement, expense allocations
      are limited to $5,000 per month beginning in February 2001. Such
      allocations aggregated $54,000 and $132,000 during the nine months ended
      September 30, 2001 and 2000, respectively and are reflected as a reduction
      of general and administrative expenses in the accompanying condensed
      consolidated statements of operations.

(12)  STOCK OPTIONS

      Certain officers and key employees of the Company are party to stock based
      compensation arrangements. Participants under the Company's plans hold
      options, some of which have tandem stock appreciation rights, which base
      compensation on the performance of the Company's stock. Stock compensation
      expense has been recorded in the accompanying consolidated financial
      statements pursuant to APB Opinion No. 25. Such amounts are subject to
      future adjustments based upon vesting and the market value of the
      Company's Series A Common Stock when the rights are exercised.

(13)  INCOME TAXES

      Pursuant to the Liberty Transactions described in note 3, the Company
      recorded an approximate $114 million deferred tax liability in connection
      with its investment in Sprint PCS Stock, which is accounted for as an
      available-for-sale security in the accompanying consolidated financial
      statements. Tax net operating losses are available to offset this future
      taxable income. Accordingly, a portion of the tax valuation allowance
      established as of December 31, 1999 for deferred tax assets was reversed.
      The Company accounted for the decrease in the tax valuation allowance as a
      direct increase to additional paid-in capital in the accompanying
      condensed consolidated financial statements.

(14)  COMMITMENTS AND CONTINGENCIES

      In March 2001, LSAT Astro agreed to take such actions as reasonably
      necessary to enable Astrolink to meet its 2001 funding requirements. It
      was anticipated that such actions could include the purchase of equity or
      debt securities of Astrolink, the facilitation of guaranteed bank
      financing, or any other approaches acceptable to the members and
      Astrolink. LSAT Astro's obligation to make any investment in or provide
      any financial accommodation to Astrolink under this agreement is limited
      to $94,437,000, and does not constitute a guarantee of any obligation of
      Astrolink. Such obligation was also subject to (i) negotiation and
      execution of definitive agreements relating thereto and (ii) receipt by
      Astrolink from other Astrolink members of similar and proportional
      investments or financial accommodations acceptable to Astrolink and LSAT
      Astro. At least two other members in Astrolink have publicly announced
      that they do not currently intend to make further investments in
      Astrolink. Although such public announcement may not in itself terminate
      any


                                      I-17
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

      obligation of LSAT Astro under the March 2001 agreement with Astrolink,
      LSAT Astro does not currently expect that it will be called upon to make
      any investment in or to provide any other financial accommodation to
      Astrolink pursuant to that agreement.

      LSAT LLC has guaranteed certain lease obligations of the Sky Latin America
      businesses through 2015. Such guarantees aggregated approximately
      $109,000,000 at September 30, 2001. Currently, LSAT LLC is not certain of
      the likelihood of being required to perform under such guarantees.

      On October 12, 2001, Liberty Media Corporation announced that it had
      offered to acquire by merger all the issued and outstanding shares of the
      Company's common stock that Liberty Media does not already own. In the
      proposed merger, each share of Company common stock would be exchanged for
      0.09 of a share of Liberty Media Series A common stock. Following the
      announcement, two purported class action complaints were filed in
      District Court in Arapahoe County, Colorado, and eight purported class
      action complaints were filed in the Court of Chancery in New Castle
      County, Delaware. Each complaint names Liberty Media, the Company and
      members of the board of directors of the Company (and in one
      case certain officers of the Company) as defendants, and alleges various
      breaches of duty and other claims in connection with the proposed merger.
      The plaintiffs generally seek preliminary and permanent injunctive relief,
      and if the transaction is consummated, an order rescinding the transaction
      or damages. The Company believes that the claims against the Company and
      its directors and officers are premature and without merit.

      The Company has contingent liabilities related to legal proceedings and
      other matters arising in the ordinary course of business. Although it is
      reasonably possible the Company may incur losses upon conclusion of such
      matters, an estimate of any loss or range of loss cannot be made. In the
      opinion of management, it is expected that amounts, if any, which may be
      required to satisfy such contingencies will not be material in relation to
      the accompanying financial statements.

(15)  SUBSEQUENT EVENTS

      On August 16, 2001, the Company announced that it had agreed with Liberty
      Media to acquire (i) 100% of Ascent Entertainment Group, Inc. ("Ascent
      Entertainment"), a wholly-owned subsidiary of Liberty Media, and (ii)
      Liberty Media's 89% ownership interest in LSAT LLC for aggregate
      consideration of 340,000,000 shares of LSAT Series B common stock. Such
      transactions were subject to shareholder approval and other customary
      closing conditions.

      On October 12, 2001, LSAT announced that it had received a proposal (the
      "Liberty Proposal") from Liberty Media to acquire all of the issued and
      outstanding shares of LSAT that Liberty Media does not already own. As
      proposed, LSAT stockholders would receive 0.09 shares of Liberty Media
      Series A common stock for each share of LSAT common stock held.


                                      I-18
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

      LSAT intends to respond to Liberty Media as soon as LSAT's Board of
      Directors has had an opportunity to consider the proposal. Any transaction
      between LSAT and Liberty Media would be subject to negotiation, execution
      and delivery of definitive documentation relating thereto, and any closing
      conditions provided for in such documentation.

      The aforementioned transaction whereby Liberty Media would contribute its
      100% ownership interest in Ascent Entertainment, as well as Liberty
      Media's 89% ownership interest in Liberty Satellite, LLC in exchange for
      340,000,000 shares of LSAT Series B common stock has been suspended by
      mutual agreement to give the Board of Directors of LSAT an opportunity to
      consider the Liberty Proposal and respond to the proposed merger.


                                      I-19
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

The following discussion and analysis provides information concerning the
financial condition and results of operations of the Company and should be read
in conjunction with (i) the accompanying condensed consolidated financial
statements of the Company, and (ii) the consolidated financial statements, and
related notes thereto, of the Company, and MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.

Certain statements in this Quarterly Report on Form 10-Q constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company, or industry results,
to differ materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such risks,
uncertainties and other factors include, among others: general economic and
business conditions and industry trends; uncertainties inherent in proposed
business strategies and development plans, including uncertainties regarding
possible regulatory issues under the Investment Company Act of 1940, as amended
(the "Investment Company Act"); future financial performance, including
availability, terms and deployment of capital; the ability of vendors to deliver
required equipment, software and services; availability of qualified personnel;
changes in, or the failure or the inability to comply with, government
regulations, including, without limitation, regulations of the FCC, and adverse
outcomes from regulatory proceedings; changes in the nature of key strategic
relationships with partners and joint ventures; and other factors referenced in
this Report. These forward-looking statements speak only as of the date of this
Report. The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement contained
herein to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.

See note 3 to the accompanying condensed consolidated financial statements for a
discussion of the Liberty Transactions. Material Changes in Results of
Operations

MATERIAL CHANGES IN RESULTS OF OPERATIONS

The Company is currently a holding company and has had no significant direct
operations since April 1998. The Company (i) incurs general and administrative
expenses to manage its interests in other companies and maintain its status as a
publicly traded company and (ii) provides management services to Phoenixstar.

Effective February 1, 2000, the Company entered into a management agreement with
Phoenixstar pursuant to which the Company provides legal, accounting and
management services to Phoenixstar in exchange for a monthly fee. Such fees
aggregated $315,000 and $340,000 during the nine months ended September 30, 2001
and 2000, respectively. In addition, the Company allocates certain general and
administrative expenses, such as rent and computer support, to Phoenixstar.
Under the current management agreement, expense allocations are limited to
$5,000 per


                                      I-20
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

MATERIAL CHANGES IN RESULTS OF OPERATIONS (CONTINUED)

month beginning in February 2001. Such allocations aggregated $54,000 and
$132,000 during the nine months ended September 30, 2001 and 2000, respectively,
and are reflected as a reduction of general and administrative expenses in the
accompanying condensed consolidated statements of operations.

The Company incurred general and administrative expenses of $1,674,000 and
$660,000 for the three months ended September 30, 2001 and 2000, respectively;
and $3,244,000 and $3,033,000 for the nine months ended September 30, 2001 and
2000, respectively. The expenses for the third quarter of 2001 include
$1,016,000 for investment banking, legal and accounting fees related to the
Company's announced acquisition of Ascent Entertainment Group, Inc. and Liberty
Media's ownership of LSAT LLC. The expenses for the nine month period in 2000
include $800,000 in investment banking, legal and accounting fees that the
Company incurred in connection with the Liberty Transactions.

The Company records estimated stock compensation pursuant to the intrinsic value
method of Accounting Principles Board Opinion No. 25. Such estimate is subject
to future adjustment based upon market value of the Company's stock.

The Company recognized interest income of $1,404,000 and $7,289,000 during the
nine months ended September 30, 2001 and 2000, respectively. Such income was
earned primarily on the cash balance maintained by LSAT Astro which the Company
acquired as part of the Liberty Transactions. As all of such LSAT Astro cash had
been used to fund Astrolink capital calls as of September 30, 2001, the Company
does not expect to generate significant interest income in the future.

During the nine months ended September 30, 2001 and 2000, the Company recognized
interest expense of $4,761,000 and $3,695,000 respectively. The increase in
interest expense is the net effect of an increase in the Company's weighted
average debt balance partially offset by a decrease in interest rates.

During the nine months ended September 30, 2001 and 2000, the Company's share of
losses of affiliates aggregated $173,650,000 and $4,500,000, respectively. The
2000 amount represents only seven months of losses for Astrolink and three
months of losses for Aerocast, whereas the 2001 amount represents nine months
for Astrolink and Aerocast and seven months for Wildblue. In addition, the 2001
amount includes an adjustment to the carrying amount for Astrolink aggregating
$155,000,000. Exclusive of such adjustment, the Company recorded $18,650,000 in
share of losses in 2001. As Astrolink, Aerocast and Wildblue are in the
development stage of their respective business, the Company does not expect that
its share of losses of affiliates will decrease in the foreseeable future.

For the nine months ended September 30, 2001, unrealized gains on financial
instruments include a $10,989,000 gain related to derivatives not designated as
hedging instruments, a $21,633,000 gain related to changes in the time value of
fair value hedges and a $6,808,000 loss related to the iBEAM Put Option.

During the first quarter of 2001, the Company determined that certain of its
cost investments had experienced other than temporary declines in value. As a
result, the Company's cost bases of such investments were adjusted to their
respective estimated fair values. These adjustments resulted in a realized loss
of $37,814,000, and are reflected as impairment of investments in the condensed
consolidated statement of operations.


                                      I-21
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

MATERIAL CHANGES IN RESULTS OF OPERATIONS (CONTINUED)

The Company recorded minority interest share of losses (earnings) aggregating
$154,669,000 and ($18,608,000) during the nine months ended September 30, 2001
and 2000, respectively. The 2000 amount is due to the gain recorded by LSAT LLC
on the GM Hughes transaction, whereas the 2001 amount is due to the impairment
losses recorded by LSAT LLC.

The Company's tax expense for the nine months ended September 30, 2001 is
primarily attributable to the federal alternative minimum tax that is payable in
connection with the transfer of the Sprint PCS Shares to LSAT LLC discussed in
note 7.

MATERIAL CHANGES IN FINANCIAL CONDITION

The Company currently has no operating income or positive cash flow. During the
nine months ended September 30, 2001, the Company funded its operating and
investing activities with a combination of contributions and advances from
Liberty Media, as a member of LSAT LLC, and borrowings of debt.

During 2000, the Company entered into a $303 million loan agreement due 2003.
Such facility, the PCS Loan Facility, is secured by the Company's interest in
the Sprint PCS Stock and the Sprint PCS equity collar described below. Interest
accrues at LIBOR and is payable monthly. The Company anticipates that it will
use available borrowings under the PCS Loan Agreement to fund its investing and
operating activities.

The trust holding the Sprint PCS Stock in which LSAT has beneficial interest has
entered into an equity collar with a financial institution with respect to such
Sprint PCS Stock. The collar provides the trust with a put option that gives it
the right to require its counterparty to buy 5,084,745 shares of Sprint PCS
Stock from the trust in seven tranches in March 2003 for a weighted average
price of $59.71 per share. The trust simultaneously sold a call option giving
the counterparty the right to buy the same shares of stock from the trust in
seven tranches in March 2003 for a weighted average price of $82.39 per share.
The put and call options for this collar were equally priced, resulting in no
cash cost to the trust or LSAT.

LSAT LLC has entered into a put spread collar with a financial institution with
respect to its shares of GM Hughes Stock. The collar (i) provides LSAT LLC with
a put option that gives it the right to require its counterparty to buy
1,821,921 shares of GM Hughes Stock from LSAT LLC in three tranches in October
2003 for a weighted average price of $26.64, and (ii) provides the counterparty
with a put option that gives it the right to require LSAT LLC to repurchase the
1.8 million shares of GM Hughes Stock for a weighted average price of $14.80.
LSAT LLC simultaneously sold a call option giving the counterparty the right to
buy the same shares of stock from LSAT LLC in three tranches in October 2003 for
a weighted average price of $54.32 per share. The put and call options for this
collar were equally priced, resulting in no cash cost to LSAT LLC.

LSAT LLC has also entered into an equity collar with a financial institution
with respect to its shares of XMSR common stock. The collar provides LSAT LLC
with a put option that gives it the right to require its counterparty to buy
1,000,000 shares of XMSR common stock from LSAT LLC in three tranches in
November 2003,


                                      I-22
<Page>

MATERIAL CHANGES IN FINANCIAL CONDITION (CONTINUED)

December 2003 and February 2004 for a weighted average price of $28.55. LSAT LLC
simultaneously sold a call option giving the counterparty the right to buy the
same shares of stock from LSAT LLC in three tranches in November 2003, December
2003 and February 2004 for a weighted average price of $51.49 per share. The put
and call options for this collar were equally priced, resulting in no cash cost
to LSAT LLC.

As the Company's equity collars are designated to specific shares of stock held
by the Company, and the changes in the fair value of the equity collars are
correlated with changes in the fair value of the underlying securities, the
equity collars function as hedges. Accordingly, changes in the fair value of the
equity collars are recognized in earnings as unrealized gains or losses on
financial instruments along with the changes in the fair value of the underlying
securities. The Company's put spread collars do not function as hedges, and
therefore changes in the fair value of the put spread collars are recorded as
unrealized gains or losses on financial instruments in the Company's
consolidated statements of operations.

On June 27, 2001, LSAT LLC entered into an agreement to loan 1 million shares of
XMSR to a third party. The obligation to return those shares is secured by cash
collateral equal to 100% of the market value of that stock, which was $4,300,000
at September 30, 2001. During the period of the loan, which is terminable by
either party at any time, the cash collateral is to be marked-to-market daily.
Interest accrues on the cash collateral for the benefit of LSAT LLC at the rate
of .15% per annum. As of September 30, 2001, 1,000,000 shares of XMSR had been
lent under this agreement.

In March 2001, LSAT Astro agreed to take such actions as reasonably necessary to
enable Astrolink to meet its 2001 funding requirements. It was anticipated that
such actions could include the purchase of equity or debt securities of
Astrolink, the facilitation of guaranteed bank financing, or any other
approaches acceptable to the members and Astrolink. LSAT Astro's obligation to
make any investment in or provide any financial accommodation to Astrolink under
this agreement is limited to $94,437,000, and does not constitute a guarantee of
any obligation of Astrolink. Such obligation was also subject to (i) negotiation
and execution of definitive agreements relating thereto and (ii) receipt by
Astrolink from other Astrolink members of similar and proportional investments
or financial accommodations acceptable to Astrolink and LSAT Astro. At least two
other members in Astrolink have publicly announced that they do not currently
intend to make further investments in Astrolink. Although such public
announcement may not in itself terminate any obligation of LSAT Astro under the
March 2001 agreement with Astrolink, LSAT Astro does not currently expect that
it will be called upon to make any investment in or to provide any other
financial accommodation to Astrolink pursuant to that agreement.

LSAT LLC has guaranteed certain lease obligations of the Sky Latin America
businesses through 2015. Such guarantees aggregated approximately $109,000,000
at September 30, 2001. Currently, LSAT LLC is not certain of the likelihood of
being required to perform under such guarantees.

The Company will continue to be subject to the risks associated with operating
as a holding company including possible regulation under the Investment Company
Act. The Company does not currently intend to be an investment company within
the meaning of the Investment Company Act.


                                      I-23
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At September 30, 2001, the Company had $115,913,000 of variable-rate debt with a
weighted-average interest rate of 3.79%. Accordingly, the Company is sensitive
to market rate risk. To date, the Company has not entered into any derivative
instruments to manage its interest rate exposure. All of such debt is due in
2003.

The Company also has price risk related to investments in marketable equity
securities. The following table summarizes the market risk for the Company:

<Table>
<Caption>
                                 September 30, 2001                December 31, 2000
                             ---------------------------      ---------------------------
                             Shares    Fair     Carrying      Shares    Fair     Carrying
                             Owned     Value      Value       Owned     Value      Value
                             ------  --------   --------      ------  --------   --------
                                                amounts in thousands
<S>                          <C>     <C>        <C>           <C>     <C>        <C>
Equity price risk:
   GM Hughes Stock (1)       1,822   $ 24,286   $ 24,286      1,822   $ 42,013   $ 42,013
   Sprint PCS Stock (1)      5,085   $133,678   $133,678      5,085   $102,330   $102,330
   XMSR Stock (1)            1,000   $  5,240   $  5,240      1,000   $ 16,000   $ 16,000
</Table>

(1)   See MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS for a discussion of the Company's equity collars and
      put spread collar related to its marketable equity securities.


                                      I-24
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS.

            In a civil action entitled TCI SATELLITE ENTERTAINMENT, INC. ET AL
            V. BOARD OF EQUALIZATION OF MONTEZUMA COUNTY, Case No. 99-CA-0975,
            the Board of Equalization of Montezuma County (the "Montezuma
            Board") appealed a ruling by the Colorado State Board of Assessment
            Appeals that the Montezuma Board violated administrative, statutory
            and judicial mandates in denying the Company and Phoenixstar
            personal property tax exemptions found in Colorado Revised Statutes
            Section 39-3-119.5. The Colorado Court of Appeals reversed the
            ruling of the Colorado State Board of Assessment Appeals, and the
            matter was further appealed to the Colorado Supreme Court, which
            affirmed the ruling of the Colorado Court of Appeals. Phoenixstar
            has a contractual obligation to indemnify the Company for any
            liability, arising out of this matter. This represents the final
            resolution of this matter, and accordingly, it will not be reported
            in future filings.

            SHAREHOLDER LITIGATION. On October 12, 2001, Liberty Media
            Corporation announced that it had offered to acquire by merger all
            the outstanding shares of the Company's common stock that
            Liberty Media does not already own. In the proposed merger, each
            share of Company common stock would be exchanged for 0.09 of a share
            of Liberty Media Series A common stock. Beginning on October 15,
            2001, eight purported class actions styled STEINER V. LIBERTY
            SATELLITE & TECHNOLOGY, INC., ET AL., C.A. No. 19185, LEVY V.
            ANGELICH, ET AL., C.A. No. 19186, FINKE V. LIBERTY SATELLITE &
            TECHNOLOGY, INC., C.A. No. 19187, GARBER V. HOWARD, ET AL., C.A.
            No. 19192, HAUSSER V. BENNETT, ET AL., C.A. No. 19199, MARKS V.
            LIBERTY SATELLITE & TECHNOLOGY, INC., ET AL., C.A. No. 19200, RAND
            V. LIBERTY SATELLITE & TECHNOLOGY, INC., ET AL., C.A. No. 19207, and
            KRIM V. LIBERTY SATELLITE & TECHNOLOGY, INC., ET AL., C.A. No.
            19223, were filed on behalf of the stockholders of the Company,
            other than Liberty Media and the defendants, in the Court of
            Chancery in New Castle County, Delaware (the "Delaware Actions"). On
            October 25 and 29, 2001, two purported class actions, styled COHEN
            V. HOWARD, ET AL., Case No. 01CV3086 and HIMES V. LIBERTY SATELLITE
            & TECHNOLOGY, INC., ET AL., Case No. 01CV3119, were filed on behalf
            of the stockholders of the Company, other than Liberty Media and the
            defendants, in District Court in Arapahoe County, Colorado (the
            "Colorado Actions" and, together with the Delaware Actions, the
            "Actions"). The Actions generally name as defendants in addition to
            the Company current directors Gary Howard, John W. Goddard, J. Curt
            Hockemeier, Alan M. Angelich, William H. Berkman and Robert R.
            Bennett, as well as William R. Fitzgerald, an officer of Liberty
            Media who has been nominated, but not elected, to fill a vacancy on
            the board. Certain of the Company's officers are named as defendants
            in one of the Delaware Actions, and Carl Vogel, a former officer
            and director of the Company, is named as a defendant in one of the
            Delaware Actions. The Actions assert that the offer made by Liberty
            Media, among other things, is the product of unfair dealing by
            Liberty Media and its affiliates on the Company's board of
            directors, does not offer the public stockholders of the Company
            fair value for their shares, and is timed to take advantage of
            drop in the trading price of the Company's stock. The plaintiffs
            generally seek preliminary and permanent injunctive relief to
            prevent consummation of the offer made by Liberty Media, and, if
            the transaction with Liberty Media is consummated, an order
            rescinding the transaction or damages. The Company believes that
            the claims in the Actions against the Company and the individual
            defendants are unripe and without merit.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS.

            On June 22, 2001, the Company issued 2,045,713 shares of Series A
            common stock to Liberty Media. Such issuance was made in lieu of a
            cash payment of dividends on the Company's Series A and Series B
            Preferred Stock and was valued at $7,500,000. The foregoing issuance
            was made pursuant to the private placement exemption from the
            Securities Act of 1933 (the "Act") afforded by Section 4(2) of the
            Act.


                                      II-1
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K.

      (a)   Exhibits

            None

      (b)   Report on Form 8-K filed during quarter ended September 30, 2001:

                Date of Report      Items Filed    Financial Statements Filed
                --------------      -----------    --------------------------

              September 27, 2001    Item 5 and 7            None


                                      II-2
<Page>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        LIBERTY SATELLITE & TECHNOLOGY, INC.


Date: November 14, 2001                 By: /S/ KENNETH G. CARROLL
                                            ------------------------------------
                                             Kenneth G. Carroll
                                             President, Chief Financial Officer
                                             and Treasurer
                                                (Principal Financial Officer and
                                                Principal Accounting Officer)


                                      II-3