<Page>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                  F O R M 10-Q

/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended June 30, 2002

                                       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

     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 July 31, 2002, was:

                  Series A common stock - 8,728,428 shares; and
                   Series B common stock - 34,765,764 shares.

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

                      Condensed Consolidated Balance Sheets
                                   (unaudited)

<Table>
<Caption>
                                                                                     June 30,              December 31,
                                                                                      2002                     2001
                                                                               -----------------          -------------
                                                                                         amounts in thousands
<S>                                                                            <C>                            <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                   $          32,724                 33,913
   Restricted cash (note 7)                                                                7,250                 18,360
   Receivables, net                                                                       37,231                 34,358
   Other current assets                                                                    2,659                  3,193
                                                                               -----------------          -------------
        Total current assets                                                              79,864                 89,824
                                                                               -----------------          -------------

Investments in affiliates accounted for using the equity method (note 6)                   9,447                 12,158
Investments in available-for-sale securities and other cost
   investments, including securities pledged to creditors (notes 7 and 8)                518,529                577,482

Property and equipment:
   Video systems                                                                         412,187                410,121
   Support equipment                                                                      14,591                 13,716
                                                                               -----------------          -------------
                                                                                         426,778                423,837
   Accumulated depreciation                                                             (138,507)              (115,352)
                                                                               -----------------          -------------
                                                                                         288,271                308,485
                                                                               -----------------          -------------
Intangible assets subject to amortization:
   Hotel contracts                                                                       163,000                163,000
   Accumulated amortization                                                             (122,250)               (95,083)
                                                                               -----------------          -------------
                                                                                          40,750                 67,917
                                                                               -----------------          -------------

Intangible assets not subject to amortization - Goodwill (note 2)                         62,058                155,189

Other assets                                                                              13,885                 14,140
                                                                               -----------------          -------------

        Total assets                                                           $       1,012,804              1,225,195
                                                                               =================          =============
</Table>

                                                                     (continued)

                                       I-1
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                      Condensed Consolidated Balance Sheets
                                   (unaudited)

<Table>
<Caption>
                                                                                    June 30,               December 31,
                                                                                      2002                     2001
                                                                               -----------------          -------------
                                                                                         amounts in thousands
<S>                                                                            <C>                           <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses                                       $          45,739                 39,737
   Due to parent (note 3):
      Note payable                                                                        48,411                 18,552
      Accrued interest                                                                       630                  1,171
      Other accrued expenses                                                              15,217                 14,678

   Current portion of long-term debt (note 8)                                            113,412                    909
   Securities lending agreement (note 7)                                                   7,250                 18,360
                                                                               -----------------          -------------
        Total current liabilities                                                        230,659                 93,407
                                                                               -----------------          -------------

Note payable to parent (note 3)                                                               --                 48,411
Debt (note 8)                                                                            266,355                362,264
Put option liability due to related party (note 3)                                        29,742                 28,488
Deferred tax liability                                                                    16,576                 27,169
Other liabilities                                                                          1,104                     --
                                                                               -----------------          -------------
        Total liabilities                                                                544,436                559,739
                                                                               -----------------          -------------

Minority interests in equity of consolidated subsidiaries                                  9,513                  9,836
Redeemable preferred stock                                                               214,087                196,027

Stockholders' Equity:
   Preferred stock; authorized 5,000,000 shares; issued 300,000
      shares in 2002 and 2001                                                                 --                     --
   Series A common stock, $1 par value; authorized 100,000,000 shares;
      issued 6,757,848 shares at June 30, 2002 and 6,753,101 shares at
      December 31, 2001                                                                    6,758                  6,753
   Series B common stock, $1 par value; authorized 70,000,000 shares;
      issued 34,765,764 shares at June 30, 2002 and 34,771,828 shares at
      December 31, 2001                                                                   34,766                 34,772
   Additional paid-in capital                                                          1,981,612              1,980,389
   Accumulated other comprehensive loss                                                  (23,780)               (10,650)
   Accumulated deficit                                                                (1,754,263)            (1,551,346)
                                                                               -----------------          -------------
                                                                                         245,093                459,918
   Series A common stock held in treasury, at cost (2,954 shares)                           (325)                  (325)
                                                                               -----------------          -------------
        Total stockholders' equity                                                       244,768                459,593
                                                                               -----------------          -------------

Commitments and contingencies (note 8, 10 and 11)
                                                                               $       1,012,804              1,225,195
                                                                               =================          =============
</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 Operations
                                   (unaudited)

<Table>
<Caption>
                                                                   Three months ended               Six months ended
                                                                        June 30,                        June 30,
                                                            ------------------------------    ----------------------------
                                                                2002               2001             2002           2001
                                                            -----------      -------------    --------------   -----------
                                                                                amounts in thousands,
                                                                              except per share amounts
<S>                                                         <C>                   <C>               <C>           <C>
Revenue:
   In-room entertainment services                           $    60,999             63,339           118,382       125,553
   Other                                                            105              5,911               210        11,447
                                                            -----------      -------------    --------------   -----------
                                                                 61,104             69,250           118,592       137,000
                                                            -----------      -------------    --------------   -----------
Operating costs and expenses:
   Operating
     In-room entertainment services                              38,343             42,276            75,277        82,977
     Other                                                           --              2,491                --         4,736
   Selling, general and administrative ("SG&A")
     (notes 3 and 9)                                              5,952             27,002            12,586        41,046
   Stock compensation - SG&A                                         73                 73               146           122
   Depreciation and amortization                                 33,553             42,649            67,268        86,480
   Impairment of long-lived assets (notes 7 and 13)               5,103                 --             6,514            --
                                                            -----------      -------------    --------------   -----------
                                                                 83,024            114,491           161,791       215,361
                                                            -----------      -------------    --------------   -----------

        Operating loss                                          (21,920)           (45,241)          (43,199)      (78,361)

Other income (expense):
   Interest income                                                  511              3,309               963         8,566
   Interest expense-parent (note 3)                                (470)              (850)           (1,462)       (1,920)
   Interest expense-other                                        (4,253)           (12,055)           (8,324)      (23,217)
   Share of losses of affiliates (note 6)                        (1,856)          (160,486)           (3,358)     (165,078)
   Unrealized gains (losses) on financial
     instruments, net (note 7)                                    6,563              4,824              (753)       14,002
   Nontemporary declines in fair value of
     investments (note 7)                                       (58,948)            (2,238)          (58,948)      (39,932)
   Loss on settlement of litigation (note 7)                         --                 --                --        (3,700)
   Other, net                                                       288              2,329            (1,800)        2,291
                                                            -----------      -------------    --------------   -----------
                                                                (58,165)          (165,167)          (73,682)     (208,988)
                                                            -----------      -------------    --------------   -----------

        Loss before income taxes and minority
          interests                                             (80,085)          (210,408)         (116,881)     (287,349)

Income tax benefit (expense)                                     (3,542)               799             6,712        10,988
Minority interests in loss (earnings) of
  consolidated subsidiaries                                        (314)             7,652               383        16,023
                                                            -----------      -------------    --------------   -----------

        Loss before cumulative effect of
          accounting change                                     (83,941)          (201,957)         (109,786)     (260,338)
Cumulative effect of accounting change, net of
  taxes (note 2)                                                     --                 --           (93,131)           --
                                                            -----------      -------------    --------------   -----------
        Net loss                                                (83,941)          (201,957)         (202,917)     (260,338)

Accretion of redeemable preferred stock                          (1,530)            (1,530)           (3,060)       (3,060)
Dividends on redeemable preferred stock                          (7,500)            (7,500)          (15,000)      (15,000)
                                                            -----------      -------------    --------------   -----------

        Net loss attributable to common
          stockholders                                      $   (92,971)          (210,987)         (220,977)     (278,398)
                                                            ===========      =============    ==============   ===========
Basic and diluted loss per common share before
  cumulative effect of accounting change (note 4)                 (2.24)             (5.11)            (3.08)        (6.74)
Cumulative effect of accounting change                      $        --                 --             (2.24)           --
                                                            -----------      -------------    --------------   -----------
Basic and diluted net loss per common share                 $     (2.24)             (5.11)            (5.32)        (6.74)
                                                            ===========      =============    ==============   ===========
</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 Statements of Comprehensive Loss
                                   (unaudited)

<Table>
<Caption>
                                                              Three months ended                     Six months ended
                                                                    June 30,                             June 30,
                                                          ------------------------------     ----------------------------------
                                                              2002             2001               2002               2001
                                                          ------------     -------------     ---------------    ---------------
                                                                                amounts in thousands
<S>                                                       <C>                   <C>                 <C>                <C>
Net loss                                                  $    (83,941)         (201,957)           (202,917)          (260,338)
                                                          ------------     -------------     ---------------    ---------------

Other comprehensive income, net of tax
      Unrealized holding losses                                (13,596)            1,530             (14,636)            (2,475)
      Less reclassification adjustment for
        losses included in earnings                                 --                --                  --              9,000
      Foreign currency translation adjustments                   1,446               736               1,506              3,273
                                                          ------------     -------------     ---------------    ---------------

        Other comprehensive income (loss)                      (12,150)            2,266             (13,130)             9,798
                                                          ------------     -------------     ---------------    ---------------

        Comprehensive loss                                $    (96,091)         (199,691)           (216,047)          (250,540)
                                                          ============     =============     ===============    ===============
</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 Statement of Stockholders' Equity

                         Six months ended June 30, 2002
                                   (unaudited)

<Table>
<Caption>
                                                                                                           Accumulated
                                                            Common Stock                 Additional           other
                                                    -------------------------------       paid-in         comprehensive
                                                       Series A          Series B          Capital            Loss
                                                    --------------      -----------     -------------    ---------------
                                                                           amounts in thousands
<S>                                                 <C>                      <C>            <C>                 <C>
Balance at January 1, 2002                          $        6,753           34,772         1,980,389           (10,650)

   Net loss                                                     --               --                --                --
   Other comprehensive loss                                                                                     (13,130)
   Contribution by Liberty Media of
     intercompany notes receivable (note 3)                     --               --            19,203                --
   Retirement of fractional shares in
     connection with reverse stock split                        (1)              --               (10)               --
   Series B common stock exchanged for
     Series A common stock                                       6               (6)               --                --
   Accretion and dividends on
     redeemable preferred stock                                 --               --           (18,060)               --
   Recognition of stock compensation
     related to restricted stock awards,
     net of taxes                                               --               --                90                --
                                                    --------------      -----------     -------------  ----------------

Balance at June 30, 2002                            $        6,758           34,766         1,981,612           (23,780)
                                                    ==============      ===========     =============  ================


<Caption>
                                                                                             Total
                                                       Accumulated        Treasury        stockholders'
                                                         Deficit            Stock            Equity
                                                      ------------       ----------      --------------
                                                                    amounts in thousands
<S>                                                     <C>                    <C>             <C>
Balance at January 1, 2002                              (1,551,346)            (325)            459,593

   Net loss                                               (202,917)              --            (202,917)
   Other comprehensive loss                                                                     (13,130)
   Contribution by Liberty Media of
     intercompany notes receivable (note 3)                     --               --              19,203
   Retirement of fractional shares in
     connection with reverse stock split                        --               --                 (11)
   Series B common stock exchanged for
     Series A common stock                                      --               --                  --
   Accretion and dividends on
     redeemable preferred stock                                 --               --             (18,060)
   Recognition of stock compensation
     related to restricted stock awards,
     net of taxes                                               --               --                  90
                                                      ------------       ----------      --------------

Balance at June 30, 2002                                (1,754,263)            (325)            244,768
                                                      ============       ==========      ==============
</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)

                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)

<Table>
<Caption>
                                                                                       Six months ended
                                                                                           June 30,
                                                                           -------------------------------------
                                                                                  2002                 2001
                                                                           -----------------    ----------------
                                                                                      amounts in thousands
                                                                                          (see note 5)
<S>                                                                         <C>                         <C>
Cash flows from operating activities:
   Net loss                                                                 $      (202,917)            (260,338)
   Adjustments to reconcile net loss to net cash provided (used) by
     operating activities:
        Stock compensation                                                              146                  122
        Depreciation and amortization                                                67,268               86,480
        Impairment of long-lived assets                                               6,514                   --
        Non-cash interest expense                                                       582               10,681
        Share of losses of affiliates                                                 3,358              165,078
        Unrealized losses (gains) on financial instruments                              753              (14,002)
        Nontemporary declines in fair value of investments                           58,948               39,932
        Loss on settlement of litigation                                                 --                3,700
        Minority interests in loss of consolidated subsidiaries                        (383)             (16,023)
        Deferred tax benefit                                                         (1,585)             (18,680)
        Cumulative effect of accounting change, net of taxes                         93,131                   --
        Other non-cash items                                                          2,647                2,978
        Changes in operating assets and liabilities:
              Change in receivables and prepaid expenses                             (1,951)              (2,108)
              Change in accruals and payables                                         5,791               (8,882)
                                                                           ----------------     ----------------

                Net cash provided (used) by operating activities                     32,302              (11,062)
                                                                           ----------------     ----------------

Cash flows from investing activities:
   Investments in and advances to affiliates and investees                          (23,350)            (178,901)
   Capital expended for equipment                                                   (26,315)             (46,503)
   Acquisition of minority interest of subsidiary                                        --              (17,445)
   Other investing activities                                                          (469)              (2,693)
                                                                           ----------------     ----------------

                Net cash used by investing activities                               (50,134)            (245,542)
                                                                           -----------------    ----------------

Cash flows from financing activities:
   Borrowings of third-party debt                                                    22,000               57,000
   Repayments of third-party debt                                                    (5,406)             (15,000)
   Advances from parent                                                               6,573                   --
   Repayments of note payable to parent                                              (6,573)              (6,572)
   Cash contributions from parent                                                        --               21,969
   Cash payments of preferred stock dividends                                            --              (15,000)
   Other financing activities                                                            49                   --
                                                                           ----------------     ----------------

                Net cash provided by financing activities                            16,643               42,397
                                                                           ----------------     ----------------

                Net decrease in cash and cash equivalents                            (1,189)            (214,207)

                Cash and cash equivalents:
                   Beginning of period                                               33,913              466,617
                                                                           ----------------     ----------------

                   End of period                                            $        32,724              252,410
                                                                            ===============     ================
</Table>

  See accompanying notes to condensed consolidated financial statements.

                                       I-6
<Page>
             LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

              Notes to Condensed Consolidated Financial Statements

                                  June 30, 2002
                                   (unaudited)

(1)      BASIS OF PRESENTATION
         The accompanying condensed consolidated financial statements include
         the accounts of Liberty Satellite & Technology, Inc. and those of all
         majority-owned or controlled subsidiaries ("LSAT" and together with its
         consolidated subsidiaries, the "Company"). All significant
         inter-company transactions have been eliminated.

         GENERAL. LSAT has been a consolidated subsidiary of Liberty Media
         Corporation ("Liberty Media") since March 16, 2000, when LSAT issued
         preferred stock to Liberty Media in exchange for certain assets. On
         March 28, 2000, Liberty Media acquired voting control of Ascent
         Entertainment Group, Inc. ("Ascent"), and on June 8, 2000, Liberty
         Media completed its acquisition of Ascent pursuant to which Ascent
         became an indirect wholly-owned subsidiary of Liberty Media. Ascent's
         primary operating subsidiary is On Command Corporation ("On Command"),
         which provides in-room, on-demand video entertainment and informational
         services to hotels, motels and resorts. At June 30, 2002, Liberty
         Media, primarily through its ownership interest in Ascent, controlled
         approximately 63% of the outstanding On Command common stock ("On
         Command Common Stock"). On April 1, 2002, LSAT issued 34,000,000 shares
         of its Series B common stock ("Series B Common Stock") to Liberty Media
         in exchange for the 89.41% interest in Liberty Satellite, LLC ("LSAT
         LLC") not already owned by LSAT, and 100% of the capital stock of
         Ascent (the "LSAT LLC and Ascent Transaction"). As a result of the
         consummation of the LSAT LLC and Ascent Transaction, Liberty Media's
         common stock ownership in LSAT increased to 84.1% and its voting power
         in LSAT increased to 97.6%. The foregoing transactions are described in
         greater detail below.

         As a result of the consummation of the LSAT LLC and Ascent Transaction,
         LSAT became the owner of 100% of the equity interests of Ascent and
         LSAT LLC. Due to the fact that LSAT, LSAT LLC and Ascent are all under
         the common control of Liberty Media, the LSAT LLC and Ascent
         Transaction has been accounted for in a manner similar to a
         pooling-of-interests. As such, the Company's financial statements have
         been restated to include LSAT LLC and Ascent as wholly-owned
         subsidiaries of LSAT, effective with the respective March 2000 dates
         that Liberty Media acquired control of such entities.

                                       I-7
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         Separate results of operations for LSAT, LSAT LLC and Ascent for the
         periods prior to the LSAT LLC and Ascent Transaction are as follows:

<Table>
<Caption>
                                                          Three months          Six months
                                                             ended                ended
                                                        March 31, 2002        June 30, 2001
                                                      -----------------    ------------------
                                                               amounts in thousands
                  <S>                                 <C>                            <C>
                  REVENUE
                  LSAT                                $             105                   210
                  LSAT LLC                                           --                    --
                  Ascent                                         57,383               136,790
                                                      -----------------    ------------------

                  Combined                            $          57,488               137,000
                                                      =================    ==================

                  NET EARNINGS (LOSS)
                  LSAT                                $           7,136               (24,557)
                  LSAT LLC                                      (13,223)             (173,862)
                  Ascent (1)                                   (112,889)              (61,919)
                                                      -----------------    ------------------

                  Combined                            $        (118,976)             (260,338)
                                                      =================    ==================
</Table>

                  ----------
                  (1)  Includes Liberty Media purchase accounting adjustments
                       that have not been "pushed down" to Ascent's historical
                       financial statements.

         In addition to LSAT's interests in On Command and various investments,
         the Company is currently pursuing strategic opportunities worldwide in
         the distribution of Internet and other content via satellite and
         related businesses.

         CONTRIBUTION OF SPRINT PCS STOCK AND FORMATION OF LSAT LLC. On March
         16, 2000, LSAT completed two transactions with Liberty Media. Pursuant
         to the terms of the first transaction, LSAT 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 $300,000,000 in exchange for 150,000 shares of LSAT
         Series A Preferred Stock with a liquidation value of $150,000,000 and
         150,000 shares of LSAT Series B Preferred Stock ("Series B Preferred
         Stock") with a liquidation value of $150,000,000. The shares of Series
         B Preferred Stock have super voting rights, which give Liberty Media
         voting control over LSAT. Accordingly, since March 16, 2000, LSAT has
         been a consolidated subsidiary of Liberty Media.

         Pursuant to the terms of the second transaction with Liberty Media,
         LSAT (through its wholly-owned subsidiaries) became the managing member
         of two newly formed limited liability companies, LSAT LLC and LSAT
         Astro LLC ("LSAT Astro," and together with LSAT LLC, the "LSAT Joint
         Ventures"). LSAT contributed (i) its beneficial interest in 4,221,921
         shares of General Motors Corporation Class H common stock ("GM Hughes
         Stock"), subject to a stock appreciation right, and (ii) other assets
         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 LSAT is a consolidated subsidiary of Liberty Media, all of
         the assets contributed by LSAT and Liberty Media to the LSAT Joint
         Ventures were recorded at their net book values at the date of
         contribution.

                                       I-8
<Page>
             LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         LIBERTY MEDIA'S ACQUISITION OF ASCENT. On March 28, 2000, Liberty Media
         completed its cash tender offer for the outstanding common stock of
         Ascent at a price of $15.25 per share. Approximately, 85% of the
         outstanding common shares of Ascent were tendered in the offer, and
         Liberty Media paid approximately $385,000,000. On June 8, 2000, Liberty
         Media completed its acquisition of 100% of Ascent for an additional
         $67,000,000. The total purchase price for the acquisition was
         $452,000,000. Liberty Media accounted for such transaction using the
         purchase method of accounting.

         LSAT LLC AND ASCENT TRANSACTION. On August 16, 2001, LSAT entered into
         two separate purchase agreements with Liberty Media and certain of its
         subsidiaries and affiliates. Both agreements were amended in November
         2001 and January 2002. One agreement provided for LSAT's acquisition of
         certain subsidiaries of Liberty Media that hold an aggregate 89.41%
         ownership interest in LSAT LLC in exchange for 25,298,379 shares of
         Series B Common Stock. The second purchase agreement provided for
         LSAT's acquisition of 100% of the capital stock of Ascent from a
         subsidiary of Liberty Media in exchange for 8,701,621 shares of Series
         B Common Stock. The foregoing transactions closed on April 1, 2002. As
         noted above, the LSAT LLC and Ascent Transaction has been accounted for
         in a manner similar to a pooling-of-interests.

         REVERSE STOCK SPLIT. On April 1, 2002, LSAT effected 1 for 10 reverse
         stock splits of its Series A common stock ("Series A Common Stock") and
         Series B Common Stock. All share and per share amounts included in
         these condensed consolidated financial statements have been adjusted to
         give retroactive effect to such reverse stock splits.

         These interim condensed consolidated financial statements 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 June 30,
         2002 and the results of its operations for the three and six months
         ended June 30, 2002 and 2001. 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, 2001 Annual Report
         on Form 10-K.

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America 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 prior period amounts have been reclassified for comparability
         with the 2002 presentation.

                                       I-9
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

(2)      NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board (the "FASB")
         issued Statement of Financial Accounting Standards No. 141, BUSINESS
         COMBINATIONS ("Statement 141"), and Statement of Financial Accounting
         Standards No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS ("Statement
         142"). Statement 141 requires that the purchase method of accounting be
         used for all business combinations initiated after June 30, 2001.
         Statement 141 also specifies, for all purchase method business
         combinations completed after June 30, 2001, criteria that intangible
         assets acquired in a purchase method business combination must meet to
         be recognized and reported apart from goodwill. Statement 142 requires
         that goodwill and intangible assets with indefinite useful lives no
         longer be amortized, but instead tested for impairment at least
         annually in accordance with the provisions of Statement 142. Statement
         142 also requires that intangible assets with estimable useful lives be
         amortized over their respective estimated useful lives to their
         estimated residual values, and reviewed for impairment in accordance
         with Statement of Financial Accounting Standards No. 144, ACCOUNTING
         FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS.

         The Company adopted the provisions of Statement 141 upon issuance, and
         adopted Statement 142 effective January 1, 2002. Statement 141 requires
         that upon adoption of Statement 142, the Company evaluate its existing
         intangible assets and goodwill that were acquired in a prior purchase
         business combination, and make any necessary reclassifications in order
         to conform with the new criteria in Statement 141 for recognition apart
         from goodwill. In connection with Statement 142's transitional goodwill
         impairment evaluation, the Company was also required to perform an
         assessment of whether there was an indication that goodwill was
         impaired as of the date of adoption. In connection with the adoption of
         Statement No. 142, the Company recognized a $93,131,000 impairment
         loss, net of taxes, as the cumulative effect of a change in accounting
         principle.

         Adjusted net loss applicable to common stockholders and pro forma loss
         per common share for the three and six months ended June 30, 2001,
         exclusive of amortization expense related to goodwill are as follows
         (amounts in thousands, except per share amounts):

<Table>
<Caption>
                                                                         Three months         Six months
                                                                             ended               ended
                                                                        June 30, 2001        June 30, 2001
                                                                       ---------------      ---------------
         <S>                                                           <C>                         <C>
         Net loss applicable to common stockholders, as reported       $      (210,987)            (278,398)
         Amortization of goodwill                                                9,380               18,728
                                                                       ---------------      ---------------

         Net loss applicable to common stockholders, as adjusted       $      (201,607)            (259,670)
                                                                       ================     ===============

         Pro forma basic and diluted loss per common share, as
           reported                                                    $         (5.11)               (6.74)
         Amortization of goodwill                                                  .23                  .45
                                                                       ---------------      ---------------
         Pro forma basic and diluted loss per common share, as
           adjusted                                                    $         (4.88)               (6.29)
                                                                       ===============      ===============
</Table>

                                      I-10
<Page>
             LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         In August 2001, the FASB issued Statement of Financial Accounting
         Standards No. 143, ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS, which
         requires that the fair value of a liability for an asset retirement
         obligation be recognized in the period in which it is incurred if a
         reasonable estimate of fair value can be made. The statement also
         requires that the associated asset retirement costs are capitalized as
         part of the carrying amount of the long-lived asset. This statement is
         effective for financial statements issued for fiscal years beginning
         after June 15, 2002. The adoption of this statement is not expected to
         have a material impact on the Company's financial position, results of
         operations or cash flows.

         In August 2001, the FASB issued Statement of Financial Accounting
         Standards No. 144 ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
         LONG-LIVED ASSETS ("Statement 144"), which addresses financial
         accounting and reporting for the impairment or disposal of long-lived
         assets. Statement 144 supercedes prior statements that address the
         disposal of a segment of a business, and eliminates the exception to
         consolidation for subsidiaries for which control is likely to be
         temporary. Statement 144 retains the prior statement's fundamental
         provisions for the recognition and measurement of impairment of
         long-lived assets to be held and used, as well as the measurement of
         long-lived assets to be disposed of by sale. Statement 144 is effective
         for fiscal years beginning after December 15, 2001. The adoption of
         this statement did not have a material impact on the Company's
         financial position, results of operations or cash flows.

         In April 2002, the FASB issued Statement of Financial Accounting
         Standards No. 145, RESCISSION OF FASB STATEMENTS NO. 4, 44 AND 64,
         AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL CORRECTIONS
         ("Statement 145"). Statement 145 rescinds FASB Statement No. 4,
         REPORTING GAINS AND LOSSES FROM EXTINGUISHMENT OF DEBT, and an
         amendment of that Statement, FASB Statement No. 64, EXTINGUISHMENTS OF
         DEBT MADE TO SATISFY SINKING-FUND REQUIREMENTS. Statement 145 also
         rescinds FASB Statement No. 44, ACCOUNTING FOR INTANGIBLE ASSETS OF
         MOTOR CARRIERS. Statement 145 amends FASB Statement No. 13, ACCOUNTING
         FOR LEASES, to eliminate an inconsistency between the required
         accounting for sale-leaseback transactions and the required accounting
         for certain lease modifications that have economic effects that are
         similar to sale-leaseback transactions. Statement 145 also amends other
         existing authoritative pronouncements to make various technical
         corrections, clarify meanings, or describe their applicability under
         changed conditions. Statement 145 is generally effective for financial
         statements issued for fiscal years beginning after May 15, 2002. The
         adoption of Statement 145 is not expected to have a material impact on
         the Company's financial position, results of operations or cash flows.

         In June 2002, the FASB issued Statement of Financial Accounting
         Standards No. 146, ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR
         DISPOSAL ACTIVITIES ("Statement 146"). Statement 146 addresses
         financial accounting and reporting for costs associated with exit or
         disposal activities and nullifies Emerging Issues Task Force Issue No.
         94-3, LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS
         AND OTHER COSTS TO EXIT AN ACTIVITY (INCLUDING CERTAIN COSTS INCURRED
         IN A RESTRUCTURING). Statement 146 is effective for exit or disposal
         activities initiated after December 31, 2002. The adoption of Statement
         146 is not expected to have a material impact on the Company's
         financial position, results of operations or cash flows.

                                      I-11
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

(3)      TRANSACTIONS WITH LIBERTY MEDIA AND OTHER RELATED PARTIES

         TRANSACTIONS WITH LIBERTY MEDIA

         NOTE PAYABLE. In connection with the March 16, 2000 formation of LSAT
         LLC, LSAT issued a $60,000,000 note payable to Liberty Media in
         exchange for its 13.99% ownership interest in LSAT Astro. The note
         bears interest at the 3 month London Interbank Offering Rate ("LIBOR")
         plus 2% (3.84% at June 30, 2002). 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. At June 30, 2002, the unpaid
         principal on the note was $48,411,000 and the accrued interest on the
         note was $630,000.

         TAX LIABILITY ALLOCATION AND INDEMNIFICATION AGREEMENT. In connection
         with the LSAT LLC and Ascent Transaction, LSAT and Liberty Media
         entered into a tax liability allocation and indemnification agreement
         whereby LSAT will be obligated to make a cash payment to Liberty Media
         in each year that LSAT (taken together with any of its subsidiaries)
         has taxable income. The amount of the payment will be equal to the
         amount of the taxable income of LSAT and its subsidiaries (determined
         as if LSAT and its subsidiaries filed a separate return) multiplied by
         the highest applicable corporate tax rate. In the event that (1) LSAT
         and its subsidiaries, when treated as a separate group, has a net
         operating loss or deduction or is entitled to a tax credit for a
         particular year; and (2) Liberty Media is able to use such loss,
         deduction or credit to reduce its tax liability, LSAT will be entitled
         to a credit against current and future payments to Liberty Media under
         the agreement. If LSAT disaffiliates itself with Liberty Media and the
         members of Liberty Media's affiliated group prior to the time that LSAT
         is able to use such credit, LSAT will be entitled to a payment from
         Liberty Media at the earlier of the time that (1) LSAT and its
         subsidiaries show they could have used the net operating loss or net
         tax credit to reduce their own separately computed tax liability or (2)
         the voting power of the stock of LSAT held by Liberty Media and the
         members of its affiliated group drops below 20%.

         In addition, under the tax liability allocation and indemnification
         agreement, LSAT will have the opportunity to participate in the defense
         of claims of the Internal Revenue Service that might affect its
         liability under the agreement, and to participate in tax refunds paid
         to Liberty Media where such refunds are due in part to LSAT's
         operations.

         At June 30, 2002, Ascent owed $15,063,000 to Liberty Media pursuant to
         a tax liability allocation and indemnification agreement. Such amount
         is non-interest bearing and is due on demand.

         EXPENSE ALLOCATIONS AND REIMBURSEMENTS. Liberty Media allocates rent,
         salaries, benefits and certain other general and administrative
         expenses to the Company. Although there is no written agreement with
         Liberty Media for these allocations and reimbursements, the Company
         believes the allocated amounts to be reasonable. The aggregate
         allocations from Liberty Media were $265,000 and $262,000 for the six
         months ended June 30, 2002 and 2001, respectively. Such amounts are
         included in selling, general and administrative expenses in the
         accompanying condensed consolidated statements of operations. In
         addition, the Company reimburses Liberty Media for certain expenses
         paid by Liberty Media on behalf of the Company. Amounts owed to Liberty
         Media pursuant to these arrangements ($154,000 at June 30, 2002) are
         non-interest bearing and are generally paid on a monthly basis.

                                      I-12
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         SKY LATIN AMERICA LOANS. During the year ended December 31, 2001, and
         the three months ended March 31, 2002, Liberty Media loaned $18,552,000
         and $6,573,000, respectively, to LSAT LLC. LSAT LLC used the proceeds
         from these loans to fund capital calls from its various 10% investees
         that operate satellite television systems in Latin America ("Sky Latin
         America"). The loans provided for interest at 8% and were due and
         payable on demand after November 27, 2001. Concurrently with the
         closing of the LSAT LLC and Ascent Transaction, (i) Liberty Media
         contributed to the Company, as part of that transaction and for no
         additional consideration, promissory notes issued by subsidiaries of
         Liberty Media, with an aggregate principal balance of $18,552,000 and
         related accrued interest of $651,000, representing the loans described
         above that were made through December 31, 2001, and (ii) LSAT LLC
         repaid principal of $6,573,000 and accrued interest of $37,000 related
         to the first quarter 2002 advances.

         SALE OF ASCENT NETWORK SERVICES. Effective September 4, 2001, Ascent
         completed the sale of Ascent Network Services to Liberty Livewire
         Corporation ("Liberty Livewire"), a consolidated subsidiary of Liberty
         Media, for cash consideration of $32,038,000. Ascent Network Services
         provides video distribution services to the NBC television network and
         other private networks. As Ascent and Liberty Livewire are both
         consolidated subsidiaries of Liberty media, no gain or loss was
         recognized in connection with this transaction. During the six months
         ended June 30, 2001, Ascent Network Services paid management fees to
         Liberty Livewire aggregating $4,800,000. Such management fees are
         included in selling, general and administrative expenses in the
         accompanying condensed consolidated statement of operations.

         PUT OPTION LIABILITY. Effective September 29, 2000, LSAT LLC acquired a
         1% managing common interest in a joint venture ("IB2 LLC") from a
         subsidiary of Liberty Digital, Inc. ("Liberty Digital") for $652,000.
         Liberty Digital, an indirect wholly-owned subsidiary of Liberty Media,
         retained a preferred interest (the "Preferred Interest") in IB2 LLC,
         which owns approximately 360,000 shares of iBEAM Broadcasting Corp.
         ("iBEAM") common stock ("iBEAM Stock"). The Preferred Interest had 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
         Liberty Digital the right to put the Preferred Interest to LSAT LLC for
         a purchase price equal to $26,000,000 (the value of iBEAM Stock on
         September 29, 2000) plus a 9% return, compounded annually (the "Put
         Option"). LSAT LLC has the right to call Liberty Digital's Preferred
         Interest at a price equal to the initial liquidation value plus a
         return of 9%, compounded annually. Both the Put Option and call option
         are exercisable on September 29, 2008. Under certain limited
         circumstances, including iBEAM's bankruptcy, LSAT LLC can force Liberty
         Digital to exercise the Put Option prior to September 29, 2008.

         During the fourth quarter of 2001, iBEAM filed for bankruptcy under
         Chapter 11 of the Bankruptcy Code. As a result of such bankruptcy
         filing, the Company began carrying the Put Option liability at an
         amount ($29,742,000 at June 30, 2002), which represents the Put Option
         purchase price to LSAT LLC plus an accrued return to Liberty Digital of
         9%, compounded annually. The Company anticipates that future losses
         with respect to the Put Option will be limited to Liberty Digital's 9%
         return on the Put Option liability.

         Changes in the fair market value of the Put Option subsequent to
         September 29, 2000 have been recognized as unrealized gains (losses) on
         financial instruments in the Company's consolidated statements of
         operations. During the six months ended June 30, 2002 and 2001, the
         Company recorded unrealized losses of $1,254,000 and $2,460,000,
         respectively, related to the Put Option.

                                      I-13
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         TRANSACTIONS WITH OTHER RELATED PARTIES

         PHOENIXSTAR MANAGEMENT AGREEMENT. Effective February 1, 2000, the
         Company entered into a management agreement with Phoenixstar, Inc.
         (formerly known as PRIMESTAR, Inc.) ("Phoenixstar") pursuant to which
         the Company is managing Phoenixstar's affairs in exchange for a monthly
         management fee. Prior to 1999, the Company beneficially owned 37% of
         Phoenixstar's outstanding shares. In 1999, the Company agreed to forego
         any liquidating distribution or other payment that may be made in
         respect of the outstanding shares of Phoenixstar upon any dissolution
         and winding-up of Phoenixstar, or otherwise in respect of Phoenixstar's
         equity, and to transfer its shares in Phoenixstar to the other
         Phoenixstar stockholders. Management fees from Phoenixstar aggregated
         $210,000 for each of the six-month periods ended June 30, 2002 and
         2001. In addition, the Company allocates certain general and
         administrative expenses, such as office rent and computer support to
         Phoenixstar. Under the current management agreement, expense
         allocations have been limited to $5,000 per month since February 2001.
         Such allocations aggregated $30,000 and $39,000 during the six months
         ended June 30, 2002 and 2001, respectively, and are reflected as a
         reduction of general and administrative expenses in the accompanying
         condensed consolidated statements of operations.

(4)      LOSS PER COMMON SHARE
         The loss per common share for the three and six months ended June 30,
         2002 and 2001 is based on 41,523,600 and 41,524,200 weighted average
         shares outstanding during the three and six month 2002 periods,
         respectively and 41,320,400 weighted average shares outstanding during
         each of the 2001 periods. Potential common shares were not included in
         the computation of diluted loss per share because their inclusion would
         have been anti-dilutive. At June 30, 2002, the number of potential
         common shares was approximately 2,159,000. Such potential common shares
         consist of stock options to acquire shares of Series A Common Stock and
         securities that are convertible into 1,696,717 shares of Series B
         Common Stock at June 30, 2002. The foregoing potential common share
         amounts do not take into account the assumed number of shares that
         would be repurchased by the Company upon the exercise of stock options.

(5)      SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
         Cash paid for interest was $8,333,000 and $14,281,000 for the six
         months ended June 30, 2002 and 2001, respectively. Cash paid for income
         taxes was not significant during these periods. There were no
         significant non-cash investing and financing activities for the six
         months ended June 30, 2002. Significant non-cash investing and
         financing activities for the six months ended June 30, 2001 are as
         follows (amounts in thousands):

<Table>
                      <S>                                           <C>
                      Recorded value of cost investment acquired    $     20,000
                      Conversion of note receivable                       (5,000)
                                                                    ------------
                      Cash paid for cost investment                 $     15,000
                                                                    ============
</Table>

                                      I-14
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

(6)      INVESTMENTS IN AFFILIATES
         The following table reflects the Company's carrying amount of its
         investments accounted for using the equity method:

<Table>
<Caption>
                                                                               June 30,            December 31,
                                                                                 2002                 2001
                                                                          ----------------        -------------
                                                                                  amounts in thousands
               <S>                                                        <C>                            <C>
               ASTROLINK International LLC ("Astrolink")                  $             --                   --
               Aerocast.com, Inc. ("Aerocast")                                       9,447               12,158
                                                                           ---------------        -------------

                                                                          $          9,447               12,158
                                                                          ================        =============
</Table>

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

<Table>
<Caption>
                                                                                     Six months ended
                                                                                         June 30,
                                                                          -------------------------------------
                                                                                2002                  2001
                                                                          ---------------         -------------
                                                                                  amounts in thousands
               <S>                                                        <C>                          <C>
               Astrolink                                                  $          (647)             (162,144)
               Aerocast                                                            (2,711)               (2,934)
                                                                          ---------------         -------------

                                                                          $        (3,358)             (165,078)
                                                                          ===============         =============
</Table>

         ASTROLINK

         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 owns an
         approximate 31.5% ownership interest in Astrolink. Astrolink, a
         developmental stage entity, originally intended to build a global
         telecom network using Ka-band geostationary satellites to provide
         broadband data communications services. Astrolink's original business
         plan required approximately $2.4 billion in additional financing over
         the next several years. During the fourth quarter of 2001, certain of
         the members of Astrolink informed Astrolink that they do 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 its proposed business plan,
         and liquidating the venture entirely. There can be no assurance that
         Astrolink will be able to obtain the necessary financing for a
         scaled-back business plan on acceptable terms.

                                      I-15
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         During the second quarter of 2002, LSAT signed a non-binding letter of
         intent with the other partners of Astrolink, in connection with a
         proposed restructuring of Astrolink. The non-binding letter of intent
         contemplates the settlement of all claims among the parties and their
         affiliates relating to Astrolink and the acquisition of all the assets
         of Astrolink by LSAT. If the transactions contemplated by the
         non-binding letter of intent are consummated, Liberty Media will make a
         capital contribution to LSAT at the closing, in exchange for shares of
         Series B Common Stock at fair market value at closing. The parties have
         agreed not to publicly disclose the specific economic terms of the
         proposed transaction, pending execution of a definitive agreement on
         such terms. Subject to consummation of the transactions contemplated by
         the non-binding letter of intent, and any necessary regulatory
         approvals, LSAT currently plans to pursue a revised operating plan for
         the new Astrolink system, taking into account current financial and
         market factors. The transactions contemplated by the non-binding letter
         of intent are subject to, among other conditions, the negotiation,
         execution and delivery of definitive agreements, required third party
         and governmental consents, and the termination or renegotiation, on
         terms acceptable to LSAT, of Astrolink's prior procurement contracts.

         During the second quarter of 2001, the Company determined that its
         investment in Astrolink experienced a nontemporary decline in value.
         Accordingly, the carrying amount of such investment was adjusted to its
         then estimated fair value resulting in a recognized loss of
         $155,000,000. Such loss is included in share of losses of affiliates.
         Based on a fourth quarter 2001 assessment of Astrolink's remaining
         sources of liquidity and Astrolink's inability to obtain financing for
         its business plan, the Company concluded that the carrying value of
         LSAT Astro's investment in Astrolink should be reduced to reflect a
         fair value that assumes the liquidation of Astrolink. Accordingly, LSAT
         Astro wrote-off all of its remaining investment in Astrolink during the
         fourth quarter of 2001. The aggregate amount required to reduce LSAT
         Astro's investment in Astrolink to zero was $249,868,000. Including
         such fourth quarter amount, LSAT Astro recorded losses and charges
         relating to its investment in Astrolink aggregating $417,202,000 during
         the year ended December 31, 2001.

         Since LSAT Astro's investment in Astrolink was reduced to zero at
         December 31, 2001, LSAT Astro's share of Astrolink's losses since
         December 31, 2001 has been limited to the amounts loaned to Astrolink
         by the Company during the six months ended June 30, 2002 ($647,000). At
         June 30, 2002, the Company was not obligated to provide additional
         funding to Astrolink.

         AEROCAST

         LSAT LLC owns an approximate 45.5% ownership interest in Aerocast.
         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.

         At June 30, 2002, the carrying amount of the Company's investment in
         Aerocast exceeded the Company's proportionate share of Aerocast's net
         assets by $7,627,000. Such excess relates to intellectual property and
         technology developed by Aerocast, and is being amortized over a useful
         life of five years. Amortization aggregated $1,041,000 and $983,000 for
         the six months ended June 30, 2002 and 2001, respectively, and is
         included in share of losses of affiliates.

                                      I-16
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         Aerocast is in the start-up phase of its business, and the Company
         anticipates that Aerocast will need additional financing to fund its
         business plan. In order to maintain its current ownership interest in
         Aerocast, the Company may be required to participate in such additional
         financing. If the Company is unable or unwilling to provide additional
         financing, its ownership interest may be diluted or it may forfeit
         certain voting or other shareholder rights. There is no assurance that
         Aerocast will be able to obtain the necessary financing on acceptable
         terms. If it is unable to secure the necessary financing, Aerocast may
         be forced to alter its business plan or consider a plan of liquidation.

         Summarized unaudited combined financial information for Aerocast is as
         follows:

<Table>
<Caption>
                                                      Six months ended
                                                          June 30,
                                           ------------------------------------
                                                 2002                  2001
                                           -----------------    ---------------
                                                   amounts in thousands
         <S>                               <C>                          <C>
         COMBINED OPERATIONS
            Revenue                        $            57                  --
            Operating expenses                      (3,507)             (5,173)
            Depreciation                              (197)               (122)
            Other income                                32                 310
                                           ---------------      --------------

               Net loss                    $        (3,615)             (4,985)
                                           ===============      ==============
</Table>

(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>
                                                             June 30,              December 31,
                                                               2002                    2001
                                                         ----------------          ------------
                                                                 amounts in thousands
            <S>                                          <C>                            <C>
            Sprint Corporation PCS Group
               ("Sprint PCS Group") (a)*                 $        299,458               301,840
            Sky Latin America (b)                                 126,764               175,048
            Hughes Electronics Corporation
               ("GM Hughes") (c)*                                  38,067                42,894
            XM Satellite Radio Holdings, Inc.
               ("XMSR") (d)*                                       27,864                29,475
            Other (e)                                              26,376                28,225
                                                         ----------------          ------------

                                                         $        518,529               577,482
                                                         ================          ============
</Table>

         *   Denotes an investment carried as an available-for-sale security.
             Amounts shown in the table represent the combined fair market value
             of the security and any related derivative instrument.

         (a) SPRINT PCS GROUP

         The Company acquired beneficial interest in 5,084,745 shares of Sprint
         Corporation PCS Group common stock ("Sprint PCS Stock") from Liberty
         Media in March 2000. The Company accounts for such investment as an
         available-for-sale security.

                                      I-17
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         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 the 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 June
         30, 2002, the fair value of the Sprint PCS Collar was approximately
         $276,729,000.

         Effective May 9, 2001, LSAT transferred (i) its beneficial interest in
         the Sprint PCS Stock, (ii) the Sprint PCS Collar and (iii) the PCS Loan
         Facility (as described in note 8) 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.

         (b) SKY LATIN AMERICA

         The amounts shown in the table for Sky Latin America represent 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.

         During the second quarter of 2002, the Company recorded a $58,948,000
         loss to reflect a nontemporary decline in the value of LSAT LLC's
         investment in Sky Latin America.

         (c) GM HUGHES

         The Company, through LSAT LLC, holds 1,821,921 shares of General Motors
         Corporation Class H common stock ("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 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 June 30, 2002, the fair value of the GM Hughes put
         spread collar was approximately $19,119,000, which represented an
         increase of $4,373,000 from December 31, 2001. Such increase is
         included in unrealized gains on financial instruments in the
         accompanying condensed consolidated statement of operations.

         (d) XMSR

         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 1% 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

                                      I-18
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         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 June 30,
         2002, the fair value of the XMSR equity collar was approximately
         $20,614,000.

         On June 27, 2001, LSAT LLC entered into an agreement to lend 1,000,000
         shares of XMSR to a third party. The obligation of such third party to
         return those shares to LSAT LLC is secured by cash collateral equal to
         100% of the market value of that stock, which was $7,250,000 at June
         30, 2002. 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 0.15% per
         annum. As of June 30, 2002, 1,000,000 shares of XMSR had been lent
         under this agreement. The loan has no stated maturity date.

         (e) OTHER

         On March 30, 2001, On Command acquired certain preferred stock of STSN,
         Inc. ("STSN") in exchange for cash of $15,000,000 and the conversion of
         a $5,000,000 convertible promissory note. During the fourth quarter of
         2001, On Command recorded a $16,539,000 loss to reflect an other than
         temporary decline in the estimated fair value of its investment. Such
         estimated fair value was based on the price of securities sold by STSN
         to On Command and other investors during the first quarter of 2002. In
         this regard, On Command purchased $2,599,000 of preferred stock from
         STSN during the first six months of 2002.

         During the first quarter of 2002, On Command transferred certain
         equipment with a carrying value of $1,411,000 to STSN. In connection
         with this transfer, STSN agreed to make quarterly royalty payments to
         On Command equal to 20% of the net operating margin of the assets
         transferred for the next seven years. For purposes of these royalty
         payments, net operating margin is defined as gross revenue less all
         direct costs. Due to the uncertainty involved in estimating these
         royalty payments, On Command recorded an impairment loss on this
         transaction equal to the $1,411,000 carrying value of the contributed
         equipment. The royalty payments from STSN are recognized as revenue
         when received by On Command. During the first six months of 2002,
         royalty payments received from STSN were not significant.

         During the first quarter of 2001, On Command completed a transaction
         that resulted in On Command's acquisition of a 7.5% interest in e-ROOM
         CORPORATION ("e-ROOM") and the settlement of certain litigation. To
         acquire the 7.5% interest and settle the litigation, On Command (i)
         contributed its Asia-Pacific subsidiaries to e-ROOM and transferred On
         Command intercompany receivables from such subsidiaries to e-ROOM, (ii)
         issued 275,000 shares of On Command Common Stock to e-ROOM, and (iii)
         paid $1,000,000 to e-ROOM. On Command also agreed that e-ROOM will have
         the option during the 15 day period beginning on March 1, 2003 to cause
         On Command to repurchase all, but not less than all, of the 275,000
         shares of On Command Common Stock issued to e-ROOM at a price of $15
         per share. Such repurchase obligation will terminate if the On Command
         Common Stock closes at or above $15 per share on any ten consecutive
         trading days prior to March 1, 2003, and the shares of On Command
         Common Stock held by e-ROOM are freely tradable during such period. Due
         to the existence of this repurchase obligation, On Command valued the
         On Command Common Stock issued to e-ROOM at $15 per share. The excess
         of the value assigned to the consideration paid to e-ROOM

                                      I-19
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         over the then estimated $5,298,000 fair value of the 7.5% interest in
         e-ROOM received by On Command has been reflected as loss on settlement
         of litigation in the accompanying condensed consolidated statements of
         operations. On Command's original estimate of the litigation loss
         resulted in a $4,764,000 charge during the fourth quarter of 2000. An
         additional charge of $3,700,000 was recorded during the first quarter
         of 2001 to reflect a change in the estimate of the amount of On
         Command's intercompany receivables to be transferred to e-ROOM. During
         the fourth quarter of 2001, On Command recorded a $2,000,000 impairment
         charge to reflect an other than temporary decline in the estimated fair
         value of its investment in e-ROOM.

         DERIVATIVE INSTRUMENTS

         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 counterparties, consisting
         primarily of major financial institutions and does not expect
         nonperformance by any of its counterparties.

         The Company's equity collars are accounted for as fair value 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 have not been designated
         as fair value 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 condensed consolidated
         statements of operations.

         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 of Financial
         Accounting Standard No. 133, had no impact on earnings for the six
         months ended June 30, 2002 and 2001. No fair value hedges or cash flow
         hedges were derecognized or discontinued during the six months ended
         June 30, 2002 and 2001.

         For the six months ended June 30, 2002, unrealized losses on financial
         instruments include a $4,373,000 gain related to the GM Hughes put
         spread collar, a $3,872,000 loss related to changes in the time value
         of equity collars and a $1,254,000 loss related to the iBEAM Put
         Option.

         NONTEMPORARY DECLINES IN FAIR VALUE OF INVESTMENTS

         During the six months ended June 30, 2002 and 2001, the Company
         determined that certain of its investments experienced other than
         temporary declines in value. As a result, the cost bases of such
         investments were adjusted to their respective estimated fair values.
         Such adjustments resulted in recognized losses of $58,948,000 (all of
         which related to Sky Latin America) during the 2002 period, and
         $39,932,000 (including $20,518,000 related to LSAT LLC's investment in
         Wildblue Communications, Inc. ("Wildblue") and $14,575,000 related to
         LSAT LLC's investment in XMSR) during the 2001 period.

                                      I-20
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         Investments in available-for-sale securities (including related equity
         collars) are summarized below. Such amounts are in addition to the
         unrealized gains and losses recognized in the condensed consolidated
         statements of operations.

<Table>
<Caption>
                                                            June 30,               December 31,
                                                              2002                    2001
                                                         --------------           -------------
                                                                 amounts in thousands
         <S>                                             <C>                            <C>
         Equity securities
             Fair value                                  $      374,894                 388,163
                                                         ==============           =============
             Gross unrealized holding gains              $           --                   3,942
                                                         ==============           =============
             Gross unrealized holding losses             $      (43,292)                (23,532)
                                                         ==============           =============
</Table>

(8)      DEBT
         Debt is summarized as follows:

<Table>
<Caption>
                                                            June 30,               December 31,
                                                              2002                     2001
                                                         --------------           -------------
                                                                 amounts in thousands
         <S>                                             <C>                            <C>
         On Command Revolving Credit Facility (a)        $      265,633                 263,633
         PCS Loan Facility (b)                                  112,503                  97,503
         Other (c)                                                1,631                   2,037
                                                         --------------           -------------
                                                                379,767                 363,173
         Less current portion                                  (113,412)                   (909)
                                                         --------------           -------------
                                                         $      266,355                 362,264
                                                         ==============           =============
</Table>

         (a)  On Command's revolving credit facility, as amended, (the "On
              Command Revolving Credit Facility") provides for aggregate
              borrowings of $275,000,000. Borrowings under the On Command
              Revolving Credit Facility are due and payable in July 2004.
              Subject to certain conditions, the On Command Revolving Credit
              Facility can be renewed for two additional years. On Command's
              ability to draw additional funds under the On Command Revolving
              Credit Facility is limited by certain financial covenants. On
              Command had $9,367,000 of remaining availability under the On
              Command Revolving Credit Facility at June 30, 2002.

              Revolving loans extended under the On Command Revolving Credit
              Facility bear interest at the London Interbank Offering Rate
              ("LIBOR") plus a spread that may range from 1.10% to 2.75%
              depending on certain operating ratios of On Command (4.93%
              effective borrowing rate at June 30, 2002). In addition, a
              facility fee ranging from 0.15% to 0.50% per annum is charged on
              the On Command Revolving Credit Facility, depending on certain
              operating ratios of On Command. The On Command Revolving Credit
              Facility contains customary covenants and agreements, most notably
              the inclusion of restrictions on On Command's ability to pay
              dividends or make other distributions, and restrictions on On
              Command's ability to make capital expenditures. In addition, On
              Command is required to maintain minimum leverage and interest
              coverage ratios. On Command was in compliance with such covenants
              at June 30, 2002. Substantially all of On Command's assets are
              pledged as collateral for borrowings under the On Command
              Revolving Credit Facility.

              Although On Command expects to be in compliance with the covenants
              of the On Command Revolving Credit Facility through December 31,
              2002, On Command currently believes that it will not be in
              compliance with the leverage ratio covenant as of March 31, 2003
              as a result of

                                      I-21
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

              certain changes to such covenant that take effect for the periods
              ending subsequent to 2002. On Command intends to seek an amendment
              to the On Command Revolving Credit Facility that would allow On
              Command to maintain compliance with this covenant. Although no
              assurance can be given, On Command believes that it will be
              successful in obtaining such an amendment on acceptable terms to
              On Command. In the event On Command is unable to obtain an
              acceptable amendment to the On Command Revolving Credit Facility,
              On Command would seek to refinance the On Command Revolving Credit
              Facility with alternative sources of financing. No assurance can
              be given that any such alternative financing would be available on
              terms acceptable to On Command.

         (b)  LSAT LLC's revolving credit facility, as amended, provides for
              maximum borrowings of $303,000,000 (the "PCS Loan Facility"). In
              May 2001, LSAT transferred its rights and obligations under the
              PCS Loan Facility to LSAT LLC. The PCS Loan Facility is secured by
              LSAT LLC's interest in shares of Sprint PCS Stock and by the
              Sprint PCS Collar described in note 7. Interest accrues at the 30
              day LIBOR (1.84% at June 30, 2002) and is payable monthly. The
              principal balance is due and payable March 10, 2003. At June 30,
              2002, borrowing availability pursuant to the PCS Loan Facility
              was $190,497,000.

         (c)  Other debt represents capital lease obligations.

         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 the Company for debt of the same remaining maturities. Due
         to its variable rate nature, the fair value of the Company's debt
         approximated its carrying value at June 30, 2002.

(9)      TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
         During the second quarter of 2001, Ascent purchased 2,245,155 shares of
         common stock of On Command from On Command's former Chairman of the
         Board and Chief Executive Officer for aggregate cash consideration of
         $25,191,000. Such purchase price represents a per share price of
         $11.22. The closing market price for On Command common stock on the day
         the transaction was signed was $7.77. The Company has included the
         $7,746,000 difference between the aggregate market value of the shares
         purchased and the cash consideration paid in selling, general and
         administrative expenses in the accompanying condensed consolidated
         statement of operations.

(10)     SIGNIFICANT CUSTOMERS
         During the first six months of 2002, hotels owned, managed or
         franchised by Marriott International, Inc. ("Marriott"), Hilton Hotels
         Corporation ("Hilton") and Six Continents Hotels, Inc. ("Six
         Continents") accounted for 29.3%, 17.0% and 10.9%, respectively, of On
         Command's room revenue. The loss of any of these customers, or the loss
         of a significant number of other hotel chain customers, could have a
         material adverse effect on On Command's results of operations and
         financial condition. However, contracts with respect to individually
         owned, managed or franchised hotels expire over an extended period of
         time depending on the installation date of the individual hotel.
         Additionally, the terms of On Command's contracts with hotels owned by
         a hotel chain are sometimes different than those of On Command's
         contracts with hotels that are managed or franchised by the same hotel
         chain.

         In October 2000, Hilton announced that it would not be renewing its
         master contract with On Command. In addition, On Command's master
         contract with Promus Hotel Corporation ("Promus"), a subsidiary of
         Hilton, expired on May 25, 2002. As a result, hotels owned, managed or
         franchised by Hilton or Promus are currently subject to a master
         contract between Hilton and a competitor of On Command. Accordingly, On
         Command anticipates that hotels owned by Hilton or Promus will not
         renew their contracts as they expire. On the other hand, hotels that
         are

                                      I-22
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         managed or franchised by Hilton are not precluded from renewing their
         contracts with On Command, and, although no assurance can be given, On
         Command anticipates that certain of those hotels will choose to renew.
         At June 30, 2002, On Command provided service to approximately 134,000
         rooms in 555 hotels that are owned, managed or franchised by Hilton or
         Promus. The majority of these rooms are located in managed or
         franchised hotels that are not owned by Hilton or Promus. Through June
         30, 2002, On Command's contracts with 73 of the aforementioned 555
         hotels (19,300 rooms) had expired and service to these hotels is
         currently provided under monthly or other short-term renewals. On
         Command's individual contracts with the remaining 482 Hilton or Promus
         hotels (114,700 rooms) expire at various dates through 2010 with the
         majority expiring by 2005. Over time, On Command anticipates that the
         revenue it derives from hotels that are owned, managed or franchised by
         Hilton or Promus will decrease. However, due to the uncertainties
         involved, On Command is currently unable to predict the amount and
         timing of the revenue decreases.

(11)     COMMITMENTS AND CONTINGENCIES
         The Company leases office space and certain equipment pursuant to
         noncancelable operating leases. In addition, LSAT LLC has guaranteed
         certain lease obligations of the Sky Latin America businesses through
         2015. Such guarantees aggregated approximately $103,926,000 at December
         31, 2001. Currently, LSAT LLC is not certain of the likelihood of being
         required to perform under such guarantees.

         On Command is a party to affiliation agreements with programming
         suppliers. Pursuant to certain of such agreements, On Command is
         committed to carry such suppliers' programming on its video systems.
         Additionally, certain of such agreements provide for penalties and
         charges in the event the programming is not carried or not delivered to
         a contractually specified number of rooms.

         The Company has contingent liabilities related to legal proceedings,
         taxes 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 condensed
         consolidated financial statements.

(12)     INFORMATION ABOUT OPERATING SEGMENTS
         LSAT identifies its reportable segments as those consolidated
         subsidiaries that represent 10% or more of its combined revenue and
         those equity method affiliates whose share of earnings or losses
         represent 10% or more of its pre-tax earnings or loss. Subsidiaries and
         affiliates not meeting this threshold are aggregated together for
         segment reporting purposes. The segment presentation for prior periods
         has been conformed to the current period segment presentation.

         For the six months ended June 30, 2002, LSAT had two operating
         segments: On Command and Other. On Command provides in-room, on-demand
         video entertainment and information services to hotels, motels and
         resorts primarily in the United States and is majority owned and
         consolidated by LSAT. Other includes LSAT's non-consolidated
         investments, corporate and other consolidated businesses not
         representing separately reportable segments.

         The accounting policies of the segments that are also consolidated
         subsidiaries are the same as those described in the summary of
         significant accounting policies. LSAT evaluates performance based on
         the measures of revenue and operating cash flow. LSAT defines operating
         cash flow as operating income before deducting stock compensation,
         depreciation and amortization and impairment of long-lived assets.
         LSAT's definition of operating cash flow may differ from cash

                                      I-23
<Page>
              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

         flow measurements provided by other public companies. LSAT believes
         operating cash flow is a widely used financial indicator of companies
         similar to LSAT and its affiliates, which should be considered in
         addition to, but not as a substitute for, operating income, net income,
         cash flow provided by operating activities and other measures of
         financial performance prepared in accordance with generally accepted
         accounting principles. LSAT generally accounts for intersegment sales
         and transfers as if the sales or transfers were to third parties, that
         is, at current prices.

         LSAT's reportable segments are strategic business units that offer
         different products and services. They are managed separately because
         each segment requires different technology, distribution channels and
         marketing strategies.

         LSAT utilizes the following financial information for purposes of
         making decisions about allocating resources to a segment and assessing
         a segment's performance:

<Table>
<Caption>
                                              On Command      Other     Eliminations       Total
                                            -------------    --------   ------------     ---------
                                                             amounts in thousands
          <S>                               <C>               <C>               <C>      <C>
          PERFORMANCE MEASURES:

          Six months ended, 2002
              Revenue                       $     118,382         210           --         118,592
              Operating cash flow           $      32,133      (1,404)          --          30,729

          Six months ended, 2001
              Revenue                       $     125,553      11,447           --         137,000
              Operating cash flow           $      17,757      (9,516)          --           8,241

          BALANCE SHEET INFORMATION:

          As of June 30, 2002
              Total assets                  $     443,940     568,864           --       1,012,804
</Table>

         The following table provides a reconciliation of segment operating cash
         flow to loss before income taxes and minority interest:

<Table>
<Caption>
                                                                   Six months ended June 30,
                                                                  -----------------------------
                                                                      2002             2001
                                                                  -----------      ------------
                                                                          amounts in thousands
         <S>                                                      <C>               <C>
         Segment operating cash flow                              $    30,729          8,241
         Stock compensation                                              (146)          (122)
         Depreciation and amortization                                (67,268)       (86,480)
         Impairment of long-lived assets                               (6,514)            --
         Interest income                                                  963          8,566
         Interest expense                                              (9,786)       (25,137)
         Share of losses of affiliates                                 (3,358)      (165,078)
         Unrealized gains (losses) on financial instruments              (753)        14,002
         Nontemporary declines in fair value of investments           (58,948)       (39,932)
         Loss on settlement of litigation                                  --         (3,700)
         Other, net                                                    (1,800)         2,291
                                                                  -----------      ---------
              Loss before income taxes and minority interests     $  (116,881)      (287,349)
                                                                  ===========      =========
</Table>

                                      I-24
<Page>
             LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

         Notes to Condensed Consolidated Financial Statements, continued

(13)     SUBSEQUENT EVENTS
         On July 18, 2002, the Company consummated the sale (the "OCE Sale") of
         its 70% majority shareholdings in On Command Europe ("OCE") to Techlive
         Limited ("Techlive"), the owner of the remaining 30% interest in OCE.
         Proceeds from the sale aggregated $2,550,000. Such proceeds do not
         reflect any reduction for OCE's cash balances (approximately $1,400,000
         at June 30, 2002) that were transferred to Techlive as a part of the
         OCE Sale. As a result of the consummation of the OCE Sale, On Command
         recorded a $5,103,000 impairment loss during the second quarter of 2002
         to reduce the carrying value of OCE's long-lived assets to the fair
         value indicated by the OCE Sale.

         Concurrent with the consummation of the OCE Sale, On Command and
         Techlive entered into a License Agreement (the "License Agreement"),
         and On Command received a $200,000 payment for (i) the use of the "On
         Command Europe" corporate name through July 17, 2003; and (ii) the fee
         due for the first year of the License Agreement. The License Agreement
         provides OCE with the ability to continue to operate as an authorized
         On Command distributor, subject to performance criteria to be
         determined by On Command, for a period of ten years. As part of the
         agreement, On Command will license software and provide technical
         support to OCE at escalating per room rates over the next ten years.

                                      I-25
<Page>

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 the accompanying condensed consolidated financial statements
of the Company.

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. To the extent that such statements are not
recitations of historical fact, such statements constitute forward-looking
statements which, by definition, involve risks and uncertainties. Where, in any
forward-looking statement, the Company expresses an expectation or belief as to
future results or events, such expectation or belief is expressed in good faith
and believed to have a reasonable basis, but there can be no assurance that the
statement of expectation or belief will result or be achieved or accomplished.
The following include some but not all of the factors that could cause actual
results or events to differ materially from those anticipated:

-    general economic and business conditions and industry trends;
-    trends in hotel occupancy rates and business and leisure travel patterns;
-    the regulatory and competitive environment of the industries in which the
     Company, and the entities in which it has interests, operate;
-    uncertainties inherent in new business strategies, new product launches and
     development plans;
-    rapid technological changes;
-    the acquisition, development and/or financing of telecommunications
     networks and services;
-    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 failure or inability to comply with, government regulations,
     including, without limitation, regulations of the Federal Communications
     Commission, and adverse outcomes from regulatory proceedings;
-    changes in the nature of key strategic relationships with major customers,
     partners and joint venturers;
-    competitor responses to the Company's products and services, and the
     products and services of the entities in which it has interests, and the
     overall market acceptance of such products and services.

These forward-looking statements and such risks, uncertainties and other factors
speak only as of the date of this Quarterly Report, and 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 our
expectations with regard thereto, or any other change in events, conditions or
circumstances on which any such statement is based.

RECENT TRANSACTIONS

LSAT LLC AND ASCENT TRANSACTION. On August 16, 2001, LSAT entered into two
related purchase agreements with Liberty Media and certain of its subsidiaries
and affiliates. Both agreements were amended in November 2001 and January 2002.
One agreement provided for LSAT's acquisition of certain subsidiaries of Liberty
Media that hold an aggregate 89.41% ownership interest in LSAT LLC in exchange
for 25,298,379 shares of Series B Common Stock of the Company. The second
purchase agreement provided for LSAT's acquisition of 100% of the capital stock
of Ascent from a subsidiary of Liberty Media in exchange for 8,701,621 shares of
Series B Common Stock of the Company. The foregoing LSAT LLC and Ascent
Transaction closed on April 1, 2002. As a result of the consummation of the LSAT
LLC and Ascent Transaction, Liberty Media's common stock ownership in LSAT
increased to 84.1% and its voting power in the Company increased to 97.6%.

As a result of the consummation of the LSAT LLC and Ascent Transaction, LSAT
became the owner of 100% of the equity interests of Ascent and LSAT LLC. Due to
the fact that the Company, LSAT LLC and Ascent are all under the common control
of Liberty Media, the LSAT LLC and Ascent Transaction has been accounted for by
the Company in a manner similar to a pooling-of-interests. As such, the
Company's consolidated financial statements have been restated to include LSAT
LLC and Ascent as wholly-owned subsidiaries of LSAT effective with the
respective March 2000 dates that Liberty Media acquired control of such
entities.

                                      I-26
<Page>

As a result of the LSAT LLC and Ascent Transaction, LSAT's primary operating
subsidiary is On Command. Through Ascent, a wholly-owned subsidiary of LSAT,
LSAT owned approximately 63% of the outstanding On Command Common Stock at June
30, 2002. On Command develops, assembles, installs, and operates proprietary
video systems. On Command's primary distribution system allows hotel guests to
select, on an on-demand basis, motion pictures on computer-controlled television
sets located in their hotel rooms. On Command also provides, under long-term
contracts, in-room viewing of select cable channels and other interactive
services to hotels and businesses. The interactive services include video games,
Internet offerings, CD quality music and various hotel and guest services. At
June 30, 2002, On Command had operating subsidiaries or branches in the United
States, Canada, Mexico and Europe. See note 13 to the accompanying condensed
consolidated financial statements.

SALE OF ASCENT NETWORK SERVICES. Effective September 4, 2001, Ascent completed
the sale of Ascent Network Services to Liberty Livewire, a consolidated
subsidiary of Liberty Media, for cash consideration of $32,038,000. Ascent
Network Services provides video distributions services to the NBC television
network and other private networks. As Ascent and Liberty Livewire are both
consolidated subsidiaries of Liberty Media, no gain or loss was recognized in
connection with this transaction.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

REVENUE

IN-ROOM ENTERTAINMENT REVENUE

Revenue from On Command's in-room entertainment services consists primarily of
fees collected from hotels for in-room services provided to hotel guests by On
Command ("room revenue"). Services provided by On Command to hotel guests
include pay-per-view movies, free-to-guest programming, video games, Internet
service, short video products and digital music. On Command also earns revenue
from the sale of video systems to third parties and the sale of video equipment
to hotels ("video system and equipment sales"). Total in-room entertainment
revenue decreased $2,340,000 or 3.7% and $7,171,000 or 5.7% during the three and
six months ended June 30, 2002, respectively, as compared to the corresponding
prior year periods.

Room revenue decreased $26,000 from $59,156,000 during the three months ended
June 30, 2001 to $59,130,000 during the corresponding 2002 period, and decreased
$6,633,000 from $120,017,000 during the six months ended June 30, 2001 to
$113,384,000 during the corresponding 2002 period. Such changes in room revenue
during the three and six-month periods are attributable to a lower volume of
pay-per-view buys offset by (i) increases attributable to higher average rates
for certain pay-per-view products and (ii) increased revenue from short videos
and other new products. During the six-month period, the beneficial effect of
the higher rates and new products was more than offset by a reduction in the
volume of pay-per-view buys. Most of the decrease in pay-per-view buys in both
the three- and six-month periods is attributable to a decline in occupancy
rates, as further discussed below. A 3.3% reduction in the average number of
rooms served by On Command during the six months ended June 30, 2002, as
compared to the corresponding prior year period, also contributed to the
decrease in pay-per-view buys. The decline in the average number of rooms served
by On Command is attributable to (i) the transfer of certain hotel rooms to
e-ROOM as part of a litigation settlement (as further described in note 7 to the
accompanying condensed consolidated financial statements), (ii) the loss of
rooms to competitors, and (iii) the discontinuance of service to certain
non-profitable rooms.

Overall hotel occupancy rates declined 3.8% during the six months ended June 30,
2002, as compared to the corresponding prior year period. In addition, occupancy
rates for luxury hotels declined 4.9% over the same period. Since On Command
derives a significant portion of its revenue from luxury and other upscale
hotels, On Command believes that the occupancy rate for luxury hotels is the
best indicator of the impact changes in hotel occupancy are having on On
Command's business. Hotel occupancy rates are outside of On Command's control,
and changes in hotel occupancy rates can have a significant impact on On
Command's results of operations.

                                      I-27
<Page>

During the six months ended June 30, 2002, hotels owned, managed or franchised
by Marriott, Hilton and Six Continents accounted for 29.3%, 17.0% and 10.9%,
respectively, of On Command's room revenue. The loss of any of these customers,
or the loss of a significant number of other hotel chain customers, could have a
material adverse effect on On Command's results of operations and financial
condition. However, contracts with respect to individually owned, managed or
franchised hotels expire over an extended period of time depending on the
installation date of the individual hotel. Additionally, the terms of On
Command's contracts with hotels owned by a hotel chain are sometimes different
than those of On Command's contracts with hotels that are managed or franchised
by the same hotel chain.

In October 2000, Hilton announced that it would not be renewing its master
contract with On Command. In addition, On Command's master contract with Promus,
a subsidiary of Hilton, expired on May 25, 2002. As a result, hotels owned,
managed or franchised by Hilton or Promus are currently subject to a master
contract between Hilton and a competitor of On Command. Accordingly, On Command
anticipates that hotels owned by Hilton or Promus will not renew their contracts
as they expire. On the other hand, hotels that are managed or franchised by
Hilton are not precluded from renewing their contracts with On Command, and,
although no assurance can be given, On Command anticipates that certain of those
hotels will choose to renew. At June 30, 2002, On Command provided service to
approximately 134,000 rooms in 555 hotels that are owned, managed or franchised
by Hilton or Promus. The majority of these rooms are located in managed or
franchised hotels that are not owned by Hilton or Promus. Through June 30, 2002,
On Command's contracts with 73 of the aforementioned 555 hotels (19,300 rooms)
had expired and service to these hotels is currently provided under monthly or
other short-term renewals. On Command's individual contracts with the remaining
482 Hilton or Promus hotels (114,700 rooms) expire at various dates through
2010, with the majority expiring by 2005. Over time, On Command anticipates that
the revenue it derives from hotels that are owned, managed or franchised by
Hilton or Promus will decrease. However, due to the uncertainties involved, On
Command is currently unable to predict the amount and timing of the revenue
decreases.

Video system and equipment sales decreased $2,314,000 from $4,183,000 during the
three months ended June 30, 2001 to $1,869,000 during the corresponding 2002
period, and decreased $538,000 from $5,536,000 during the six months ended
June 30, 2001 to $4,998,000 during the corresponding 2002 period. Such decreases
are primarily attributable to the net effects of decreases in sales of On
Command's video systems to third parties, increases in sales of On Command's
music systems, and a one-time $700,000 reduction of revenue during the first
quarter of 2001 attributable to the net impact of a sales return and the
associated restocking fee.

OTHER REVENUE

Other revenue in the 2001 periods is primarily comprised of the revenue of
Ascent Network Services. Ascent sold Ascent Network Services to Liberty Livewire
on September 4, 2001. For additional information, see note 3 to the accompanying
condensed consolidated financial statements.

OPERATING COSTS

IN-ROOM ENTERTAINMENT OPERATING COSTS

In-room entertainment operating costs consist primarily of fees paid to movie
and other content providers, hotel commissions, connectivity costs associated
with On Command's Internet product, costs associated with the manufacturing of
video systems sold to other providers, costs associated with the repair,
maintenance and support of video systems and other room service equipment, and
costs associated with research and development activities.

                                      I-28
<Page>

In-room entertainment operating costs decreased $3,933,000 or 9.3% and
$7,700,000 or 9.3% during the three and six months ended June 30, 2002, as
compared to the corresponding prior year periods. The majority of such
reductions are attributable to (i) lower labor and overhead costs resulting from
a May 2001 corporate restructuring and other cost savings measures, and (ii) a
decrease in the costs associated with video system and equipment sales due to
lower sales volumes. In addition, an overall reduction in direct in-room service
costs (content fees, hotel commissions and other direct in-room service costs)
contributed to the decrease during the six-month period. Such decrease in direct
in-room service costs resulted from the net effect of (i) increases attributable
to higher guest programming costs and (ii) decreases attributable to lower
license fee royalties and certain cost saving measures. Hotel commissions
generally varied with room revenue and accordingly, lower hotel commissions
contributed to the decrease during the six-month period. The increase in guest
programming costs is the result of higher rates from program suppliers, and an
increase in the number of rooms with upgraded video systems that provide for a
greater number of programming alternatives. The decrease in license fee
royalties is primarily attributable to a lower volume of feature film buys. Due
to changes in the mix of pay-per-view buys, license fee royalties decreased as a
percentage of room revenue during the six months ended June 30, 2002, as
compared to the corresponding prior year period. Direct in-room service costs
represented 50.2% and 48.4% of total room revenue during the six months ended
June 30, 2002 and 2001, respectively. The higher percentage in 2002 is primarily
attributable to the fact that certain of On Command's content fees and other
in-room service costs do not vary with room revenue and occupancy rates.

On Command is a party to various agreements that permit On Command to distribute
movies and programming networks. No assurance can be given that the cost of such
movies and programming networks will not increase in future periods as contracts
expire and renewals are negotiated. Any cost increases that On Command is not
able to pass on to its customers would result in increased pressure on On
Command's operating margins.

OTHER OPERATING COSTS

Other operating costs in the 2001 periods represent the operating costs of
Ascent Network Services. Ascent sold Ascent Network Services to Liberty Livewire
on September 4, 2001. For additional information, see note 3 to the accompanying
condensed consolidated financial statements.

SELLING GENERAL AND ADMINISTRATIVE EXPENSE

Selling, general and administrative expense decreased $21,050,000 or 78.0% and
$28,460,000 or 69.3% during the three and six months ended June 30, 2002,
respectively, as compared to the corresponding prior year periods. Costs
associated with On Command's relocation and restructuring activities during the
2001 periods accounted for $8,098,000 and $11,445,000 respectively of the
decreases. The three and six month decreases also include $7,746,000 related to
Ascent's second quarter 2001 purchase of 2,245,155 shares of On Command Common
Stock from the then Chief Executive Officer of On Command. For additional
information regarding this transaction, see note 9 to the accompanying
condensed consolidated financial statements. The remaining decreases are
primarily attributable to the elimination of expenses as a result of the
September 2001 sale of Ascent Network Services, and cost reductions realized
by On Command as a result of a May 2001 corporate restructuring and other
cost savings measures.

STOCK COMPENSATION

LSAT 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 the market value of the underlying
common stock. Since none of LSAT's outstanding stock appreciation rights
("SARs") were in-the-money at June 30, 2002 or 2001, LSAT recorded no
compensation expense with respect to SARs during the six months ended June
30, 2002 and 2001. The stock compensation expense recorded during the six
months ended June 30, 2002 and 2001 is attributable to restricted stock
awards granted in February 2001.

                                      I-29
<Page>

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense decreased 9,096,000 or 21.3% and
$19,212,000 or 22.2% during the three and six months ended June 30, 2002 and
2001 respectively, as compared to the corresponding prior year periods. Such
decreases are primarily attributable to the Company's adoption of Statement 142,
which, as further described in note 2 to the accompanying condensed consolidated
financial statements, required the Company to cease recording goodwill
amortization effective January 1, 2002.

IMPAIRMENT OF LONG-LIVED ASSETS

On Command recorded impairment losses of $1,411,000 and $5,103,000 during the
first and second quarters of 2002, respectively. The first quarter loss
relates to a transaction in which certain equipment was transferred to STSN,
and the second quarter loss relates to the OCE Sale. For additional
information, see notes 7 and 13 to the accompanying condensed consolidated
financial statements.

OTHER INCOME (EXPENSE)

The Company recognized interest income of $963,000 and $8,566,000 during the six
months ended June 30, 2002 and 2001, respectively. The 2002 income was earned
primarily on certain bonds that were purchased by LSAT LLC in August 2001. Such
bonds are included with the Company's investment in Sky Latin America. The 2001
income was earned primarily on the cash and cash equivalent balances maintained
by Ascent. The majority of Ascent's cash and cash equivalent balances were
utilized to redeem the Ascent Senior Secured Discount Notes on December 31,
2001. To a lesser extent, interest earned on LSAT Astro's cash and cash
equivalent balances also contributed to the Company's interest income during the
six months ended June 30, 2001. During 2001, all of LSAT Astro's cash and cash
equivalent balances were utilized to fund the capital calls of Astrolink, LSAT
Astro's 31.5%-owned investee.

During the six months ended June 30, 2002 and 2001, the Company recognized
interest expense of $9,786,000 and $25,137,000, respectively. The decrease in
interest expense represents the combined effect of a decrease in interest rates
and a decrease in the Company's weighted average debt balance. The reduction in
the Company's weighted average debt balance is primarily due to the December 31,
2001 redemption of the Ascent Senior Secured Discount Notes.

During the six months ended June 30, 2002 and 2001, the Company's share of
losses of affiliates aggregated $3,358,000 and $165,078,000, respectively. The
2002 amount includes $2,711,000 representing the Company's share of Aerocast's
losses and $647,000 representing losses with respect to the Company's investment
in Astrolink. Since LSAT Astro's investment in Astrolink was reduced to zero at
December 31, 2001, LSAT Astro's share of Asrtolink's losses has been limited to
the amounts loaned to Astrolink by the Company during the six months ended June
30, 2002. At June 30, 2002, the Company was not obligated to provide additional
funding to Astrolink. The Company's share of losses for the six months ended
June 30, 2001 includes a $155,000,000 loss representing a reduction in the
carrying value of LSAT Astro's investment in Astrolink. For additional
information, see note 6 to the accompanying condensed consolidated financial
statements.

Unrealized gains (losses) on financial instruments during the six months ended
June 30, 2002 and 2001 aggregated ($753,000) and $14,002,000, respectively. The
details of such gains (losses) are as follows (amounts in thousands):

<Table>
<Caption>
                                                                   Six months ended
                                                           --------------------------------
                                                                June 30,            June 30,
                                                                  2002               2001
                                                           ------------------      ---------
<S>                                                        <C>                        <C>
Change in fair value of GM Hughes put spread collar        $            4,373          3,686
Change in time value of equity collars                                 (3,872)        12,776
Change in fair value of iBEAM put option                               (1,254)        (2,460)
                                                           ------------------      ---------
                                                           $             (753)        14,002
                                                           ==================      =========
</Table>

                                      I-30
<Page>

Nontemporary declines in fair values of investments aggregated $58,948,000 and
$39,932,000 during the six months ended June 30, 2002 and 2001, respectively.
The 2002 amount represents a reduction of the carrying value of LSAT LLC's
investment in Sky Latin America. The 2001 amount includes reductions of the
carrying values of LSAT LLC's investments in Wildblue and XMSR of $20,518,000
and $14,575,000, respectively. For additional information, see note 7 to the
accompanying condensed consolidated financial statements.

INCOME TAXES

The Company recognized income tax benefits of $6,712,000 and $10,988,000
during the six months ended June 30, 2002 and 2001, respectively. The 2002
benefit includes a $5,666,000 tax refund received by LSAT as a result of a
change in tax law that occurred during the first quarter of 2002. Such change
resulted in the elimination of restrictions on the use of net operating loss
carryforwards to offset alternative minimum tax liabilities. The 2002 and
2001 income tax benefits also include deferred tax benefits associated with
losses recognized by Ascent. Ascent has recognized such losses to the extent
that the tax effect of such losses offsets Ascent's deferred income tax
liability. At June 30, 2002, Ascent's deferred tax liability was $16,576,000.
Ascent's majority-owned subsidiary, On Command, is not included in the
consolidated tax return of Liberty Media. At the LSAT level, LSAT is only
able to recognize income tax benefits for financial reporting purposes to the
extent that such benefits offset recorded income tax liabilities or LSAT
generates taxable income. For financial reporting purposes, all of LSAT's
income tax liabilities had been fully offset by income tax benefits at June
30, 2002 and 2001. In connection with the consummation of the LSAT LLC and
Ascent Transaction, the Company and Liberty Media entered into a Tax
Liability Allocation and Indemnification Agreement. For additional
information, see note 3 to the accompanying condensed consolidated financial
statements.

MINORITY INTERESTS IN LOSS (EARNINGS) OF CONSOLIDATED SUBSIDIARIES

The minority interests' share of losses of consolidated subsidiaries aggregated
$383,000 and $16,023,000 during the six months ended June 30, 2002 and 2001,
respectively. Such amounts primarily represent the minority interests' share of
On Command's net losses. The decrease is primarily attributable to a change in
how On Command's losses are allocated. During the first quarter of 2002, the
cumulative losses allocated by Ascent to the On Command minority interests
exceeded Ascent's carrying amount for the minority interests in On Command's
equity. Since the On Command minority interest holders have no obligation to
make further contributions to On Command, 100% of On Command's losses for
periods subsequent to March 31, 2002 have been, and will be in future periods,
allocated to Ascent unless and to the extent that the On Command minority
interest holders make additional investments in On Command's equity.

MATERIAL CHANGES IN FINANCIAL CONDITION

LSAT is a holding company that does not generate positive cash flow at the
LSAT level. The only subsidiary of LSAT that generates significant revenue is
On Command. Due to covenant restrictions contained in On Command's bank
credit facility, LSAT is generally not entitled to the cash resources or cash
generated by the operations of On Command. The sources of liquidity available
to LSAT at the LSAT level are described below.

On a consolidated basis, the Company used cash provided by operating
activities of $32,302,000 and cash provided by financing activities of
$16,643,000 to fund investing activities of $50,134,000. The Company's
investing activities included $23,350,000 of investments in and advances to
affiliates and $26,315,000 of capital expenditures.

LSAT LLC's PCS Loan Facility, as amended, provides for maximum borrowings of
$303,000,000 and is due and payable on March 10, 2003. The PCS Loan Facility is
secured by the Company's interest in the Sprint PCS Stock and the Sprint PCS
Collar described below. Interest accrues at the 30 day LIBOR (1.84% at June 30,
2002) and is payable monthly. The Company anticipates that it will use available
borrowings under the PCS Loan Facility to fund its investing and operating
activities. At June 30, 2002, borrowing availability pursuant to the PCS Loan
Facility was $190,497,000.

                                      I-31
<Page>

In March 2000, LSAT entered into a $60,000,000 note payable to Liberty Media.
The note bears interest at the 3 month LIBOR plus 2% (3.84% at June 30, 2002).
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. At June 30, 2002, the unpaid principal
on the note was $48,411,000 and the accrued interest on the note was $630,000.

Borrowings under the PCS Loan Facility and the note payable to Liberty Media
are due and payable in March 2003. Although the Company could elect to use
proceeds from the sale of its Sprint PCS Stock and the unwinding of the
Sprint PCS Collar to repay in full the PCS Loan Facility and the note payable
to Liberty Media, the Company might also seek to refinance or extend the PCS
Loan Facility and/or the note payable to Liberty Media in order to avoid
selling some or all of its Sprint PCS Stock. No assurance can be given that
the Company would be able to obtain, on terms acceptable to the Company, the
external financing that might be required to repay the Liberty Media note
and/or the PCS Loan Facility if such borrowings are not otherwise extended or
repaid.

During the year ended December 31, 2001 and the three months ended March 31,
2002, Liberty Media loaned $18,552,000 and $6,573,000, respectively, to LSAT
LLC. LSAT LLC used the proceeds from these loans to fund capital calls from Sky
Latin America. The loans provided for interest at 8% and were due and payable on
demand after November 27, 2001. Concurrently, with the closing of the LSAT LLC
and Ascent Transaction, (i) Liberty Media contributed to the Company, as part of
that transaction and for no additional consideration, promissory notes issued by
subsidiaries of Liberty Media, with an aggregate principal balance of
$18,552,000 and related accrued interest of $651,000, representing the loans
described above that were made through December 31, 2001, and (ii) LSAT LLC
repaid principal of $6,573,000 and accrued interest of $37,000 related to the
first quarter 2002 advances.

As a result of the consummation of the LSAT LLC and Ascent Transaction,
Liberty Media no longer has a direct ownership interest in LSAT LLC, and has
no obligation to provide funding to LSAT LLC. Accordingly, LSAT's primary
sources of liquidity at the LSAT level are expected to be borrowing
availability under the PCS Loan Facility and cash and cash equivalent
balances held by LSAT. At June 30, 2002, LSAT's cash and cash equivalent
balances aggregated $32,724,000. LSAT does not expect Ascent or its principal
operating subsidiary, On Command, to provide any of LSAT's financial
resources during 2002. The financial resources and requirements of On Command
are described below. During 2002, LSAT anticipates that, at the LSAT level,
it will use a portion of its financial resources to fund LSAT LLC's capital
contributions to Sky Latin America, LSAT's operating deficit, its interest
requirements under the PCS Loan Facility and the note payable to Liberty
Media, and its preferred stock dividend requirements, as described below.

The On Command Revolving Credit Facility, as amended, provides for aggregate
borrowings of $275,000,000. Borrowings under the On Command Revolving Credit
Facility are due and payable in July 2004. Subject to certain conditions, the On
Command Revolving Credit Facility can be renewed for two additional years. On
Command's ability to draw additional funds under the On Command Revolving Credit
Facility is limited by certain financial covenants. On Command had $9,367,000 of
remaining availability under the On Command Revolving Credit Facility at June
30, 2002.

Revolving loans extended under the On Command Revolving Credit Facility bear
interest at the London Interbank Offering Rate ("LIBOR") plus a spread that may
range from 1.10% to 2.75% depending on certain operating ratios of On Command
(4.93% effective borrowing rate at June 30, 2002). In addition, a facility fee
ranging from 0.15% to 0.50% per annum is charged on the On Command Revolving
Credit Facility, depending on certain operating ratios of On Command. The On
Command Revolving Credit Facility contains customary covenants and agreements,
most notably the inclusion of restrictions on On Command's ability to pay
dividends or make other distributions, and restrictions on On Command's ability
to make capital expenditures. In addition, On Command is required to maintain
minimum leverage and interest coverage ratios. On Command was in compliance with
such covenants at June 30, 2002. Substantially all of On Command's assets are
pledged as collateral for borrowings under the On Command Revolving Credit
Facility.

                                      I-32
<Page>

Although On Command expects to be in compliance with the covenants of the On
Command Revolving Credit Facility through December 31, 2002, On Command
currently believes that it will not be in compliance with the leverage ratio
covenant as of March 31, 2003 as a result of certain changes to such covenant
that take effect for the periods ending subsequent to 2002. On Command intends
to seek an amendment to the On Command Revolving Credit Facility that would
allow On Command to maintain compliance with this covenant. Although no
assurance can be given, On Command believes that it will be successful in
obtaining such an amendment on acceptable terms to On Command. In the event On
Command is unable to obtain an acceptable amendment to the On Command Revolving
Credit Facility, On Command would seek to refinance the On Command Revolving
Credit Facility with alternative sources of financing. No assurance can be given
that any such alternative financing would be available on terms acceptable to On
Command.

Historically, On Command has required external financing to fund the cost of
installing and upgrading video systems in hotels However, during 2002, On
Command intends to reduce its reliance on external financing by reducing
expenses and by more effectively managing capital expenditures. Assuming On
Command is successful in reducing expenses, increasing revenue per equipped
room, and more effectively managing capital expenditures, On Command expects
that it will be able to rely on cash provided by operations, existing
availability under the On Command Revolving Credit Facility, and existing
cash and cash equivalent balances to fund its capital expenditures and other
anticipated liquidity requirements. On Command's revenue targets for 2002 are
based in part on the assumption that the overall hotel occupancy rate for
2002 will be consistent with the 2001 rate. Through June 30, 2002, On
Command's actual revenue is approximately 2.7% behind the targeted amount due
in large part to decreases in occupancy rates. Although On Command expects to
derive increased revenue per equipped room as a result of ongoing system
upgrades, no assurance can be given that On Command will meet its revenue
targets if occupancy rates do not improve. Nevertheless, On Command expects
to compensate for any revenue shortfall by reducing expenses and managing its
capital expenditures. Accordingly, although no assurance can be given, On
Command continues to believe that it will not require additional sources of
liquidity to fund its capital expenditures and anticipated liquidity
requirements. Notwithstanding the foregoing, On Command anticipates that it
will require additional external financing to (i) fund any significant new
growth initiatives or unanticipated liquidity requirements, or (ii) refinance
the On Command Revolving Credit Facility, if necessary. No assurance can be
given that On Command will be successful in reducing its reliance on external
financing during the balance of 2002, and if external financing is required,
no assurance can be given that any such financing would be available on terms
acceptable to On Command.

The trust holding the Sprint PCS Stock in which LSAT LLC has a beneficial
interest has entered into an equity collar with a financial institution for LSAT
LLC's benefit 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 number of 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. The fair value of the Sprint PCS Collar was approximately $276,729,000
at June 30, 2002.

LSAT LLC has entered into a put spread collar with a financial institution with
respect to the Company's 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
1,821,921 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. At June 30,
2002, the fair value of the GM Hughes Stock put spread collar was approximately
$19,119,000.

                                      I-33
<Page>

LSAT LLC has also entered into an equity collar with a financial institution
with respect to the Company's 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. The fair value of the XMSR equity collar
was approximately $20,614,000 at June 30, 2002.

On June 27, 2001, LSAT LLC entered into an agreement to loan 1,000,000 shares of
XMSR to a third party. The obligation of such third party to return those shares
to LSAT LLC is secured by cash collateral equal to 100% of the market value of
that stock, which was $7,250,000 at June 30, 2002. Such cash collateral is
reported as restricted cash in the accompanying 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
June 30, 2002, 1,000,000 shares of XMSR had been lent under this agreement. The
loan has no stated maturity date.

The Company accounts for its equity collars as fair value hedges. Accordingly,
changes in the fair value of these equity collars are reported in earnings along
with the changes in the fair value of the underlying securities. The Company
recognizes in earnings the ineffective portion of its equity collars. The
Company's put spread collars have not been designated as fair value hedges, and
therefore changes in the fair value of the put spread collars are recorded as
unrealized gains on financial instruments in the Company's condensed
consolidated statements of operations.

LSAT LLC has guaranteed certain lease obligations of the Sky Latin America
businesses through 2015. Such guarantees aggregated approximately $103,926,000
at December 31, 2001. Currently, the Company is not certain of the likelihood of
being required to perform under such guarantees.

Effective September 29, 2000, LSAT LLC acquired a 1% managing common interest
in IB2 LLC from a subsidiary of Liberty Digital for $652,000. Liberty Digital
retained a Preferred Interest in IB2 LLC, which owns approximately 360,000
shares of iBEAM Stock. The Preferred Interest had 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 Liberty Digital the right to put
the Preferred Interest to LSAT LLC for a purchase price equal to $26,000,000
(the value of iBEAM Stock on September 29, 2000) plus a 9% return, compounded
annually (the "Put Option"). LSAT LLC has the right to call Liberty Digital's
Preferred Interest at a price equal to the initial liquidation value plus a
return of 9%, compounded annually. Both the Put Option and call option are
exercisable on September 29, 2008. Under certain limited circumstances,
including iBEAM's bankruptcy, LSAT LLC can force Liberty Digital to exercise
the Put Option prior to September 29, 2008. During the fourth quarter of
2001, iBEAM filed for bankruptcy under Chapter 11 of the Bankruptcy Code. As
a result of such bankruptcy filing, the Company began carrying the Put Option
liability at an amount ($29,742,000 at June 30, 2002), which represents the
Put Option purchase price to LSAT LLC plus an accrued return to Liberty
Digital of 9%, compounded annually. The Company anticipates that future
losses with respect to the Put Option will be limited to Liberty Digital's 9%
return on the Put Option liability.

In March 2000, LSAT issued 150,000 shares of Series A Cumulative Preferred
Stock ("Series A Preferred Stock"), and 150,000 shares of Series B Preferred
Stock to Liberty Media in exchange for shares of Sprint PCS Stock. On the
date of issuance, each such series of preferred stock had an aggregate stated
value of $150,000,000. The Series A Preferred Stock and Series B Preferred
Stock, which were each issued at a discount to their stated values, are
redeemable at the option of Liberty Media on or after April 1, 2020 at a
price equal to stated value plus all accrued and unpaid dividends. The
Company may elect to use cash or Series A Common Stock to satisfy such
dividend requirements through March 2003. Accrued dividends on the Series A
Preferred Stock and Series B Preferred Stock aggregated $22,500,000 at June
30, 2002.

                                      I-34
<Page>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At June 30, 2002, the Company had $426,547,000 of variable-rate liabilities
with a weighted-average interest rate of 3.99%. Accordingly, the Company is
sensitive to interest rate risk. To date, the Company has not entered into
any derivative instruments to manage its interest rate exposure. At June 30,
2002, the Company's variable rate liabilities were due and payable as follows
(amounts in thousand):

<Table>
               <S>                     <C>
               March 2003              $         160,914
               July 2004                         265,633
                                       -----------------
                                       $         426,547
                                       =================
</Table>

The Company is exposed to changes in stock prices primarily as a result of its
significant holdings in Sprint PCS Stock and other publicly traded securities.
The Company uses equity collars and a put spread collar to hedge market risk
with respect to certain of its publicly traded securities. At June 30, 2002, the
aggregate fair market value of the Company's publicly traded securities
(excluding the fair value of related hedge instruments) was $58,311,000
($22,729,000 of which represents the fair value of the Sprint PCS Stock). At
June 30, 2002, the fair value of the Company's equity collars was $297,344,000
($276,729,000 of which represents the fair value of the Sprint PCS Stock equity
collar), and the fair value of the Company's put spread collar was $19,119,000.
At June 30, 2002, the fair market value of the GM Hughes Stock that is the
subject of the put spread collar was $18,948,000. One element of the GM Hughes
put spread collar provides a counterparty with the right to require the Company
to repurchase the GM Hughes Stock for a weighted average price of $14.80 per
share in October 2003. At June 30, 2002, the per share market value of GM Hughes
Stock was $10.40. In addition, the Company owned $9,385,000 of publicly traded
securities at June 30, 2002 that were not hedged.

Although the Company's equity collars and put spread collar provide
protection against market risk, such derivative instruments may involve
elements of credit risk and market risk in excess of what is recognized in
the Company's condensed consolidated financial statements. The Company
monitors its positions and the credit quality of counterparties, consisting
primarily of major financial institutions and does not anticipate
nonperformance by any counterparty. For additional information concerning
the Company's investments in publicly traded securities and related
derivative financial instruments, see note 7 to the accompanying condensed
consolidated financial statements of the Company.

On Command transacts business in various foreign currencies, including Canada
and Mexico and to a lesser extent, Spain. On Command believes the risks of
foreign exchange rate fluctuations on its present operations are not material to
On Command's overall financial condition. However, On Command will consider
using foreign currency contracts, swap arrangements, or other financial
instruments designed to limit exposure to foreign exchange rate fluctuations, if
deemed prudent.

                                      I-35
<Page>

PART II - OTHER INFORMATION

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

         (a)  Exhibits:

              None.

         (b)  Reports on Form 8-K filed during quarter ended June 30, 2002:

<Table>
<Caption>
                     Date Filed                   Items Reported               Financial Statements Filed
                     ----------                   --------------               --------------------------
         <S>                                     <C>                    <C>
         April 20, 2002, as amended by           Items 2, 5 and 7       Liberty Satellite & Technology, Inc. -
            Form 8-K/A filed on June 14,                                  Supplemental Consolidated Financial
            2002                                                          Statements as of December 31, 2001
                                                                          and 2000 and for the three years
                                                                          ended December 31, 2001

         May 21, 2002                                 Item 9            None
</Table>

                                      II-36
<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: August 14, 2002      By: /s/ Kenneth G. Carroll
                               -----------------------------------------
                                   Kenneth G. Carroll
                                   Acting President, Chief Financial Officer and
                                   Treasurer (Principal Financial Officer and
                                   Principal Accounting Officer)

                                   II-37