<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, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the transition period from _____ to _____


Commission File Number:  0-21317


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


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


     7600 East Orchard Road, Suite 330 South
             Englewood, Colorado                           80111
     ----------------------------------------            ----------
     (Address of principal executive offices)            (Zip Code)


     Registrant's telephone number, including area code: (303) 268-5440

     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, 2001, was:

                 Series A common stock - 67,530,518 shares; and
                    Series B common stock - 7,718,786 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,
                                                                           2001             2000
                                                                         ---------       ------------
                                                                           amounts in thousands
<S>                                                                      <C>               <C>
ASSETS
Current assets:
    Cash and cash equivalents (note 13)                                  $  20,738         157,198
    Receivables and prepaid expenses                                           726           1,166
                                                                         ---------       ---------
          Total current assets                                              21,464         158,364
                                                                         ---------       ---------
Investments in affiliates accounted for using the equity
    method (note 6)                                                        300,721         341,559
Investments in available-for-sale securities and others
    (note 7)                                                               514,549         486,029
Support equipment and other assets, net                                        237             304
                                                                         ---------       ---------
                                                                         $ 836,971         986,256
                                                                         =========       =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable and accrued expenses                                $     595             298
    Due to parent (note 8)
       Accrued interest                                                      1,145           1,703
       Other accrued expenses                                                   66             470
    Income taxes payable                                                     5,695              --
                                                                         ---------       ---------
          Total current liabilities                                          7,501           2,471
                                                                         ---------       ---------
Note payable to parent (note 8)                                             48,411          54,982
Debt (note 9)                                                               66,003          35,003
Put option liability (note 7)                                               34,189          31,729
                                                                         ---------       ---------
          Total liabilities                                                156,104         124,185
                                                                         ---------       ---------
Minority interests in equity of consolidated subsidiaries                  410,704         534,301
Redeemable preferred stock                                                 192,000         196,614

Stockholders' Equity:
    Series A common stock, $1 par value; authorized
       185,000,000 shares; issued 67,525,227 in 2001
       and 65,469,595 in 2000                                               67,525          65,470
    Series B common stock, $1 par value; authorized
       30,000,000 shares; issued 7,724,077 in 2001
       and 7,733,996 in 2000                                                 7,724           7,734
    Additional paid-in capital                                             914,354         926,678
    Accumulated other comprehensive income                                  13,551          12,860
    Accumulated deficit                                                   (924,666)       (881,261)
                                                                         ---------       ---------
                                                                            78,488         131,481
    Series A common stock held in treasury, at cost (29,545 shares)           (325)           (325)
                                                                         ---------       ---------
          Total stockholders' equity                                        78,163         131,156
                                                                         ---------       ---------
Commitments and contingencies (note 13)                                  $ 836,971         986,256
                                                                         =========       =========
</Table>

See accompanying notes to condensed consolidated financial statements.

                                      I-1
<Page>

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

                 Condensed Consolidated Statements of Operations
                                   (unaudited)

<Table>
<Caption>
                                                       Three months ended            Six months ended
                                                          June 30,                       June 30,
                                                 -------------------------       -------------------------
                                                   2001             2000            2001            2000
                                                 ---------       ---------       ---------       ---------
                                                                   amounts in thousands,
                                                                 except per share amounts
<S>                                              <C>             <C>             <C>             <C>
Management fee revenue                           $     105             130             210             220
Operating costs and expenses:
   Selling, general and administrative
      (notes 8 and 10)                                 789           1,155           1,570           2,373
   Stock compensation (note 11)                         73          (5,175)            122          (2,787)
   Depreciation                                         28              27              62              40
                                                 ---------       ---------       ---------       ---------
                                                       890          (3,993)          1,754            (374)
                                                 ---------       ---------       ---------       ---------
      Operating income (loss)                         (785)          4,123          (1,544)            594
Other income (expense):
   Interest income                                     214           3,561           1,141           4,234
   Interest expense-parent                            (850)         (1,235)         (1,920)         (1,440)
   Interest expense-other                             (770)           (312)         (1,391)           (449)
   Share of losses of affiliates                  (161,504)         (1,967)       (166,096)         (2,106)
   Unrealized gain on financial instruments          4,824              --          14,002              --
   Impairment of investments                          (120)             --         (37,814)             --
   Gain on sale of GM Hughes stock (note 7)             --          36,643              --          36,643
   Loss on GM Hughes share
      appreciation rights (note 7)                      --         (65,721)             --         (65,721)
                                                 ---------       ---------       ---------       ---------
                                                  (158,206)        (29,031)       (192,078)        (28,839)
                                                 ---------       ---------       ---------       ---------
      Loss before income taxes and
         minority interest                        (158,991)        (24,908)       (193,622)        (28,245)

Income tax benefit (expense)                        (5,547)         15,402          (5,233)         15,402
Minority interest                                  124,278         (17,775)        155,450         (18,166)
                                                 ---------       ---------       ---------       ---------
      Net loss                                     (40,260)        (27,281)        (43,405)        (31,009)

Accretion of redeemable preferred stock             (1,443)         (1,432)         (2,886)         (1,671)
Dividends on redeemable preferred stock             (7,500)         (7,483)        (15,000)         (8,733)
                                                 ---------       ---------       ---------       ---------
      Net loss attributable to common
         stockholders                            $ (49,203)        (36,196)        (61,291)        (41,413)
                                                 =========       =========       =========       =========
Basic and diluted loss per common share
   (note 4)                                      $    (.67)           (.51)           (.84)           (.58)
                                                 =========       =========       =========       =========

</Table>

See accompanying notes to condensed consolidated financial statements.

                                      I-2
<Page>

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

        Condensed Consolidated Statements of Comprehensive Income (Loss)
                                   (unaudited)

<Table>
<Caption>
                                                         Three months ended          Six months ended
                                                              June 30,                     June 30,
                                                     ------------------------      -----------------------
                                                       2001            2000          2001            2000
                                                     ---------      ---------      ---------      ---------
                                                                       amounts in thousands
<S>                                                  <C>            <C>            <C>            <C>
Net loss                                             $(40,260)      $(27,281)       (43,405)       (31,009)
                                                     --------       --------       --------       --------
Other comprehensive income, net of tax
   Unrealized holding gains (losses)                      163        (21,685)          (261)        23,704
   Less reclassification adjustment for losses
      (gains) included in earnings                         --        (37,115)           952        (37,115)
   Unrealized gain (loss) on share appreciation
      rights liability                                     --          2,059             --        (22,708)
   Less reclassification adjustment for loss
      included in earnings                                 --         65,291             --         65,291
                                                     --------       --------       --------       --------
         Other comprehensive income                       163          8,550            691         29,172
                                                     --------       --------       --------       --------
            Comprehensive income (loss)              $(40,097)      $(18,731)       (42,714)        (1,837)
                                                     ========       ========       ========       ========
</Table>

See accompanying notes to condensed consolidated financial statements.

                                      I-3
<Page>

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

            Condensed Consolidated Statement of Stockholders' Equity

                         Six months ended June 30, 2001
                                   (unaudited)

<Table>
<Caption>
                                                                           Accumulated
                                           Common Stock       Additional      other                                     Total
                                       --------------------     paid-in   comprehensive   Accumulated     Treasury   stockholders'
                                       Series A    Series B     capital      income         deficit        stock        equity
                                       --------    --------     --------  -------------   -----------     --------     --------
                                                                           amounts in thousands
<S>                                    <C>         <C>        <C>         <C>             <C>             <C>        <C>
Balance at January 1, 2001             $ 65,470       7,734      926,678       12,860       (881,261)        (325)     131,156
  Net loss                                   --          --           --           --        (43,405)          --      (43,405)
  Other comprehensive income                 --          --           --          691             --           --          691
  Accretion and dividends on
    redeemable preferred stock               --          --      (17,886)          --             --           --      (17,886)
  Issuance of Series A common stock
    for preferred stock dividends         2,045          --        5,455           --             --           --        7,500
  Recognition of stock compensation
    related to restricted stock
    awards, net of taxes                     --          --           75           --             --           --           75
  Issuance of common stock by
    affiliate                                --          --           32           --             --           --           32
  Series B common stock exchanged
    for Series A common stock                10         (10)          --           --             --           --           --
                                       --------    --------     --------     --------       --------     --------     --------
Balance at June 30, 2001               $ 67,525       7,724      914,354       13,551       (924,666)        (325)      78,163
                                       ========    ========     ========     ========       ========     ========     ========

</Table>

See accompanying notes to condensed consolidated financial statements.

                                      I-4
<Page>

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

                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)

<Table>
<Caption>
                                                                                 Six months ended
                                                                                     June 30,
                                                                             -------------------------
                                                                               2001             2000
                                                                             ---------       ---------
                                                                                amounts in thousands
                                                                                    (see note 5)
<S>                                                                          <C>               <C>
Cash flows from operating activities:
    Net loss                                                                 $ (43,405)        (31,009)
    Adjustments to reconcile net loss to net cash
       used by operating activities:
          Depreciation                                                              62              40
          Share of losses of affiliates                                        166,096           2,106
          Unrealized gain on financial instruments                             (14,002)             --
          Impairment of investments                                             37,814              --
          Gain on sale of GM Hughes stock                                           --         (36,643)
          Loss on GM Hughes share appreciation rights                               --          65,721
          Minority interest                                                   (155,450)         18,166
          Deferred tax benefit                                                    (494)        (15,402)
          Stock compensation                                                       122          (2,787)
          Payments for stock compensation                                           --          (2,436)
          Other noncash charges                                                     22              62
          Changes in operating assets and liabilities, net
             of the effects of the Liberty transaction:
                Change in receivables and prepaid expenses                         396          (1,360)
                Change in accruals and payables                                  5,031           1,992
                                                                             ---------       ---------
                   Net cash used by operating activities                        (3,808)         (1,550)
                                                                             ---------       ---------
Cash flows from investing activities:
    Investments in and advances to affiliates                                 (164,032)        (86,875)
    Capital expended for support equipment                                         (17)            (52)
    Proceeds received in the Liberty transaction                                    --         249,620
    Net proceeds from sale of GM Hughes stock                                       --          74,243
    Payment of GM Hughes share appreciation rights                                  --         (65,721)
                                                                             ---------       ---------
                   Net cash provided (used) by investing activities           (164,049)        171,215
                                                                             ---------       ---------
Cash flows from financing activities:
    Borrowings of debt                                                          31,000          18,600
    Repayments of note payable to parent                                        (6,572)         (3,666)
    Contributions by minority owners of subsidiaries                            21,969          36,359
    Payments of preferred stock dividends                                      (15,000)             --
    Proceeds from exercise of stock options                                         --             497
    Purchase of treasury stock                                                      --            (325)
                                                                             ---------       ---------
                   Net cash provided by financing activities                    31,397          51,465
                                                                             ---------       ---------
                   Net increase (decrease) in cash and cash equivalents       (136,460)        221,130
                   Cash and cash equivalents:
                      Beginning of period                                      157,198           2,473
                                                                             ---------       ---------
                      End of period                                          $  20,738         223,603
                                                                             =========       =========
</Table>

See accompanying notes to condensed consolidated financial statements.

                                      I-5
<Page>

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

              Notes to Condensed Consolidated Financial Statements

                                  June 30, 2001
                                   (unaudited)

(1)  BASIS OF PRESENTATION

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

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

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

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

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

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

                                      I-6
<Page>

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

              Notes to Condensed Consolidated Financial Statements

(2)  ACCOUNTING CHANGE

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

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

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

                                      I-7
<Page>

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

              Notes to Condensed Consolidated Financial Statements

(3)  LIBERTY TRANSACTIONS

     On March 16, 2000, the Company completed two transactions (collectively,
     the "Liberty Transactions"), both of which closed simultaneously, with
     Liberty Media. Pursuant to the terms of the first transaction, the Company
     acquired a beneficial interest in 5,084,745 shares of Sprint Corporation
     PCS Group common stock ("Sprint PCS Stock") with an aggregate market value
     on the closing date of $300 million in exchange for 150,000 shares of LSAT
     Series A Preferred Stock with a liquidation value of $150 million and
     150,000 shares of LSAT Series B Preferred Stock ("Series B Preferred
     Stock") with a liquidation value of $150 million. The shares of Series B
     Preferred Stock have super voting rights which give Liberty Media voting
     control over the Company. Accordingly, since March 16, 2000, the Company
     has been a consolidated subsidiary of Liberty Media.

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

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

                                      I-8
<Page>

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

              Notes to Condensed Consolidated Financial Statements

(4)  LOSS PER COMMON SHARE

     The basic loss per common share is based on the weighted average number of
     shares outstanding during the period of 73,204,000 for each of the three
     and six month periods ended June 30, 2001; and 71,529,000 and 71,456,000
     for the three and six months ended June 30, 2000, respectively. Excluded
     from the computation of diluted loss per common share for the six months
     ended June 30, 2001 and 2000 are options and convertible securities to
     acquire 22,569,000 and 13,683,000 shares of LSAT common stock,
     respectively, because inclusion of such options and convertible securities
     would be anti-dilutive.

(5)  SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

     Cash paid for interest was $3,638,000 and $158,000 for the six months ended
     June 30, 2001 and 2000, respectively. Cash paid for income taxes was not
     significant during the six months ended June 30, 2001 and 2000.

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

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

(6)  INVESTMENTS IN AFFILIATES

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

<Table>
<Caption>
                                                         June 30,     December 31,
                                                           2001           2000
                                                         --------     -----------
                                                          amounts in thousands
<S>                                                      <C>          <C>
     ASTROLINK International LLC ("Astrolink") (a)       $243,487       268,712
     Aerocast.com, Inc. ("Aerocast") (b)                   16,269        11,852
     Wildblue Communications, Inc. ("Wildblue") (c)        40,965        60,995
                                                         --------      --------
                                                         $300,721       341,559
                                                         ========      ========
</Table>


                                      I-9
<Page>

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

              Notes to Condensed Consolidated Financial Statements

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

<Table>
<Caption>
                    Six months ended June 30,
                    -------------------------
                      2001            2000
                    ---------       ---------
                       amounts in thousands
<S>                 <C>                <C>
     Astrolink      $(162,144)         (2,106)
     Aerocast          (2,934)             --
     Wildblue          (1,018)             --
                    ---------       ---------
                    $(166,096)         (2,106)
                    =========       =========
</Table>

     At June 30, 2001, the aggregate carrying amount of the Company's
     investments in its affiliates exceeded the Company's proportionate share of
     such affiliates' net assets by $9,708,000. Such excess is being amortized
     over a useful life of five years. Amortization aggregated $1,534,000 for
     the six months ended June 30, 2001, and is included in share of losses of
     affiliates.

     Summarized unaudited combined financial information for affiliates is as
     follows:

<Table>
<Caption>
                                            Six months ended June 30,
                                            -------------------------
                                               2001            2000
                                            ---------       ---------
                                              amounts in thousands
<S>                                         <C>            <C>
     COMBINED OPERATIONS
         Operating expenses                 $(35,913)        (8,686)
         Depreciation and amortization          (749)          (171)
         Other income                          6,250          2,172
                                            --------       --------
         Net loss                           $(30,412)        (6,685)
                                            ========       ========
</Table>

     (a)  The Company owns a direct 13.99% interest in LSAT Astro and an
          indirect (through LSAT LLC) 86.01% interest in LSAT Astro. LSAT Astro
          owns an approximate 31.5% ownership interest in Astrolink. Astrolink
          is currently in its developmental stages, but intends to build a
          telecom network using Ka-band geostationary satellites to provide
          broadband data communications services. Astrolink currently plans to
          launch two satellites in late 2002 or early 2003 and intends to serve
          customers in North America and Europe. Additional spacecraft, if
          launched, could extend the network worldwide or could provide in-orbit
          backup.

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

                                      I-10
<Page>

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

              Notes to Condensed Consolidated Financial Statements

     (b)  During 2000, LSAT LLC invested $12.6 million in exchange for an
          approximate 37% ownership interest in Aerocast, and in March 2001,
          invested an additional $7.35 million increasing its ownership interest
          in Aerocast to approximately 47.5%. Aerocast is developing next
          generation streaming media technologies for broadband network
          operators and video content providers. Aerocast intends to utilize
          terrestrial and satellite platforms to distribute streaming media to
          businesses and consumers with high-speed internet access.

     (c)  The Company, through LSAT LLC, owns an approximate 16% interest in
          Wildblue. Wildblue plans to build a Ka-band satellite network that
          will focus on providing broadband services to homes and small offices
          in North America and Latin America.

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

(7)  INVESTMENT IN AVAILABLE-FOR-SALE SECURITIES AND OTHERS

     Investments in available-for-sale securities and others are summarized as
     follows:

<Table>
<Caption>
                                                     June 30,    December 31,
                                                       2001         2000
                                                     --------    ------------
                                                      amounts in thousands
<S>                                                  <C>         <C>
     Hughes Electronics Corporation (a)*             $ 46,688        47,011
     Sprint Corporation PCS Group (b)*                290,334       278,489
     Various Latin American satellite companies
        ("Sky Latin America") (c)                     146,672       127,605
     XM Satellite Radio Holdings, Inc.
        ("XMSR") (d)*                                  27,855        26,924
     Other                                              3,000         6,000
                                                     --------      --------
                                                     $514,549       486,029
                                                     ========      ========
</Table>

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

                                      I-11
<Page>

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

              Notes to Condensed Consolidated Financial Statements

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

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

          The Company, through LSAT LLC, continues to hold 1,821,921 shares of
          GM Hughes Stock and accounts for such shares as available-for-sale.
          The closing price of GM Hughes Stock as of June 30, 2001 was $20.86.

          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, 2001, the fair value of the GM
          Hughes put spread collar was approximately $8,683,000, which
          represented an increase of $3,686,000 from December 31, 2000. Such
          increase is included in unrealized gain on financial instruments in
          the accompanying condensed consolidated statement of operations.

     (b)  The Company acquired beneficial interest in 5,084,745 shares (the
          "Sprint PCS Shares") of Sprint PCS Stock as part of the Liberty
          Transactions. The Company accounts for such investment as an
          available-for-sale security. The closing share price of Sprint PCS
          Stock on June 30, 2001 was $24.15 per share.

                                      I-12
<Page>

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

              Notes to Condensed Consolidated Financial Statements

          The trust holding the Sprint PCS Stock for LSAT's benefit has entered
          into an equity collar (the "Sprint PCS Collar") with a financial
          institution with respect to LSAT's Sprint PCS Stock. The collar
          provides the trust with a put option that gives it the right to
          require its counterparty to buy 5,084,745 shares of Sprint PCS Stock
          from the trust in seven tranches in March 2003 for a weighted average
          price of $59.71 per share. LSAT simultaneously sold a call option
          giving the counterparty the right to buy the same shares of stock from
          the trust in seven tranches in March 2003 for a weighted average price
          of $82.39 per share. The put and call options for this collar were
          equally priced, resulting in no cash cost to the trust or the Company.
          At June 30, 2001, the fair value of the PCS equity collar was
          approximately $167,537,000.

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

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

          On September 27, 2000, Liberty Media and The News Corporation Limited
          ("News Corp") announced that they had reached an agreement pursuant to
          which, among other things, Liberty Media will transfer various assets
          to a subsidiary of News Corp, Sky Global Networks, Inc. ("SGN"), in
          exchange for shares of SGN common stock representing 4.76% of the
          outstanding shares of the class (the "SGN Transaction"). That
          percentage interest is subject to reduction upon the issuance of
          additional shares of that class by SGN. The assets to be transferred
          by Liberty Media to SGN will consist of its interests in the
          partnerships operating the Sky Latin America businesses (the "Sky
          Latin America Interests") and a portion of Liberty Media's shares in
          Gemstar-TV Guide International Group, Inc. Liberty Media is obligated
          to contribute any proceeds of the disposition of the Sky Latin America
          Interests to LSAT LLC. The SGN Transaction is subject to various
          conditions, including completion of SGN's initial public offering and
          receipt of required governmental and other material third party
          approvals.

     (d)  XMSR, a publicly traded company, plans to transmit up to 100 national
          audio channels of music, news, talk, sports and children's programming
          from two satellites directly to vehicle, home and portable radios.
          LSAT LLC currently owns 1,000,000 shares of XMSR common stock
          representing an approximate 2% interest. The XMSR closing stock price
          as of June 30, 2001 was $16.20 per share.

                                      I-13
<Page>

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

              Notes to Condensed Consolidated Financial Statements

          LSAT LLC has entered into an equity collar with a financial
          institution with respect to its shares of XMSR common stock. The
          collar provides LSAT LLC with a put option that gives it the right to
          require its counterparty to buy 1,000,000 shares of XMSR common stock
          from LSAT LLC in three tranches in November 2003, December 2003 and
          February 2004 for a weighted average price of $28.55. LSAT LLC
          simultaneously sold a call option giving the counterparty the right to
          buy the same shares of stock from LSAT LLC in three tranches in
          November 2003, December 2003 and February 2004 for a weighted average
          price of $51.49 per share. The put and call options for this collar
          were equally priced, resulting in no cash cost to LSAT LLC. At June
          30, 2001, the fair value of the XMSR equity collar was approximately
          $11,655,000.

          On June 27, 2001, LSAT LLC entered into an agreement to loan 1 million
          shares of XMSR to a third party. The obligation to return those shares
          is secured by cash collateral equal to 100% of the market value of
          that stock, which was $16,200,000 at June 30, 2001. During the period
          of the loan, which is terminable by either party at any time, the cash
          collateral is to be marked-to-market daily. Interest accrues on the
          cash collateral for the benefit of LSAT LLC at the rate of .15% per
          annum. As of June 30, 2001, no shares of XMSR had been lent under this
          agreement.

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

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

                                      I-14
<Page>

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

              Notes to Condensed Consolidated Financial Statements

     Effective September 29, 2000 (the "iBEAM Closing Date"), LSAT LLC acquired
     a 1% managing common interest in a joint venture ("IB2 LLC") from a
     subsidiary of Liberty Digital, Inc. ("LDIG") for $652,000. LDIG, a
     consolidated subsidiary of Liberty Media, retained a preferred interest
     (the "Preferred Interest") in IB2 LLC, which owns approximately 3.6 million
     shares of iBEAM Broadcasting Corp. common stock ("iBEAM Stock"). The
     Preferred Interest has an initial liquidation value of $64,574,000 and is
     entitled to a return of 9% compounded annually. As part of the transaction,
     LSAT LLC granted LDIG the right to put the Preferred Interest to LSAT LLC
     for a purchase price equal to $26 million (the value of iBEAM Stock on the
     iBEAM Closing Date) plus 9% compounded annually (the "iBEAM Put Option").
     LSAT LLC has the right to call LDIG's Preferred Interest at a price equal
     to the initial liquidation value plus 9% compounded annually. Both the put
     and call options are exercisable eight years from the iBEAM Closing Date.

     Changes in the fair market value of the iBEAM Put Option subsequent to the
     iBEAM Closing Date are recognized as unrealized gains (losses) on financial
     instruments in the Company's consolidated statements of operations. During
     the six months ended June 30, 2001, LSAT LLC recorded an unrealized loss of
     $2,460,000 related to the iBEAM Put Option.

     Investments in available-for-sale securities are summarized as follows:

<Table>
<Caption>
                                               June 30,       December 31,
                                                 2001            2000
                                              ---------       ------------
                                                 amounts in thousands
<S>                                           <C>            <C>
     Equity securities
         Fair value                           $ 364,877         352,424
         Gross unrealized holding gains         196,544         205,550
         Gross unrealized holding losses       (210,219)       (224,794)
</Table>

(8)  AMOUNTS DUE TO PARENT

     Certain general and administrative expenses are allocated to the Company by
     Liberty Media. Such allocations aggregated $238,000 for the six months
     ended June 30, 2001. In addition, the Company reimburses Liberty Media for
     certain expenses paid by Liberty Media on behalf of the Company. Accrued
     expense allocations and reimbursements are non-interest bearing, aggregated
     $65,000 at June 30, 2001, and are generally repaid monthly.

     On March 16, 2000, the Company entered into a $60,000,000 promissory note
     payable to Liberty Media in exchange for its interest in LSAT Astro. The
     note bears interest at Libor plus 2% (7.03% at June 30, 2001). Interest
     payments are due semi-annually on the first day of March and September. The
     note, which allows for prepayments, matures on March 16, 2003 at which time
     all unpaid principal and interest is due. Accrued interest aggregated
     $1,145,000 at June 30, 2001.

                                      I-15
<Page>

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

              Notes to Condensed Consolidated Financial Statements

(9)  DEBT

     Effective September 29, 2000, the Company entered into a $35 million loan
     agreement, which was amended effective November 3, 2000 to allow for
     maximum borrowings of $303 million (the "PCS Loan Agreement"). The PCS Loan
     Agreement is secured by the Company's interest in the shares of Sprint PCS
     Stock the Company received in the Liberty Transactions and by the Sprint
     PCS equity collar described in note 7. Interest accrues at LIBOR (5.05% at
     June 30, 2001) and is payable monthly. The principal balance is due and
     payable March 10, 2003.

     The fair value of the Company's debt is estimated based upon the quoted
     market prices for the same or similar issues or on the current rates
     offered to the Company for debt of the same remaining maturities. At June
     30, 2001, the fair value of the Company's debt approximated its carrying
     value.

(10) TRANSACTIONS WITH RELATED PARTIES

     Effective February 1, 2000, the Company entered into a management agreement
     with Phoenixstar pursuant to which the Company is managing Phoenixstar's
     affairs in exchange for a monthly fee. Such fees aggregated $210,000 and
     $220,000 for the six months ended June 30, 2001 and 2000, respectively. In
     addition, the Company allocates certain general and administrative
     expenses, such as rent and computer support, to Phoenixstar. Under the
     current management agreement, expense allocations are limited to $5,000 per
     month beginning in February 2001. Such allocations aggregated $39,000 and
     $90,000 during the six months ended June 30, 2001 and 2000, respectively
     and are reflected as a reduction of general and administrative expenses in
     the accompanying condensed consolidated statements of operations.

(11) STOCK OPTIONS

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

(12) INCOME TAXES

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

                                      I-16
<Page>

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

              Notes to Condensed Consolidated Financial Statements

(13) COMMITMENTS AND CONTINGENCIES

     Pursuant to the terms of the Liberty Transactions, Liberty Media
     contributed $249,620,000 in cash to LSAT Astro. The Company has used
     $238,050,000 of such cash since March 2000 to fund Astrolink capital calls
     and intends to use the remainder of such cash to fund a portion of
     Astrolink's 2001 capital requirements. LSAT and LSAT Astro assumed the
     commitment for such capital requirements in connection with the Liberty
     Transactions.

     In addition to the aforementioned commitment, LSAT Astro and the other
     Astrolink members have agreed to take such actions as are reasonably
     necessary to enable Astrolink to meet its 2001 funding requirements. Such
     actions may include the purchase of equity or debt securities of Astrolink,
     the facilitation of guaranteed bank financing, or any other approaches
     acceptable to the members and Astrolink, subject to the negotiation and
     execution of definitive agreements thereto. LSAT Astro's obligation to make
     any investment in or provide any financial obligation to Astrolink under
     this agreement is limited to $94,437,000, and does not constitute a
     guarantee of any obligation of Astrolink.

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

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


                                      I-17
<Page>

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


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

GENERAL

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

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

See note 3 to the accompanying condensed consolidated financial statements for a
discussion of the Liberty Transactions.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

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

                                      I-18
<Page>

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

MATERIAL CHANGES IN RESULTS OF OPERATIONS (CONTINUED)

Effective February 1, 2000, the Company entered into a management agreement with
Phoenixstar pursuant to which the Company provides legal, accounting and
management services to Phoenixstar in exchange for a monthly fee. Such fees
aggregated $210,000 and $220,000 during the six months ended June 30, 2001 and
2000, respectively. In addition, the Company allocates certain general and
administrative expenses, such as rent and computer support, to Phoenixstar.
Under the current management agreement, expense allocations are limited to
$5,000 per month beginning in February 2001. Such allocations aggregated $39,000
and $90,000 during the six months ended June 30, 2001 and 2000, respectively,
and are reflected as a reduction of general and administrative expenses in the
accompanying condensed consolidated statements of operations.

The Company incurred general and administrative expenses of $1,570,000 and
$2,373,000 for the six months ended June 30, 2001 and 2000, respectively. The
decrease is due primarily to a decrease in professional fees due to $800,000 in
investment banking, legal and accounting fees that the Company incurred in
connection with the Liberty Transactions in 2000. Such expenses were not
incurred in 2001.

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

The Company recognized interest income of $1,141,000 and $4,234,000 during the
six months ended June 30, 2001 and 2000, respectively. Such income was earned
primarily on the cash balance maintained by LSAT Astro which the Company
acquired as part of the Liberty Transactions. As primarily all of such LSAT
Astro cash had been used to fund Astrolink capital calls as of June 30, 2001,
the Company does not expect to generate significant interest income in the
future.

During the six months ended June 30, 2001 and 2000, the Company recognized
interest expense of $3,311,000 and $1,889,000 respectively. The increase in
interest expense is the net effect of an increase in the Company's weighted
average debt balance partially offset by a decrease in interest rates.

During the six months ended June 30, 2001 and 2000, the Company's share of
losses of affiliates aggregated $166,096,000 and $2,106,000, respectively. The
2000 amount represents only four months for Astrolink, whereas the 2001 amount
represents six months for Astrolink and Aerocast and four months for Wildblue.
In addition, the 2001 amount includes an adjustment to the carrying amount for
Astrolink aggregating $155,000,000. As Astrolink, Aerocast and Wildblue are in
the development stage of their business, the Company does not expect its share
of losses of affiliates will decrease in the foreseeable future.

During the first quarter of 2001, the Company determined that certain of its
cost investments had experienced other than temporary declines in value. As a
result, the Company's cost bases of such investments were adjusted to their
respective estimated fair values at March 31, 2001. These adjustments resulted
in a realized loss of $37,814,000, and are reflected as impairment of
investments in the condensed consolidated statement of operations.

                                      I-19
<Page>

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

MATERIAL CHANGES IN RESULTS OF OPERATIONS (CONTINUED)

The Company recorded minority interest share of losses (earnings) aggregating
$155,450,000 and $(18,166,000) during the six months ended June 30, 2001 and
2000, respectively. The 2000 amount is due to the gain recorded by LSAT LLC on
the GM Hughes transaction, whereas the 2001 amount is due to the impairment
losses recorded by LSAT LLC.

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

MATERIAL CHANGES IN FINANCIAL CONDITION

The Company currently has no operating income or positive cash flow. During the
six months ended June 30, 2001, the Company funded its operating and investing
activities with a combination of contributions from Liberty Media and borrowings
of debt.

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

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

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

                                      I-20
<Page>

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


MATERIAL CHANGES IN FINANCIAL CONDITION (CONTINUED)

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

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

On June 27, 2001, LSAT LLC entered into an agreement to loan 1 million shares of
XMSR to a third party. The obligation to return those shares is secured by cash
collateral equal to 100% of the market value of that stock, which was
$16,200,000 at June 30, 2001. During the period of the loan, which is terminable
by either party at any time, the cash collateral is to be marked-to-market
daily. Interest accrues on the cash collateral for the benefit of LSAT LLC at
the rate of .15% per annum. As of June 30, 2001, no shares of XMSR had been lent
under this agreement.

Pursuant to the terms of the Liberty Transactions, Liberty Media contributed
$249,620,000 in cash to LSAT Astro. The Company has used $238,050,000 of such
cash since March 2000 to fund Astrolink capital calls and intends to use the
remainder of such cash to fund a portion of Astrolink's 2001 capital
requirements. LSAT and LSAT Astro assumed the commitment for such capital
requirements in connection with the Liberty Transactions.

In addition to the aforementioned commitment, LSAT Astro and the other Astrolink
members have agreed to take such actions as are reasonably necessary to enable
Astrolink to meet its 2001 funding requirements. Such actions may include the
purchase of equity or debt securities of Astrolink, the facilitation of
guaranteed bank financing, or any other approaches acceptable to the members and
Astrolink, subject to the negotiation and execution of definitive agreements.
LSAT Astro's obligation to make any investment in or provide any financial
obligation to Astrolink under this agreement is limited to $94,437,000, and does
not constitute a guarantee of any obligation of Astrolink.

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

                                      I-21
<Page>

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

MATERIAL CHANGES IN FINANCIAL CONDITION (CONTINUED)

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


                                      I-22
<Page>

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At June 30, 2001, the Company had $114,414,000 of variable-rate debt with a
weighted-average interest rate of 5.89%. Accordingly, the Company is sensitive
to market rate risk. To date, the Company has not entered into any derivative
instruments to manage its interest rate exposure. All of such debt is due in
2003.

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

<Table>
<Caption>
                                           June 30, 2001                            December 31, 2000
                                 ----------------------------------        ---------------------------------
                                 Shares       Fair         Carrying        Shares      Fair         Carrying
                                 owned        value         owned          value       value          value
                                 -----        ------        ------         -----      --------      --------
                                                            amounts in thousands
<S>                           <C>          <C>           <C>            <C>        <C>           <C>
Equity price risk:
    GM Hughes Stock (1)          1,822        38,005        38,005         1,822      $ 42,013      $ 42,013
    Sprint PCS Stock (1)         5,085       122,797       122,797         5,085      $102,330      $102,330
    XMSR Stock (1)               1,000        16,200        16,200         1,000      $ 16,000      $ 16,000
</Table>

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


                                      I-23
<Page>

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


PART II - OTHER INFORMATION

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

     (a)  Exhibits

          None

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

<Table>
<Caption>
          Date of Report      Items Filed         Financial Statements Filed
          --------------      -----------         --------------------------
<S>                           <C>                 <C>
          May 10, 2001          Item 2            Liberty Satellite & Technology, Inc. -- Pro
                                                  forma financial information
</Table>


                                      II-1
<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 10, 2001                  By: /s/ Kenneth G. Carroll
                                           -------------------------
                                           Kenneth G. Carroll
                                           Senior Vice President,
                                           Chief Financial Officer and Treasurer
                                              (Principal Financial Officer and
                                              Principal Accounting Officer)




                                      II-2