<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 September 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 October 31, 2002, was:

                 Series A common stock - 11,078,834 shares; and
                   Series B common stock - 34,765,055 shares.

<Page>

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

                      Condensed Consolidated Balance Sheets
                                   (unaudited)

<Table>
<Caption>
                                                                           September 30,     December 31,
                                                                               2002             2001
                                                                           -------------    -------------
                                                                                amounts in thousands
<S>                                                                        <C>                     <C>
ASSETS
Current assets:
   Cash and cash equivalents                                               $      22,471           33,913
   Restricted cash (note 7)                                                        3,900           18,360
   Trade and other receivables, net                                               31,584           34,358
   Other current assets                                                            3,440            3,193
                                                                           -------------    -------------
        Total current assets                                                      61,395           89,824
                                                                           -------------    -------------

Investments in affiliates accounted for using the equity method (note 6)           8,140           12,158
Investments in available-for-sale securities and other cost
   investments, including securities pledged to creditors (notes 7 and 9)        516,384          577,482

Property and equipment:
   Video systems                                                                 419,845          410,121
   Support equipment                                                              14,091           13,716
                                                                           -------------    -------------
                                                                                 433,936          423,837
   Accumulated depreciation                                                     (151,086)        (115,352)
                                                                           -------------    -------------
                                                                                 282,850          308,485
                                                                           -------------    -------------
Intangible assets subject to amortization:
   Hotel contracts                                                               163,000          163,000
   Accumulated amortization                                                     (135,833)         (95,083)
                                                                           -------------    -------------
                                                                                  27,167           67,917
                                                                           -------------    -------------

Intangible assets not subject to amortization - Goodwill (note 2)                 62,060          155,191

Other assets                                                                      13,478           14,138
                                                                           -------------    -------------

      Total assets                                                         $     971,474        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, continued
                                   (unaudited)

<Table>
<Caption>
                                                                                     September 30,     December 31,
                                                                                         2002            2001
                                                                                     -------------    -------------
                                                                                          amounts in thousands
<S>                                                                                  <C>                     <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses                                             $      43,662           39,737
   Due to parent (note 3):
      Note payable                                                                          48,411           18,552
      Accrued interest                                                                         151            1,171
      Other accrued expenses                                                                16,610           14,678

   Current portion of long-term debt (note 9)                                              113,418              909
   Securities lending agreement (note 7)                                                     3,900           18,360
                                                                                     -------------    -------------
        Total current liabilities                                                          226,152           93,407
                                                                                     -------------    -------------

Note payable to parent (note 3)                                                                 --           48,411
Debt (note 9)                                                                              259,040          362,264
Put option liability due to related party (note 3)                                          30,369           28,488
Deferred tax liability                                                                      11,279           27,169
Other liabilities                                                                              836               --
                                                                                     -------------    -------------
        Total liabilities                                                                  527,676          559,739
                                                                                     -------------    -------------

Minority interests in equity of consolidated subsidiaries                                    9,744            9,836
Redeemable preferred stock                                                                 200,617          196,027

Stockholders' Equity:
   Preferred stock; authorized 5,000,000 shares; issued and outstanding
      300,000 shares in 2002 and 2001                                                           --               --
   Series A common stock, $1 par value; authorized 100,000,000 shares;
      issued and outstanding 11,078,834 shares at September 30, 2002 and
      6,753,101 shares at December 31, 2001                                                 11,079            6,753
   Series B common stock, $1 par value; authorized 70,000,000 shares;
      issued and outstanding 34,765,055 shares at September 30, 2002 and
      34,771,828 shares at December 31, 2001                                                34,765           34,772
   Additional paid-in capital                                                            1,990,806        1,980,389
   Accumulated other comprehensive loss                                                    (18,927)         (10,650)
   Accumulated deficit                                                                  (1,783,929)      (1,551,346)
                                                                                     -------------    -------------
                                                                                           233,794          459,918
   Series A common stock held in treasury, at cost (17,254 shares at September 30,
      2002 and 2,954 shares at December 31, 2001)                                             (357)            (325)
                                                                                     -------------    -------------
        Total stockholders' equity                                                         233,437          459,593
                                                                                     -------------    -------------

Commitments and contingencies (notes 6, 9, 11, and 12)
                                                                                     $     971,474        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                   Nine months ended
                                                                    September 30,                       September 30,
                                                          --------------------------------    --------------------------------
                                                               2002              2001              2002              2001
                                                          --------------    --------------    --------------    --------------
                                                                                 amounts in thousands,
                                                                               except per share amounts
<S>                                                       <C>                       <C>              <C>               <C>
Revenue:
   In-room entertainment services                         $       60,790            58,322           179,172           183,875
   Other                                                             105             3,425               315            14,872
                                                          --------------    --------------    --------------    --------------
                                                                  60,895            61,747           179,487           198,747
                                                          --------------    --------------    --------------    --------------
Operating costs and expenses:
   Operating
      In-room entertainment services                              38,547            38,819           113,374           121,093
      Other                                                           --               324                --             5,060
   Selling, general and administrative ("SG&A")
      (notes 3 and 10)                                             6,328            10,276            18,241            51,725
   Stock compensation - SG&A                                          73                73               219               195
   Depreciation and amortization                                  32,863            42,140           100,035           128,620
   Asset impairments and other charges (note 8)                      684               137             7,925               422
                                                          --------------    --------------    --------------    --------------
                                                                  78,495            91,769           239,794           307,115
                                                          --------------    --------------    --------------    --------------

        Operating loss                                           (17,600)          (30,022)          (60,307)         (108,368)

Other income (expense):
   Interest income                                                   584             2,500             1,547            11,066
   Interest expense-parent (note 3)                                 (471)             (864)           (1,933)           (2,784)
   Interest expense-other                                         (4,168)          (10,889)          (12,492)          (34,106)
   Share of losses of affiliates (note 6)                         (1,407)           (7,347)           (4,765)         (172,425)
   Unrealized gains on financial
      instruments, net (note 7)                                    2,618            11,812             1,865            25,814
   Nontemporary declines in fair value of
      investments (note 7)                                       (17,385)             (207)          (76,333)          (40,139)
   Other, net (note 7)                                               327            (2,107)           (1,965)           (3,531)
                                                          --------------    --------------    --------------    --------------
                                                                 (19,902)           (7,102)          (94,076)         (216,105)
                                                          --------------    --------------    --------------    --------------

        Loss before income taxes and minority
          interests                                              (37,502)          (37,124)         (154,383)         (324,473)

Income tax benefit                                                 8,033             5,831            14,745            16,819
Minority interests in losses (earnings) of
   consolidated subsidiaries                                        (197)            4,675               186            20,698
                                                          --------------    --------------    --------------    --------------

        Loss before cumulative effect of
          accounting change                                      (29,666)          (26,618)         (139,452)         (286,956)
Cumulative effect of accounting change, net of
   taxes (note 2)                                                     --                --           (93,131)               --
                                                          --------------    --------------    --------------    --------------
        Net loss                                                 (29,666)          (26,618)         (232,583)         (286,956)

Accretion of redeemable preferred stock                           (1,530)           (1,530)           (4,590)           (4,590)
Dividends on redeemable preferred stock                           (7,500)           (7,500)          (22,500)          (22,500)
                                                          --------------    --------------    --------------    --------------

        Net loss attributable to common
          stockholders                                    $      (38,696)          (35,648)         (259,673)         (314,046)
                                                          ==============    ==============    ==============    ==============

Basic and diluted loss per common share before
   cumulative effect of accounting change (note 4)        $        (0.88)            (0.86)            (3.91)            (7.59)
Cumulative effect of accounting change                                --                --             (2.19)               --
                                                          --------------    --------------    --------------    --------------
Basic and diluted loss per common share                   $        (0.88)            (0.86)            (6.10)            (7.59)
                                                          ==============    ==============    ==============    ==============
</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                  Nine months ended
                                                                     September 30,                      September 30,
                                                           --------------------------------    --------------------------------
                                                                2002              2001              2002              2001
                                                           --------------    --------------    --------------    --------------
                                                                                   amounts in thousands
<S>                                                        <C>                      <C>              <C>               <C>
Net loss                                                   $      (29,666)          (26,618)         (232,583)         (286,956)
                                                           --------------    --------------    --------------    --------------

Other comprehensive income (loss), net of tax:

   Unrealized holding losses                                       (5,535)           (8,471)          (20,171)          (10,946)
   Reclassification adjustment for
     losses included in net loss (note 7)                          10,605                --            10,605             9,000

   Foreign currency translation adjustments                        (1,147)           (1,197)              359             2,076
   Reclassification adjustment for losses
     included in net loss (note 8)                                    930                --               930                --
                                                           --------------    --------------    --------------    --------------

        Other comprehensive income (loss)                           4,853            (9,668)           (8,277)              130
                                                           --------------    --------------    --------------    --------------

        Comprehensive loss                                 $      (24,813)          (36,286)         (240,860)         (286,826)
                                                           ==============    ==============    ==============    ==============
</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

                      Nine months ended September 30, 2002
                                   (unaudited)

<Table>
<Caption>
                                                                                                Accumulated
                                                      Common Stock              Additional          other
                                              -----------------------------       paid-in       comprehensive     Accumulated
                                                Series A        Series B          capital           loss            deficit
                                              -------------   -------------    -------------    -------------    -------------
                                                                                             amounts in thousands
<S>                                           <C>                    <C>           <C>                <C>           <C>
Balance at January 1, 2002                    $       6,753          34,772        1,980,389          (10,650)      (1,551,346)

   Net loss                                              --              --               --               --         (232,583)
   Other comprehensive loss                              --              --               --           (8,277)              --
   Contribution by Liberty Media of
     intercompany notes receivable (note 3)              --              --           19,203               --               --
   Purchase of Series A common stock                     --              --               --               --               --
   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                          --              --          (27,090)              --               --
   Issuance of Series A common stock for
     preferred stock dividends                        4,320              --           18,180               --               --
   Recognition of stock compensation
     related to restricted stock awards,
     net of taxes                                        --              --              134               --               --
                                              -------------   -------------    -------------    -------------    -------------

Balance at September 30, 2002                 $      11,079          34,765        1,990,806          (18,927)      (1,783,929)
                                              =============   =============    =============    =============    =============

<Caption>
                                                                   Total
                                                Treasury       stockholders'
                                                  stock           equity
                                              -------------    -------------

<S>                                                    <C>          <C>
Balance at January 1, 2002                             (325)         459,593

   Net loss                                              --         (232,583)
   Other comprehensive loss                              --           (8,277)
   Contribution by Liberty Media of
     intercompany notes receivable (note 3)              --           19,203
   Purchase of Series A common stock                    (32)             (32)
   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                          --          (27,090)
   Issuance of Series A common stock for
     preferred stock dividends                           --           22,500
   Recognition of stock compensation
     related to restricted stock awards,
     net of taxes                                        --              134
                                              -------------    -------------

Balance at September 30, 2002                          (357)         233,437
                                              =============    =============
</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>
                                                                                           Nine months ended
                                                                                             September 30,
                                                                                     ------------------------------
                                                                                          2002            2001
                                                                                     -------------    -------------
                                                                                         amounts in thousands
                                                                                             (see note 5)
<S>                                                                                  <C>                   <C>
Cash flows from operating activities:
   Net loss                                                                          $    (232,583)        (286,956)
   Adjustments to reconcile net loss to net cash provided (used) by
     operating activities:
        Stock compensation                                                                     219              195
        Depreciation and amortization                                                      100,035          128,620
        Asset impairments and other charges                                                  7,925              422
        Non-cash interest expense                                                               --           16,277
        Share of losses of affiliates                                                        4,765          172,425
        Unrealized gains on financial instruments                                           (1,865)         (25,814)
        Nontemporary declines in fair value of investments                                  76,333           40,139
        Minority interests in loss of consolidated subsidiaries                               (186)         (20,698)
        Deferred tax benefit                                                                (9,817)         (33,023)
        Cumulative effect of accounting change, net of taxes                                93,131               --
        Other non-cash items                                                                 1,012            4,022
        Changes in operating assets and liabilities:
             Receivables and prepaid expenses                                                1,871            2,641
             Accruals and payables                                                           6,161          (14,412)
                                                                                     -------------    -------------

                Net cash provided (used) by operating activities                            47,001          (16,162)
                                                                                     -------------    -------------

Cash flows from investing activities:
   Investments in and advances to affiliates and investees                                 (27,163)        (251,294)
   Capital expended for equipment                                                          (41,447)         (72,886)
   Proceeds received upon disposition of assets, net of cash transferred                     1,135           32,131
   Acquisition of minority interest of subsidiary                                               --          (17,445)
   Other investing activities                                                                 (304)          (2,219)
                                                                                     -------------    -------------

                Net cash used by investing activities                                      (67,779)        (311,713)
                                                                                     -------------    -------------

Cash flows from financing activities:
   Borrowings of third-party debt                                                           22,000          120,000
   Repayments of third-party debt                                                          (12,715)         (15,000)
   Advances and contributions from Liberty Media                                             6,573           36,256
   Repayments of note payable to parent                                                     (6,573)          (6,572)
   Cash payments of preferred stock dividends                                                   --          (15,000)
   Other financing activities                                                                   51               --
                                                                                     -------------    -------------

                Net cash provided by financing activities                                    9,336          119,684
                                                                                     -------------    -------------

                Net decrease in cash and cash equivalents                                  (11,442)        (208,191)

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

                   End of period                                                     $      22,471          258,426
                                                                                     =============    =============
</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

                               September 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. At
     September 30, 2002, Liberty Media owned approximately 86% of LSAT's
     outstanding common stock, which, when considered with LSAT preferred stock
     owned by Liberty Media, represented approximately 98% of LSAT's outstanding
     voting power. 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. 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"). At September 30, 2002, LSAT,
     primarily through its ownership interest in Ascent, controlled
     approximately 63% of the outstanding On Command common stock ("On Command
     Common Stock"). 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 common 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       Nine months
                                                            ended              ended
                                                        March 31, 2002   September 30, 2001
                                                        --------------   ------------------
                                                              amounts in thousands
                 <S>                                    <C>                           <C>
                 REVENUE
                 LSAT                                   $          105                315
                 LSAT LLC                                           --                 --
                 Ascent                                         57,383            198,432
                                                        --------------     --------------

                 Combined                               $       57,488            198,747
                                                        ==============     ==============

                 NET EARNINGS (LOSS)
                 LSAT                                   $        7,136            (22,790)
                 LSAT LLC                                      (13,223)          (173,182)
                 Ascent (1)                                   (112,889)           (90,984)
                                                        --------------     --------------

                 Combined                               $     (118,976)          (286,956)
                                                        ==============     ==============
</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 indirect 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 12% Cumulative Preferred
     Stock ("Series A Preferred Stock") with a liquidation value of $150,000,000
     and 150,000 shares of LSAT Series B 8% Cumulative Convertible Voting
     Preferred Stock ("Series B Preferred Stock") with a liquidation value of
     $150,000,000. While the shares of Series A Preferred Stock have no voting
     rights, 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. For a description of the
     consideration paid by the Company to acquire its ownership interest in LSAT
     Astro, see note 3. 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 acquired the
     remaining 15% of Ascent common shares then outstanding 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
     interrelated 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 collectively held the 89.41% ownership
     interest in LSAT LLC not already owned by LSAT 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 transaction 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 September 30, 2002 and the results
     of its operations for the three and nine months ended September 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, and in the
     Company's Form 8-K/A filed on September 10, 2002.

     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 attributable to common stockholders and pro forma loss
     per common share for the three and nine months ended September 30, 2001,
     exclusive of amortization expense related to goodwill are as follows:

<Table>
<Caption>
                                                                 Three months      Nine months
                                                                     ended            ended
                                                                 September 30,    September 30,
                                                                     2001             2001
                                                                 -------------    -------------
                                                                      amounts in thousands,
                                                                    except per share amounts
     <S>                                                         <C>                   <C>
     Net loss attributable to common stockholders, as reported   $     (35,648)        (314,046)
     Amortization of goodwill                                            9,411           28,139
                                                                 -------------    -------------

     Net loss attributable to common stockholders, as adjusted   $     (26,237)        (285,907)
                                                                 =============    =============

     Basic and diluted loss per common share, as reported        $       (0.86)           (7.59)
     Amortization of goodwill                                             0.23             0.68
                                                                 -------------    -------------
     Pro forma basic and diluted loss per common share, as
        adjusted                                                 $       (0.63)           (6.91)
                                                                 =============    =============
</Table>

                                      I-10
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     Amortization of the intangible asset associated with On Command's hotel
     contracts aggregated $40,750,000 for the nine months ended September 30,
     2002. This intangible asset, which represents the Company's only
     significant intangible asset with a finite useful life, will be fully
     amortized by March 31, 2003.

     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 August 2001, the FASB issued Statement of Financial Accounting Standards
     No. 143, ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS ("Statement 143"). 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"). In June
     2002, the FASB issued Statement of Financial Accounting Standards No. 146,
     ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
     ("Statement 146"). The adoption of Statements 143, 145 and 146 is not
     expected to have a material impact on the Company's financial position,
     results of operations or cash flows.

(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% (3.74% at September
     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
     September 30, 2002, the unpaid principal on the note was $48,411,000 and
     the accrued interest on the note was $151,000.

                                      I-11
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     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.

     In connection with the LSAT LLC and Ascent Transaction, the Company assumed
     an intercompany income tax liability owed by Ascent to Liberty Media
     pursuant to a tax liability allocation and indemnification agreement with
     terms similar to the agreement described above. At September 30, 2002, the
     amount owed by Ascent to Liberty Media pursuant to this agreement was
     $18,446,000. 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, the Company believes the allocated amounts to be
     reasonable. The aggregate allocations from Liberty Media were $228,000 and
     $313,000 for the nine months ended September 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 ($1,332,000 at
     September 30, 2002) are non-interest bearing and are generally paid on a
     monthly basis.

     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% per annum 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.

                                      I-12
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     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 nine months ended September
     30, 2001, Ascent Network Services paid management fees to Liberty Livewire
     aggregating $6,400,000. 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 ($30,369,000
     at September 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 nine months ended September 30, 2002 and 2001, the Company recorded
     unrealized losses of $1,881,000 and $6,808,000, 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 connection with certain other transactions that
     closed 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 $315,000 for each of the nine-month periods ended
     September 30, 2002 and 2001, respectively. 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 $45,000 and $54,000 during the
     nine months ended September 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 nine months ended September 30,
     2002 and 2001 is based on 44,176,400 and 42,564,800 weighted average shares
     outstanding during the three- and nine-month 2002 periods, respectively and
     41,524,900 and 41,388,600 weighted average shares outstanding during the
     three- and nine-month 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 September 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 September 30, 2002. The foregoing potential common share
     amounts do not take into account the assumed number of shares that might 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 $13,121,000 and $21,207,000 for the nine months
     ended September 30, 2002 and 2001, respectively. Cash paid for income taxes
     was not significant during these periods. For descriptions of certain
     non-cash investing and financing activities, see notes 7 and 8.

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

<Table>
<Caption>
                                                      September 30,    December 31,
                                                          2002            2001
                                                      -------------   -------------
                                                          amounts in thousands
<S>                                                   <C>                    <C>
          ASTROLINK International LLC ("Astrolink"$              --              --
          Aerocast.com, Inc. ("Aerocast")                     8,140          12,158
                                                      -------------   -------------

                                                      $       8,140          12,158
                                                      =============   =============
</Table>

                                      I-14
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

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

<Table>
<Caption>
                                                       Nine months ended
                                                        September 30,
                                                 -----------------------------
                                                      2002           2001
                                                 -------------   -------------
                                                     amounts in thousands
          <S>                                    <C>                   <C>
          Astrolink                              $         647         167,334
          Aerocast                                       4,118           5,091
                                                 -------------   -------------

                                                 $       4,765         172,425
                                                 =============   =============
</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, was originally established 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 did 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.

     During the second quarter of 2002, LSAT signed a non-binding letter of
     intent with the other members 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.

                                      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 2001, the Company determined that its
     investment in Astrolink had 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 in the accompanying
     condensed consolidated statements of operations. 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 nine months ended September 30, 2002 ($647,000). At
     September 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 September 30, 2002, the carrying amount of the Company's investment in
     Aerocast exceeded the Company's proportionate share of Aerocast's net
     assets by $7,106,000. Such excess relates to intellectual property and
     technology developed by Aerocast, and is being amortized over a useful life
     of five years. Amortization aggregated $1,561,000 and $1,503,000 for the
     nine months ended September 30, 2002 and 2001, respectively, and is
     included in share of losses of affiliates.

     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.

                                      I-16
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     Summarized unaudited financial information for Aerocast is as follows:

<Table>
<Caption>
                                                              Nine months ended
                                                                September 30,
                                                        ------------------------------
                                                            2002             2001
                                                        -------------    -------------
                                                            amounts in thousands
     <S>                                                <C>                     <C>
     OPERATIONS
        Revenue                                         $          85               --
        Operating expenses                                     (5,305)          (8,259)
        Depreciation                                             (295)            (226)
        Other income                                               35              418
                                                        -------------    -------------

           Net loss                                     $      (5,480)          (8,067)
                                                        =============    =============
</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>
                                                        September 30,     December 31,
                                                            2002             2001
                                                        -------------    -------------
                                                             amounts in thousands
       <S>                                              <C>                    <C>
       Sprint Corporation PCS Group
          ("Sprint PCS Group") (a)*                     $     301,485          301,840
       Sky Latin America (b)                                  130,476          175,048
       Hughes Electronics Corporation
          ("GM Hughes") (c)*                                   36,945           42,894
       XM Satellite Radio Holdings, Inc.
          ("XMSR") (d)*                                        28,047           29,475
       Other (e)                                               19,431           28,225
                                                        -------------    -------------

                                                        $     516,384          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.

     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. 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 receipts or payments.
     At September 30, 2002, the fair value of the Sprint PCS Collar was
     approximately $291,519,000.

                                      I-17
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     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 9) 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 and Colombia. LSAT LLC has a 10%
     beneficial interest in each of the Sky Latin America businesses. See note
     12 for a discussion of the Company's contingent obligations with respect to
     Sky Latin America.

     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 per share, 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 per share. 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 receipts or payments. At September 30,
     2002, the fair value of the GM Hughes put spread collar was approximately
     $20,274,000, which represented an increase of $5,528,000 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 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 per share. 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
     receipts or payments. At September 30, 2002, the fair value of the XMSR
     equity collar was approximately $24,147,000.

                                      I-18
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     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 $3,900,000 at September 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 September
     30, 2002, 1,000,000 shares of XMSR had been lent under this agreement. The
     loan has no stated maturity date.

     (e) OTHER

     Information concerning certain of the Company's other investments is set
     forth below.

     On March 30, 2001, On Command acquired certain preferred stock of STSN,
     Inc. ("STSN"), a high speed access provider, 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.

     Subsequent to September 30, 2002, STSN informed the Company that additional
     financing would be required during the first quarter of 2003 due to
     revisions to STSN's business plan. As a result, the Company's ownership
     interest in STSN will be diluted if the Company does not participate in
     such additional financing. Based on the foregoing developments, the Company
     will reevaluate the carrying value of its investment in STSN during the
     fourth quarter of 2002.

     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 would 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 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.

                                      I-19
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     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 together
     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 currently.
     Hedge ineffectiveness, determined in accordance with Statement of Financial
     Accounting Standard No. 133, had no impact on earnings for the nine months
     ended September 30, 2002 and 2001. No fair value hedges or cash flow hedges
     were derecognized or discontinued during the nine months ended
     September 30, 2002 and 2001.

     For the nine months ended September 30, 2002, unrealized losses on
     financial instruments include a $5,528,000 gain related to the GM Hughes
     put spread collar, a $1,782,000 loss related to changes in the time value
     of equity collars and a $1,881,000 loss related to the iBEAM Put Option.

     NONTEMPORARY DECLINES IN FAIR VALUE OF INVESTMENTS

     During the nine months ended September 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 $76,333,000 ($58,948,000 of which related
     to Sky Latin America and $17,385,000 which related to LSAT LLC's investment
     in Loral Space & Communications Ltd. ("Loral")) during the 2002 period, and
     $40,139,000 (including $20,725,000 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.

     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>
                                                  September 30,     December 31,
                                                      2002             2001
                                                  -------------    -------------
                                                       amounts in thousands
     <S>                                          <C>                    <C>
     Equity securities
         Fair value                               $     369,036          388,163
                                                  =============    =============
         Gross unrealized holding gains           $          --            3,942
                                                  =============    =============
         Gross unrealized holding losses          $     (35,010)         (23,532)
                                                  =============    =============
</Table>

                                      I-20
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

(8)  DISPOSITION

     In July 2002, On Command consummated the sale (the "OCE Sale") of its
     70% majority shareholdings in On Command Europe Limited ("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 of $1,415,000 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. During the third quarter of 2002, OCE's remaining net assets,
     including a $930,000 cumulative foreign currency translation loss, were
     written-off against the net proceeds received, resulting in no material
     impact to the Company's net loss for the period.

(9)  DEBT
     Debt is summarized as follows:

<Table>
<Caption>
                                                        September 30,     December 31,
                                                             2002            2001
                                                        -------------    -------------
                                                             amounts in thousands
     <S>                                                <C>                    <C>
     On Command Revolving Credit Facility (a)           $     258,633          263,633
     PCS Loan Facility (b)                                    112,503           97,503
     Capital lease obligations                                  1,322            2,037
                                                        -------------    -------------
                                                              372,458          363,173
     Less current portion                                    (113,418)            (909)
                                                        -------------    -------------
                                                        $     259,040          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. On Command had $16,367,000
          of remaining availability under the On Command Revolving Credit
          Facility at September 30, 2002. On Command's ability to draw
          additional funds under the On Command Revolving Credit Facility is
          limited by certain financial covenants.

          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 (4.32% effective borrowing rate at
          September 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 leverage and interest coverage ratios.
          On Command was in compliance with such covenants at September 30,
          2002. Substantially all of On Command's assets are pledged as
          collateral for borrowings under the On Command Revolving Credit
          Facility.

                                      I-21
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

          At September 30, 2002, the maximum leverage ratio permitted under the
          On Command Revolving Credit Facility was 4.50, and On Command's actual
          leverage ratio was 4.07. The maximum leverage ratio permitted under
          the On Command Revolving Credit Facility at December 31, 2002 and
          March 31, 2003 is 4.25 and 3.50, respectively. On Command is seeking
          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 or at all.

     (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 (1.82% at
          September 30, 2002) and is payable monthly. The principal balance is
          due and payable March 10, 2003. At September 30, 2002, borrowing
          availability pursuant to the PCS Loan Facility was $190,497,000.

     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 September 30, 2002.

(10) 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.

     On August 8, 2000, the Company issued 13,500 shares of the Company's Series
     A, $.01 Par Value Convertible Participating Preferred Stock ("Series A
     Preferred Stock"), to the former Chairman and Chief Executive Officer of
     the Company in exchange for a $21,080,000 promissory note and a $13,500
     cash payment. The promissory note is secured by the Series A Preferred
     Stock or proceeds thereon and the former Chairman and Chief Executive
     Officer's personal obligations under such promissory note are limited to
     25% of the principal amount of the note plus accrued interest thereon. The
     note, which may not be prepaid, is due and payable on August 1, 2005, and
     interest on the note accrues at a rate of 7% per annum, compounded
     quarterly.

                                      I-22
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

(11) SIGNIFICANT CUSTOMERS
     During the first nine 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
     29.9%, 15.9% 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 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 September 30, 2002, On Command provided service to
     approximately 128,700 rooms in 543 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 September 30, 2002, On Command's contracts with 64 of the
     aforementioned 543 hotels (16,500 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 479 Hilton or Promus
     hotels (112,200 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.

                                      I-23
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

(12) COMMITMENTS AND CONTINGENCIES
     The Company and other investors in the Sky Latin America businesses have
     severally guaranteed obligations due under certain transponder agreements
     and equipment lease agreements through 2018. At September 30,2002, the
     portions of the remaining undiscounted obligations due under such
     transponder agreements and equipment lease agreements that were severally
     guaranteed by the Company aggregated approximately $109,057,000 and
     $7,000,000, respectively. Subsequent to September 30, 2002, Globo
     Comunicacoes e Participacoes ("GloboPar"), an investor in three of the Sky
     Latin America entities, announced that it was reevaluating its capital
     structure. As a result, the Company believes that it is probable that
     GloboPar will not meet some, if not all, of its future funding obligations
     with respect to these three Sky Latin America entities. To the extent that
     GloboPar does not meet its funding obligations, the Company and other
     investors could mutually agree to assume GloboPar's obligations. To the
     extent that the Company or such other investors do not fully assume
     GloboPar's funding obligations, any funding shortfall could lead to
     defaults under applicable transponder agreements and equipment lease
     agreements. With respect to the equipment lease agreements, default also
     includes bankruptcy, debt default, or material adverse change in the
     business or financial condition of any guarantor that materially adversely
     affects the ability of any such guarantor to perform its obligations under
     the guarantee. In the event any such defaults were to occur, the default
     provisions of the applicable agreements would determine the ultimate amount
     to be paid by the Company. The Company believes that the maximum amount of
     the Company's aggregate exposure under the default provisions of the
     various agreements is not in excess of the undiscounted remaining
     obligations guaranteed by the Company, as set forth above. The three
     entities in which GloboPar is an investor account for approximately
     $89,667,000 of the approximately $116,057,000 of aggregate obligations
     guaranteed by the Company at September 30, 2002. The Company cannot
     currently predict whether it will be required to perform under any of such
     guarantees.

     The Company leases office space and certain equipment pursuant to
     noncancelable operating leases.

     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.

(13) INFORMATION ABOUT OPERATING SEGMENTS
     LSAT identifies its reportable segments as those consolidated subsidiaries
     that represent 10% or more of its combined revenue, net earnings or loss,
     or total assets. The Company's investments in equity affiliates are
     considered reportable segments if the Company's investment in, or share of
     losses of, any equity affiliate represents 10% or more of the Company's
     total assets or pre-tax earnings or loss, respectively. 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.

                                      I-24
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

     For the nine months ended September 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 and corporate.

     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 asset
     impairments and other charges. LSAT's definition of operating cash flow may
     differ from cash 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 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>
     PERFORMANCE MEASURES:

     Nine months ended September 30, 2002
         Revenue                            $    179,172            315              --        179,487
         Operating cash flow (deficit)      $     49,884         (2,012)             --         47,872

     Nine months ended September 30, 2001
         Revenue                            $    183,875         14,872              --        198,747
         Operating cash flow (deficit)      $     31,187        (10,318)             --         20,869

     BALANCE SHEET INFORMATION:

     As of September 30, 2002
         Total assets                       $    416,427        555,047              --        971,474
</Table>

                                      I-25
<Page>

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

         Notes to Condensed Consolidated Financial Statements, continued

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

<Table>
<Caption>
                                                                  Nine months ended september 30,
                                                                  -------------------------------
                                                                       2002             2001
                                                                  -------------     -------------
                                                                       amounts in thousands
     <S>                                                          <C>                    <C>
     Segment operating cash flow                                  $      47,872            20,869
     Stock compensation                                                    (219)             (195)
     Depreciation and amortization                                     (100,035)         (128,620)
     Asset impairment and other charges                                  (7,925)             (422)
     Interest income                                                      1,547            11,066
     Interest expense                                                   (14,425)          (36,890)
     Share of losses of affiliates                                       (4,765)         (172,425)
     Unrealized gains on financial instruments                            1,865            25,814
     Nontemporary declines in fair value of investments                 (76,333)          (40,139)
     Other, net                                                          (1,965)           (3,531)
                                                                  -------------     -------------
          Loss before income taxes and minority interests         $    (154,383)         (324,473)
                                                                  =============     =============
</Table>


                                      I-26
<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;
- the risk of potentially changing attitudes and community standards regarding
  On Command's adult content;
- 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 On Command to obtain an amendment to the On Command Revolving
  Credit Facility that will allow On Command to maintain compliance with the
  covenants contained therein;
- the ability of vendors to deliver required equipment, software, content and
  services on terms acceptable to the Company;
- 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
interrelated 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 collectively held the 89.41% ownership
interest in LSAT LLC not already owned by LSAT 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 LSAT LLC and Ascent Transaction closed on April 1, 2002. At
September 30, 2002, Liberty Media owned approximately 86% of LSAT's outstanding
common stock, which, when considered with the Series B Preferred Stock owned by
Liberty Media, represented approximately 98% of LSAT's outstanding voting power.

                                      I-27
<Page>

As a result of the consummation of the LSAT LLC and Ascent Transaction, LSAT
became the owner of 100% of the common 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.

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
September 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, digital music and various hotel and guest
services. At September 30, 2002, On Command had operating subsidiaries or
branches in the United States, Canada, Mexico, Argentina, Spain and Portugal.

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.

CRITICAL ACCOUNTING POLICIES

CARRYING VALUE OF INVESTMENTS. The Company continually reviews its investments
to determine whether a decline in fair value below the cost basis is
nontemporary. The Company considers a number of factors in its determination
including (i) the financial condition, operating performance and near term
prospects or the investee; (ii) the reason for the decline in fair value, be it
general market conditions, industry specific of investee specific; (iii) the
length of time that the fair value of the investment is below the Company's
carrying value and (iv) the Company's intent and ability to hold the investment
for a period of time sufficient to allow for a recovery in fair value. If the
decline in fair value is deemed to be nontemporary, the cost basis of the
security is written down to fair value. In situations where the fair value of an
asset is not evident due to a lack of public market price or other factors,
management uses its bests estimates and assumptions to arrive at the estimated
fair value of such an asset. The Company's assessment of the foregoing factors
pursuant to this accounting policy involves a high degree of judgment and
includes significant estimates and assumptions.

CARRYING VALUE OF LONG-LIVED ASSETS. The Company considers its policy for
assessing the recoverability of its long-lived assets to be a critical
accounting policy due to the materiality of the amounts involved and the high
degree of judgment involved in determining the estimates and assumptions that
form the basis for the Company's recoverability conclusions under the policy.
For additional information concerning this policy, see note 2 to the
accompanying condensed consolidated financial statements.

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 (comprised of room revenue and video systems and equipment sales)
increased $2,468,000 or 4.2% and decreased $4,703,000 or 2.6% during the three
and nine months ended September 30, 2002, respectively, as compared to the
corresponding prior year periods.

                                      I-28
<Page>

Room revenue increased $2,667,000 from $55,342,000 during the three months
ended September 30, 2001 to $58,009,000 during the corresponding 2002 period,
and decreased $3,966,000 from $175,359,000 during the nine months ended
September 30, 2001 to $171,393,000 during the corresponding 2002 period. The
increase in room revenue during the three-month period is attributable to (i)
increases attributable to higher average rates for certain pay-per-view
products; (ii) increases in revenue from short videos and other new products;
and (iii) a lower volume of pay-per-view buys. During the nine-month period,
the lower volume of pay-per-view buys more than offset the increases
associated with higher rates and new products. On Command believes that most
of the decrease in pay-per-view buys 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 nine months ended September
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 disposition
of certain hotel rooms to e-ROOM and Techlive (as further described in notes
7 and 8 to the accompanying condensed consolidated financial statements),
(ii) the loss of rooms to competitors, and (iii) the discontinuance of
service to certain non-profitable hotels.

Overall hotel occupancy rates declined 3.2% during the nine months ended
September 30, 2002, as compared to the corresponding prior year period. In
addition, occupancy rates for hotels in the top 25 markets declined 5.9% over
the same period. Since On Command derives a significant portion of its revenue
from hotels in the top 25 markets, On Command believes that the occupancy rate
for this segment 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.

During the nine months ended September 30, 2002, hotels owned, managed or
franchised by Marriott, Hilton and Six Continents accounted for 29.9%, 15.9% 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 September 30, 2002, On Command provided service
to approximately 128,700 rooms in 543 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
September 30, 2002, On Command's contracts with 64 of the aforementioned 543
hotels (16,500 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 479 Hilton or Promus hotels (112,200 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.

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.

                                      I-29
<Page>

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, direct costs associated with
On Command's Internet product, costs associated with video and music 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.

In-room entertainment operating costs remained relatively constant during the
three months ended September 30, 2002, as compared to the corresponding prior
year period due to the net effect of (i) increases attributable to higher
direct in-room service costs (content fees, hotel commissions, and other
direct in-room service costs), as further described below; (ii) decreases
attributable to the third quarter 2002 reversal of $1,618,000 of accruals
deemed no longer needed for their originally intended purpose; (iii)
decreases in labor and overhead costs resulting from a May 2001 corporate
restructuring and other cost saving measures; (iv) decreases in research and
development expenses; and (v) decreases in the costs associated with video
system and equipment sales and other revenue. Direct in-room service costs
were higher during the third quarter of 2002 due primarily to increases in
guest programming costs, hotel commissions, license fee royalties, and video
duplication and distribution costs. Such increases were only partially offset
by reductions in Internet direct costs. The increases in guest programming
costs are 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 increases in hotel commissions and
license fee royalties are largely attributable to increases in the
corresponding revenue amounts during the three-month 2002 period.

In-room entertainment operating costs decreased $7,719,000 or 6.4% during the
nine months ended September 30, 2002, as compared to the corresponding prior
year period. Such decrease is primarily due to the net effect of (i)
decreases in labor and overhead costs attributable to a May 2001 corporate
restructuring and other cost saving measures; (ii) decreases in the costs
associated with video system and equipment sales and other revenue; (iii)
decreases due to the reversal of accruals, as described above;  (iv)
decreases in research and development expenses; and (v) increases
attributable to higher direct in-room service costs. Direct in-room service
costs were higher during the nine months ended September 30, 2002 due to the
net effect of (i) increases attributable to higher guest programming costs
and hotel commissions; and (ii) decreases attributable to lower license fee
royalties, video duplication and distribution costs, and Internet direct
costs. The decrease in license fee royalties is primarily attributable to a
lower volume of feature film buys. Hotel commissions, as a percentage of
total room revenue, increased slightly during the nine-month 2002 period.
Direct in-room service costs represented 50.1% and 49.0% of total room
revenue during the nine months ended September 30, 2002 and 2001,
respectively. Certain of the Company'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. Certain of the Company's contracts with
hotel customers limit the amount of any cost increases that can be passed on to
such hotel customers. 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.

                                      I-30
<Page>

SELLING GENERAL AND ADMINISTRATIVE EXPENSE

Selling, general and administrative expense decreased $3,948,000 or 38.4% and
$33,484,000 or 64.7% during the three and nine months ended September 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 $1,824,000 and $13,269,000, respectively of the
decreases. In addition, the elimination of expenses as a result of the September
2001 sale of Ascent Network Services accounted for approximately $3,100,000 and
$8,800,000, respectively of the decreases. The nine-month decrease also includes
$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 10 to the
accompanying condensed consolidated financial statements. The remaining decrease
during the nine-month period is primarily attributable to cost reductions
realized by On Command as a result of a May 2001 corporate restructuring and
other cost saving measures. During the three-month period, the effect of On
Command's cost reduction efforts was more than offset by the effects of higher
labor costs associated with an employee incentive plan initiated by On Command
during 2002, higher bad debt expense and certain other individually
insignificant items.

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 September 30, 2002 or 2001, LSAT recorded no compensation
expense with respect to SARs during the nine months ended September 30, 2002 and
2001. The stock compensation expense recorded during the nine months ended
September 30, 2002 and 2001 is attributable to restricted stock awards granted
in February 2001.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense decreased $9,277,000 or 22.0% and
$28,585,000 or 22.2% during the three and nine months ended September 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. Depreciation remained relatively
constant during the 2002 and 2001 periods as reductions to On Command's
depreciable asset base attributable to assets becoming fully depreciated and
asset dispositions were largely offset by increases attributable to capital
expenditures.

ASSET IMPAIRMENTS AND OTHER CHARGES

The Company recorded an impairment loss during the nine months ended September
30, 2002 of $5,103,000 relating to the OCE Sale. For additional information, see
note 8 to the accompanying condensed consolidated financial statements. The
Company also recorded other charges aggregating $2,822,000 and $422,000 during
the nine months ended September 30, 2002 and 2001, respectively. Such charges
are comprised of amounts related to obsolete materials and equipment, and losses
on various asset dispositions.

OTHER INCOME (EXPENSE)

The Company recognized interest income of $1,547,0000 and $11,066,000 during the
nine months ended September 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 nine months ended September 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.

                                      I-31
<Page>

During the nine months ended September 30, 2002 and 2001, the Company recognized
interest expense of $14,425,000 and $36,890,000, 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 nine months ended September 30, 2002 and 2001, the Company's share of
losses of affiliates aggregated $4,765,000 and $172,425,000, respectively. The
2002 amount includes $4,118,000 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 Astrolink's losses has been limited to
the amounts loaned to Astrolink by the Company during the nine months ended
September 30, 2002. At September 30, 2002, the Company was not obligated to
provide additional funding to Astrolink. The Company's share of losses for the
nine months ended September 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 on financial instruments during the nine months ended September
30, 2002 and 2001 aggregated $1,865,000 and $25,814,000, respectively. The
details of such gains (losses) are as follows:

<Table>
<Caption>
                                                                 Nine months ended september 30,
                                                                 -------------------------------
                                                                      2002             2001
                                                                 -------------     -------------
                                                                       amounts in thousands
<S>                                                              <C>                      <C>
Change in fair value of GM Hughes put
   spread collar                                                 $       5,528            10,989
Change in time value of equity collars                                  (1,782)           21,633
Change in fair value of iBEAM put option                                (1,881)           (6,808)
                                                                 -------------     -------------
                                                                 $       1,865            25,814
                                                                 =============     =============
</Table>

Nontemporary declines in fair values of investments aggregated $76,333,000 and
$40,139,000 during the nine months ended September 30, 2002 and 2001,
respectively. The 2002 amount includes reductions of the carrying values of LSAT
LLC's investments in Sky Latin America and Loral of $58,948,000 and $17,385,000,
respectively. The 2001 amount includes reductions of the carrying values of LSAT
LLC's investments in Wildblue and XMSR of $20,725,000 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 $14,745,000 and $16,819,000 during
the nine months ended September 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
September 30, 2002, Ascent's deferred tax liability was $14,849,000. 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 September 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.

                                      I-32
<Page>

MINORITY INTERESTS IN LOSS OF CONSOLIDATED SUBSIDIARIES

The minority interests' share of losses of consolidated subsidiaries aggregated
$186,000 and $20,698,000 during the nine months ended September 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 the On Command
Revolving 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 $47,001,000 and cash provided by financing activities of $9,336,000 to fund
investing activities of $67,779,000. The Company's investing activities included
$27,163,000 of investments in and advances to affiliates and $41,447,000 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 (1.82% at September
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 September 30, 2002, borrowing availability pursuant to
the PCS Loan Facility was $190,497,000.

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% (3.74% at September 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 September 30, 2002, the
unpaid principal on the note was $48,411,000 and the accrued interest on the
note was $151,000.

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.

In August 2002, the LSAT Board of Directors authorized the Company's purchase of
up to 3,000,000 of LSAT's Series A and Series B common stock in open market
purchases. The timing of purchases, prices paid and actual number of shares of
common stock purchased will depend on market conditions and the direction of
management. During the third quarter of 2002, LSAT purchased 14,300 shares of
Series A common stock for aggregate cash consideration of $32,000 pursuant to
this share buy back program.

                                      I-33
<Page>

In March 2000, LSAT issued 150,000 shares of 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, Series A Common Stock or a
combination thereof to satisfy such dividend requirements through March 2003.
During the third quarter of 2002, the Company issued 4,320,277 shares of Series
A Common Stock in satisfaction of dividends accrued through June 30, 2002.
Accrued and unpaid dividends on the Series A Preferred Stock and Series B
Preferred Stock aggregated $7,500,000 at September 30, 2002.

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% per annum 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
September 30, 2002, LSAT's cash and cash equivalent balances aggregated
$20,658,000. 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.

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. On Command had $16,367,000 of
remaining availability under the On Command Revolving Credit Facility at
September 30, 2002. On Command's ability to draw additional funds under the On
Command Revolving Credit Facility is limited by certain financial covenants.

Revolving loans extended under the On Command Revolving Credit Facility bear
interest at the LIBOR plus a spread that may range from 1.10% to 2.75% depending
on certain operating ratios of On Command (4.32% effective borrowing rate at
September 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 leverage and
interest coverage ratios. On Command was in compliance with such covenants at
September 30, 2002. Substantially all of On Command's assets are pledged as
collateral for borrowings under the On Command Revolving Credit Facility.

                                      I-34
<Page>

At September 30, 2002, the maximum leverage ratio permitted under the On Command
Revolving Credit Facility was 4.50, and On Command's actual leverage ratio was
4.07. The maximum leverage ratio permitted under the On Command Revolving Credit
Facility at December 31, 2002 and March 31, 2003 is 4.25 and 3.50, respectively.
Although On Command anticipates that it will be in compliance with the leverage
ratio covenant at December 31, 2002, On Command currently believes that it will
not be in compliance with such covenant at March 31, 2003. On Command is seeking
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 or at
all.

In connection with a first quarter 2001 transaction, On Command agreed that
e-ROOM would 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.

Historically, On Command has required external financing to fund the cost of
installing and upgrading video systems in hotels. However, during the first nine
months of 2002, On Command has reduced its reliance on external financing by
reducing expenses, increasing revenue per equipped room, and by more effectively
managing capital expenditures. Assuming On Command continues to meet its revenue
targets, reduce expenses and effectively manage 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 through 2003. Through September 30, 2002, On
Command 's actual revenue was in line with the targeted range for the year ended
December 31, 2002. On Command 's revenue targets for 2003 are based in part on
the assumption that occupancy rates for 2003 will be consistent with the 2002
rates. Although no significant revenue shortfall is expected in 2002 or 2003, On
Command expects that it would 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 through 2003. 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 (as
discussed above). No assurance can be given that On Command will continue to be
successful in reducing its reliance on external financing during the balance of
2002 and 2003, and if external financing is required, no assurance can be given
that any such financing would be available on terms acceptable to On Command or
at all.

The Company uses equity collars and a put spread collar to hedge market risk
with respect to certain of its publicly traded securities. 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.

                                      I-35
<Page>

The Company and other investors in the Sky Latin America businesses have
severally guaranteed obligations due under certain transponder agreements and
equipment lease agreements through 2018. At September 30,2002, the portions of
the remaining undiscounted obligations due under such transponder agreements and
equipment lease agreements that were severally guaranteed by the Company
aggregated approximately $109,057,000 and $7,000,000, respectively. Subsequent
to September 30, 2002, Globo Comunicacoes e Participacoes ("GloboPar"), an
investor in three of the Sky Latin America entities, announced that it was
reevaluating its capital structure. As a result, the Company believes that it is
probable that GloboPar will not meet some, if not all, of its future funding
obligations with respect to these three Sky Latin America entities. To the
extent that GloboPar does not meet its funding obligations, the Company and
other investors could mutually agree to assume GloboPar's obligations. To the
extent that the Company or such other investors do not fully assume GloboPar's
funding obligations, any funding shortfall could lead to defaults under
applicable transponder agreements and equipment lease agreements. With respect
to the equipment lease agreements, default also includes bankruptcy, debt
default, or material adverse change in the business or financial condition of
any guarantor that materially adversely affects the ability of any such
guarantor to perform its obligations under the guarantee. In the event any such
defaults were to occur, the default provisions of the applicable agreements
would determine the ultimate amount to be paid by the Company. The Company
believes that the maximum amount of the Company's aggregate exposure under the
default provisions of the various agreements is not in excess of the
undiscounted remaining obligations guaranteed by the Company, as set forth
above. The three entities in which GloboPar is an investor account for
approximately $89,667,000 of the approximately $116,057,000 of aggregate
obligations guaranteed by the Company at September 30, 2002. The Company cannot
currently predict whether it will be required to perform under any of 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 ($30,369,000 at September 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.

                                      I-36
<Page>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At September 30, 2002, the Company had $419,547,000 of variable-rate liabilities
with a weighted-average interest rate of 3.58%. 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. Assuming no
increase or decrease in the amount outstanding, a hypothetical 1% increase (or
decrease) in interest rates at September 30, 2002 would increase (or decrease)
the Company's annual interest expense and cash outflows by approximately
$4,915,000. At September 30, 2002, the Company's variable rate liabilities were
due and payable as follows (amounts in thousand):

               March 2003                                      $         160,914
               July 2004                                                 258,633
                                                               -----------------
                                                               $         419,547
                                                               =================

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 September 30,
2002, the aggregate fair market value of the Company's publicly traded
securities (excluding the fair value of related hedge instruments) was
$33,096,000 ($9,966,000 of which represents the fair value of the Sprint PCS
Stock). At September 30, 2002, the fair value of the Company's equity collars
was $315,666,000 ($291,519,000 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 $20,274,000. At September 30, 2002, the fair market value of the GM Hughes
Stock that is the subject of the put spread collar was $16,671,000. Among other
things, the GM Hughes put spread collar (i) provides the Company with the right
to require a counterparty to purchase shares of GM Hughes Stock for a weighted
average price of $26.64 per share in October 2003; and (ii) provides a
counterparty with the right to require the Company to repurchase shares of GM
Hughes Stock for a weighted average price of $14.80 per share in October 2003.
At September 30, 2002, the per share market value of GM Hughes Stock was $9.15.
In addition, the Company owned $2,559,000 of publicly traded securities at
September 30, 2002 that were not hedged. 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, Argentina, Spain and Portugal. 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.

ITEM 4.  CONTROLS AND PROCEDURES

The Company's acting president and chief financial officer performed an
evaluation of the Company's disclosure controls and procedures as of a date
within 90 days prior to the filing of this quarterly report on Form 10-Q. Based
on this evaluation, the Company believes that such controls and procedures
effectively ensure that information required to be disclosed in this quarterly
report on Form 10-Q is appropriately recorded, processed and reported. There
have been no significant changes in the Company's disclosure controls and
procedures or in other factors that could significantly affect these controls
subsequent to the date of this evaluation.

                                      I-37
<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 September 30, 2002:

<Table>
<Caption>
             Date Filed                Items Reported            Financial Statements Filed
             ----------                --------------            --------------------------
         <S>                               <C>                   <C>
          August 14, 2002                  Item 9                                 None
         September 10, 2002                Item 7                Liberty Satellite & Technology, Inc. -
                                                                     Consolidated Financial
                                                                    Statements as of December 31,
                                                                    2001 and 2000 and for the
                                                                      three years ended
                                                                      December 31, 2001
</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:  November 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-2
<Page>

                                  CERTIFICATION

I, Kenneth G. Carroll, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Liberty Satellite &
Technology, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report my conclusions about the effectiveness of
the disclosure controls and procedures based on my evaluation as of the
Evaluation Date;

5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date:  November 14, 2002

/s/ Kenneth G. Carroll
------------------------------------
Kenneth G. Carroll

Acting President and Chief Financial Officer

                                      II-3