<Page>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

     /X/      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934
              For the fiscal year ended December 31, 2001

                                       OR

     / /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
              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                (I.R.S. Employer
        of incorporation or organization)            Identification Number)

            12300 LIBERTY BOULEVARD
               ENGLEWOOD, COLORADO                            80112
    (Address of principal executive offices)                (Zip Code)

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

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                Series A Common Stock, par value $1.00 per share
                Series B Common Stock, par value $1.00 per share

     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. Yes /X/ No / /

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. /X/

     The aggregate market value of the voting stock held by nonaffiliates of
Liberty Satellite & Technology, Inc. computed by reference to the last sales
price of such stock, as of the close of trading on February 28, 2002, was
approximately $39,473,000.

     The number of shares outstanding of Liberty Satellite & Technology, Inc.'s
common stock as of February 28, 2002 was:

                  Series A Common Stock - 6,750,147 shares; and
                     Series B Common Stock - 771,828 shares.

<Page>

                      LIBERTY SATELLITE & TECHNOLOGY, INC.
                         2001 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               PAGE
<S>            <C>                                                                                             <C>
                                                           PART I

Item 1.        Business....................................................................................... I-1
Item 2.        Properties..................................................................................... I-9
Item 3.        Legal Proceedings.............................................................................. I-9
Item 4.        Submission of Matters to a Vote of Security Holders............................................ I-10

                                                           PART II

Item 5.        Market for Registrant's Common Equity and Related Stockholder Matters.......................... II-1
Item 6.        Selected Financial Data........................................................................ II-2
Item 7.        Management's Discussion and Analysis of Financial Condition and Results of
                 Operations................................................................................... II-3
Item 7A.       Quantitative and Qualitative Disclosures About Market Risk..................................... II-12
Item 8.        Financial Statements and Supplementary Data.................................................... II-12
Item 9.        Changes in and Disagreements with Accountants on Accounting and
                 Financial Disclosure......................................................................... II-12

                                                          PART III

Item 10.       Directors and Executive Officers of the Registrant............................................. III-1
Item 11.       Executive Compensation......................................................................... III-4
Item 12.       Security Ownership of Certain Beneficial Owners and Management................................. III-7
Item 13.       Certain Relationships and Related Transactions................................................. III-12

                                                           PART IV

Item 14.       Exhibits, Financial Statements and Financial Statement Schedules and
                 Reports on Form 8-K.......................................................................... IV-1
</Table>

<Page>

PART I

ITEM 1.   BUSINESS

(A)      GENERAL DEVELOPMENT OF BUSINESS

         GENERAL. Liberty Satellite & Technology, Inc. ("LSAT" or the "Company")
pursues strategic opportunities worldwide in the distribution of Internet data
and other content via satellite and related businesses. Currently, the Company
conducts its business as the general manager of Liberty Satellite, LLC (a joint
venture between the Company and Liberty Media Corporation), and through
strategic investments in, and contractual arrangements with, various entities
that operate, or are developing, satellite and terrestrial wireless networks for
broadband distribution of Internet access, video programming, streaming media
and other data. In addition, the Company is actively seeking to develop or
acquire operating businesses related to, and complementary with, that mission.
Most of the businesses with which the Company has strategic relationships are in
the development stage and operate at substantial losses. There can be no
assurances that such businesses will continue to be able to fund such losses or
that their development plans will be achieved.

         Since its formation in 1996, the Company has undergone a number of
significant changes in its business. This Annual Report includes, for LSAT and
its subsidiaries, audited consolidated balance sheets as of December 31, 2001
and 2000, and audited consolidated statements of operations and cash flows for
each of the three years ended December 31, 2001, 2000 and 1999, as well as
certain selected financial data for each of the years in the five-year period
ended December 31, 2001. In order to help the reader to understand the financial
information presented herein, this Annual Report provides a brief description of
the business of LSAT and its predecessors over such five-year period, as well as
certain material transactions affecting the Company during such period.

         On April 1, 2002, the Company effected 1 for 10 reverse stock splits of
its Series A common stock and Series B common stock ("Series B Common Stock").
All shares and per share amounts included herein have been adjusted to give
retroactive effect to such reverse stock splits.

THE SPIN-OFF. LSAT was incorporated in Delaware in November 1996 under the name
TCI Satellite Entertainment, Inc. Prior to the Spin-off (as defined below), the
Company was wholly owned by Tele-Communications, Inc. ("TCI") (now known as AT&T
Broadband LLC). Among other businesses, TCI, through various subsidiaries, was
engaged in distributing PRIMESTAR(R) satellite television services, a medium
power digital satellite service. The Company was formed to own and operate
certain businesses constituting TCI's collective interest in the digital
satellite business. On December 4, 1996, TCI distributed, as a dividend, all of
the issued and outstanding LSAT common stock to the holders of TCI's then
outstanding TCI Group tracking stock (the "Spin-off").

PRIMESTAR BY TCI. From December 1996 through March 1998, LSAT marketed and
distributed the PRIMESTAR(R) programming service under the brand names
"PRIMESTAR By TCI" and "PRIMESTAR By TSAT" and owned an aggregate 21%
partnership interest in PRIMESTAR Partners L.P. (now known as Phoenixstar
Partners L.P.) ("Primestar Partners"). Primestar Partners owned and operated the
PRIMESTAR(R) service, which was the second largest digital satellite business
and the eighth largest multichannel video programming distribution business in
the U.S., measured by the number of subscribers at December 31, 1998. In
addition, the Company, through its wholly-owned subsidiary, Tempo Satellite,
Inc. ("Tempo"), held a construction permit (the "FCC License") issued by the
Federal Communications Commission ("FCC"), authorizing construction of a high
power direct broadcast satellite ("DBS") system at the 119(Degree) West
Longitude ("W.L.") orbital position. Tempo was a party to a satellite
construction agreement (the "Satellite Construction Agreement") with Space
Systems/Loral, Inc. ("Loral") pursuant to which Tempo arranged for the
construction of two high power direct broadcast satellites (the "Tempo
Satellites"). In March 1997, one of the Tempo Satellites ("Tempo DBS-1") was
launched into geosynchronous orbit. The other Tempo Satellite ("Tempo DBS-2")
served as a ground spare for Tempo DBS-1.

                                       I-1
<Page>

THE PRIMESTAR ROLL-UP. Effective April 1, 1998, a business combination (the
"Primestar Roll-up") was consummated whereby LSAT contributed and transferred to
PRIMESTAR, Inc. (now known as Phoenixstar, Inc.) ("Phoenixstar") substantially
all of LSAT's assets and liabilities in exchange for shares of Phoenixstar
common stock representing approximately 37% of the outstanding shares of common
equity of Phoenixstar and approximately 38% of the combined voting power of such
common equity. In addition, the business of Primestar Partners and the business
of distributing the PRIMESTAR(R) programming service of each of the other
partners in Primestar Partners was consolidated into Phoenixstar.

         As a result of the Primestar Roll-up, LSAT became a holding company,
with no substantial assets or liabilities other than (i) 100% of the outstanding
capital stock of Tempo, (ii) its ownership interest in Phoenixstar, and (iii)
its rights and obligations under certain agreements with Phoenixstar and others.

THE HUGHES TRANSACTIONS. In 1999, LSAT, Tempo, Phoenixstar and Primestar
Partners sold to Hughes Electronics Corporation ("Hughes"), a subsidiary of
General Motors Corporation, (i) Tempo DBS-1 and Tempo DBS-2 (ii) Tempo's
119(Degree) W.L. orbital location license and (iii) Phoenixstar's rights to use
Tempo's DBS system for aggregate consideration of $500 million including assumed
liabilities (the "Hughes High Power Transaction").

         In a separate transaction (the "Hughes Medium Power Transaction")
completed on April 28, 1999 (the "Hughes Closing Date"), Phoenixstar sold to
Hughes, Phoenixstar's medium-power DBS business and assets for $1.1 billion in
cash plus 14.613 million shares of General Motors Class H common stock ("GM
Hughes Stock"). Phoenixstar used the cash proceeds from Hughes to repay its bank
and public debt.

         In connection with their approval of the Hughes Medium Power
Transaction and other transactions, the stockholders of Phoenixstar approved the
payment to LSAT of 4,221,921 shares of GM Hughes Stock (the "Phoenixstar
Payment"). In consideration of the Phoenixstar Payment, the Company agreed to
approve the Hughes Medium Power Transaction and Hughes High Power Transaction
(the "Hughes Transactions") as a stockholder of Phoenixstar, to modify certain
agreements to facilitate the Hughes High Power Transaction, and to issue
Phoenixstar a share appreciation right (the "LSAT GMH SAR") with respect to the
shares of GM Hughes Stock received as the Phoenixstar Payment. The LSAT GMH SAR
granted Phoenixstar the right to any market price appreciation in such GM Hughes
Stock during the one-year period following the date of issuance, over an agreed
strike price of $15.67. The Company agreed to forgo 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 existing equity and to transfer its shares in
Phoenixstar to the other Phoenixstar stockholders. Effective May 10, 2000, the
Company sold 2,400,000 shares of GM Hughes Stock and used a portion of the cash
proceeds to satisfy the LSAT GMH SAR liability.

LIBERTY 2000 TRANSACTIONS. On March 16, 2000, the Company completed two
transactions (the "Liberty 2000 Transactions") with Liberty Media Corporation
("Liberty Media"). Pursuant to the terms of the first transaction, the Company
acquired from Liberty Media its beneficial interest in 5,084,745 shares of
Sprint Corporation PCS Group common stock ("Sprint PCS Stock"), in exchange for
(i) Series A 12% Cumulative Preferred Stock of the Company with a liquidation
value of $150,000,000 and (ii) Series B 8% Cumulative Convertible Voting
Preferred Stock ("Series B Preferred Stock") of the Company with a liquidation
value of $150,000,000. The Series B Preferred Stock is convertible into Series B
Common Stock of the Company at a conversion price of $88.40 per share, subject
to adjustment, and prior to conversion represents approximately 85% of the
voting power of the Company.

         Pursuant to the terms of the second transaction, the Company and
Liberty Media formed a joint venture, Liberty Satellite, LLC, a Delaware limited
liability company ("LSAT LLC"), to hold and manage interests in entities engaged
globally in the distribution of internet data and other content via satellite
and related businesses. Liberty Media contributed cash and its interests in XM
Satellite Radio Holdings, Inc., Wildblue Communications, Inc., LSAT Astro LLC
and the Sky Latin America satellite businesses in exchange for an 89.41%
ownership interest in LSAT LLC. The Company contributed its interest in GM
Hughes Stock, subject to the LSAT GMH SAR, and certain other assets, in exchange
for a 10.59% managing ownership interest in LSAT LLC.

                                       I-2
<Page>

         In a related transaction, the Company paid Liberty Media $60,000,000 in
the form of an unsecured promissory note in exchange for a 13.99% ownership
interest in LSAT Astro LLC ("LSAT Astro"), a limited liability company whose
assets included an approximate 31.5% interest in ASTROLINK International LLC and
$250,000,000 in cash. The remaining 86.01% of LSAT Astro was contributed by
Liberty Media to LSAT LLC, as indicated above.

LSAT LLC AND ASCENT TRANSACTIONS. On August 16, 2001, the Company entered
into two separate purchase agreements with Liberty Media and certain of its
subsidiaries and affiliates. Both agreements were amended in November 2001
and January 2002. One agreement provides for the Company's acquisition of
certain subsidiaries of Liberty Media that hold an aggregate 89.41% ownership
interest in LSAT LLC in exchange for 25,298,379 shares of the Company's
Series B Common Stock. The second purchase agreement provides for the
Company's acquisition of 100% of the capital stock of Ascent Entertainment
Group ("Ascent"), Inc. from a subsidiary of Liberty Media in exchange for
8,701,621 shares of the Company's Series B Common Stock. Ascent's primary
operating subsidiary is On Command Corporation, which provides in-room,
on-demand video entertainment and information services to hotels, motels and
resorts, primarily in the United States. The foregoing transactions (the
"LSAT LLC and Ascent Transactions") closed on April 1, 2002. As a result of
the consummation of the LSAT LLC and Ascent Transactions, Liberty Media's
common stock ownership in the Company increased to 84.1% and its voting power
in the Company increased to 97.6%.

LIBERTY MEDIA PROPOSAL. On October 12, 2001, LSAT announced that it had received
a proposal from Liberty Media to acquire all of the issued and outstanding
shares of LSAT that Liberty Media does not already own. As proposed, LSAT
stockholders would have received 0.9 of a share of Liberty Media Series A
common stock for each share of LSAT common stock held. On December 3, 2001,
Liberty Media announced that it was withdrawing its proposal.

OTHER BUSINESS. Effective February 1, 2000, the Company entered into a
Management Agreement with Phoenixstar pursuant to which the Company is managing
Phoenixstar's affairs in exchange for a monthly management fee.

         Effective September 14, 2001, the Company transferred its 80% ownership
interest in TSAT Technologies, Inc. ("Technologies Sub") to Asvan Technology,
LLC, ("Asvan"). LSAT and Asvan had previously entered into an agreement pursuant
to which Asvan transferred certain assets and intellectual property to
Technologies Sub in exchange for a 20% equity interest in Technologies Sub. LSAT
had agreed to provide Technologies Sub with a maximum of $5,000,000 (the
"Funding Commitment") to develop technologies relating to the design of (i) a
stable, low phase noise, remotely tunable transceiver, and (ii) an integrated
receiver/decoder (IRD) service module for commercial premises and multiple
dwelling units.

         In connection with the transfer of LSAT's 80% interest in Technologies
Sub to Asvan, LSAT's obligations under the Funding Commitment were terminated.
In addition, LSAT obtained the right to purchase from Technologies Sub hardware
and software products developed using the aforementioned technologies at prices
not to exceed 110% of Technologies Sub's direct cost to produce such products.
This pricing is to remain in effect until the aggregate costs to LSAT is
$1,000,000 less than that which would be paid by other Asvan customers.
Thereafter, Asvan agreed to sell products to LSAT at prices not to exceed the
lowest price offered by Technologies Sub to any other buyer of similar
quantities of the products.

FORWARD LOOKING STATEMENTS. Certain statements in this Annual Report on Form
10-K constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performance or achievements of the Company, or
industry results, to differ materially from any future results, performance or
achievements express or implied by such forward-looking statements. Such risks,
uncertainties and other factors include, among others:

     -   General economic and business conditions and industry trends;
     -   Uncertainties inherent in proposed business strategies and development
         plans, including uncertainties regarding possible regulatory issues
         under the Investment Company Act of 1940, as amended (the "Investment
         Company Act");

                                       I-3
<Page>

     -   Future financial performance, including availability, terms and
         deployment of capital;
     -   The ability of vendors to deliver required equipment, software and
         services;
     -   Availability of qualified personnel;
     -   Changes in, or the failure or the inability to comply with, government
         regulation, including, without limitation, regulations of the FCC, and
         adverse outcomes from regulatory proceedings;
     -   Changes in the nature of key strategic relationships with partners and
         joint venturers;
     -   And other factors referenced in this Report.

         Many of the foregoing risks and uncertainties are discussed in greater
detail under the captions "BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." These forward-looking
statements (and such risks, uncertainties and other factors) speak only as of
the date of this Report. The Company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based.

(B)      FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

         Not applicable.

(C)      NARRATIVE DESCRIPTION OF BUSINESS

         PRINCIPLE SUBSIDIARIES AND STRATEGIC RELATIONSHIPS

         The following table sets forth information concerning the Company's
significant subsidiaries and business affiliates. The Company holds its
interests in the listed entities indirectly through LSAT LLC or LSAT Astro. The
investment in such entities may be in the form of partnership or joint venture
interests, common stock investments or instruments convertible or exchangeable
into common stock. LSAT LLC is owned 10.59% by LSAT and 89.41% by Liberty Media.
LSAT Astro is owned 13.99% by LSAT and 86.01% by LSAT LLC. Ownership percentages
in the table represent LSAT LLC's or LSAT Astro's ownership in the respective
entity, as appropriate. Ownership percentages in the table are approximate,
calculated as of February 1, 2002, and, where applicable and except where
otherwise noted, assume conversion of the Company's ownership interest to common
equity.

<Table>
<Caption>
                                          PERCENTAGE
                                           OWNERSHIP
ENTITY                                     AT 2/1/02                     DESCRIPTION OF BUSINESS
----------------------------------------------------------------------------------------------------------------
<S>                                           <C>       <C>
                                      OWNED INDIRECTLY THROUGH LSAT LLC

Aerocast.com, Inc.                          45.5%       Developing  a  terrestrial  and  satellite   network  to
                                                        distribute streaming media to businesses and consumers.

Hughes Electronics Corporation               < 1%       Provides  digital  television  entertainment,  satellite
(NYSE:  GMH)                                            services and satellite-based private business networks.

Sky Latin America                             10%       Operates  a  satellite  delivered   television  platform
                                                        serving Mexico, Brazil, Colombia, Chile and Argentina.

Sprint Corporation PCS Group                 < 1%       Operates an all-digital PCS nationwide network.
(NYSE:  PCS)
</Table>

                                       I-4
<Page>

<Table>
<Caption>
                                          PERCENTAGE
                                          OWNERSHIP
ENTITY                                     AT 2/1/02                     DESCRIPTION OF BUSINESS
----------------------------------------------------------------------------------------------------------------
<S>                                           <C>       <C>
                                      OWNED INDIRECTLY THROUGH LSAT LLC

Wildblue Communications, Inc.                 16%       Building   a  Ka-band   satellite   network  to  provide
                                                        broadband  data  communications  services  to homes  and
                                                        small offices in North America and Latin America.

XM Satellite Radio Holdings, Inc.            1.3%       Provides   100   national   audio   channels   from  two
(NASDAQ:  XMSR)                                         satellites  directly  to  vehicle,   home  and  portable
                                                        radios.

                                          OWNED THROUGH LSAT ASTRO

ASTROLINK International LLC                 31.5%       Building   a  Ka-band   satellite   network   originally
                                                        intended  to  provide   broadband  data   communications
                                                        services to businesses worldwide.
</Table>

ASTROLINK INTERNATIONAL LLC

         The original business plan of ASTROLINK International LLC ("Astrolink")
required approximately $2.4 billion in additional financing over the next
several years, including approximately $830,000,000 in 2002. During the fourth
quarter of 2001, two of Astrolink's members informed Astrolink that they do not
intend to provide any of Astrolink's required financing. In light of this
decision, Astrolink is considering several alternatives with respect to its
proposed business plan, including, but not limited to, seeking alternative
funding sources, scaling back their proposed business plan, and liquidating the
venture entirely. There can be no assurance that Astrolink will be able to
obtain the necessary financing on acceptable terms, or that Astrolink will be
able to fulfill its business plan as originally proposed, or at all.

         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. Including
LSAT Astro's share of Astrolink's losses for 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 has recorded
losses and charges relating to its investment in Astrolink aggregating
$417,202,000 during the year ended December 31, 2001.

SPRINT PCS

         LSAT LLC holds beneficial interests with respect to 5,084,745 shares of
Sprint PCS Stock (NYSE: PCS) and certain derivative financial instruments
related to those shares. LSAT LLC acquired such interests from the Company
pursuant to a Trust Interest Purchase Agreement, dated May 9, 2001 between the
Company and LSAT LLC. The aggregate purchase price for the interests in the
shares of Sprint PCS Stock was $287,267,000, and was paid by (i) delivery of two
secured demand promissory notes issued by LSAT LLC to the Company in the
aggregate principal amount of $224,226,000, and (ii) the assumption of
$65,041,000 of indebtedness which the Company owed to the Trust. The notes bear
interest at a rate of 6.5% per annum, payable quarterly in arrears, at maturity
and upon payment of principal. Amounts outstanding under the notes are due and
payable, in whole or in part, three business days after the Company's demand
therefore, and in any event, in March 2003. LSAT LLC's obligations to the
Company under the notes are secured by LSAT LLC's interest in shares of Sprint
PCS Stock and by an equity collar of the Sprint PCS Stock. At December 31, 2001,
the combined fair value of LSATA LLC's interest in the Sprint PCS Stock and the
Sprint PCS Stock equity collar was $301,840,000.

                                       I-5
<Page>

         The Sprint PCS Stock of Sprint Corporation is intended to reflect the
performance of Sprint Corporation's wireless PCS operations (the "Sprint PCS
Group"). The Sprint PCS Group operates a 100% digital PCS wireless network in
the United States with licenses to provide service nationwide using a single
frequency and a single technology. The Sprint PCS Group also provides wholesale
PCS services to companies that resell the services to their customers on a
retail basis.

AEROCAST.COM, INC.

         Aerocast.com, Inc. ("Aerocast") is an early-stage company that was
organized to develop a terrestrial and satellite network to distribute streaming
media to businesses and consumers. Aerocast provides services based on this
platform to content providers and broadband last-mile operators (e.g., cable
modem, digital subscriber line ("DSL") and wireless). Other major investors in
Aerocast include Soros Fund Management and Motorola Broadband Communications.

WILDBLUE COMMUNICATIONS, INC.

         Wildblue Communications, Inc. ("Wildblue") was established to build a
Ka-band satellite network to provide broadband data communications services to
homes and small offices in North America and Latin America. Other strategic
investors in Wildblue include Gemstar-TV Guide International, Inc., Kleiner
Perkins Caufield & Byers, TRW, Inc., EchoStar Communications Corp., and Telesat
Canada. Wildblue requires significant additional equity funding in the next six
months to continue to pursue its current business plan. There can be no
assurances that sufficient financing will be available on terms acceptable to
Wildblue or on any terms, or that an alternative business plan requiring less
capital can be developed.

         Based on a fourth quarter 2001 assessment of Wildblue's remaining
sources of liquidity and Wildblue's inability to obtain financing for its
business plan, the Company concluded that the carrying value of LSAT LLC's
investment in Wildblue should be reduced to reflect a fair value that assumes
the liquidation of Wildblue. Accordingly, LSAT LLC wrote-off $36,245,000 of it's
investment in Wildblue during the fourth quarter of 2001. Including such fourth
quarter write-off, LSAT LLC has recorded writedowns of its investment in
Wildblue aggregating $56,483,000 during the year ended December 31, 2001. At
December 31, 2001, the remaining carrying value of the Company's investment in
Wildblue was $4,512,000.

SKY LATIN AMERICA

         LSAT LLC has a 10% interest in each of three Latin American satellite
television operators, together known as Sky Latin America, serving Mexico,
Brazil, Colombia, Chile and Argentina. Sky Latin America offers entertainment
and services via satellite to households through its various owned and
affiliated distribution platforms worldwide. The Sky Latin America entities
distribute their programming primarily via direct-to-home or DTH platforms,
allowing their subscribers to access a variety of channels covering general
entertainment, music, movies, sports, kids, news, documentaries and education
genres with their television remote controls. Other major investors in Sky Latin
America include News Corporation, Grupo Televisa and Organizacion Globo.

XM SATELLITE RADIO HOLDINGS, INC.

         XM Satellite Radio Holdings (Nasdaq: XMSR) offers approximately 100
national audio channels from two satellites directly to vehicle, home and
portable radios. At December 31, 2001, LSAT LLC owned 1,000,000 shares of XM
Satellite Radio Holdings.

HUGHES ELECTRONICS CORPORATION

         Hughes (NYSE: GMH), a subsidiary of General Motors Corporation,
provides digital television entertainment, satellite services and
satellite-based private business networks. At December 31, 2001, LSAT LLC owned
1,821,921 shares of GM Hughes Stock.

THE PRIMESTAR(R) BUSINESS

                                       I-6
<Page>

         Prior to the Hughes Closing Date on April 28, 1999, the Company was
engaged, directly and through Phoenixstar and Primestar Partners, in the
PRIMESTAR(R) medium power satellite business described below and related high
power satellite efforts of Tempo, a wholly-owned subsidiary of the Company.
Since the consummation of the Hughes Transactions described above, the Company
has not been engaged directly or indirectly in the PRIMESTAR(R) or Tempo
businesses. Since the Hughes Closing Date, "PRIMESTAR" has been a registered
trademark of Hughes.

PRIMESTAR(R) SERVICE. PRIMESTAR(R) offered a medium power satellite service with
over 160 channels of digital video and audio programming throughout the
continental United States. The medium power service was transmitted via 24
transponders on GE-2, which is owned and operated by GE American Communications,
Inc. and located at the 85(Degree) W.L. orbital position. The PRIMESTAR(R)
medium power service served approximately 2.3 million subscribers as of
December 31, 1998.

         The Company and other PRIMESTAR distributors, each of whom was also
affiliated with a partner of Primestar Partners, contracted directly with
residential and commercial subscribers and billed such subscribers directly for
the PRIMESTAR(R) service. In turn, the Company and other PRIMESTAR distributors
paid authorization and programming fees to Primestar Partners.

TEMPO DBS SYSTEM. Prior to the closing of the Hughes High Power Transaction, the
Company, through Tempo, held the FCC License, authorizing construction of a high
power DBS system consisting of two or more satellites delivering DBS service in
11 frequencies at the 119(Degree) W.L. orbital position. The 119(Degree) W.L.
orbital position is generally visible to home satellite dishes throughout the
entire continental U.S. Tempo was also a party to the Satellite Construction
Agreement with Loral, pursuant to which Tempo arranged for the construction of
Tempo DBS-1 and Tempo DBS-2 and had an option to purchase up to three additional
satellites.

COMPETITION

         The Company pursues strategic opportunities worldwide in the
distribution of Internet data and other content via satellite and related
businesses. Currently, the Company conducts its business through strategic
investments in, and contractual arrangements with, various entities that
operate, or are developing, satellite and terrestrial wireless networks for
broadband distribution of Internet access, video programming, streaming media
and other data. Most of the businesses with which the Company has strategic
relationships are in the development stage and operate at substantial losses.
There can be no assurances that such businesses will continue to be able to fund
such losses or that their development plans will be achieved.

         The broadband communications industry experiences intense competition
in worldwide markets among numerous global competitors, including some of the
world's largest and best known companies. The Company and those entities in
which the Company has made strategic investments will face competition from
other satellite providers, cable television providers, "wireless cable"
providers, DSL (digital subscriber line) providers, traditional narrowband
Internet access providers, proprietary on-line services and other
telecommunications companies and service providers. Many of such competitors and
potential competitors have substantially greater capital and financial
resources, brand recognition, marketing resources, and/or technological
capabilities than the Company, and many have substantial existing customer bases
and established relationships with content providers, distributors and/or retail
outlets. Such advantages may increase the ability of such actual and potential
competitors to compete successfully against the Company and its strategic
investments.

         The Company expects that significant competitive factors will include
price, service quality and reliability, signal latency, susceptibility to "rain
fade" and other forms of interference, geographic service areas or "footprints,"
ease of use, breadth of features and service offerings, the ability to bundle
complementary services, the availability of vendor financing for antennas,
receivers and other customer premises equipment, brand recognition and
time-to-market.

         The Company believes that competition in its industry will increase as
the FCC grants additional licenses in existing frequency ranges and as new
technologies are developed and deployed.

                                       I-7
<Page>

REGULATORY MATTERS

FCC REGULATION. The FCC is the government agency with primary authority in the
United States to regulate the use of radio spectrum, including both satellite
and terrestrial applications. The Company does not currently hold any FCC
licenses or other authorizations, and cannot directly acquire, own, construct or
operate a satellite system without an appropriate license, construction permit
or other authorization issued by the FCC for such purpose. In addition, most
microwave and other terrestrial radio operations also require FCC authorization.
The FCC has promulgated numerous regulations governing the construction,
ownership and operation of satellite and terrestrial radio systems. Wireless
communications companies must comply with all such regulations applicable to
their operations, and if they violate such regulations, the FCC can impose
sanctions such as fines, loss or modification of authorizations, and/or the
denial of applications for new authorizations or for renewal of existing
authorizations.

         Certain terrestrial wireless systems utilize un-licensed radio
frequencies for communicating between the antenna serving an individual
community and subscribers in that community. However, such systems are
nevertheless subject to FCC regulation and may utilize other frequencies that
require authorizations for other purposes (such as satellite earth stations or
microwave communications between a head end and community antennas). Service
providers that use unlicensed spectrum are also subject to interference from
other permitted users of such spectrum in their service areas, and may be
subject to restrictions on amplification and other limitations.

         Construction of a Ka-band satellite system requires an appropriate
construction permit from the FCC. Such permits are generally subject to time
limits and requirements that the permittee exercise due diligence toward the
construction and deployment of the permitted system within such time limits.
Licenses for Ka-band satellites are issued for an initial ten-year term
commencing once the satellite is successfully placed into orbit and its
operations fully conform to the terms and conditions of the license. Upon the
expiration of the license for each Ka-band satellite, the licensee must apply
for renewal of the license. Astrolink and Wildblue have been granted five and
two FCC permits, respectively. Such permits require Astrolink and Wildblue to
meet terms and conditions and comply with FCC regulations. If they do not meet
the FCC terms and conditions, their FCC permits could expire, be revoked,
modified, or may or may not be renewed.

INVESTMENT COMPANY ACT. The Investment Company Act requires companies that are
engaged primarily in the business of investing, reinvesting, owning, holding or
trading in securities, or that fail certain numerical tests regarding the
composition of their assets and their sources of income and that are not
primarily engaged in a business other than investing, reinvesting, owning,
holding or trading in securities, to register as "investment companies." Various
substantive restrictions are imposed on investment companies by the Investment
Company Act.

         The Company is primarily engaged in a business other than investing,
reinvesting, owning, holding or trading securities, and does not intend to be an
investment company within the meaning of the Investment Company Act. However,
there is a risk that the Company could be deemed an investment company within
the meaning of the Investment Company Act. If the Company is required to
register as an investment company under the Investment Company Act, the Company
would become subject to substantial regulation of its capital structure,
management, operations, transactions with "affiliated persons," as defined in
the Investment Company Act, and other matters. If the Company were deemed to be
an investment company subject to regulation under the Investment Company Act and
did not register under that Act, it would be in violation of the Investment
Company Act and would be prohibited from engaging in business or selling its
securities and could be subject to civil and criminal actions for doing so. In
addition, the Company's contracts would be voidable and a court could appoint a
receiver to take control of the Company and liquidate it. Therefore, the
Company's classification as an investment company subject to regulation under
the Investment Company Act could materially adversely affect its business,
results of operations and financial condition.

                                       I-8
<Page>

OTHER

         During 2000 and 1999, the Company purchased approximately $25,000 and
$200,000, respectively, in equipment to be used in research and development
activities, in addition to approximately $320,000 and $200,000, respectively,
expended in research and development activities which is included in operations.
Amounts expended for research and development in 2001 were not significant.

         Compliance with federal, state and local provisions that have been
enacted or adopted regulating the discharge of material into the environment or
otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, results of operations or competitive
position of the Company.

         As of December 31, 2001, the Company had 4 employees.

(D)      FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
         SALES

         Not applicable.

ITEM 2.  PROPERTIES.

         The Company owns no real estate. The Company subleases office space
from Liberty Media in Englewood, Colorado. The Company believes that such office
space is adequate for its business operations for the foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS.

         There are no material pending legal proceedings to which the Company is
a party or to which any of its property is subject, except as follows:

         In a civil action entitled DANIEL BOONE, OZARK HEARTLAND ELECTRONICS,
INC. V. RADIO SHACK, ET AL, pending in the United States District Court, Western
District, Springfield Division, Missouri, Civil Action No. 99-3109-CV-S-RGC-ECF,
plaintiff alleges that the Company and other defendants (i) entered into a
vertical resale price maintenance agreement with Radio Shack, in violation of
Section 1 of the Sherman Act, and (ii) tortiously interfered with plaintiff's
contractual relationship with Radio Shack when they requested that Radio Shack
terminate plaintiff's right to market PRIMESTAR(R) products. On February 1,
2001, the Eighth Circuit Court of Appeals affirmed an earlier ruling by the
District Court granting summary judgment in favor of each of the Defendants and
dismissing the suit. The plaintiff has filed a Petition for Rehearing, which was
denied by the Eighth Circuit Court of Appeals on March 4, 2002. The plaintiff
has until June 3, 2002 to file a petition for certiorari with the United States
Supreme Court. Phoenixstar has a contractual obligation to indemnify the Company
for liability, if any, arising out of this matter.

                                       I-9
<Page>

         SHAREHOLDER LITIGATION. On October 12, 2001, Liberty Media announced
that it had offered to acquire by merger all the outstanding shares of the
Company's common stock that Liberty Media did not already own. In the proposed
merger, each share of Company common stock would have been exchanged for 0.09 of
a share of Liberty Media Series A common stock. Beginning on October 15, 2001,
eight purported class actions styled STEINER V. LIBERTY SATELLITE & TECHNOLOGY,
INC., ET AL., C.A. No. 19185, LEVY V. ANGELICH, ET AL., C.A. No. 19186, FINKE V.
LIBERTY SATELLITE & TECHNOLOGY, INC., C.A. No. 19187, GARBER V. HOWARD, ET AL.,
C.A. No. 19192, HAUSSER V. BENNETT, ET AL., C.A. No. 19199, MARKS V. LIBERTY
SATELLITE & TECHNOLOGY, INC., ET AL., C.A. No. 19200, RAND V. LIBERTY SATELLITE
& TECHNOLOGY, INC., ET AL., C.A. No. 19207, and KRIM V. LIBERTY SATELLITE &
TECHNOLOGY, INC., ET AL., C.A. No. 19233, were filed on behalf of the
stockholders of the Company, other than Liberty Media and the defendants, in the
Court of Chancery in New Castle County, Delaware (the "Delaware Actions"). On
October 25 and 29, 2001, two purported class actions, styled COHEN V. HOWARD, ET
AL., Case No. 01CV3086 and HIMES V. LIBERTY SATELLITE & TECHNOLOGY, INC., ET
AL., Case No. 01CV3119, were filed on behalf of the stockholders of the Company,
other than Liberty Media and the defendants, in District Court in Arapahoe
County, Colorado (the "Colorado Actions" and, together with the Delaware
Actions, the "Actions"). The Actions generally named as defendants in addition
to the Company current directors Gary Howard, John W. Goddard, J. Curt
Hockemeier, Alan M. Angelich, Williams H. Berkman and Robert R. Bennett, as well
as William R. Fitzgerald, an officer of Liberty Media who had been nominated,
but not elected, to fill a vacancy on the board. Certain of the Company's
officers were named as defendants in one of the Delaware Actions, and Carl
Vogel, a former officer and director of the Company, was named as a defendant in
one of the Delaware Actions. The Actions asserted that the offer made by Liberty
Media, among other things, was the product of unfair dealing by Liberty Media
and its affiliates on the Company's board of directors, did not offer the public
stockholders of the Company fair value for their shares, and was timed to take
advantage of drop in the trading price of the Company's stock. The plaintiffs
generally sought preliminary and permanent injunctive relief to prevent
consummation of the offer made by Liberty Media, and, if the transaction with
Liberty Media was consummated, an order rescinding the transaction or damages.
On December 3, 2001, Liberty Media announced the withdrawal of the October 12,
2001 proposal. Each of the Actions, other than KRIM V. LIBERTY SATELLITE &
TECHNOLOGY, INC. have been subsequently dismissed without prejudice. The
Company believes that the claims in the Krim matter are unripe and without
merit, and will be dismissed as well. This represents the final resolution of
this matter, and accordingly, it will not be reported in future filings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None

                                      I-10
<Page>

PART II.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Through April 1, 2002, shares of the Series A common stock ("Series
A Common Stock") and Series B common stock ("Series B Common Stock") of
Liberty Satellite and Technology, Inc. ("LSAT" or the "Company") traded
over-the-counter on the OTC Bulletin Board under the symbols "LSATA" and
"LSATB", respectively. Following the April 1, 2002 reverse stock splits
described below, shares of Series A Common Stock and Series B Common Stock
began trading under the symbols "LSTTA" and "LSTTB", respectively.
Historically, shares of Series B Common Stock have had low trading volume due
to a relatively low number of shares held in the public float. The following
table sets forth the range of high and low bid prices in U.S. dollars of
shares of Series A Common Stock and Series B Common Stock for the periods
indicated. The prices are interdealer prices, do not include retail markups,
markdowns, or commissions and may not represent actual transactions.

         On April 1, 2002, the Company effected 1 for 10 reverse stock splits of
its Series A Common Stock and Series B Common Stock. All share and per share
amounts included herein have been adjusted to give retroactive effect to such
reverse stock splits.

<Table>
<Caption>
                                          SERIES A                SERIES B
                                     -------------------     -------------------
                                       HIGH       LOW          HIGH       LOW
                                     --------   --------     --------   --------
<S>                                  <C>          <C>          <C>       <C>
2001
  First quarter                      $  50.00      14.38        46.25     16.25
  Second quarter                     $  45.50      14.38        45.00     16.25
  Third quarter                      $  31.50      10.40        29.50     11.00
  Fourth quarter                     $  14.80       7.50        16.50      8.10

2000
  First quarter                      $ 208.10     118.10       205.00    110.00
  Second quarter                     $ 185.00      73.80       187.50     78.80
  Third quarter                      $ 134.70      79.40       137.50     80.00
  Fourth quarter                     $  98.80      21.30       102.50     22.50
</Table>

         As of January 31, 2002, there were approximately 4,640 and 277 record
holders of the Series A Common Stock and Series B Common Stock, respectively
(which amounts do not include the number of shareholders whose shares are held
of record by banks, brokerage houses or other institutions, but include each
such institution as one shareholder).

         The Company has not paid cash dividends on its Series A Common Stock
and Series B Common Stock and has no present intention of so doing. Payment of
cash dividends, if any, in the future will be determined by the Company's Board
of Directors in light of its earnings, financial condition and other relevant
considerations.

                                      II-1
<Page>

ITEM 6.  SELECTED FINANCIAL DATA

         Selected financial data related to the Company's financial condition
and results of operations for the five years ended December 31, 2001 are
summarized as follows (such information should be read in conjunction with the
accompanying consolidated financial statements of the Company).

<Table>
<Caption>
                                                                      Years ended December 31,
                                               -------------------------------------------------------------------------
                                                    2001            2000          1999         1998(1)          1997
                                                    ----            ----          ----         -------          ----
                                                           amounts in thousands, except per share amounts
<S>                                              <C>              <C>            <C>          <C>             <C>
SUMMARY STATEMENT OF OPERATIONS DATA:
  Revenue                                        $      420           445             --       168,500         561,990
  Operating, selling, general and
    administrative expenses and stock
    compensation                                 $   (5,072)       (1,096)       (12,160)     (158,810)       (489,947)
  Operating loss                                 $   (4,739)         (749)       (12,183)      (55,415)       (171,599)
  Interest expense (2)                           $   (6,254)       (5,729)          (140)      (14,177)        (47,992)
  Share of losses of affiliates (3)              $ (424,247)       (7,251)            --      (375,053)        (20,473)
  Nontemporary declines in fair values of
    investments(4)                               $  (76,799)       (9,860)            --            --              --
  Minority interest in loss (earnings) of
      consolidated subsidiary                    $  374,634          (536)            --            --              --
  Net earnings (loss)                            $ (102,648)      (49,137)        67,262      (445,266)       (238,341)
  Basic and diluted earnings (loss) per
    common share (5)                             $   (18.63)       (10.75)          9.67        (65.75)         (35.76)

</Table>

<Table>
<Caption>
                                                                            December 31,
                                               -------------------------------------------------------------------------
                                                    2001            2000           1999        1998(1)         1997
                                                    ----            ----           ----        -------         ----
                                                                        amounts in thousands
<S>                                              <C>              <C>            <C>          <C>            <C>
SUMMARY BALANCE SHEET DATA:
  Cash and cash equivalents                      $    9,686       157,198          2,473            --           6,084
  Investments in affiliates accounted for
    using the equity method                      $   12,158       280,564             --            --          11,093
  Investments in available-for-sale
    securities and other cost investments,
    including securities pledged to
    creditors                                    $  570,723       547,024        140,101            --              --
  Total assets                                   $  612,077       986,256        143,197       463,133       1,204,856
  Debt, including current portion (2)            $  182,826        89,985          3,044            --         418,729
  Minority interest in consolidated
    subsidiary                                   $  194,385       534,301             --            --              --
  Redeemable preferred stock                     $  202,386       196,614             --            --              --
  Stockholders' equity (deficit)                 $      706       131,156         64,727        (6,365)       136,269
</Table>

----------

(1)      Pursuant to a roll-up transaction that was consummated on April 1,
         1998, LSAT contributed and transferred to PRIMESTAR, Inc. (now known as
         Phoenixstar, Inc.) all of its assets and liabilities except for assets
         and liabilities related to the high power direct broadcast satellite
         system then being constructed by Tempo Satellite, Inc., a wholly-owned
         subsidiary of the Company.

(2)      At December 31, 2001, debt is comprised of $97,503,000 of outstanding
         borrowings under a loan facility, $66,963,000 of aggregate borrowings
         outstanding under promissory notes payable to Liberty Media
         Corporation, and $18,360,000 of borrowings outstanding pursuant to a
         securities lending agreement. For additional information, see notes 4,
         6 and 8 to the accompanying consolidated financial statements.

(3)      The 2001 amount includes charges and losses aggregating $417,202,000
         relating to the Company's indirect investment in ASTROLINK
         International LLC.

                                      II-2
<Page>

(4)      The 2001 amount includes charges aggregating $56,483,000 to reflect
         nontemporary declines in the fair value of the Company's indirect
         investment in Wildblue Communications, Inc.

(5)      On April 1, 2002, the Company effected 1 for 10 reverse stock splits of
         its Series A Common Stock and Series B Common Stock. All share and per
         share amounts included herein have been adjusted to give retroactive
         effect to such reverse stock split.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

RECENT TRANSACTIONS

LIBERTY 2000 TRANSACTIONS. On March 16, 2000, the Company completed two
transactions (the "Liberty 2000 Transactions") with Liberty Media Corporation
("Liberty Media"). Pursuant to the terms of the first transaction, the Company
acquired a beneficial interest in 5,084,745 shares of Sprint Corporation PCS
Group common stock (the "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 with a liquidation value of $150,000,000 and
150,000 shares of LSAT B 8% cumulative Convertible Voting Preferred Stock
(Series B Preferred Stock") with a liquidation value of $150,000,000. The shares
of Series B Preferred Stock have super voting rights which give Liberty Media
voting control over the Company. Accordingly, since March 16, 2000, the Company
has been a consolidated subsidiary of Liberty Media.

         Pursuant to the terms of the second transaction, the Company (through
its wholly-owned subsidiaries) became the managing member of two newly formed
limited liability companies, Liberty Satellite, LLC ("LSAT LLC") and LSAT Astro
LLC ("LSAT Astro" and with LSAT LLC, the "LSAT Joint Ventures"). The Company
contributed (i) its beneficial interest in 4,221,921 shares of General Motors
Class H common stock ("GM Hughes Stock"), subject to the liability under the
LSAT GMH SAR, as defined below, 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. In addition, the Company received a 13.99%
ownership interest in LSAT Astro in exchange for a $60,000,000 note payable to
Liberty Media. As the Company is a consolidated subsidiary of Liberty Media, all
of the assets contributed by the Company and Liberty Media to the LSAT Joint
Ventures were recorded at their net book values at the date of contribution.

LSAT LLC AND ASCENT TRANSACTIONS. On August 16, 2001, the Company entered
into two separate purchase agreements with Liberty Media and certain of its
subsidiaries and affiliates. Both agreements were amended in November 2001
and January 2002. One agreement provides for the Company's acquisition of
certain subsidiaries of Liberty Media that hold an aggregate 89.41% ownership
interest in LSAT LLC in exchange for 25,298,379 shares of Series B Common
Stock of the Company. The second purchase agreement provides for the
Company's acquisition of 100% of the capital stock of Ascent Entertainment
Group, Inc. ("Ascent") from a subsidiary of Liberty Media in exchange for
8,701,621 shares of Series B Common Stock of the Company. Ascent's primary
operating subsidiary is On Command Corporation, which provides in-room,
on-demand video entertainment and information services to hotels, motels and
resorts, primarily in the United States. The foregoing transactions (the
"LSAT LLC and Ascent Transactions") closed on April 1, 2002. As a result of
the consummation of the LSAT LLC and Ascent Transactions, Liberty Media's
common stock ownership in the Company increased to 84.1% and its voting power
in the Company increased to 97.6%.

                                      II-3
<Page>

         As a result of the consummation of the LSAT LLC and Ascent
Transactions, the Company became the owner of 100% of the equity interests of
Ascent and LSAT LLC. Due to the fact that the Company, LSAT LLC and Ascent
are all under the common control of Liberty Media, the LSAT LLC and Ascent
Transactions will each be accounted for by the Company in a manner similar to
a pooling-of-interests. This means that the book value of Ascent's assets,
liabilities and stockholders' equity (including certain purchase accounting
adjustments that Liberty Media has not "pushed down" to Ascent's historical
financial statements) will be carried over to the consolidated balance sheet
of the Company. In addition, beginning with the Company's Report on Form 10-Q
for the quarter ended June 30, 2002, the consolidated financial statements of
the Company for periods prior to the consummation of the LSAT LLC and Ascent
Transactions will be restated to (i) eliminate the minority interest in LSAT
LLC's financial position and results of operations, and (ii) include Ascent's
financial position and results of operations from March 28, 2000, the date
Ascent was acquired by Liberty Media. Summarized unaudited financial
information for Ascent for the periods that Ascent has been owned by Liberty
Media is set forth below. Such financial information includes the "push down"
of Liberty Media's purchase accounting adjustments related to Ascent.

<Table>
<Caption>
                                                                           December 31,
                                                             -----------------------------------
                                                                   2001                  2000
                                                             ---------------        ------------
                                                                      amounts in thousands
<S>                                                          <C>                       <C>
CONSOLIDATED FINANCIAL POSITION
       Current assets                                        $        60,651             350,313
       Property and equipment, net                                   317,025             324,595
       Intangible and other assets                                   242,312             348,477
                                                             ---------------        ------------
           Total assets                                      $       619,988           1,023,385
                                                             ===============        ============

       Accounts payable and accrued liabilities              $        38,584              76,545
       Debt                                                          264,761             426,396
       Deferred tax liability                                         27,171              30,394
       Amounts due to Liberty Media                                   16,094              34,311
       Minority interest                                                 948              54,790
       Equity                                                        272,430             400,949
                                                             ---------------        ------------
           Total liabilities and equity                      $       619,988           1,023,385
                                                             ===============        ============
</Table>

<Table>
<Caption>
                                                                                              Nine months
                                                                         Year ended              ended
                                                                        December 31,          December 31,
                                                                            2001                 2000
                                                                      ----------------      ----------------
                                                                              amounts in thousands
<S>                                                                   <C>                           <C>
CONSOLIDATED OPERATING RESULTS
       Revenue                                                        $        253,967               217,828
       Operating, selling, general and administrative expenses                (217,726)             (162,754)
       Depreciation and amortization                                          (172,240)             (135,215)
                                                                      ----------------      ----------------
           Operating income                                                   (135,999)              (80,141)
       Other income (expense)                                                    3,342                25,602
                                                                      ----------------      ----------------
           Net loss                                                   $       (132,657)              (54,539)
                                                                      ================      ================
</Table>

                                      II-4
<Page>

         HUGHES TRANSACTIONS. Effective June 4, 1999, the Company completed
the sale of its high power direct broadcast satellite ("DBS") assets to
Hughes Electronics Corporation ("Hughes"), pursuant to an asset purchase
agreement dated as of January 22, 1999 (the "Hughes High Power Agreement").
The assets transferred by the Company pursuant to the Hughes High Power
Agreement consisted of Temp's two high-power DBS satellites ("Tempo DBS-1"
and "Tempo DBS-2"), its Federal Communications Commission ("FCC")
authorizations with respect to the 119(degree) West Longitude orbital
location ("FCC License") and certain related assets. The Company had
previously granted PRIMESTAR, Inc. (now known as Phoenixstar) ("Phoenixstar")
the transferable right and option (the "Tempo Purchase Option") to purchase
such high power DBS assets for aggregate consideration of $2,500,000 in cash
and the assumption of all liabilities. In addition, Tempo Satellite, Inc.
("Tempo") a subsidiary of the Company, had previously granted to Primestar
Partners LP ("Primestar Partners") the right to purchase or lease 100% of the
capacity of the DBS system being constructed by Tempo (the "Tempo Capacity
Rights"), and Primestar Partners had made advances to Tempo to fund the
construction of Tempo's DBS system in the aggregate amount of $465,000,000
(the "Tempo Reimbursement Obligation").

         Accordingly, the Hughes High Power Agreement provided for (i) the sale
by Phoenixstar to Hughes of the Tempo Purchase Option, (ii) the exercise of the
Tempo Purchase Option by Hughes, and (iii) the termination of the Tempo Capacity
Rights (collectively, the "Hughes High Power Transaction"). The aggregate
consideration payable by Hughes in the Hughes High Power Transaction was
$500,000,000, payable as described below.

         As regulatory approval was required to transfer Tempo DBS-1 and the FCC
License, the Hughes High Power Agreement provided for the Hughes High Power
Transaction to be completed in two steps. The first closing was consummated
effective March 10, 1999, and the second closing was consummated effective June
4, 1999. The Company recognized an aggregate gain on disposition of assets of
$13,712,000 in connection with such closings.

         In a separate transaction (the "Hughes Medium Power Transaction")
completed on April 28, 1999 (the "Hughes Medium Power Closing Date"),
Phoenixstar sold to Hughes Phoenixstar's medium-power DBS business and assets
for $1.1 billion in cash and 14,613,000 shares of GM Hughes Stock valued at
approximately $258,000,000 on the date of closing.

         In connection with the Company's approval, as a stockholder of
Phoenixstar, of the Hughes Medium Power Transaction and other transactions, the
Company received 4,221,921 shares of GM Hughes Stock, valued at $66,143,000, on
the Hughes Medium Power Closing Date. Such amount is recorded as other income in
the 1999 consolidated statement of operations. As a condition to the receipt of
the GM Hughes Stock, the Company issued Phoenixstar a share appreciation right
(the "LSAT GMH SAR") granting Phoenixstar the right to any market price
appreciation in such GM Hughes Stock during the one-year period following the
date of issuance, over an agreed strike price of $15.67.

GENERAL

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

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

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

                                      II-5
<Page>

RESULTS OF OPERATIONS

         The Company is currently a holding company. As a holding company, LSAT
has had no significant direct operations since April 1, 1998. The Company (i)
incurs general and administrative expenses to manage its interests in other
companies and maintain its status as a publicly traded company and (ii) provides
management services to Phoenixstar. As discussed above, the closing of the LSAT
LLC and Ascent Transactions will have a significant impact on the Company's
historical and future consolidated financial statements.

2001 VS. 2000

         Effective February 1, 2000, the Company entered into a management
agreement with Phoenixstar pursuant to which the Company is managing
Phoenixstar's affairs in exchange for a monthly fee. Such fees aggregated
$420,000 and $445,000 in 2001 and 2000, respectively. In addition,
Phoenixstar reimburses the Company for certain expenditures that benefit
Phoenixstar, such as office rent and computer support. Under the current
management agreement, expense allocations have been limited to $5,000 per
month since February 2001. Such allocations aggregated $54,000 and $169,000
during 2001 and 2000, respectively, and are reflected as a reduction of
general and administrative expenses in the accompanying consolidated
statements of operations

         Including amounts allocated to the Company from Liberty Media, the
Company's general and administrative expenses were $4,804,000 and $4,211,000
in 2001 and 2000, respectively. The increase in 2001 is primarily due to
investment banking, legal and accounting fees related to the LSAT LLC and
Ascent Transactions. Such increased fees were partially offset by lower
salaries, due primarily to the April 2001 reassignment of three employees to
another subsidiary of Liberty Media.

         The Company records estimated stock compensation pursuant to the
intrinsic value method of Accounting Principles Board Opinion No. 25. Such
estimate is subject to future adjustment based upon market value of the
Company's stock. The stock compensation expense in 2001 is attributable to
restricted stock awards granted in February 2001. Since none of the Company's
outstanding stock appreciation rights ("SARs") were in-the-money at December 31,
2001 or 2000, the Company recorded no compensation expense with respect to SARs
during 2001. The adjustment to stock compensation expense in 2000 is the result
of a decrease in the Company's liability for SARs.

         The Company recognized interest income of $1,871,000 and $10,361,000
in 2001 and 2000, respectively. Such income was earned primarily on the cash
and cash equivalent balances maintained by LSAT Astro. The Company acquired
its interests in LSAT Astro in March 2000 pursuant to the Liberty 2000
Transactions. During 2001, all of LSAT Astro's cash and cash equivalent
balances were utilized to fund the capital calls of ASTROLINK International
LLC ("Astrolink"), LSAT Astro's 31.5%-owned investee. Accordingly, the
Company does not expect to generate significant interest income for the
foreseeable future.

         During 2001 and 2000, the Company recognized interest expense of
$6,254,000 and $5,729,000, respectively. The increase in interest expense
represents the net effect of an increase in the Company's weighted average debt
balance, partially offset by a decrease in interest rates.

                                      II-6
<Page>

         During 2001 and 2000, the Company's share of losses of affiliates
aggregated $424,247,000 and $7,251,000, respectively. The significant
increase from 2000 to 2001 is primarily attributable to losses and charges
arising from LSAT Astro's investment in Astrolink. Due to the Company's
fourth quarter 2001 determination that LSAT Astro's investment in Astrolink
should be reduced to a fair value that assumes the liquidation of Astrolink,
LSAT Astro wrote-off its remaining $249,868,000 investment in Astrolink
during the fourth quarter of 2001. Including a $155,000,000 write-off taken
during the second quarter of 2001, and LSAT Astro's share of Astrolink's
losses, the aggregate charges and losses recorded by LSAT Astro during 2001
with respect to its investment in Astrolink were $417,202,000. The comparison
between 2001 and 2000 is also affected by the fact that the 2000 amount
includes only ten months of losses for Astrolink and six months of losses for
Aerocast.com, Inc. ("Aerocast"), whereas the 2001 amount includes a full year
of losses for both Astrolink and Aerocast.

         Nontemporary declines in fair values of investments aggregated
$76,799,000 and $9,860,000 during 2001 and 2000, respectively. The significant
increase from 2000 to 2001 is primarily attributable to reductions of the
carrying value of LSAT LLC's investment in Wildblue Communications, Inc.
("Wildblue") that were recorded during 2001. Due to the Company's fourth quarter
2001 determination that LSAT LLC's investment in Wildblue should be reduced to a
fair value that assumes the liquidation of Wildblue, LSAT LLC wrote-off
$36,245,000, or all but $4,512,000, of its investment in Wildblue during the
fourth quarter of 2001. Including writedowns aggregating $20,238,000 that were
taken during the first three quarters of 2001, LSAT LLC has recorded writedowns
of its investment in Wildblue aggregating $56,483,000 during 2001. The 2001
amount also includes a $14,575,000 writedown of LSAT LLC's investment in XM
Satellite Radio Holdings, Inc. ("XMSR").

         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 best 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. Accordingly, the Company believes this
policy represents its most critical accounting policy.

         Unrealized gains on financial instruments during 2001 include a
$9,748,000 gain related to the Company's put spread collar, a $25,902,000 gain
related to changes in the time value of the Company's equity collars and a
$3,241,000 gain related to the put option liability discussed in note 4 to the
accompanying consolidated financial statements.

         In May 2000, the Company sold 2,400,000 shares of GM Hughes Stock for
net cash proceeds of $74,243,000 (after fees and commissions of $717,000) and
used $65,721,000 of such net cash proceeds to satisfy the LSAT GMH SAR. The
Company recognized a gain on the sale of the GM Hughes Stock of $36,643,000,
which was more than offset by a loss on the satisfaction of the LSAT GMH SAR of
$65,721,000.

         The Company recorded minority interest share of losses (earnings)
aggregating $374,634,000 and ($536,000) during 2001 and 2000, respectively. Such
amounts primarily represent Liberty Media's interest in LSAT LLC's net earnings
and losses. The 2001 amount includes the minority owner's share of the charges
and losses recorded with respect to LSAT Astro's investment in Astrolink and
LSAT LLC's investments in Wildblue and XMSR.

                                      II-7
<Page>

         The Company recognized income tax benefit (expense) of ($5,818,000)
and $8,131,000 in 2001 and 2000, respectively. The 2001 expense is primarily
attributable to the federal alternative minimum tax that is payable in
connection with the transfer of Sprint PCS Stock from LSAT to LSAT LLC, as
discussed in note 6 to the accompanying consolidated financial statements.
The Company is only able to realize income tax benefits for financial
reporting purposes to the extent that such benefits offset income tax
liabilities or the Company generates taxable income. For financial reporting
purposes, all of the Company's income tax liabilities had been fully offset
by income tax benefits at December 31, 2001 and December 31, 2000. In
connection with the consummation of the LSAT LLC and Ascent Transactions, the
Company and Liberty Media entered into a Tax Liability Allocation and
Indemnification Agreement. For additional information, see note 4 to the
accompanying consolidated financial statements.

2000 VS. 1999

         During 2000, the Company earned $445,000 pursuant to its February 1,
2000 management agreement with Phoenixstar. In addition, Phoenixstar reimburses
the Company for certain expenditures which benefit Phoenixstar, such as office
rent and computer support. Such reimbursements aggregated $169,000 during 2000
and are reflected as a reduction of general and administrative expenses in the
accompanying statement of operations.

         Including amounts allocated to the Company from Liberty Media, the
Company's general and administrative expenses increased from $776,000 in 1999
to $4,211,000 in 2000. Such increase is primarily due to increases in (i)
salaries and related employee costs and (ii) contract labor and professional
fees. During the period from April 1, 1998 through the second quarter of
1999, the Company had no paid employees. In anticipation of the Liberty
Transactions, the Company hired three employees in late 1999. In addition,
the Company initiated research and development ("R&D") activities in the
third quarter of 1999. The Company hired additional employees in 2000. As a
result of such hirings, the Company's salaries and employee-related costs
increased from $228,000 in 1999 to $1,478,000 in 2000. In connection with the
Liberty 2000 Transactions, the Company incurred in excess of $800,000 in
investment banking, legal and accounting fees.

         The Company records estimated stock compensation pursuant to the
intrinsic value method of Accounting Principles Board Opinion No. 25. Such
estimate is subject to future adjustment based upon market value of the
Company's stock. The adjustment to stock compensation in 2000 and the stock
compensation expense in 1999 are the result of fluctuations in the Company's
stock price.

         In 1999, the Company incurred $4,511,000 of expenses associated with
the operation and maintenance of the Tempo DBS-1 and Tempo DBS-2. Such expenses
were incurred during the first six months of 1999, prior to the sale of the
Tempo High Power Assets to Hughes.

         During the year ended December 31, 2000, the Company recognized
interest expense of $5,729,000, compared to $140,000 in 1999. Such increase is
due to an increase in the Company's weighted average debt balance in 2000.

         The Company recognized interest income of $10,361,000 for the year
ended December 31, 2000, compared to $146,000 in 1999. Such 2000 interest income
was earned primarily on LSAT Astro's cash and cash equivalent balances. As
discussed above, all of the LSAT Astro cash and cash equivalent balances were
used to fund Astrolink capital calls in 2001. Accordingly, the Company does not
expect to generate significant interest income for the foreseeable future.

         During the year ended December 31, 2000, the Company's share of losses
of affiliates aggregated $7,251,000. Such losses include ten months of losses
for Astrolink and six months of losses for Aerocast.

         During the year ended December 31, 2000, the Company recognized
impairment losses on its investments in Jato Communications Corp. and Netbeam,
Incorporated aggregating $9,860,000. The Company also recorded an unrealized
loss of $14,426,000 related to certain of its derivative financial instruments.

                                      II-8
<Page>

         During the year ended December 31, 1999, the Company recognized a gain
on sale of satellites of $13,712,000 and other income of $66,143,000. The gain
on sale of satellites related to the sale of the Tempo High Power Assets to
Hughes. The other income related to the receipt from Phoenixstar of the GM
Hughes Stock in connection with the consummation of the Hughes Medium Power
Transaction.

         The Company recorded minority share of earnings aggregating $536,000
during the year ended December 31, 2000. Such amount primarily represents
Liberty Media's interest in LSAT LLC's net earnings during 2000.

         The Company recognized income tax benefit of $8,131,000 in 2000 and
income tax expense of $416,000 in 1999. As discussed above, the Company is only
able to realize income tax benefits for financial reporting purposes to the
extent that such benefits offset income tax liabilities or the Company generates
taxable income.

LIQUIDITY AND CAPITAL RESOURCES

         The Company currently has no operating income and/or positive cash
flow. During the year ended December 31, 2001, the Company funded its operating
and investing activities with a combination of debt borrowings, and
contributions and advances from Liberty Media, as a member of LSAT LLC.

         During 2000, the Company entered into a revolving credit facility due
March 10, 2003, which, 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 the Company's interest in the Sprint PCS Stock and the Sprint PCS
Stock equity collar described below. Interest accrues at the 30 day LIBOR (2.1%
at December 31, 2001) 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 December 31, 2001, borrowing availability pursuant
to the PCS Loan Facility was $205,497,000.

         In connection with the Liberty 2000 Transactions, the Company entered
into a $60,000,000 note payable to Liberty Media. The note bears interest at the
3 month LIBOR plus 2% (5.4% at December 31, 2001). Interest payments are due
semi-annually on the first day of March and September. The note, which allows
for prepayments, matures on March 16, 2003 at which time all unpaid principal
and interest is due. At December 31, 2001, the unpaid principal on the note was
$48,411,000 and the accrued interest on the note was $886,000.

         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 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.

         The trust holding the Sprint PCS Stock in which LSAT LLC has a
beneficial interest has entered into an equity collar with a financial
institution for LSAT LLC's benefit with respect to such Sprint PCS Stock. The
collar provides the trust with a put option that gives it the right to require
its counterparty to buy 5,084,745 shares of Sprint PCS Stock from the trust in
seven tranches in March 2003 for a weighted average price of $59.71 per share.
The trust simultaneously sold a call option giving the counterparty the right to
buy the same number of shares of stock from the trust in seven tranches in March
2003 for a weighted average price of $82.39 per share. The put and call options
for this collar were equally priced, resulting in no cash cost to the trust or
the Company. The fair value of the Sprint PCS Stock equity collar was
approximately $177,721,000 at December 31, 2001.

                                      II-9
<Page>

         LSAT LLC has entered into a put spread collar with a financial
institution with respect to the Company's shares of GM Hughes Stock. The collar
(i) provides LSAT LLC with a put option that gives it the right to require its
counterparty to buy 1,821,921 shares of GM Hughes Stock from LSAT LLC in three
tranches in October 2003 for a weighted average price of $26.64, and (ii)
provides the counterparty with a put option that gives it the right to require
LSAT LLC to repurchase the 1,821,921 shares of GM Hughes Stock for a weighted
average price of $14.80. LSAT LLC simultaneously sold a call option giving the
counterparty the right to buy the same shares of stock from LSAT LLC in three
tranches in October 2003 for a weighted average price of $54.32 per share. The
put and call options for this collar were equally priced, resulting in no cash
cost to LSAT LLC. At December 31, 2001, the fair value of the GM Hughes Stock
put spread collar was approximately $14,746,000.

         LSAT LLC has also entered into an equity collar with a financial
institution with respect to the Company's shares of XMSR common stock. The
collar provides LSAT LLC with a put option that gives it the right to require
its counterparty to buy 1,000,000 shares of XMSR common stock from LSAT LLC in
three tranches in November 2003, December 2003 and February 2004 for a weighted
average price of $28.55. LSAT LLC simultaneously sold a call option giving the
counterparty the right to buy the same shares of stock from LSAT LLC in three
tranches in November 2003, December 2003 and February 2004 for a weighted
average price of $51.49 per share. The put and call options for this collar were
equally priced, resulting in no cash cost to LSAT LLC. The fair value of the
XMSR equity collar was approximately $11,115,000 at December 31, 2001.

         On June 27, 2001, LSAT LLC entered into an agreement to loan 1,000,000
shares of XMSR to a third party. The obligation to return those shares is
secured by cash collateral equal to 100% of the market value of that stock,
which was $18,360,000 at December 31, 2001. Such cash collateral is reported as
restricted cash in the accompanying consolidated balance sheet. During the
period of the loan, which is terminable by either party at any time, the cash
collateral is to be marked-to-market daily. Interest accrues on the cash
collateral for the benefit of LSAT LLC at the rate of .15% per annum. As of
December 31, 2001, 1,000,000 shares of XMSR had been lent under this agreement.
The loan has no stated maturity date.

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

         Pursuant to the terms of the Liberty 2000 Transactions, Liberty Media
contributed $249,620,000 in cash to LSAT Astro. The Company used all of such
cash to fund Astrolink capital calls during 2001 and 2000.

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

         During the year ended December 31, 2001, Liberty Media loaned
$18,552,000 to LSAT LLC. LSAT LLC used the proceeds from these loans to fund
capital calls from Sky Latin America. The loans bear interest at 8% and are due
and payable on demand. Accrued interest on these loans aggregated $285,000 at
December 31, 2001. Concurrently, with the closing of the LSAT LLC and Ascent
Transactions, Liberty Media contributed to the Company, as part of those
transactions and for no additional consideration, promissory notes issued by
subsidiaries of Liberty Media, with an aggregate principal balance of
$18,552,000.

                                      II-10
<Page>

         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, a consolidated
subsidiary of Liberty Media, retained a preferred interest (the "Preferred
Interest") in IB2 LLC, which owns approximately 360,000 shares of iBEAM
Broadcasting Corp. ("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 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 adjusted the carrying amount of the Put
Option liability to $28,488,000. Such amount represents the Put Option purchase
price to LSAT LLC plus an accrued return to Liberty Digital of 9%, compounded
annually. The Company anticipates that future losses with respect to the Put
Option will be limited to Liberty Digital's 9% return on the Put Option
liability.

         In March 2000, the Company issued 150,000 shares of Series A
Cumulative Preferred Stock ("Series A Preferred Stock"), and 150,000 shares
of Series B Cumulative Preferred Stock ("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. During 2001, the Company
used a combination of cash ($22,500,000) and shares of Series A Common Stock
(204,571 shares) to satisfy the $30,000,000 aggregate annual dividend
requirements of the Series A Preferred Stock and Series B Preferred Stock.
The Company may elect to use cash or Series A Common Stock to satisfy such
dividend requirements through March 2003. For additional information
concerning the Company's redeemable preferred stock, see note 9 to the
accompanying consolidated financial statements of the Company.

         Information concerning the timing of the Company's required payments
due under the PCS Loan Agreement, certain promissory notes with Liberty Media,
and the Put Option liability is summarized below:

<Table>
<Caption>
                                                                              Payments due by period
                                                              ----------------------------------------------------
                                                              Less than       1 to 3        4 to 5         After
                                                 Total         One Year        Years         Years        5 Years
                                              ------------    ----------     ---------     --------      ---------
                                                                      amounts in thousands
<S>                                           <C>                 <C>          <C>               <C>        <C>
PCS Loan Agreement                            $     97,503            --        97,503           --             --
Promissory notes with Liberty Media                 66,963        18,552        48,411           --             --
Put Option liability                                28,488            --            --           --         28,488
                                              ------------    ----------     ---------     --------      ---------
        Total                                 $    192,954        18,552       145,914           --         28,488
                                              ============    ==========     =========     ========      =========
</Table>

         As a result of the consummation of the LSAT LLC and Ascent
Transactions, Liberty Media no longer has a direct ownership interest in LSAT
LLC, and therefore has no obligation to provide funding to LSAT LLC.
Accordingly, the Company's primary sources of liquidity are expected to be
borrowing availability under the PCS Loan Facility and cash and cash
equivalent balances held by the Company and Ascent (exclusive of any such
balances held by Ascent's subsidiaries). Other than such cash and cash
equivalent balances, which aggregated $31,044,000 at December 31, 2001, the
Company does not expect Ascent and its consolidated subsidiaries to provide
or require any of the Company's financial resources during 2002. During 2002,
the Company anticipates that it will use a portion of its financial resources
to fund LSAT LLC's capital contributions to Sky Latin America, the Company's
operating deficit, its interest requirements under the PCS Loan Facility and
the note payable to Liberty Media, and its dividend requirements under the
Series A Preferred Stock and Series B Preferred Stock.

                                      II-11
<Page>

RECENT ACCOUNTING PRONOUNCEMENTS

         During 2001, the Financial Accounting Standards Board issued four
new Statements of Financial Accounting Standards. The Company does not
believe that the adoption of any of such statements will have a material
impact on the Company's financial position, results of operations or cash
flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         At December 31, 2001, the Company had $145,914,000 of variable-rate
debt with a weighted-average interest rate of 3.2%. Accordingly, the Company is
subject to interest rate risk. To date, the Company has not entered into any
derivative instruments to manage its interest rate exposure. All such
variable-rate debt is due in March 2003.

         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
December 31, 2001, the aggregate fair market value of the Company's publicly
traded securities (excluding the fair value of related hedge instruments) was
$184,581,000 ($124,119,000 of which represents the fair value of the Sprint PCS
Stock). At December 31, 2001, the fair value of the Company's equity collars was
$188,836,000 ($177,721,000 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
$14,746,000. At December 31, 2001, the fair market value of the GM Hughes Stock
that is the subject of the put spread collar was $28,149,000. At price levels
approximately 4% below the December 31, 2001 fair market value of GM Hughes
Stock, the put spread collar would cease to provide protection against further
declines in fair value. In addition, the Company owned $13,954,000 of publicly
traded securities at December 31, 2001 that were not hedged.

         As described above, the Company uses equity collars and put spread
collars to manage fair value risk associated with certain investments. Changes
in the fair value of the Company's put spread collar and changes in the time
value of the Company's equity collars are recognized as gains and losses in the
Company's consolidated statement of operations. The Company uses the
Black-Scholes model to estimate the fair value of its derivative instruments.
The Black-Scholes model incorporates a number of variables in determining such
fair values, including expected volatility of the underlying security and an
appropriate discount rate. Considerable management judgment is required in
estimating the Black-Scholes variables. Actual results may differ materially
from these estimates. Accordingly, the Company considers its policy for
accounting for derivative instruments to be one of its critical accounting
policies.

         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
financial statements. The Company monitors its positions and the credit quality
of counter-parties, consisting primarily of major financial institutions and
does not anticipate nonperformance by any counter-party. For additional
information concerning the Company's investments in publicly traded securities
and related derivative financial instruments, see notes 4 and 6 to the
accompanying consolidated financial statements of the Company.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The financial statements of the Company are filed under this item
beginning on page II-13.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.

                                      II-12
<Page>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Liberty Satellite & Technology, Inc.:

         We have audited the accompanying consolidated balance sheets of Liberty
Satellite & Technology, Inc. and subsidiaries as of December 31, 2001 and 2000,
and the related consolidated statements of operations, comprehensive income
(loss), stockholders' equity (deficit), and cash flows for each of the years in
the three-year period ended December 31, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Liberty
Satellite & Technology, Inc. and subsidiaries as of December 31, 2001 and 2000,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.


                                                           KPMG LLP

Denver, Colorado
February 1, 2002, except for the
fourth paragraph of note 1 and
the fifth paragraph of note 4,
which are as of April 1, 2002


                                      II-13
<Page>

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

                           Consolidated Balance Sheets

                           December 31, 2001 and 2000

<Table>
<Caption>
                                                                                    2001                   2000
                                                                             -----------------      -----------------
                                                                                        amounts in thousands
<S>                                                                          <C>                             <C>
ASSETS

Current assets:
  Cash and cash equivalents                                                  $           9,686               157,198
  Restricted cash (note 6)                                                              18,360                    --
  Receivables (note 11)                                                                    898                   873
  Prepaid expenses                                                                         229                   293
                                                                             -----------------      -----------------

    Total current assets                                                                29,173               158,364
                                                                             -----------------      -----------------

Investments in affiliates accounted for using the
  equity method (note 5)                                                                12,158               280,564

Investments in available-for-sale securities and other cost
  investments, including securities pledged to creditors (note 6)                      570,723               547,024

Support equipment and other assets, net                                                     23                    304
                                                                             -----------------      -----------------

    Total assets                                                             $         612,077               986,256
                                                                             =================      =================
</Table>

                                                                     (continued)
                                      II-14

<Page>

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

                     Consolidated Balance Sheets, continued

                           December 31, 2001 and 2000

<Table>
<Caption>
                                                                                     2001                  2000
                                                                             -----------------      -----------------
                                                                                         amounts in thousands
<S>                                                                          <C>                             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                           $              21                     18
  Accrued expenses                                                                       1,755                    280
  Taxes payable                                                                            286                     --

  Due to parent (note 4)
    Note payable                                                                        18,552                     --
    Accrued interest                                                                     1,171                  1,703
    Other accrued expenses                                                                  53                    470
                                                                             -----------------      -----------------
                                                                                        19,776                  2,173
                                                                             -----------------      -----------------

  Securities lending agreement (note 6)                                                 18,360                     --
                                                                             -----------------      -----------------

       Total current liabilities                                                        40,198                  2,471
                                                                             -----------------      -----------------

Note payable to parent (note 4)                                                         48,411                 54,982
Loan facility (note 8)                                                                  97,503                 35,003
Put option liability due to related party (note 4)                                      28,488                 31,729
                                                                             -----------------      -----------------

       Total liabilities                                                               214,600                124,185
                                                                             -----------------      -----------------

Minority interests in equity of consolidated
  subsidiary                                                                           194,385                534,301
Redeemable preferred stock (note 9)                                                    202,386                196,614

Stockholders' Equity (note 10):
  Preferred stock; authorized 5,000,000 shares; issued 300,000 shares in
    2001 and 2000                                                                           --                     --
  Series A common stock, $1 par value; authorized
    18,500,000 shares; issued 6,753,101 in 2001 and 6,546,959 in 2000                    6,753                  6,547
  Series B common stock, $1 par value; authorized 3,000,000 shares; issued
    771,828 in 2001 and 773,399 in 2000                                                    772                    773
  Additional paid-in capital                                                           964,251                992,562
  Accumulated other comprehensive income                                                13,164                 12,860
  Accumulated deficit                                                                 (983,909)              (881,261)
                                                                             -----------------      ------------------
                                                                                         1,031                131,481
  Series A common stock held in treasury, at cost
    (2,954 shares)                                                                        (325)                  (325)
                                                                             -----------------      -----------------
       Total stockholders' equity                                                          706                131,156
                                                                             -----------------      -----------------

Commitments and contingencies (note 13)

       Total liabilities and stockholders' equity                            $         612,077                986,256
                                                                             =================      =================
</Table>

See accompanying notes to consolidated financial statements.

                                      II-15
<Page>

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

                      Consolidated Statements of Operations

                  Years ended December 31, 2001, 2000, and 1999

<Table>
<Caption>
                                                                                 2001                  2000                 1999
                                                                           --------------        --------------      --------------
                                                                                              amounts in thousands,
                                                                                            except per share amounts
<S>                                                                        <C>                          <C>                 <C>
Revenue:
  Management fees (note 4)                                                 $          420                   445                  --
                                                                           --------------        --------------      --------------

Operating costs and expenses:
  Operating                                                                            --                    --               4,511
  Selling, general and administrative (note 4)                                      4,109                 3,741                 776
  Allocations from parent (note 4)                                                    695                   470                  --
  Stock compensation (note 10)                                                        268                (3,115)              6,873
  Depreciation                                                                         87                    98                  23
                                                                           --------------        --------------      --------------
                                                                                    5,159                 1,194              12,183
                                                                           --------------        --------------      --------------

      Operating loss                                                               (4,739)                 (749)            (12,183)

Other income (expense):
  Interest income                                                                   1,871                10,361                 146
  Interest expense-parent (note 4)                                                 (3,686)               (3,942)                 --
  Interest expense-other                                                           (2,568)               (1,787)               (140)
  Share of losses of affiliates (note 5)                                         (424,247)               (7,251)                 --
  Nontemporary declines in fair values of investments (note 6)                    (76,799)               (9,860)                 --
  Unrealized gains (losses) on financial instruments (note 2)                      38,891               (14,426)                 --
  Gain on sale of GM Hughes Stock (note 6)                                             --                36,643                  --
  Loss on GM Hughes Stock share appreciation rights (note 6)                           --               (65,721)                 --
  Gain (loss) on disposition of assets (note 6)                                      (187)                   --              13,712
  Other, net (note 6)                                                                  --                    --              66,143
                                                                           --------------        --------------      --------------
                                                                                 (466,725)              (55,983)             79,861
                                                                           --------------        --------------      --------------

      Earnings (loss) before income taxes and minority interest                  (471,464)              (56,732)             67,678

Income tax benefit (expense) (note 12)                                             (5,818)                8,131                (416)
Minority interest in loss (earnings) of consolidated subsidiary                   374,634                  (536)                 --
                                                                           --------------        --------------      --------------

      Net earnings (loss)                                                        (102,648)              (49,137)             67,262

Accretion of redeemable preferred stock (note 9)                                   (5,772)               (4,547)                 --
Dividends on redeemable preferred stock (note 9)                                  (30,000)              (23,733)                 --
                                                                           --------------        --------------      --------------

      Net earnings (loss) attributable to common stockholders              $     (138,420)              (77,417)             67,262
                                                                           ==============        ==============      ==============

Basic and diluted earnings (loss) per common share (note 2)                $       (18.63)               (10.75)               9.67
                                                                           ==============        ==============      ==============
</Table>

See accompanying notes to consolidated financial statements

                                      II-16
<Page>

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

             Consolidated Statements of Comprehensive Income (Loss)

                  Years ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                     2001                2000               1999
                                                               ---------------     ---------------    ---------------
                                                                                  amounts in thousands
<S>                                                            <C>                         <C>                <C>
Net earnings (loss)                                            $      (102,648)            (49,137)            67,262
                                                               ---------------     ---------------    ---------------
Other comprehensive income, net of tax:
  Unrealized holding gains (losses) on available for
    sale securities                                                       (649)              7,392             42,583
  Less reclassification adjustment for losses (gains)
    included in net earnings (loss)                                        953             (37,115)                --
  Unrealized losses on share appreciation rights
    liability                                                               --             (22,708)           (42,583)
  Less reclassification adjustment for losses
    included in net earnings (loss)                                         --              65,291                 --
                                                               ---------------     ---------------    ---------------
           Other comprehensive income                                      304              12,860                 --
                                                               ---------------     ---------------    ---------------

               Comprehensive income (loss)                     $      (102,344)            (36,277)            67,262
                                                               ===============     ===============    ===============
</Table>

See accompanying notes to consolidated financial statements

                                      II-17
<Page>

              LIBERTY SATELLITE & TECHNOLOGY, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)
            Consolidated Statements of Stockholders' Equity (Deficit)
                  Years ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                                                   Accumulated
                                                               Common Stock          Additional       Other
                                                           -----------------------    Paid-in     Comprehensive   Accumulated
                                                             Series A     Series B    Capital        Income         Deficit
                                                           -----------   ---------   ---------    -------------   -----------
                                                                               amounts in thousands
<S>                                                        <C>                 <C>      <C>              <C>         <C>
Balance at January 1, 1999                                 $     5,929         846      886,246              --      (899,386)
 Net earnings                                                       --          --           --              --        67,262
 Recognition of stock compensation related to stock
  options and restricted stock awards                               --          --          612              --            --
 Issuance of Series A common stock related to restricted
  stock awards                                                      16          --          (16)             --            --
 Tax benefit related to stock options and restricted
  stock awards                                                      --          --         (234)             --            --
 Issuance of Series A common stock upon conversion of
  convertible securities of Tele-Communications, Inc.              345          --        3,107              --            --
                                                           -----------   ---------   ---------    -------------   -----------

Balance at December 31, 1999                               $     6,290         846      889,715              --      (832,124)
 Net loss                                                           --          --           --              --       (49,137)
 Other comprehensive income                                         --          --           --          12,860            --
 Reversal of deferred tax asset valuation allowance
   resulting from the Liberty 2000 Transactions (note 4)            --          --      114,628              --            --
 Accretion and dividends on redeemable preferred stock              --          --      (28,280)             --            --
 Issuance of Series A common stock for preferred
   stock dividends                                                 166          --       16,067              --            --
 Recognition of stock compensation related to stock
   options and restricted stock awards                              --          --           22              --            --
 Issuance of Series A common stock upon exercise of
   stock options                                                     7          --          490              --            --
 Issuance of common stock related to restricted stock
   awards                                                           11          --          (11)             --            --
 Series B common stock exchanged for Series A
   common stock                                                     73         (73)          --              --            --
 Purchase of treasury stock (note 11)                               --          --           --              --            --
 Dividend to related party (note 4)                                 --          --          (69)             --            --
                                                           -----------   ---------   ---------    -------------   -----------

Balance at December 31, 2000                               $     6,547         773      992,562          12,860      (881,261)
                                                           ===========   =========   ==========   =============   ===========

<Caption>
                                                                          Total
                                                                      Stockholders'
                                                           Treasury      Equity
                                                            Stock      (Deficit)
                                                           --------   -------------
                                                            amounts in thousands
<S>                                                            <C>          <C>
Balance at January 1, 1999                                       --          (6,365)
 Net earnings                                                    --          67,262
 Recognition of stock compensation related to stock
  options and restricted stock awards                            --             612
 Issuance of Series A common stock related to restricted
  stock awards                                                   --              --
 Tax benefit related to stock options and restricted
  stock awards                                                   --            (234)
 Issuance of Series A common stock upon conversion of
  convertible securities of Tele-Communications, Inc.            --           3,452
                                                           --------   -------------

Balance at December 31, 1999                                     --          64,727
 Net loss                                                        --         (49,137)
 Other comprehensive income                                      --          12,860
 Reversal of deferred tax asset valuation allowance
   resulting from the Liberty 2000 Transactions (note 4)         --         114,628
 Accretion and dividends on redeemable preferred stock           --         (28,280)
 Issuance of Series A common stock for preferred
   stock dividends                                               --          16,233
 Recognition of stock compensation related to stock
   options and restricted stock awards                           --              22
 Issuance of Series A common stock upon exercise of
   stock options                                                 --             497
 Issuance of common stock related to restricted stock
   awards                                                        --              --
 Series B common stock exchanged for Series A
   common stock                                                  --              --
 Purchase of treasury stock (note 11)                          (325)           (325)
 Dividend to related party (note 4)                              --             (69)
                                                           --------   -------------

Balance at December 31, 2000                                   (325)        131,156
                                                           ========   =============
</Table>

                                      II-18
<Page>

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

      Consolidated Statements of Stockholders' Equity (Deficit), continued

                  Years ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                                                   Accumulated
                                                               Common Stock          Additional       other
                                                           -----------------------    paid-in     comprehensive   Accumulated
                                                            Series A     Series B     Capital         Income        Deficit
                                                           -----------   ---------   ----------   -------------   -----------
                                                                                   amounts in thousands
<S>                                                        <C>                 <C>      <C>              <C>         <C>
Balance at December 31, 2000                               $     6,547         773      992,562          12,860      (881,261)
  Net loss                                                          --          --           --              --      (102,648)
  Other comprehensive income                                        --          --           --             304            --
  Accretion and dividends on redeemable preferred stock             --          --      (35,772)             --            --
  Issuance of Series A common stock for preferred
    stock dividends                                                205          --        7,295              --            --
  Recognition of stock compensation related to
    restricted stock awards, net of taxes                           --          --          166              --            --
  Series B common stock exchanged for Series A
    common stock                                                     1          (1)          --              --            --
                                                           -----------   ---------   ----------   -------------   -----------

Balance at December 31, 2001                               $     6,753         772      964,251          13,164      (983,909)
                                                           ===========   =========   ==========   =============   ===========

<Caption>
                                                                          Total
                                                                      stockholders'
                                                           Treasury      equity
                                                            Stock       (Deficit)
                                                           --------   -------------
                                                            amounts in thousands
<S>                                                            <C>         <C>
Balance at December 31, 2000                                   (325)        131,156
  Net loss                                                       --        (102,648)
  Other comprehensive income                                     --             304
  Accretion and dividends on redeemable preferred stock          --         (35,772)
  Issuance of Series A common stock for preferred
    stock dividends                                              --           7,500
  Recognition of stock compensation related to
    restricted stock awards, net of taxes                        --             166
  Series B common stock exchanged for Series A
    common stock                                                 --              --
                                                           --------   -------------

Balance at December 31, 2001                                   (325)            706
                                                           ========   =============
</Table>

See accompanying notes to consolidated financial statements.

                                      II-19
<Page>

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

                      Consolidated Statements of Cash Flows
                  Years ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                              2001            2000          1999
                                                                          -------------   ------------   -----------
                                                                                     amounts in thousands
                                                                                         (see note 3)
<S>                                                                       <C>                 <C>            <C>
Cash flows from operating activities:
  Net earnings (loss)                                                     $    (102,648)       (49,137)       67,262
  Adjustments to reconcile net earnings (loss) to net cash
    used in operating activities:
      Depreciation                                                                   87             98            23
      Share of losses of affiliates                                             424,247          7,251            --
      Minority interest in earnings (loss) of consolidated subsidiary          (374,634)           536            --
      Gain on sale of GM Hughes Stock                                                --        (36,643)           --
      Loss on GM Hughes share appreciation rights                                    --         65,721            --
      Nontemporary declines in fair values of investments                        76,799          9,860            --
      Unrealized losses (gains) on financial instruments                        (38,891)        14,426            --
      Stock compensation and restricted stock awards                                268         (3,115)        6,873
      Payments for stock compensation                                                --         (2,404)         (707)
      Deferred income tax benefit                                                  (310)        (7,481)         (234)
      Loss (gain) on disposition of assets                                          187             --       (13,712)
      Receipt of GM Hughes Stock recorded as other income                            --             --       (66,143)
      Other non-cash charges                                                         22            235            15
      Changes in operating assets and liabilities, net of the effect of
        the Liberty 2000 Transactions:
           Change in receivables                                                    (69)          (873)           --
           Change in prepaid expenses                                                64           (180)         (113)
           Change in accruals and payables                                          816          1,558           957
                                                                          -------------   ------------   -----------
             Net cash used in operating activities                              (14,062)          (148)       (5,779)
                                                                          -------------   ------------   -----------

Cash flows from investing activities:
  Capital expended for equipment                                                    (20)           (54)         (298)
  Investments in and advance to affiliates                                     (215,993)      (181,669)       (2,000)
  Net proceeds from sale of GM Hughes Stock                                          --         74,243            --
  Payment of GM Hughes share appreciation rights                                     --        (65,721)           --
  Proceeds received in Liberty 2000 Transactions                                     --        249,620            --
  Other investing activities                                                          5            (50)        2,500
                                                                          -------------   ------------   -----------
             Net cash provided by (used in) investing activities               (216,008)        76,369           202
                                                                          -------------   ------------   -----------

Cash flows from financing activities:
  Borrowings of debt                                                             62,500         55,103            --
  Repayments of debt                                                             (6,572)       (28,162)           --
  Contributions from minority owner of subsidiary                                30,578         51,413            --
  Advances from minority owner                                                   18,552             --            --
  Payment of preferred stock dividends                                          (22,500)            --            --
  Proceeds from exercise of stock options                                            --            497            --
  Purchase of treasury stock                                                         --           (325)           --
  Payment of deferred financing costs                                                --            (22)         (250)
  Increase in due to Phoenixstar                                                     --             --         4,848
  Proceeds from issuance of common stock                                             --             --         3,452
                                                                          -------------   ------------   -----------
             Net cash provided by financing activities                           82,558         78,504         8,050
                                                                          -------------   ------------   -----------

             Net increase (decrease) in cash and cash equivalents              (147,512)       154,725         2,473
             Cash and cash equivalents - beginning of year                      157,198          2,473            --
                                                                          -------------   ------------   -----------
             Cash and cash equivalents - end of year                      $       9,686        157,198         2,473
                                                                          =============   ============   ===========
</Table>

See accompanying notes to consolidated financial statements.

                                      II-20
<Page>

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

                   Notes to Consolidated Financial Statements

                        December 31, 2001, 2000 and 1999

(1)   BASIS OF PRESENTATION

      The accompanying consolidated financial statements include the accounts of
      Liberty Satellite & Technology, Inc. and those of all majority-owned or
      controlled subsidiaries, including the LSAT Joint Ventures described in
      note 4 ("LSAT" or the "Company"). All significant inter-company
      transactions have been eliminated.

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

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

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

(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      CASH AND CASH EQUIVALENTS

      The Company considers all highly liquid investments with a maturity of
      three months or less at the date of acquisition to be cash equivalents.

      INVESTMENTS

      All marketable equity securities held by the Company are classified as
      available-for-sale and are carried at fair value. Unrealized holding gains
      and losses on securities classified as available-for-sale are carried net
      of taxes as a component of accumulated other comprehensive earnings in
      stockholders' equity. Realized gains and losses are determined on a
      specific-identification basis. Other investments in which the ownership
      interest is less than 20% and are not considered marketable securities are
      carried at the lower of cost or net realizable value.

      For those investments in affiliates in which the Company's voting interest
      is 20% to 50%, the equity method of accounting is generally used. Under
      this method, the investment, originally recorded at cost, is adjusted to
      recognize the Company's share of net earnings or losses of the affiliates
      as they occur rather then as dividends or other distributions are
      received, limited to the extent of the Company's investment in, advances
      to and commitments for the investee. The Company's share of net earnings
      or losses of affiliates includes the amortization of the difference
      between the Company's investment and its share of the net assets of the
      investee. Recognition of gains on sales of properties to affiliates
      accounted for under the equity method is deferred in proportion to the
      Company's ownership interest in such affiliates.

      Changes in the Company's proportionate share of the underlying equity of a
      subsidiary or equity method investee, which result from the issuance of
      additional securities by such subsidiary or equity investee, are
      recognized as increases to or reductions of additional paid-in capital in
      the consolidated statements of stockholders' equity.

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

                   Notes to Consolidated Financial Statements

      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 of the
      investee; (ii) the reason for the decline in fair value, be it general
      market conditions, industry specific or 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 best estimates and
      assumptions to arrive at the estimated fair value of such an asset.
      Writedowns for cost investments are included in the consolidated
      statements of operations as nontemporary declines in fair values of
      investments. Writedowns for equity method investments are included in
      share of losses of affiliates. The Company's assessment of the foregoing
      factors involves a high degree of judgment and includes significant
      estimates and assumptions.

      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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

      The Company has entered into equity collars and put spread collars with
      respect to certain securities held by the Company. The Company uses equity
      collars and put spread collars to manage fair value risk associated with
      certain investments. As the Company's equity collars are designated to
      specific shares of stock held by the Company and the changes in the fair
      value of the equity collars are correlated with changes in the fair value
      of the underlying securities, the equity collars qualify as fair value
      hedges under Statement 133. The Company's put spread collars generally do
      not have high correlation with the underlying security and accordingly,
      have not been designated as hedges under Statement 133.

      Derivative instruments are generally not used for speculative purposes.
      The derivative instruments may involve elements of credit and market risk
      in excess of amounts recognized in the financial statements. The Company
      monitors its positions and the credit quality of counter-parties,
      consisting primarily of major financial institutions and does not
      anticipate nonperformance by any counter party.

      For derivatives designated either as fair value or cash flow hedges,
      changes in the time value of the derivatives are excluded from the
      assessment of hedge effectiveness and are recognized in earnings. The
      Company currently does not have any cash flow hedges. Hedge
      ineffectiveness, determined in accordance with Statement 133, had no
      impact on earnings for the year ended December 31, 2001. No fair value
      hedges were derecognized or discontinued during the year ended December
      31, 2001.

                                      II-22
<Page>

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

                   Notes to Consolidated Financial Statements

      For the year ended December 31, 2001, unrealized gains on financial
      instruments include a $9,748,000 gain related to the Company's put spread
      collar, a $25,902,000 gain related to changes in the time value of the
      Company's equity collars and a $3,241,000 gain related to a put option
      liability.

      STOCK BASED COMPENSATION

      The Company accounts for stock-based employee compensation using the
      intrinsic value method pursuant to Accounting Principles Board Opinion No.
      25. The Company has adopted the disclosure provisions of Statement of
      Financial Accounting Standards No. 123 "ACCOUNTING FOR STOCK-BASED
      COMPENSATION."

      INCOME TAXES

      The Company accounts for its income taxes using the asset and liability
      method. Under the asset and liability method, deferred tax assets and
      liabilities are recognized for the estimated future tax consequences
      attributable to differences between the financial statement carrying
      amounts of existing assets and liabilities and their respective tax bases.
      Deferred tax assets and liabilities are measured using enacted tax rates
      in effect for the year in which those temporary differences are expected
      to be recovered or settled. The effect on deferred tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that includes the enactment date.

      EARNINGS (LOSS) PER COMMON SHARE

      The Company computes earnings (loss) per share in accordance with
      Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE
      ("Statement 128"). Statement 128 requires companies with complex capital
      structures to present basic and diluted EPS. Basic EPS is measured as the
      income or loss attributable to common shareholders divided by the weighted
      average outstanding common shares for the period. Net earnings (loss) is
      reduced (increased) by preferred stock dividends and accretion to arrive
      at income (loss) attributable to common shareholders. Diluted EPS is
      similar to basic EPS but presents the dilutive effect on a per share basis
      of potential common shares (e.g., convertible securities, options, etc.)
      as if they had been converted at the beginning of the periods presented,
      or at original issuance date, if later. Potential dilutive common shares
      that have an anti-dilutive effect (i.e., those that increase income per
      share or decrease loss per share) are excluded from diluted EPS.

      The earnings (loss) per common share for the years ended December 31,
      2001, 2000 and 1999 is based on 7,430,500, 7,203,300 and 6,958,700
      weighted average shares outstanding during the respective periods.
      Potential common shares were not included in the computation of diluted
      EPS because their inclusion would be anti-dilutive. At December 31, 2001,
      2000, and 1999, the number of potential common shares was approximately
      2,159,200, 2,201,800, and 533,800, respectively. Such potential common
      shares consist of stock options to acquire shares of the Company's Series
      A Common Stock and securities that were convertible into 1,696,717 shares
      of the Company's Series B Common Stock at each of December 31, 2001 and
      2000. The foregoing potential common share amounts do not take into
      account the assumed number of shares that would be repurchased by the
      Company upon the exercise of stock options.

      ESTIMATES

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

                                      II-23
<Page>

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

                   Notes to Consolidated Financial Statements

      RECLASSIFICATIONS

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

(3)   SUPPLEMENTAL DISCLOSURES TO STATEMENTS OF CASH FLOWS

      Cash paid for interest was $6,599,000, $3,831,000 and $0 during the years
      ended December 31, 2001, 2000, and 1999 respectively. Cash paid for income
      taxes was $5,845,000 in 2001 and was not material during the years ended
      December 31, 2000 and 1999.

      Other than the securities lending agreement described in note 6, and the
      issuance of Series A Common Stock to satisfy dividends on redeemable
      preferred stock, as disclosed in the consolidated statement of
      stockholders' equity, there were no significant non-cash investing and
      financing activities during 2001. Significant non-cash investing and
      financing activities for the years ended December 31, 2000 and 1999 are as
      follows (amounts in thousands):

<Table>
      <S>                                                                         <C>
      2000
        Cash received in Liberty Transactions:
          Value of investments received                                           $    649,385
          Cash received                                                                249,620
          Debt issued                                                                  (60,000)
          Deferred tax liability assumed                                              (114,628)
          Redeemable preferred stock issued                                           (185,372)
          Minority interests                                                          (539,005)
                                                                                  ------------
                                                                                  $
                                                                                  ============
      1999
        Issuance of note payable in connection with investment                    $      3,044
                                                                                  ============
        Increase in value of GM Hughes Stock and corresponding LSAT GMH SAR
        liability (note 6)                                                        $     68,959
                                                                                  ============
</Table>

(4)   TRANSACTIONS WITH LIBERTY MEDIA AND OTHER RELATED PARTIES

      TRANSACTIONS WITH LIBERTY MEDIA

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

                                      II-24
<Page>

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

                   Notes to Consolidated Financial Statements

      Pursuant to the terms of the second transaction with Liberty Media, the
      Company (through its wholly-owned subsidiaries) became the managing member
      of two newly formed limited liability companies, Liberty Satellite, LLC
      ("LSAT LLC") and LSAT Astro LLC ("LSAT Astro," and together with LSAT LLC,
      the "LSAT Joint Ventures"). The Company contributed (i) its beneficial
      interest in 4,221,921 shares of General Motors Corporation Class H common
      stock ("GM Hughes Stock"), subject to the LSAT GMH SAR described in note
      6, and (ii) other assets to LSAT LLC in exchange for a 10.59% ownership
      interest in LSAT LLC. Liberty Media contributed cash and its interests in
      various satellite related assets, including an 86.01% ownership interest
      in LSAT Astro, to LSAT LLC in exchange for the remaining 89.41% ownership
      interest in LSAT LLC. As the Company is a consolidated subsidiary of
      Liberty Media, all of the assets contributed by the Company and Liberty
      Media to the LSAT Joint Ventures were recorded at their net book values at
      the date of contribution.

      In addition, the Company received a 13.99% ownership interest in LSAT
      Astro in exchange for a $60,000,000 note payable to Liberty Media. The
      note bears interest at the 3 month LIBOR plus 2% (5.4% at December 31,
      2001). Interest payments are due semi-annually on the first day of March
      and September. The note, which allows for prepayments, matures on March
      16, 2003 at which time all unpaid principal and interest is due. At
      December 31, 2001, the unpaid principal on the note was $48,411,000 and
      the accrued interest on the note was $886,000.

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

      LSAT LLC AND ASCENT TRANSACTIONS. On August 16, 2001, the Company entered
      into two separate purchase agreements with Liberty Media and certain of
      its subsidiaries and affiliates. Both agreements were amended in November
      2001 and January 2002. One agreement provides for the Company's
      acquisition of certain subsidiaries of Liberty Media that hold an
      aggregate 89.41% ownership interest in LSAT LLC in exchange for 25,298,379
      shares of Series B Common Stock of the Company. The second purchase
      agreement provides for the Company's acquisition of 100% of the capital
      stock of Ascent Entertainment Group, Inc. ("Ascent") from a subsidiary of
      Liberty Media in exchange for 8,701,621 shares of Series B Common Stock of
      the Company. Ascent's primary operating subsidiary is On Command
      Corporation ("On Command"), which provides in-room, on-demand video
      entertainment and information services to hotels, motels and resorts,
      primarily in the United States. The foregoing transactions (the "LSAT
      LLC and Ascent Transactions") closed on April 1, 2002. As a result of
      the consummation of the LSAT LLC and Ascent Transactions, Liberty
      Media's common stock ownership in the Company increased to 84.1% and
      its voting power in the Company increased to 97.6%.

      As a result of consummation of the LSAT LLC and Ascent Transactions,
      the Company became the owner of 100% of the equity interests of Ascent
      and LSAT LLC. Due to the fact that the Company, LSAT LLC and Ascent are
      all under the common control of Liberty Media, the LSAT LLC and Ascent
      Transactions will each be accounted for in a manner similar to a
      pooling-of-interests. This means that the book value of Ascent's
      assets, liabilities and stockholders' equity (including certain
      purchase accounting adjustments that Liberty Media has not "pushed
      down" to Ascent's historical financial statements) will be carried over
      to the consolidated balance sheet of the Company. In addition,
      beginning with the Company's Report on Form 10-Q for the quarter ended
      June 30, 2002, the consolidated financial statements of the Company for
      periods prior to the consummation of the LSAT LLC and Ascent Transactions
      will be restated to (i) eliminate the minority interest in LSAT LLC's
      financial position and results of operations, and (ii) include Ascent's
      financial position and results of operations from March 28, 2000, the
      date Ascent was acquired by Liberty Media.

                                      II-25
<Page>

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

                   Notes to Consolidated Financial Statements

      REGISTRATION RIGHTS AGREEMENT. The Company and Liberty Media are parties
      to a registration rights agreement, dated as of March 16, 2000, whereby
      Liberty Media and its affiliates have at any time, the right to request
      that the Company register under the Securities Act of 1933 ("the
      "Securities Act"), as amended, any and all of the shares of the Company's
      common stock or shares of the Company's capital stock that are convertible
      into shares of the Company's common stock, owned by them, subject to the
      terms and conditions thereunder. Liberty Media and its affiliates also
      have certain "piggy-back" registration rights, whereby anytime the Company
      proposes to register shares of the Company's capital stock under the
      Securities Act, Liberty Media and its affiliates have the right to include
      their shares of the Company's capital stock in such registration. In
      general, the Company will bear the expenses incurred in connection with
      the registration and distribution of shares of the Company common stock
      owned by Liberty Media and its affiliates. The Company and Liberty Media
      entered into an amendment to this registration rights agreement to
      include thereunder the shares of the Company's Series B Common Stock that
      Liberty Media and its affiliates acquired as a result of the
      consummation of the LSAT LLC and Ascent Transactions.

      TAX LIABILITY ALLOCATION AND INDEMNIFICATION AGREEMENT. In connection with
      the LSAT LLC and Ascent Transactions, the Company and Liberty Media
      entered into a tax liability allocation and indemnification agreement
      whereby the Company will be obligated to make a cash payment to Liberty
      Media in each year that the Company (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 the Company and its
      subsidiaries (determined as if the Company and its subsidiaries filed a
      separate return) multiplied by the highest applicable corporate tax
      rate. In the event that (1) the Company 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, the Company will be entitled to a credit against current and
      future payments to Liberty Media under the agreement. If the Company
      disaffiliates itself with Liberty Media and the members of Liberty
      Media's affiliated group prior to the time that the Company is able to
      use such credit, the Company will be entitled to a payment from Liberty
      Media at the earlier of the time that (1) the Company 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 the Company held by Liberty Media and
      the members of its affiliated group drops below 20%.

      In addition, under the proposed tax liability allocation and
      indemnification agreement, the Company 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 the
      Company's operations.

      EXPENSE ALLOCATIONS AND REIMBURSEMENTS. Liberty Media allocates rent,
      salaries, benefits and certain other general and administrative expenses
      to the Company. In addition, the Company reimburses Liberty Media for
      certain expenses paid by Liberty Media on behalf of the Company. Although
      there is no written agreement with Liberty Media for these allocations and
      reimbursements, the Company believes the allocated and reimbursed amounts
      to be reasonable. Amounts owed to Liberty Media pursuant to this
      arrangement ($53,000 at December 31, 2001) are non-interest bearing and
      are generally paid on a monthly basis.

                                      II-26
<Page>

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

                   Notes to Consolidated Financial Statements

      SKY LATIN AMERICA LOANS. During the year ended December 31, 2001, Liberty
      Media loaned $18,552,000 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 bear interest at 8% and are due and payable on
      demand. Accrued interest on these loans aggregated $285,000 at December
      31, 2001. Concurrently, with the closing of the LSAT LLC and Ascent
      Transactions, Liberty Media contributed to the Company, as part of
      those transactions and for no additional consideration, promissory notes
      issued by subsidiaries of Liberty Media, with an aggregate principal
      balance of $18,552,000.

      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, a consolidated subsidiary of Liberty Media, retained a preferred
      interest (the "Preferred Interest") in IB2 LLC, which owns approximately
      360,000 shares of iBEAM Broadcasting Corp. ("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 LSAT LLC can force Liberty Digital to
      exercise the Put Option prior to September 29, 2008.

      Due to the related party nature of the transaction, the fair value of the
      Put Option on the iBEAM Closing Date that was not attributable to the
      minority interests ($805,000) has been reflected as a reduction of
      redeemable preferred stock in the accompanying financial statements.
      Similarly, LSAT's 10.59% of the cash paid for LSAT LLC's interest in IB2
      LLC has been reflected as a direct charge to additional paid-in capital.

      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 years ended December 31, 2001 and 2000, the Company recorded
      unrealized gains (losses) of $3,241,000 and ($19,423,000), respectively,
      related to the Put Option.

      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 adjusted the carrying amount of the Put Option liability to
      $28,488,000. Such amount 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.

      EXPENSE ALLOCATIONS TO ON COMMAND. During the second quarter of 2001,
      three of the Company's employees (two of which were officers of the
      Company) began performing duties for On Command, an indirect subsidiary
      of Liberty Media. Accordingly, during 2001, the Company allocated
      portions of the salaries and related benefits of such employees and
      certain other administrative costs to On Command. Effective January 1,
      2002, On Command began paying 100% of the compensation of such
      employees. The aggregate amount allocated to On Command during 2001 was
      $408,000, and such amount is reflected as a reduction of selling,
      general and administrative expenses in the accompanying consolidated
      statement of operations.

                                      II-27
<Page>

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

                   Notes to Consolidated Financial Statements

      TRANSACTIONS WITH OTHER RELATED PARTIES

      PHOENIXSTAR MANAGEMENT AGREEMENTS. Effective February 1, 2000, the Company
      entered into a management agreement with Phoenixstar, Inc. (formerly known
      as PRIMESTAR, Inc.) ("Phoenixstar") pursuant to which the company is
      managing Phoenixstar's affairs in exchange for a monthly management fee.
      Prior to 1999, the Company beneficially owned 37% of Phoenixstar's
      outstanding shares. In 1999, the Company agreed to forego any liquidating
      distribution or other payment that may be made in respect of the
      outstanding shares of Phoenixstar upon any dissolution and winding-up of
      Phoenixstar, or otherwise in respect of Phoenixstar's equity, and to
      transfer its shares in Phoenixstar to the other Phoenixstar stockholders.
      Management fees from Phoenixstar aggregated $420,000 and $445,000 in 2001
      and 2000, 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 $54,000 and $169,000 during 2001 and 2000,
      respectively, and are reflected as a reduction of general
      and administrative expenses in the accompanying statement of operations.

(5)   INVESTMENTS IN AFFILIATES ACCOUNTED FOR USING THE EQUITY METHOD

      The following table reflects the carrying amounts of investments accounted
      for using the equity method:

<Table>
<Caption>
                                                                                       December 31,
                                                                         --------------------------------------
                                                                                2001                 2000
                                                                         -----------------    -----------------
                                                                                  amounts in thousands
             <S>                                                         <C>                           <C>
             ASTROLINK International LLC ("Astrolink")                   $              --             268,712
             Aerocast.com, Inc. ("Aerocast")                                        12,158              11,852
                                                                         -----------------    ----------------

                                                                         $          12,158             280,564
                                                                         =================    ================
</Table>

      The following table reflects the share of losses of affiliates (including
      nontemporary declines in fair values of investments):

<Table>
<Caption>
                                                                          Years Ended December 31,
                                                             --------------------------------------------------
                                                                   2001              2000              1999
                                                             ----------------    -------------     ------------
                                                                             amounts in thousands
             <S>                                             <C>                        <C>                  <C>
             Astrolink                                       $       (417,202)          (6,498)              --
             Aerocast                                                  (7,045)            (753)              --
                                                            ------------------   --------------    ------------

                                                             $       (424,247)          (7,251)              --
                                                             =================   =============     ============
</Table>

                                      II-28
<Page>

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

                   Notes to Consolidated Financial Statements

      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. Liberty Media
      contributed its interest in Astrolink at its net book value on March 16,
      2000. Astrolink, a developmental stage entity, originally intended to
      build a global telecom network using Ka-band geostationary satellites to
      provide broadband data communications services. Astrolink's current
      business plan requires approximately $2.4 billion in additional financing
      over the next several years, including approximately $830,000,000 in 2002.
      During the fourth quarter of 2001, one of the members of Astrolink
      informed Astrolink that it does not intend to provide any of Astrolink's
      required financing. In light of this decision, Astrolink is considering
      several alternatives with respect to its proposed business plan,
      including, but not limited to, seeking alternative funding sources,
      scaling back their proposed business plan, and liquidating the venture
      entirely. There can be no assurance that Astrolink will be able to obtain
      the necessary financing on acceptable terms, or that it will be able to
      fulfill the business plan as originally proposed, or at all.

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

      Summarized unaudited financial information for Astrolink for the
      periods in which Astrolink was owned by LSAT Astro is as follows:

<Table>
<Caption>
                                                                             Years ended
                                                                             December 31,
                                                                 ----------------------------------
                                                                       2001                2000
                                                                 ----------------       -----------
                                                                         amounts in thousands
           <S>                                                   <C>                    <C>
           FINANCIAL POSITION
              Current assets                                      $        21,686       $    45,477
              Property and equipment, net                                 512,145           794,254
              Other assets                                                 25,370            25,348
                                                                 ----------------       -----------

                 Total assets                                     $       559,201       $   865,079
                                                                 ================       ===========

              Liabilities                                         $       244,101       $    28,949
              Owners' equity                                              315,100           836,130
                                                                 ----------------       -----------

                 Total liabilities and equity                     $       559,201       $   865,079
                                                                 ================       ===========
</Table>

                                      II-29
<Page>

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

                   Notes to Consolidated Financial Statements

<Table>
<Caption>
                                                                            Years ended
                                                                            December 31,
                                                                 ----------------------------------
                                                                      2001                2000
                                                                 ----------------       -----------
                                                                         amounts in thousands
           <S>                                                   <C>                        <C>
           RESULTS OF OPERATIONS
              General and administrative expense                 $        (65,930)          (31,431)
              Write-off of system under construction                     (728,495)               --
              Contract termination change                                (196,600)               --
              Depreciation and amortization                                (3,894)             (636)
              Other income                                                  8,179             7,818
                                                                 ----------------       -----------

                 Net loss                                        $       (986,740)          (24,249)
                                                                 ================       ===========
</Table>

      AEROCAST

      During 2000, LSAT LLC invested $12,605,000 in exchange for an ownership
      interest in Aerocast. In March 2001, LSAT LLC invested an additional
      $7,350,000, increasing its interest to approximately 45.5%. Aerocast is
      developing next generation streaming media technologies for broadband
      network operators and video content providers. Aerocast intends to utilize
      terrestrial and satellite platforms to distribute streaming media to
      businesses and consumers with high-speed internet access.

      At December 31, 2001, the aggregate carrying amount of the LSAT LLC's
      investment in Aerocast exceeded the Company's proportionate share of
      Aerocast's net assets by $8,667,000. Such excess is begin amortized over a
      useful life of five years. Amortization aggregated $2,024,000 for the year
      ended December 31, 2001, and is included in share of losses of affiliates.

      Summarized unaudited combined financial information for Aerocast for the
      periods in which Aerocast was owned by LSAT LLC is as follows:

<Table>
<Caption>
                                                                            Years ended
                                                                           December 31,
                                                                 ----------------------------------
                                                                      2001                 2000
                                                                 ----------------       -----------
                                                                     amounts in thousands
           <S>                                                   <C>                    <C>
           COMBINED FINANCIAL POSITION
              Current assets                                     $          5,268       $    10,788
              Property and equipment, net                                   1,798               582
              Other assets                                                  2,902             1,000
                                                                 ----------------       -----------

                 Total assets                                    $          9,968       $    12,370
                                                                 ================       ===========

              Current liabilities                                $            690       $     1,501
              Owners' equity                                                9,278            10,869
                                                                 ----------------       -----------

                 Total liabilities and equity                    $          9,968       $    12,370
                                                                 ================       ===========
</Table>

<Table>
<Caption>
                                                                            Years ended
                                                                            December 31,
                                                                 ----------------------------------
                                                                      2001                 2000
                                                                 ----------------       -----------
                                                                      amounts in thousands
           <S>                                                   <C>                         <C>
           COMBINED OPERATIONS
               Revenue                                           $             23                --
               Operating expenses                                         (10,736)           (2,081)
               Depreciation and amortization                                 (351)               --
               Other income, net                                              129                52
                                                                 ----------------       -----------

                  Net loss                                       $        (10,935)           (2,029)
                                                                 ================       ===========
</Table>

                                      II-30
<Page>

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

                   Notes to Consolidated Financial Statements

(6)   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>
                                                                            DECEMBER 31,
                                                                 ----------------------------------
                                                                      2001                 2000
                                                                 ----------------       -----------
                                                                        amounts in thousands
           <S>                                                   <C>                        <C>
           Sprint PCS Stock*                                     $        301,840           278,489
           Sky Latin America                                              167,422           127,605
           Hughes Electronics Corporation ("Hughes")*                      42,894            47,011
           XM Satellite Radio Holdings, Inc.("XMSR")*                      29,475            26,924
           Wildblue Communications, Inc. ("Wildblue")                       4,512            60,995
           Other                                                           24,580             6,000
                                                                 ----------------       -----------

                                                                 $        570,723           547,024
                                                                 ================       ===========
</Table>

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

      SPRINT PCS STOCK

      The Company acquired beneficial interest in 5,084,745 shares of Sprint PCS
      Stock as part of the Liberty 2000 Transactions. The Company accounts for
      such investment as an available-for-sale security.

      The trust holding the Sprint PCS Stock for LSAT's benefit has entered into
      an equity collar with a financial institution with respect to LSAT's
      Sprint PCS Stock. The collar provides the trust with a put option that
      gives it the right to require its counterparty to buy 5,084,745 shares of
      Sprint PCS Stock from the trust in seven tranches in March 2003 for a
      weighted average price of $59.71 per share. LSAT simultaneously sold a
      call option giving the counterparty the right to buy the same shares of
      stock from the trust in seven tranches in March 2003 for a weighted
      average price of $82.39 per share. The put and call options for this
      collar were equally priced, resulting in no cash cost to the trust or the
      Company. At December 31, 2001, the fair value of the Sprint PCS Stock
      equity collar was approximately $177,721,000.

      Effective May 9, 2001, LSAT transferred (i) its beneficial interest in the
      Sprint PCS Stock, (ii) its rights and obligations under the Sprint PCS
      Stock equity collar and (iii) its rights and obligations under the PCS
      Loan Agreement (see note 8) to LSAT LLC in exchange for two secured demand
      promissory notes in the aggregate principal amount of $224,226,000. Such
      notes bear interest at a rate of 6.5% per annum and are due in March 2003.
      As LSAT LLC is a consolidated subsidiary of LSAT, there was no effect on
      the Company's consolidated balance sheet on the date of the transaction.

      SKY LATIN AMERICA

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

                                      II-31
<Page>

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

                   Notes to Consolidated Financial Statements

      HUGHES ELECTRONICS CORPORATION

      Effective June 4, 1999, the Company completed the sale of its high power
      direct broadcast satellite ("DBS") assets to Hughes, pursuant to an asset
      purchase agreement dated as of January 22, 1999 (the "Hughes High Power
      Agreement"). The assets transferred by the Company pursuant to the Hughes
      High Power Agreement consisted of two high-power DBS satellites ("Tempo
      DBS-1" and "Tempo DBS-2"), its Federal Communications Commission ("FCC")
      authorizations with respect to the 119(degree) West Longitude orbital
      location ("FCC License") and certain related assets. The Company had
      previously granted Phoenixstar the transferable right and option (the
      "Tempo Purchase Option") to purchase such high power DBS assets for
      aggregate consideration of $2,500,000 in cash and the assumption of all
      liabilities. In addition, Tempo Satellite, Inc. ("Tempo") a subsidiary of
      the Company, had previously granted to Primestar Partners LP ("Primestar
      Partners") the right to purchase or lease 100% of the capacity of the DBS
      system being constructed by Tempo (the "Tempo Capacity Rights"), and
      Primestar Partners had made advances to Tempo to fund the construction of
      Tempo's DBS system in the aggregate amount of $465,000,000 (the "Tempo
      Reimbursement Obligation").

      Accordingly, the Hughes High Power Agreement provided for (i) the sale by
      Phoenixstar to Hughes of the Tempo Purchase Option, (ii) the exercise of
      the Tempo Purchase Option by Hughes, and (iii) the termination of the
      Tempo Capacity Rights (collectively, the "Hughes High Power Transaction").
      The aggregate consideration payable by Hughes in the Hughes High Power
      Transaction was $500,000,000, payable as described below.

      As regulatory approval was required to transfer Tempo DBS-1 and the FCC
      License, the Hughes High Power Agreement provided for the Hughes High
      Power Transaction to be completed in two steps. The first closing was
      consummated effective March 10, 1999, and the second closing was
      consummated effective June 4, 1999. The Company recognized an aggregate
      gain on disposition of assets of $13,712,000 in connection with such
      closings.

      In a separate transaction (the "Hughes Medium Power Transaction")
      completed on April 28, 1999 (the "Hughes Medium Power Closing Date"),
      Phoenixstar sold to Hughes Phoenixstar's medium-power DBS business and
      assets for $1.1 billion in cash and 14,613,000 shares of GM Hughes Stock
      valued at approximately $258,000,000 on the date of closing.

      In connection with the Company's approval, as a stockholder of
      Phoenixstar, of the Hughes Medium Power Transaction and other
      transactions, the Company received 4,221,921 shares of GM Hughes Stock,
      valued at $66,143,000, on the Hughes Medium Power Closing Date. Such
      amount is recorded as other income in the 1999 consolidated statement of
      operations. As a condition to the receipt of the GM Hughes Stock, the
      Company issued Phoenixstar a share appreciation right (the "LSAT GMH SAR")
      granting Phoenixstar the right to any market price appreciation in such GM
      Hughes Stock during the one-year period following the date of issuance,
      over an agreed strike price of $15.67.

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

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

                                      II-32
<Page>

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

                   Notes to Consolidated Financial Statements

      LSAT LLC has entered into a put spread collar with a financial institution
      with respect to the Company's shares of GM Hughes Stock. The collar (i)
      provides LSAT LLC with a put option that gives it the right to require its
      counterparty to buy 1,821,921 shares of GM Hughes Stock from LSAT LLC in
      three tranches in October 2003 for a weighted average price of $26.64, and
      (ii) provides the counterparty with a put option that gives it the right
      to require LSAT LLC to repurchase the shares of GM Hughes Stock for a
      weighted average price of $14.80. LSAT LLC simultaneously sold a call
      option giving the counterparty the right to buy the same shares of stock
      from LSAT LLC in three tranches in October 2003 for a weighted average
      price of $54.32 per share. The put and call options for this collar were
      equally priced, resulting in no cash cost to LSAT LLC. At December 31,
      2001, the fair value of the GM Hughes Stock put spread collar was
      approximately $14,746,000, which represented an increase of $9,748,000
      from December 31, 2000. Such increase is included in unrealized gains on
      financial instruments in the accompanying consolidated statement of
      operations.

      XMSR

      XMSR, a publicly traded company, offers up to 100 national audio channels
      of music, news, talk, sports and children's programming from two
      satellites directly to vehicle, home and portable radios. At December 31,
      2001, LSAT LLC currently owned 1,000,000 shares or 1.6% of XMSR common
      stock. The XMSR closing stock price as of December 31, 2001 was $18.36 per
      share.

      LSAT LLC has entered into an equity collar with a financial institution
      with respect to its shares of XMSR common stock. The collar provides LSAT
      LLC with a put option that gives it the right to require its counterparty
      to buy 1,000,000 shares of XMSR common stock from LSAT LLC in three
      tranches in November 2003, December 2003 and February 2004 for a weighted
      average price of $28.55. LSAT LLC simultaneously sold a call option giving
      the counterparty the right to buy the same shares of stock from LSAT LLC
      in three tranches in November 2003, December 2003 and February 2004 for a
      weighted average price of $51.49 per share. The put and call options for
      this collar were equally priced, resulting in no cash cost to LSAT LLC. At
      December 31, 2001, the fair value of the XMSR equity collar was
      approximately $11,115,000.

      On June 27, 2001, LSAT LLC entered into an agreement to loan 1,000,000
      shares of XMSR to a third party. The obligation to return those shares is
      secured by cash collateral equal to 100% of the market value of that
      stock, which was $18,360,000 at December 31, 2001. Such cash collateral is
      reported as restricted cash in the accompanying consolidated balance
      sheet. During the period of the loan, which is terminable by either party
      at any time, the cash collateral is to be marked-to-market daily. Interest
      accrues on the cash collateral for the benefit of LSAT LLC at the rate of
      .15% per annum. As of December 31, 2001, 1,000,000 shares of XMSR had been
      lent under this agreement. The loan has no stated maturity date.

      WILDBLUE

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

                                      II-33
<Page>

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

                   Notes to Consolidated Financial Statements

      During the first quarter of 2001, Wildblue announced that it was
      withdrawing its initial public offering due to continuing unfavorable
      conditions in the financial markets. As a result of such withdrawal,
      Wildblue is currently dependent upon its existing shareholders for the
      necessary funding to achieve its business plan. In light of the foregoing
      circumstances, LSAT LLC recorded a $19,500,000 charge during the first
      quarter of 2001 to reflect a nontemporary decline in the fair value of its
      investment in Wildblue. The adjustment reduced the carrying value of LSAT
      LLC's investment in Wildblue to an amount that was equal to LSAT LLC's
      proportionate share of Wildblue's equity. The Company used this valuation
      approach due to the difficulty in assessing the fair value of LSAT LLC's
      investment in Wildblue. The Company recorded additional charges during the
      second and third quarters of 2001 to reflect LSAT LLC's share of
      corresponding reductions in the net assets of Wildblue during those
      periods. Based on the Company's fourth quarter 2001 assessment of
      Wildblue's remaining sources of liquidity and Wildblue's inability to
      obtain financing for its business plan, the Company concluded that the
      carrying value of LSAT LLC's investment in Wildblue should be reduced to a
      fair value that assumes the liquidation of Wildblue. Accordingly, LSAT LLC
      recorded an additional $36,245,000 reduction to the carrying value of its
      investment in Wildblue during the fourth quarter of 2001.

      NONTEMPORARY DECLINES IN FAIR VALUES OF INVESTMENTS

      During the years ended December 31, 2001 and 2000, the Company determined
      that certain 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
      losses aggregating $76,799,000 (including $56,483,000 related to LSAT
      LLC's investment in Wildblue and $14,575,000 related to LSAT LLC's
      investment in XMSR) during 2001 and $9,860,000 in 2000.

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

<Table>
<Caption>
                                                                             December 31,
                                                                 ----------------------------------
                                                                    2001                   2000
                                                                 ----------------     -------------
                                                                           amounts in thousands
          <S>                                                    <C>                        <C>
          Equity securities
              Fair value                                         $        388,163           352,424
                                                                 ================     =============
              Gross unrealized holding gains                     $          3,942           200,552
                                                                 ================     =============
              Gross unrealized holding losses                    $        (23,532)         (224,794)
                                                                 ================     =============
</Table>

(7)   DISPOSITION

      Effective September 14, 2001, the Company transferred its 80% ownership
      interest in TSAT Technologies, Inc. ("Technologies Sub") to Asvan
      Technology, LLC, ("Asvan"). LSAT and Asvan had previously entered into an
      agreement pursuant to which Asvan transferred certain assets and
      intellectual property to Technologies Sub in exchange for a 20% equity
      interest in Technologies Sub. LSAT had agreed to provide Technologies Sub
      with a maximum of $5,000,000 (the "Funding Commitment") to develop
      technologies relating to the design of (i) a stable, low phase noise,
      remotely tunable transceiver, and (ii) an integrated receiver/decoder
      (IRD) service module for commercial premises and multiple dwelling units.

                                      II-34
<Page>

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

                   Notes to Consolidated Financial Statements

      In connection with the transfer of LSAT's 80% interest in Technologies Sub
      to Asvan, LSAT's obligations under the Funding Commitment were terminated.
      In addition, LSAT obtained the right to purchase from Technologies Sub
      hardware and software products developed using the aforementioned
      technologies at prices not to exceed 110% of Technologies Sub's direct
      cost to produce such products. This pricing is to remain in effect until
      the aggregate cost to LSAT is $1,000,000 less than that which would be
      paid by other Asvan customers. Thereafter, Asvan agreed to sell products
      to LSAT at prices not to exceed the lowest price offered by Technologies
      Sub to any other buyer of similar quantities of the products.

(8)   LOAN FACILITY

      During 2000, the Company entered into a revolving credit facility, which,
      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
      Stock equity collar described in note 6. Interest accrues at the 30 day
      LIBOR (2.1% at December 31, 2001) and is payable monthly. The principal
      balance is due and payable March 10, 2003. At December 31, 2001, borrowing
      availability pursuant to the PCS Loan Facility was $205,497,000.

      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. At
      December 31, 2001, the fair value of the Company's debt approximated its
      carrying value.

(9)   REDEEMABLE PREFERRED STOCK

      On March 16, 2000, the Company issued 150,000 shares of Series A
      Cumulative Preferred Stock ("Series A Preferred Stock") and 150,000 shares
      of Series B Preferred Stock to Liberty Media in exchange for shares of
      Sprint PCS Stock.

      SERIES A CUMULATIVE PREFERRED STOCK

      The Series A Preferred Stock accrues dividends at 12% per annum at all
      times prior to April 1, 2005, 11% on and after April 1, 2005 and prior to
      April 1, 2010, and 10% on and after April 1, 2010. Such dividends are
      payable the last day of each March, June, September and December. Prior to
      March 31, 2003, dividends may be paid, at the option of the Company, in
      cash, shares of Series A Common Stock of the Company, or a combination of
      both. Subsequent to March 31, 2003, dividends are payable in cash.
      Dividends not paid are added to the liquidation preference on such date
      and remain a part of the liquidation preference until such dividends are
      paid. In the event of a default, the dividend rate will be equal to the
      dividend rate then in effect plus 2%. Subject to certain specified
      exceptions, the Company is prohibited from paying dividends on any shares,
      parity securities or junior securities during any period in which the
      Company is in arrears with respect to payment of dividends on Series A
      Preferred Stock.

      The holder of Series A Preferred Stock is not entitled to vote on any
      matters submitted to a vote of the shareholders of the Company, except as
      required by law and other limited exceptions.

      The liquidation preference of each share of the Series A Preferred Stock
      is equal to the stated value per share of $1,000 plus all accrued and
      unpaid dividends.

      The Series A Preferred Stock is redeemable at the option of the Company,
      in whole or from time to time in part, on any business day after April 1,
      2020 at a redemption price per share equal to the liquidation preference
      of such share on the applicable redemption date. If less than all
      outstanding shares are to be redeemed, shares will be redeemed ratably
      from the holders. On or after April 1, 2020, the Series A Preferred Stock
      is redeemable at the option of the holder for cash.

                                      II-35
<Page>

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

                   Notes to Consolidated Financial Statements

      SERIES B CUMULATIVE CONVERTIBLE VOTING PREFERRED STOCK

      The Series B Preferred Stock accrues dividends at the rate of 8% per
      annum. Such dividends are payable the last day of each March, June,
      September and December. Prior to March 31, 2003, dividends may be paid, at
      the option of the Company, in cash, shares of Series A Common Stock of the
      Company, or a combination of both. Subsequent to March 31, 2003, dividends
      are payable in cash. Dividends not paid are added to the liquidation
      preference on such date and remain a part of the liquidation preference
      until such dividends are paid. In the event of a default, the dividend
      rate will be 10% per annum. Subject to certain specified exceptions, the
      Company is prohibited from paying dividends on any shares, parity
      securities or junior securities during any period in which the Company is
      in arrears with respect to payment of dividends on Series B Preferred
      Stock.

      In addition to voting rights required by law, each share of Series B
      Preferred Stock will be entitled to vote together with holders of the
      Series A and Series B Common Stock as a single class upon all matters upon
      which holders of Series A and Series B Common Stock are entitled to vote.
      In any such vote, the holders of Series B Preferred Stock will be entitled
      to 558 votes per share held. The Series B Preferred Stock is redeemable at
      the option of the Company after April 1, 2005. At any date on or after
      April 1, 2020, the Series B Preferred Stock is redeemable at the option of
      the holder for cash.

      The liquidation preference of each share of the Series B Preferred Stock
      as of any date of determination is equal to the stated value per share of
      $1,000 plus all accrued and unpaid dividends.

      Each share of the Series B Preferred Stock is initially convertible into
      11.31145 shares of Series B Common Stock. Such conversion rate was
      calculated as the liquidation value of such shares divided by $88.406 and
      is adjustable based on the adjusted liquidation value at the date of
      conversion.

      During 2001, the Company used a combination of cash ($22,500,000) and
      shares of Series A Common Stock (204,571 shares) to satisfy the
      $30,000,000 aggregate annual dividend requirements of the Series A
      Preferred Stock and Series B Preferred Stock. During 2000, the Company
      issued 165,992 shares of Series A Common Stock, and paid cash of
      $7,500,000 to satisfy the dividend requirements of the Series A
      Preferred Stock and the Series B Preferred Stock. Accrued dividends on
      the Series A Preferred Stock and Series B Preferred Stock aggregated
      $7,500,000 at December 31, 2001.

      Both the Series A and Series B Preferred Stock were issued at a discount
      from the stated values of such shares. Therefore, the Company is accreting
      both the Series A Preferred Stock and the Series B Preferred Stock up to
      the respective redemption values over the period from the issuance date to
      the redemption date using the effective interest method. Accretion on the
      Series A and Series B Preferred Stock aggregated $5,772,000 and $4,547,000
      during the years ended December 31, 2001 and 2000 respectively. Such
      accretion has been accounted for as a direct charge to additional paid-in
      capital and has been included in the calculation of loss attributable to
      common shareholders.

                                      II-36
<Page>

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

                   Notes to Consolidated Financial Statements

(10)  STOCKHOLDERS' EQUITY

      COMMON STOCK

      The Series A Common Stock has one vote per share and the Series B Common
      Stock has ten votes per share. Each share of Series B Common Stock is
      convertible, at the option of the holder, into one share of Series A
      Common Stock.

      PREFERRED STOCK

      The Company is authorized to issue 5,000,000 shares of preferred stock.
      The preferred stock may be issued from time to time as determined by the
      Company's Board of Directors (the "LSAT Board"), without stockholder
      approval. Such preferred stock may be issued in such series and with such
      designations, preferences, conversion or other rights voting powers,
      qualifications, limitations, or restrictions as shall be stated or
      expressed in a resolution or resolutions providing for the issue of such
      series adopted by the LSAT Board.

      STOCK OPTIONS

      On December 4, 1996, (the "Spin-off Date"), Tele-Communications, Inc.
      ("TCI") (now known as AT&T Broadband LLC) distributed (the "Spin-off"), as
      a dividend, all of the issued and outstanding LSAT common stock to the
      holders of TCI's then outstanding TCI Group tracking stock. On the
      Spin-off Date, the LSAT Board adopted, and TCI as the sole stockholder of
      the Company prior to the Spin-off, approved, the TCI Satellite
      Entertainment, Inc. 1996 Stock Incentive Plan, now called the Liberty
      Satellite & Technology 1996 Stock Incentive Plan (the "LSAT 1996 Plan").
      The LSAT 1996 Plan, as amended, provides for awards to be made in respect
      of a maximum of 520,000 shares of Series A Common Stock (subject to
      certain anti-dilution adjustments). Awards may be made as grants of stock
      options, stock appreciation rights ("SARs"), restricted shares, stock
      units, performance awards or any combination thereof (collectively,
      "Awards"). Awards may be made to employees and to consultants and advisors
      to the Company who are not employees. Shares of Series A Common Stock that
      are subject to Awards that expire, terminate or are annulled for any
      reason without having been exercised (or deemed exercised, by virtue of
      the exercise of a related SAR), or are forfeited prior to becoming vested,
      will return to the pool of such shares available for grant under the LSAT
      1996 Plan.

      As originally granted in February 1997, options granted to employees
      vested over five years, first became exercisable on January 1, 1998 and
      expire on December 31, 2006. In November 1997, the LSAT Board approved
      modifications to the vesting provisions to provide for vesting in three
      equal annual installments, commencing February 1998. In accordance with
      the LSAT 1996 Plan, absent action by the LSAT Board, vesting would
      accelerate and the options would terminate upon a sale of substantially
      all assets of the Company, which occurred with the sale of the Tempo DBS-1
      assets on June 4, 1999. Pursuant to a provision in the LSAT 1996 Plan, the
      LSAT Board allowed the options held by most of the employees and officers
      to vest and extended the expiration date to June 4, 2000. The original
      terms for the options were retained for employees and officers who were
      continuing with the Company.

      Options granted in 2001, 2000 and 1999 to certain key employees and
      officers of the Company pursuant to the LSAT 1996 Plan vest over a 5-year
      period beginning on the date of the grant, first becomes exercisable as to
      25% on the second anniversary of the date of grant and become exercisable
      as to an additional 25% on each of the third, fourth and fifth
      anniversaries of the date of grant. Such options expire 10 years from the
      date of grant.

                                      II-37
<Page>

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

                   Notes to Consolidated Financial Statements

      In June 1996, the Board of Directors of TCI (the "TCI Board") authorized
      TCI to permit certain of its executive officers to acquire equity
      interests in certain of TCI's subsidiaries. In connection therewith, the
      TCI Board approved the acquisition by each of two executive officers of
      TCI who were not employees of the Company (the "TCI Officers"), of 1.0% of
      the net equity of the Company. The TCI Board also approved the acquisition
      by an individual who was the chief executive officer and a director of the
      Company (the "Company Officer"), of 1.0% of the net equity of the Company
      and the acquisition by an executive officer of certain TCI subsidiaries
      who was also a director, but not an employee, of the Company (the "TCI
      Subsidiary Officer"), of 0.5% of the net equity of the Company. The TCI
      Board determined to structure such transactions as grants by the Company
      to such persons of options to purchase shares of Series A Common Stock
      representing 1.0% ( in the case of each of the TCI Officers and the
      Company Officer) and 0.5% (in the case of the TCI Subsidiary Officer) of
      the shares of Series A Common Stock and Series B Common Stock issued and
      outstanding on the Spin-off Date, determined immediately after giving
      effect to the Spin-off, but before giving effect to any exercise of such
      options (the "Spin-off Date Options").

      Spin-off Date Options to purchase 232,426 shares of Series A Common Stock
      at a per share price of $88.60 were granted on the Spin-off Date. The
      Spin-off Date Options vest in 20% cumulative increments on each of the
      first five anniversaries of February 1, 1996, and are exercisable for up
      to ten years following February 1, 1996. In February 1999, 66,407 of the
      Spin-off Date Options were cancelled. Compensation expense with respect to
      the Spin-off Date Options held by the Company Officer aggregated $35,000
      and $246,000 during the years ended December 31, 2000 and 1999,
      respectively.

      Pursuant to the terms of the Spin-off, and (in the case of the TCI
      Officers and the TCI Subsidiary Officer) in partial consideration for the
      capital contribution made by TCI to the Company in connection with the
      Spin-off, the Company agreed, effective as of the Spin-off Date, to bear
      all obligations under such options and to enter into stock option
      agreements with respect to such options with each of the TCI Officers, the
      Company Officer and the TCI Subsidiary Officer.

      On March 6, 1998, stockholders of the Company approved the TCI Satellite
      Entertainment, Inc. 1997 Nonemployee Director Stock Option Plan (the "LSAT
      DSOP"). The LSAT DSOP provides for the grant to each person that is a
      member of the LSAT Board and is not an employee of the Company, its
      subsidiaries or its affiliates, of options to purchase 5,000 shares of
      Series A Common Stock. Options issued pursuant to the LSAT DSOP vest and
      become exercisable over a three-year period from the date of grant and
      expire 10 years from the date of grant.

      The Company applies Accounting Principles Board Opinion No. 25 in
      accounting for its stock options, and accordingly, compensation expense
      has been recognized for its stock options in the accompanying financial
      statements using the intrinsic value method. The adjustment to stock
      compensation of $3,115,000 in 2000 resulted from a decrease in the
      Company's liability for SARs. Had the Company determined compensation
      expense based on the grant-date fair value method pursuant to Statement of
      Financial Accounting Standards No. 123, the Company's net earnings (loss)
      and earnings (loss) per share would have been ($105,726,000) and ($19.04)
      for 2001; ($55,112,000) and ($11.58) for 2000; and $66,498,000 and $9.57
      for 1999, respectively.

                                      II-38
<Page>

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

                   Notes to Consolidated Financial Statements

      The following table presents the number, weighted-average exercise price
      and weighted-average grant-date fair value of the Spin-off Options and
      options to buy Series A Common Stock granted pursuant to the LSAT 1996
      Plan and the LSAT DSOP.

<Table>
<Caption>
                                                                        Weighted-        Weighted-
                                                                         average         average
                                                        Number of        exercise       grant-date
                                                         Options          Price         Fair Value
                                                        ---------       ---------       -----------
      <S>                                                 <C>           <C>                <C>
      Outstanding at December 31, 1998                    339,426       $   85.70
        Exercised                                          (8,000)          80.00
        Forfeited and cancelled                            (2,000)          80.00
        Granted                                           119,050           79.30          $  60.30
                                                        ---------

      Outstanding at December 31, 1999                    448,476           84.00
        Exercised                                         (54,000)          78.60
        Forfeited and cancelled                           (75,407)          86.50
        Granted                                            25,000          111.90             87.70
                                                        ---------

      Outstanding at December 31, 2000                    344,069           86.50
        Exercised                                              --
        Forfeited and cancelled                                --
        Granted                                            15,000           26.00             22.40
                                                        ---------

      Outstanding at December 31, 2001                    359,069
                                                        =========

      Exercisable at December 31, 1999                    220,472           85.20
                                                        =========
      Exercisable at December 31, 2000                    175,815           86.50
                                                        =========
      Exercisable at December 31, 2001                    203,327           85.60
                                                        =========
</Table>

      Options outstanding at December 31, 2001 have a range of exercise prices
      from $26.00 to $119.38 and a weighted-average remaining contractual life
      of approximately six years.

      The respective estimated grant-date fair values of the options noted above
      are based on the Black-Scholes model and are stated in current annualized
      dollars on a present value basis. The key assumptions used in the model
      for purposes of these calculations include the following: (a) a discount
      rate equal to the one-year Treasury Bill rate; (b) an 85% volatility rate;
      (c) the 10-year option term; (d) the closing price of the Series A Common
      Stock on the date of grant; and (e) an expected dividend rate of zero.

      OTHER

      Effective February 1, 2001, certain key employees of the Company were
      granted, pursuant to the LSAT 1996 Plan, an aggregate of 21,750 restricted
      shares of Series A Common Stock. Such shares vest 25% on February 1, 2003,
      and vest an additional 25% on each of February 1, 2004, 2005 and 2006.
      Compensation expense with respect to the restricted shares aggregated
      $268,000 for the year ended December 31, 2001.

                                      II-39
<Page>

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

                   Notes to Consolidated Financial Statements

      In February 1997, certain key employees of the Company were granted,
      pursuant to the LSAT 1996 Plan, an aggregate of 32,500 restricted shares
      of Series A Common Stock. As originally granted, such restricted shares
      vested as to 50% on January 1, 2001 and as to the remaining 50% on January
      1, 2002. In November 1997, the LSAT Board approved modifications to the
      vesting provisions accelerating the vesting schedules under such
      restricted stock awards to provide for vesting of 50% on each of the
      second and third anniversaries of the date of granting. Compensation
      expense with respect to the restricted shares aggregated $366,000 for the
      year ended December 31, 1999.

      In connection with the Spin-off, TCI and the Company also entered into a
      "Share Purchase Agreement" to sell to each other from time to time, at the
      then current market price, shares of Series A TCI Group common stock and
      Series A Common Stock, respectively, as necessary to satisfy their
      respective obligations after the Spin-off Date under certain stock options
      and SARs held by their respective employees and non-employee directors. At
      December 31, 2001, approximately 103,400 options to purchase Series A
      Common Stock were held by current and former employees of TCI pursuant to
      the Share Purchase Agreement. Such options have exercise prices ranging
      from $174.70 to $237.60 per share and have expiration dates ranging from
      2002 to 2005.

      At December 31, 2001, a total of 462,469 shares of Series A Common Stock
      were reserved for issuance pursuant to the Spin-off Date Options, the
      Share Purchase Agreements, the LSAT 1996 Plan and the LSAT DSOP. In
      addition, 1,696,717 shares of Series B Common Stock are reserved for
      issuance upon conversion of the Series B Preferred Stock, and one share of
      Series A Common Stock is reserved for each outstanding share of Series B
      Common Stock.

(11)  TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS

      In September 2000, an executive officer, who was the Company's Chief
      Executive Officer and President until his resignation on October 8, 2001,
      purchased a 1.83% common stock interest in a subsidiary of Liberty Media
      for $400,000. Such subsidiary owns an indirect interest in LSAT LLC.
      Liberty Media and the executive officer entered into a shareholders
      agreement in which the executive officer could require Liberty Media to
      purchase, after five years, all or part of his common stock interest in
      the subsidiary, in exchange for Liberty Media common stock, at its then
      fair value. In addition, Liberty Media had the right to purchase, in
      exchange for Liberty Media common stock, the executive officer's common
      stock interest for fair market value at any time. On October 10, 2001,
      Liberty Media purchased the executive officer's 1.83% common stock
      interest in the subsidiary for $425,324.

      During 2000, a director of the Company, who is no longer a director of the
      Company, exercised stock options to buy 5,000 shares of Series A Common
      Stock of the Company. Such options had an exercise price of $65.00 per
      share, and the market price of Series A Common Stock at the time of such
      exercise was $110.00. Simultaneously with such exercise, the Company
      purchased from the director 2,954 shares of Series A Common Stock for an
      aggregate purchase price of $325,000, which represented the director's
      aggregate exercise price. Such shares are reflected as treasury shares in
      the Company's consolidated statement of stockholders' equity.

                                      II-40
<Page>

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

                   Notes to Consolidated Financial Statements

      During 2000, two executive officers of the Company, received loans in the
      principal amounts of $136,000 and $135,000, respectively, to be used
      solely for the purpose of satisfying tax liabilities related to the lapse
      of restrictions on shares of common stock awarded under the LSAT 1996
      Plan. Through December 31, 2001, the loans accrued interest at an annual
      rate of 6.41%. Each of the loans originally provided for principal and
      interest to be payable upon the occurrence of certain events and in no
      event later than December 1, 2001. Subsequent to December 31, 2001, the
      Company agreed to extend the maturity dates of the loans to December 31,
      2003, and lower the annual interest rates of the loans to 4% per annum.
      Consistent with the terms of the original loans, interest payments may be
      deferred by the borrowers until maturity. Each loan is secured in each
      case by 2,500 shares of the Company's Series A Common Stock and are
      otherwise nonrecourse to the borrowers. As of December 31, 2001, the
      balances outstanding on the loans including accrued interest, were
      $150,000 and $148,000 respectively. Effective April 27, 2001, one of the
      executive officers became the President of On Command. Since that date, On
      Command has been responsible for 100% of such executive's compensation.

(12)  INCOME TAXES

      The Company and TCI entered into a tax sharing agreement (the "TCI Tax
      Sharing Agreement") dated June 1997, to confirm that (i) neither the
      Company nor any of its subsidiaries has any obligation to indemnify TCI or
      the TCI shareholders for any tax resulting from the Spin-off failing to
      qualify as a tax-free distribution pursuant to Section 355 of the Internal
      Revenue Code of 1986 (the "Code"); (ii) TCI is obligated to indemnify the
      Company and its subsidiaries for any taxes resulting from the Spin-off
      failing to qualify as a tax-free distribution pursuant to Section 355 of
      the Code; (iii) to the best knowledge of TCI, the Company's total payment
      obligation under the TCI Tax Sharing Agreement could not reasonably be
      expected to exceed $5,000,000.

      In connection with the LSAT LLC and Ascent Transactions, the Company and
      Liberty Media entered into a Tax Liability Allocation and Indemnification
      Agreement. See note 4.

      Income tax benefit (expense) for the years ended December 31, 2001, 2000
      and 1999 consists of:

<Table>
<Caption>
                                                     Current     Deferred       Total
                                                    ---------   ----------   -----------
                                                           amounts in thousands
      <S>                                           <C>             <C>           <C>
      Year ended December 31, 2001:
        Federal                                     $  (5,927)         270        (5,657)
        State and local                                  (201)          40          (161)
                                                    ---------   ----------   -----------

                                                    $  (6,128)         310        (5,818)
                                                    =========   ==========   ===========
      Year ended December 31, 2000
        Federal                                     $     650        8,424         9,074
        State and local                                    --         (943)         (943)
                                                    ---------   ----------   -----------

                                                    $     650        7,481         8,131
                                                    =========   ==========   ===========
      Year ended December 31, 1999:
        Federal                                     $    (650)      (1,197)       (1,847)
        Sate and local                                     --        1,431         1,431
                                                    ---------   ----------   -----------

                                                    $    (650)         234          (416)
                                                    =========   ==========   ===========
</Table>

                                      II-41
<Page>

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

                   Notes to Consolidated Financial Statements

      Income tax benefit (expense) differs from the amounts computed by applying
      the federal income tax rate of 35% as a result of the following:

<Table>
<Caption>
                                                                Years Ended December 31,
                                                     ---------------------------------------
                                                         2001          2000          1999
                                                     -----------   ------------   ----------
                                                                  amounts in thousands
      <S>                                            <C>                <C>          <C>
      Computed "expected" tax (expense) benefit      $    33,891         20,044      (23,687)
      State and local income taxes, net of federal
        income tax benefit                                  (105)          (613)         931
      Tax benefit from disposal of investment                 --         27,210           --
      Change in valuation allowance                      (40,983)       (41,953)      15,695
      Other                                                1,379          3,443        6,645
                                                     -----------   ------------   ----------

                                                     $    (5,818)         8,131         (416)
                                                     ===========   ============   ==========
</Table>

      The tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities at
      December 31, 2001 and 2000 are presented below:

<Table>
<Caption>
                                                                       December 31,
                                                             -------------------------------
                                                                   2001             2000
                                                             --------------    -------------
                                                                    amounts in thousands
      <S>                                                    <C>                     <C>
      Deferred tax assets:
        Capital and net operating loss carryforwards and
          tax credits                                        $       86,764          194,716
        Future deductible amount related to losses not
          recognized for tax purposes                                32,288
        Future deductible amounts principally due to
          accruals deductible in later periods                          187            1,400
        Other                                                             2                7
                                                             --------------    -------------
          Total deferred tax assets                                 119,241          196,123
        Valuation allowance                                        (119,241)         (78,258)
                                                             --------------    -------------
          Net deferred tax assets                                        --          117,865
      Deferred tax liabilities:
        Future gain related to unrealized appreciation on
          held for sale security                                         --          116,384
        Future taxable amounts principally due to accruals
          recognized for tax purposes                                    --            1,481
                                                             --------------    -------------
             Net deferred tax liabilities                    $           --               --
                                                             ==============    =============
</Table>

      The valuation allowance for deferred tax assets as of December 31, 2001
      and 2000 was $119,241,000 and $78,258,000, respectively. Such balances
      decreased (increased) ($40,983,000) and $72,675,000 from December 31, 2000
      and 1999, respectively. The 2000 decrease includes a decrease of
      $114,628,000 included in additional paid-in capital.

      The Company has analyzed the sources and expected reversal periods of its
      deferred tax assets. The Company believes that the tax benefits
      attributable to deductible temporary differences will be realized to the
      extent of future reversals of existing taxable temporary differences.

                                      II-42
<Page>

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

                   Notes to Consolidated Financial Statements

      At December 31, 2001, the Company had capital and net operating loss carry
      forwards for income tax purposes aggregating approximately $231,431,000 of
      which, if not utilized to reduce taxable income in future periods,
      $38,130,000 expire in 2012, $106,824,000 expire in 2018, $6,410,000 expire
      in 2019, and $80,067,000 expire in 2020. In addition, alternative minimum
      tax credit carryforwards of approximately $5,759,000 at December 31, 2001
      are available to offset future regular federal and state liabilities.

(13)  COMMITMENTS AND CONTINGENCIES

      Through December 2001, the Company leased its office space under a
      noncancelable operating lease. Rent expense was $75,000, $159,000 and
      $23,000 in 2001, 2000 and 1999, respectively. At December 31, 2001, the
      Company had no noncancelable operating leases.

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

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

(14)  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<Table>
<Caption>
                                                           1st         2nd         3rd         4th
                                                         Quarter     Quarter     Quarter     Quarter
                                                        --------    --------    --------    --------
                                                                   amounts in thousands,
                                                                 except per share amounts
      <S>                                               <C>          <C>         <C>         <C>
      2001:
             Revenue                                    $    105         105         105         105
             Operating loss                             $   (759)       (785)     (1,664)     (1,531)
             Net loss                                   $ (3,145)    (40,260)       (211)    (59,032)
             Basic and diluted loss per common share    $  (1.65)      (6.72)      (1.22)      (9.03)

      2000:
             Revenue                                    $     90         130         120         105
             Operating income (loss)                    $ (3,529)      4,123      (1,111)       (232)
             Net loss                                   $ (3,728)    (27,281)    (11,644)     (6,484)
             Basic and diluted loss per common share    $   (.73)      (5.06)      (2.86)      (2.11)
</Table>

                                      II-43
<Page>

PART III.

         On April 1, 2002, the Company effected 1 for 10 reverse stock splits of
its Series A common stock ("Series A Common Stock") and Series B common stock
("Series B Common Stock"). All share and per share amounts included herein have
been adjusted to give retroactive effect to such reverse stock splits.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following lists the directors and executive officers of Liberty
Satellite and Technology, Inc. ("LSAT" or the "Company"), their birth dates, a
description of their business experience and positions held with the Company, as
of February 1, 2002, unless otherwise noted.

<Table>
<Caption>
         Name                                                       Position
         ----                                                       --------
<S>                                 <C>
Alan M. Angelich                    Has served as a director of the Company since  August 2000. Mr. Angelich  has
Born October 22, 1943               been the President of Janco Capital Partners, Inc., an investment banking firm
                                    specializing in the  telecommunications industry, since December 1995 when he
                                    co-founded the firm.

Robert R. Bennett                   Has served as a director of the Company since  August  2000. Mr.Bennett  has
Born April 19, 1958                 served as President and Chief  Executive Officer of Liberty Media Corporation
                                    ("Liberty Media") since April 1997 and a director of Liberty Media since September
                                    1994. Mr. Bennett served as Executive Vice President of Tele-Communications, Inc.
                                    ("TCI") (now known as AT&T Broadband LLC) from April 1997 to March 1999. Mr. Bennett
                                    served as Executive Vice President, Secretary and Treasurer of Liberty Media
                                    from June 1995 through March 1997, Chief Financial Officer from May 1996 through
                                    March 1997, and in various executive positions since Liberty Media's inception in
                                    1990. Mr. Bennett is a director of Liberty Digital, Inc. ("Liberty Digital"), Liberty
                                    Livewire Corporation ("Liberty Livewire"), UnitedGlobalCom, Inc. ("UnitedGlobalCom"),
                                    USA Networks, Inc., and Telewest Communications plc, and is Chairman of the
                                    Board of Liberty Digital.

William H. Berkman                  Has served as a director of the Company since August 2000. Since January 2000,
Born February 26, 1965              Mr. Berkman  has been the Managing  Partner of the Associated Group, LLC,
                                    the general partner of Liberty Associated Partners,  LP, an investment partnership
                                    specializing  in the  telecommunications  and  media  industry. From 1994
                                    to January 2000, Mr. Berkman was a principal at The  Associated Group, Inc.,
                                    a publicly  traded  company. Mr. Berkman was also one  of the founders of
                                    Teligent, Inc. and served as a member of Teligent, Inc.'s board of directors
                                    from August 1996 to January 2000. Mr. Berkman currently serves on the board
                                    of directors of Centerpoint Broadband Technologies, Inc.

William R. Fitzgerald               Has served as director of the  Company's since April 1, 2002. Mr.Fitzgerald
Born May 20, 1957                   has served as Senior Vice President of Liberty Media and as Chairman of the
                                    Board of Liberty Livewire, since August 2000. Mr. Fitzgerald served as Chief
                                    Operating Officer, Operations Administration, of AT&T Broadband LLC, from August 1999
                                    to May 2000, and Executive Vice President and Chief Operating Officer of TCI from
                                    March 1999 to August 1999. Mr. Fitzgerald served as Executive Vice President and
                                    Chief Operating Officer of TCI Communications, Inc. (TCI Communications"), the
                                    domestic cable subsidiary of TCI, from November 1998 to March 1999, served as
                                    Executive Vice President of TCI Communications from December 1997 to March 1999
                                    and served as a Senior Vice President of TCI Communications from March 1996 to
                                    December 1997. Mr. Fitzgerald is a director of On Command Corporation
                                    ("On Command") and Liberty Livewire.
</Table>

                                      III-1
<Page>

<Table>
<Caption>
         NAME                                                        POSITION
         ----                                                        --------
<S>                                 <C>
John W. Goddard                     Has served as a director of the Company since December 1996. Mr. Goddard
Born May 4, 1941                    served as President and Chief Executive Officer of the cable division of
                                    Viacom International, Inc. from 1980 until the division was sold in July 1996.
                                    Mr. Goddard is also a director of Diva Systems Corporation, Cable Television
                                    Laboratories, Inc. (Cablelabs), and The Deafness Research Foundation and is a
                                    Trustee of the Walter Kaitz Foundation.

J. Curt Hockemeier                  Has served as a director of the Company since August 2000. Mr. Hockemeier has
Born May 15, 1948                   been President of Arbinet-thexchange, a leading online telecommunications
                                    exchange, since April 2000, and Chief Executive Officer since August 2000. From
                                    June 1999 until April 2000, Mr. Hockemeier served as Executive Vice President and
                                    Chief Operating Officer for telephone operations for AT&T Broadband, LLC and, from
                                    July 1998 until June 1999, he served as AT&T Local Network Services' Vice President.
                                    Beginning in 1992, Mr. Hockemeier served as Senior Vice President of Affiliate
                                    Services for Teleport Communications Group and held other senior management
                                    positions with Teleport, including Senior Vice President of National Operations,
                                    until AT&T Corporation acquired Teleport Communications Group in July 1998.

Gary S. Howard                      Has served as Chairman of the Board since August 2000 and has served as a
Born February 22, 1951              director of the Company since November 1996. Mr. Howard served as Chief
                                    Executive Officer of the Company from December 1996 until April 2000. From
                                    February 1995 through August 1997, Mr. Howard also served as President of the
                                    Company. Mr. Howard has served as the Executive Vice President and Chief Operating
                                    Officer of Liberty Media since July 1998. Mr. Howard served as Executive Vice
                                    President of TCI from December 1997 to March 1999; as Chief Executive Officer,
                                    Chairman of the Board and director of TV Guide, Inc. from June 1997 to March 1999;
                                    and as President and Chief Executive Officer of TCI Ventures Group, LLC from
                                    December 1997 to March 1999. Mr. Howard served as President of TV Guide, Inc. from
                                    June 1997 to September 1997. Mr. Howard is a director of Liberty Media, Liberty
                                    Livewire, Liberty Digital, UnitedGlobalCom and On Command.

Kenneth G. Carroll                  Has served as Senior Vice President and Chief Financial Officer of the Company
Born April 21, 1955                 since February 1995 and as Treasurer since August 1999. Mr. Carroll is
                                    currently the Company's acting President. He has also served as Senior Vice
                                    President and Chief Financial Officer of Phoenixstar, Inc. (formerly known as
                                    PRIMESTAR, Inc.) since April 1998. From December 1994 to May 1997,
                                    Mr. Carroll served as Vice President of TCI K-1, Inc. and as Vice President of
                                    United Artists K-1 Investments, Inc.
</Table>

         On October 8, 2001, Carl E. Vogel, the Company's Chief Executive
Officer and President resigned as a director and officer of the Company. Kenneth
G. Carroll is currently the Company's acting President and will serve until the
Company's board of directors identifies and appoints a new President and Chief
Executive Officer.

         Effective April 27, 2001, Christopher Sophinos, a Senior Vice President
of the Company, became President of On Command. Since that date, On Command has
been responsible for 100% of Mr. Sophinos' compensation. Although Mr. Sophinos
continues to perform duties as an officer of the Company, substantially all of
his time is devoted to his duties at On Command.

                                      III-2
<Page>

         The directors of the Company will hold office until the next annual
meeting of stockholders of the Company and until their successors are duly
elected and qualified. The executive officers named above will serve in such
capacities until the next annual meeting of the Company's Board of Directors
(the "LSAT Board"), or until their respective successors have been duly elected
and have been qualified, or until their earlier death, resignation,
disqualification or removal from office.

         The Company's charter provides for a Board of Directors of not less
than three members. The exact number of directors is fixed by resolution of the
LSAT Board.

         There are no family relations by blood, marriage or adoption, of first
cousin or closer, among the above named individuals.

         During the past five years, none of the persons named above has had any
involvement in such legal proceedings as would be material to an evaluation of
his ability or integrity.

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater-than-ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.

         Based solely on review of the copies of Forms 3, 4 and 5 and amendments
thereto furnished to the Company with respect to its most recent fiscal year, or
written representations that no Forms 5 were required, the Company believes
that, during the year ended December 31, 2001, its officers, directors and
greater-than-ten-percent beneficial owners complied with all Section 16(a)
filing requirements.

                                      III-3
<Page>

ITEM 11.  EXECUTIVE COMPENSATION

         (a)    SUMMARY COMPENSATION TABLE

         The following table is a summary of all forms of compensation paid by
the Company to the officers named therein for services rendered in all
capacities to the Company for the fiscal years ended December 31, 2001, 2000 and
1999 (total of three persons).

<Table>
<Caption>
                                         Annual compensation          Long-term compensation
                                       -----------------------   ----------------------------------
                                                                                     Securities              All
                                                                   Restricted        underlying             other
Name and principal position                                           stock          options/            compensation
With the Company              Year               Salary               Award            Sars                 (6)
----------------              ----               ------               -----            ----                 ---

<S>                           <C>           <C>                  <C>                   <C>            <C>
Carl E. Vogel (1)             2001          $      211,247       $       --                --         $         --
  (Former Chief Executive     2000          $      200,000       $       --                --         $         --
  Officer and President)

Christopher Sophinos (2)      2001          $      106,398       $  314,063(4)             --         $     10,640
  (Senior Vice President)     2000          $      225,000       $       --                --         $     11,495
                              1999          $       51,923       $       --            42,500(5)      $         --

Kenneth G. Carroll (3)        2001          $      278,000       $  314,063(4)         15,000(5)      $     17,500
  (Senior Vice President,     2000          $      238,343       $       --                --         $     15,000
  CFO, Treasurer and          1999          $           --       $       --            42,500(5)      $         --
  Acting President)
</Table>

---------------

(1)      Mr. Vogel's employment with the Company commenced April 2000 and ended
         October 2001. From December 1999 to October 2001, Mr. Vogel was also an
         employee of Liberty Media. As such, Mr. Vogel's compensation was
         allocated between Liberty Media and the Company during the periods in
         which Mr. Vogel was employed by both the Company and Liberty Media.
         Compensation in the table represents the amount allocated to the
         Company for the period from April 2000 through October 2001.

(2)      Effective April 27, 2001, Mr. Sophinos began serving as President of On
         Command. As such, On Command was responsible for all of Mr. Sophinos'
         compensation from May 2001 through December 2001, and the 2001
         compensation in the table represents Mr. Sophinos' compensation for the
         four months ended April 30, 2001. Mr. Sophinos' employment with the
         Company commenced on September 1, 1999. Accordingly, the 1999
         compensation information included in the table represents four months
         of employment.

(3)      Mr. Carroll began receiving compensation from the Company on February
         1, 2000. Accordingly, the 2000 compensation information included in the
         table represents eleven months of employment.

(4)      Effective February 1, 2001, Messrs. Sophinos and Carroll were each
         granted 7,500 restricted shares of the Company's Series A Common Stock.
         Such shares vest 25% on February 1, 2003, and vest an additional 25% on
         February 1, 2004, 2005 and 2006.

(5)      Pursuant to the Company's 1996 Stock Incentive Plan (the "LSAT 1996
         Plan") and effective December 1, 1999, Messrs. Sophinos and Carroll
         were each granted options to purchase 20,000 shares of Series A Common
         Stock at a purchase price of $71.25 and 22,500 shares of Series A
         Common Stock at a purchase price of $88.40; and effective August 10,
         2001, Mr. Carroll was granted an aggregate of 15,000 options to acquire
         shares of Series A Common Stock at a purchase price of $26.00.

(6)      Includes LSAT contributions to the Liberty Media 401(k) Savings Plan
         (the "Liberty Media Plan") beginning in April 2000. All named
         executives were fully vested in such plans.

                                      III-4
<Page>

         Since April 2000, LSAT employees have been eligible to participate in
         the Liberty Media Plan. The Liberty Media Plan provides employees with
         an opportunity to save for retirement. The Liberty Media Plan
         participants may contribute up to 10% of their pre-tax compensation
         and/or up to 10% of their post-tax compensation. Liberty Media
         contributes a matching contribution of 100% of the participants'
         contributions. The combined participant and matching employer
         contributions were limited to $35,000 per participant during 2001.
         Participant contributions to the Liberty Media Plan are fully vested
         upon contribution.

         Generally, participants acquire a vested right in Liberty Media Plan
         contributions as follows:

<Table>
<Caption>
                          Years of Service                  Vesting Percentage
                          ----------------                  ------------------
                          <S>                                       <C>
                          Less than 1                                 0%
                          1-2                                        33%
                          2-3                                        66%
                          3 or more                                 100%
</Table>

         Directors who are not employees of Liberty Media are ineligible to
         participate in the Liberty Media Plan. Under the terms of the Liberty
         Media Plan, employees are eligible to participate after three months of
         service.

         (b)    OPTION GRANTS IN LAST FISCAL YEAR

         The following table discloses information regarding stock options
granted during the year ended December 31, 2001 to each of the named executive
officers of the Company in respect of shares of Series A Common Stock under the
LSAT 1996 Plan.

<Table>
<Caption>
                              No. of        % of Total
                            Securities       Options                       Market
                            Underlying      Granted to    Exercise or     Price on                      Grant Date
                             Options       Employees in    Base Price    Grant Date       Expiration      Present
Name                       Granted (1)         2001          ($/Sh)      ($/Sh) (2)          Date        Value $(3)
----                       ----------          ----          ------      ----------          ----       -----------
<S>                            <C>             <C>           <C>            <C>         <C>               <C>
Kenneth G. Carroll             15,000          100%          $26.00         $26.00      August 9, 2011    $335,834
</Table>

-----------------------

(1)      On August 10, 2001, Kenneth G. Carroll was granted, pursuant to the
         LSAT 1996 Plan, an aggregate of 15,000 options to acquire shares of
         Series A Common Stock. Such grant of options vests over five years with
         such vesting period beginning on the date of grant and expires 10 years
         from the date of grant. This grant represents the total of options
         granted to LSAT employees in 2001.

(2)      Represents the closing market price per share of Series A Common Stock
         on August 10, 2001.

(3)      The value shown is based upon the Black-Scholes model and is stated in
         current annualized dollars on a present value basis. The key
         assumptions used in the model for purposes of this calculation include
         the following: (a) a 4.92% discount rate; (b) an 85% volatility factor;
         (c) the 10-year option term; (d) the closing price of Series A Common
         Stock on August 10, 2001; and (e) a per share exercise price of $26.00.
         The actual value realized will depend upon the extent to which the
         stock price exceeds the exercise price on the date the option is
         exercised. Accordingly, the realized value, if any, will not
         necessarily be the value determined by the model.

                                      III-5
<Page>

         (c)    AGGREGATED LSAT OPTION/SAR EXERCISES AND FISCAL YEAR-END LSAT
         OPTION/SAR VALUES

         The following table provides, for the executives named in the Summary
Compensation Table, information on (i) the exercise during the year ended
December 31, 2001, of options with respect to shares of Series A Common Stock,
(ii) the number of shares of Series A Common Stock represented by unexercised
options owned by them at December 31, 2001, and (iii) the value of those options
as of the same date.

<Table>
<Caption>
                                                                           Number of
                                                                           securities      Value of
                                                                           underlying     unexercised
                                                                          unexercised    in-the-money
                                                                            options/       options/
                                                                            SARs at         SARs at
                                                                          December 31,   December 31,
                                               Shares                         2001           2001
                                              acquired     Value          exercisable/   exercisable/
Name                                        On exercise   realized       unexercisable   unexercisable
----                                        -----------   --------       -------------   -------------
<S>                                                  <C>        <C>            <C>                  <C>
Carl E. Vogel
  Exercisable Series A                               --         --                 --               --
  Unexercisable Series A                             --         --                 --               --
Christopher Sophinos
  Exercisable Series A                               --         --             20,625               --
  Unexercisable Series A                             --         --             31,875               --
Kenneth G. Carroll
  Exercisable Series A                               --         --             20,840               --
  Unexercisable Series A                             --         --             46,875               --
</Table>

         (d)    COMPENSATION OF DIRECTORS

         Members of the LSAT Board who are also full-time employees of the
Company or Liberty Media, or any of their respective subsidiaries, do not
receive any additional compensation for their services as directors. Directors
who are not full-time employees of the Company or Liberty Media, or any of their
respective subsidiaries, receive a retainer of $30,000 per year. All members of
the LSAT Board are also reimbursed for expenses incurred to attend any meeting
of the LSAT Board or any committee thereof. In addition, on March 6, 1998, the
LSAT stockholders approved the TCI Satellite Entertainment, Inc. 1997
Nonemployee Director Stock Option Plan (the "LSAT DSOP"). The LSAT DSOP provides
for the grant to each person that is a member of the LSAT Board and is not an
employee of the Company, its subsidiaries or its affiliates, of options to
purchase 5,000 shares of Series A Common Stock. Such grant of options is made at
the time a person first becomes an LSAT director. The LSAT DSOP provides that
the per share exercise price of each option granted under the LSAT DSOP will be
equal to the fair market value of the Series A Common Stock on the date such
option is granted. In general, fair market value is determined by reference to
the last sale price for shares of Series A Common Stock on the date of grant.

         During the first quarter of 2002, Messrs. Allan M. Angelich, John W.
Goddard and J. Curt Hockemeier, each received $7,500 for their service during
the fourth quarter of 2001 on a special committee formed by the LSAT Board to
review and evaluate Liberty Media's October 12, 2001 proposal to acquire all of
the Company common stock not already owned by Liberty Media.

         (e)    ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE
         INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS

         The members of the Company's compensation committee are Messrs. Alan M.
Angelich, William H. Berkman and John. W. Goddard, each a director of the
Company. None of the members of the compensation committee are or were officers
of the Company or any of its subsidiaries or any other person that would
constitute a compensation committee interlock with the Company.

                                      III-6
<Page>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

         The following table lists stockholders believed by the Company to be
the beneficial owners of more than five percent of the outstanding voting
securities as of December 31, 2001. Shares issuable upon the exercise of options
are only included in the table to the extent that the options are exercisable on
or before March 1, 2002. Shares issuable upon exercise of options and upon
vesting of restricted shares are deemed to be outstanding for the purpose of
computing the percentage ownership and overall voting power of persons believed
to beneficially own such securities, but have not been deemed to be outstanding
for the purpose of computing the percentage ownership or overall voting power of
any other person. Voting power in the table is computed with respect to a
general election of directors. So far as is known to the Company, the persons
indicated below have sole voting and investment power with respect to the shares
indicated as believed to be owned by them except as otherwise stated in the
notes to the table.

<Table>
<Caption>
                                                                                                            Combined
                                                                  Number of shares                           voting
         Name and Address of                                        beneficially        Percent of         power of all
           Beneficial Owner               Title of class              owned              class(1)           holdings(1)
           ----------------               --------------              -----             ----------         -----------
<S>                                   <C>                                  <C>               <C>                   <C>
Liberty Media Corporation             Series B Preferred Stock             150,000           100.0%                89.3%(2)
12300 Liberty Boulevard               Series A Common Stock                603,596             8.9%
Englewood, Colorado                   Series B Common Stock                332,265(2)         43.0%(2)

Kim Magness                           Series B Preferred Stock                   -             -                    3.9%
(individually as a member of          Series A Common Stock                 38,380(3)          *
   Magness Security LLC)              Series B Common Stock                374,520(3)         48.4%
4000 E. Belleview
Greenwood Village, Colorado

Gary Magness                          Series B Preferred Stock                   -             -                    3.2%
(as co-representative of the          Series A Common Stock                 24,337(4)          *
   estate of Bob Magness)             Series B Common Stock                312,077(4)         40.4%
29 Sunset Drive
Englewood, Colorado

William H. Gates III (5)              Series B Preferred Stock                                                        *
(individually and as a member         Series A Common Stock                509,760(5)          7.5%
   of Cascade Investment, L.L.C.)     Series B Common Stock                  1,580             *
One Microsoft Way
Redmond, Virginia
</Table>

-----------------

*        Less than one percent.

(1)      Based on 150,000 shares of the Company's Series B 8% Cumulative
         Convertible Voting Preferred Stock ("Series B Preferred Stock") with a
         liquidation value of $150,000,000, 6,753,101 shares of Series A Common
         Stock and 771,828 shares of the Company's Series B Common Stock
         outstanding as of December 31, 2001.

(2)      Does not include the 1,696,717 shares of Series B Common Stock issuable
         upon conversion of the Series B Preferred Stock. Also does not include
         34,000,000 of Series B Common Stock to be issued to Liberty Media
         pursuant to certain transactions that closed on April 1, 2002. If the
         foregoing 35,696,717 shares of Series B Common Stock had been included
         in Liberty Media's ownership calculations at December 31, 2001,
         Liberty Media's ownership percentage of Series B Common Stock would
         have increased to 98.7% and Liberty Media's voting power in the
         Company would have increased to 97.6%.

                                      III-7
<Page>

(3)      Includes 21,053 shares of Series A Common Stock and 63,462 shares of
         Series B Common Stock held by Magness Securities LLC. Mr. Magness is
         deemed to have beneficial ownership over such shares as a member of
         Magness Securities LLC. Also assumes the exercise in full of stock
         options granted in November of 1994 to acquire 500 shares of Series A
         Common Stock.

(4)      Gary Magness and Kim Magness are co-representatives of the Estate of
         Bob Magness. Share amounts include 15,227 shares of Series A Common
         Stock and 305,458 shares of Series B Common Stock held by the Estate of
         Bob Magness that are also included in the shares attributed to Kim
         Magness above

(5)      Based upon the Schedule 13D filed with the SEC by Cascade Investment,
         L.L.C. and William H. Gates III, dated November 28, 2001. Includes
         1,580 shares of Series A Common Stock, which are issuable upon
         conversion of 1,580 shares of Series B Common Stock. All shares of
         Series A Common Stock and Series B Common Stock held by Cascade
         Investment may be deemed to be beneficially owned by William H. Gates
         III, as the sole member of Cascade Investment. The address of Cascade
         Investment is 2365 Carillon Point, Kirkland, Washington.

(b)      SECURITY OWNERSHIP OF MANAGEMENT

         The following table sets forth information with respect to the
ownership by each director and each of the named executive officers of LSAT and
by all directors and executive officers of LSAT as a group of shares of Series A
Common Stock and Series B Common Stock. In addition, the table sets forth
information with respect to the ownership of such individuals of shares of
Liberty Media Series A common stock ("Liberty Media Series A Common Stock") and
Liberty Media Series B common stock ("Liberty Media Series B Common Stock").
Liberty Media owns a controlling interest in LSAT.

                                      III-8
<Page>

         The following information is given as of December 31, 2001 and, in case
of percentage ownership information, is based on 6,753,101 shares of Series A
Common Stock, 771,828 shares of Series B Common Stock, 2,378,127,544 shares of
Liberty Media Series A Common Stock, 212,045,288 shares of Liberty Media Series
B Common Stock outstanding on that date. Shares issuable upon the exercise of
options are only included in the table to the extent that the options are
exercisable on or before March 1, 2002. Shares issuable upon exercise of options
and upon vesting of restricted shares are deemed to be outstanding for the
purpose of computing the percentage ownership and overall voting power of
persons believed to beneficially own such securities, but have not been deemed
to be outstanding for the purpose of computing the percentage ownership or
overall voting power of any other persons. Voting power in the table is computed
with respect to a general election of directors. So far as is known to the
Company, the persons indicated below have sole voting and investment power with
respect to the shares indicated as believed to be owned by them, except as
indicated in the notes to the table.

<Table>
<Caption>
                                                              Number
                                                             of Shares                 Percent
                                                           Beneficially                  of         Voting
           Name                    Title of Class             Owned                     Class       Power
           ----                    --------------             -----                    -------     -------
<S>                            <C>                            <C>                        <C>          <C>
Directors:
    Alan M. Angelich           Series A                           6,666(1)(2)            *            *
                               Series B                              --                  --
                               Liberty Media Series A            63,152   (3)            *
                               Liberty Media Series B                --                  --

    Robert R. Bennett          Series A                             500   (4)            *            *
                               Series B                              --                  --
                               Liberty Media Series A         8,502,451 (5)(6)(7)        *
                               Liberty Media Series B               400                  *

    William H. Berkman         Series A                           1,666   (1)            *            *
                               Series B                              --                  --
                               Liberty Media Series A         1,273,518   (8)            *
                               Liberty Media Series B                --                  --

    William R. Fitzgerald      Series A                              52                   *           *
                               Series B                              --                   --
                               Liberty Media Series A           386,008 (9)(10)           *           *
                               Liberty Media Series B                --                   --

    John W. Goddard            Series A                           5,140 (11)(12)          *           *
                               Series B                             142   (11)            *
                               Liberty Media Series A            83,136   (11)            *
                               Liberty Media Series B            72,772   (11)            *

    J. Curt Hockemeier         Series A                           1,666    (1)            *           *
                               Series B                              --                   --
                               Liberty Media Series A             1,603   (13)            --
                               Liberty Media Series B                --                   --

    Gary S. Howard             Series A                          42,761   (14)            *           *
                               Series B                              --                   --
                               Liberty Media Series A         3,968,713 (15)(16)(17)      *
                               Liberty Media Series B                --                   --
</Table>

                                      III-9
<Page>

<Table>
<Caption>
                                                                    Number
                                                                    of Shares          Percent
                                                                  Beneficially           of        Voting
              Name                   Title of Class                  Owned              Class       Power
              ----                   --------------                  -----              -----       -----
<S>                            <C>                                    <C>                      <C>           <C>
    Carl E. Vogel              Series A                                   500                   *           *
                               Series B                                    --                   --
                               Liberty Media Series A                 218,400 (18)              *
                               Liberty Media Series B                      --                   --

Other named executive officers:

    Christopher Sophinos       Series A                                33,495 (19)              *           *
                               Series B                                    --                   --
                               Liberty Media Series A                   4,651 (20)              *
                               Liberty Media Series B                      --                   --

    Kenneth G. Carroll         Series A                                33,698 (21)              *           *
                               Series B                                    --                   --
                               Liberty Media Series A                  15,490 (22)              *
                               Liberty Media Series B                     --                    --

All directors and executive officers as a group
                               Series A                               126,144                  1.8%         *
                               Series B                                   142                   *
                               Liberty Media Series A              14,517,122                   *
                               Liberty Media Series B                  73,172                   *
</Table>

-----------

*        Less than one percent.

(1)      Assumes the exercise in full of options to purchase 1,666 shares
         granted pursuant to the Company's Nonemployee Director Stock Option
         Plan.

(2)      Includes 5,000 shares owned by Janco Capital Partners. Mr. Angelich has
         shared voting and dispositive power over such shares.

(3)      Includes 23,000 shares owned by Janco Capital Partners. Mr. Angelich
         has shared voting and dispositive power over such shares.

(4)      Assumes the exercise in full of stock options granted in tandem with
         SARs in November 1994 to purchase 500 shares.

(5)      Includes 902,767 restricted shares, none of which are currently vested.

(6)      Assumes the exercise in full of options to purchase 4,879,052 shares.

(7)      Includes 20,099 shares held by the Liberty 401(k) Savings Plan. Mr.
         Bennett's beneficial ownership is these shares is limited to his
         ability to direct the voting thereof pursuant to the terms of the
         savings plan.

(8)      Assumes the exercise in full of options to purchase 1,273,518 shares.

(9)      Assumes the exercise in full of options to purchase 346,016 shares.

                                     III-10
<Page>

(10)     Includes 5,224 shares held by the Liberty 401(k) Savings Plan. Mr.
         Fitzgerald's beneficial ownership in these shares is limited to his
         ability to direct the voting thereof pursuant to the terms of the
         savings plan.

(11)     Includes 140 shares of Series A Common Stock, 142 shares of Series B
         Common Stock, 83,136 shares of Liberty Media Series A Common Stock and
         72,772 shares of Liberty Media Series B Common Stock held in trusts in
         which Mr. Goddard is a beneficial owner.

(12)     Assumes the exercise in full of options to purchase 5,000 shares
         granted pursuant to the Company's Nonemployee Director Stock Option
         Plan.

(13)     Includes 1,603 shares held by a long-term 401(k) savings plan. Mr.
         Hockemeier's beneficial ownership in these shares is limited to his
         ability to direct the voting thereof pursuant to the terms of the
         savings plan.

(14)     Assumes the exercise in full of Company stock options in respect of the
         following: (i) stock options granted in tandem with SARs in November
         1992 to acquire 250 shares; (ii) stock options in tandem with SARs
         granted in October 1993 to acquire 250 shares; (iii) stock options in
         tandem with SARs granted in November 1994 to acquire 250 shares; (iv)
         stock options granted in tandem with SARs in December 1995 to purchase
         750 shares; and (v) stock options granted in December 1996 to purchase
         33,203 shares. Also includes 2,549 shares held by trusts in which Mr.
         Howard is beneficial owner as trustee for his children.

(15)     Includes 582,177 restricted shares, none of which are currently vested.

(16)     Assumes the exercise in full of options to purchase 2,560,341 shares.

(17)     Includes 38,337 shares held by the Liberty 401(k) Savings Plan.
         Mr. Howard's beneficial ownership in these shares is limited to his
         ability to direct the voting thereof pursuant to the terms of the
         savings plan.

(18)     On October 8, 2001, Mr. Vogel resigned as director and officer of the
         Company. The share numbers assume the exercise in full of options to
         purchase 200,000 shares.

(19)     Assumes the exercise in full of (i) stock options granted in tandem
         with SARs in February 1997 to purchase 10,000 shares; and (ii) stock
         options granted in December 1999 to purchase 10,625. Also includes
         7,500 restricted shares issued in February 2001, none of which are
         currently vested.

(20)     Includes 3,051 shares held by the Liberty 401(k) Savings Plan.
         Mr. Sophinos' beneficial ownership in these shares is limited to his
         ability to direct the voting thereof pursuant to the terms of the
         savings plan.

(21)     Assumes the exercise in full of Company stock options in respect of the
         following: (1) stock options granted in tandem with SARs in November of
         1994 to acquire 40 shares; (ii) stock options granted in tandem with
         SARs in December 1995 to purchase 175 shares; (iii) stock options
         granted in tandem with SARs in February 1997 to purchase 10,000 shares;
         and (iv) stock options granted in December 1999 to purchase 10,625
         shares. Also includes 7,500 restricted shares issued in February 2001,
         none of which are currently vested.

(22)     Includes 2,784 shares held by the Liberty 401(k) Savings Plan.
         Mr. Carroll's beneficial ownership in these shares is limited to his
         ability to direct the voting thereof pursuant to the terms of the
         savings plan.

                                     III-11
<Page>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

DIVIDENDS ON PREFERRED STOCK HELD BY LIBERTY MEDIA. In accordance with the terms
of the Series A Preferred Stock and Series B Preferred Stock, the Company has
the right to issue shares of Series A Common Stock in satisfaction of its
dividend liability. Between March 16, 2000 and December 31, 2001, the Company
issued shares of Series A Common Stock, representing a $14,240,000 dividend
obligation under the terms of the Series A Preferred Stock and a $9,493,000
dividend obligation under the terms of Series B Preferred Stock. During the same
period, cash dividends on the Series A Preferred Stock and Series B Preferred
Stock have aggregated $13,500,000 and $9,000,000, respectively.

PROMISSORY NOTE WITH LIBERTY MEDIA. On March 16, 2000, the Company paid Liberty
Media $60,000,000 in the form of an unsecured promissory note in exchange for a
13.99% ownership interest in LSAT Astro LLC. The note bears interest at the 3
month LIBOR plus 2%. 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. As of December
31, 2001, the unpaid principal balance on the note was $48,411,000 and accrued
interest under this note was $886,000. Interest expense on the note for the year
ended December 31, 2001 was $3,402,000.

LSAT LLC AND ASCENT TRANSACTIONS. On August 16, 2001, the Company entered
into two separate purchase agreements with Liberty Media and certain of its
subsidiaries and affiliates. Both agreements were amended in November 2001
and January 2002. One agreement provides for the Company's acquisition of
certain subsidiaries of Liberty Media that hold an aggregate 89.41% ownership
interest in Liberty Satellite, LLC ("LSAT LLC") in exchange for 25,298,379
shares of Series B Common Stock of the Company. The second purchase agreement
provides for the Company's acquisition of 100% of the capital stock of Ascent
Entertainment Group, Inc. from a subsidiary of Liberty Media in exchange for
8,701,621 shares of Series B Common Stock of the Company. Ascent's primary
operating subsidiary is On Command, which provides in-room, on-demand video
entertainment and information services to hotels, motels, and resorts,
primarily in the United States. The foregoing transactions (the "LSAT LLC and
Ascent Transactions") closed on April 1, 2002. As a result of the
consummation of the LSAT LLC and Ascent Transactions, Liberty Media's common
stock ownership in the Company increased to 84.1% and its voting power in the
Company increased to 97.6%.

REGISTRATION RIGHTS AGREEMENT BETWEEN THE COMPANY AND LIBERTY MEDIA. The Company
and Liberty Media are parties to a registration rights agreement, dated as of
March 16, 2000, whereby Liberty Media and its affiliates have at any time, the
right to request that the Company register under the Securities Act of 1933, as
amended, (the "Securities Act") any and all of the shares of Series A Common
Stock and Series B Common Stock (collectively, "LSAT Common Stock") or shares of
the Company's capital stock that are convertible into shares of LSAT Common
Stock, owned by them, subject to the terms and conditions thereunder. Liberty
Media and its affiliates also have certain "piggy-back" registration rights,
whereby anytime the Company proposes to register shares of the Company's capital
stock under the Securities Act, Liberty Media and its affiliates have the right
to include their shares of the Company's capital stock in such registration. In
general, the Company will bear the expenses incurred in connection with the
registration and distribution of shares of the Company common stock owned by
Liberty Media and its affiliates. The Company and Liberty Media entered into
an amendment to this registration rights agreement to include thereunder the
shares of Series B Common Stock that Liberty Media and its affiliates acquired
as a result of the consummation of the LSAT LLC and Ascent Transactions.

TRANSACTION BETWEEN THE COMPANY AND LSAT LLC. On May 9, 2001, the Company sold
to LSAT LLC 100% of its beneficial interests in the Liberty PCS Trust
representing rights with respect to 5,084,745 shares of Sprint Corporation PCS
Group common stock ("Sprint PCS Stock") and certain derivative financial
instruments related to those shares in the form of an equity collar. The
aggregate market value for the interests sold by the Company on the closing date
was $287,267,000 and was paid by (i) delivery of two secured demand promissory
notes in the aggregate principal amount of $224,226,000 and (ii) the assumption
of $63,041,000 of indebtedness which the Company owed to the Trust pursuant to
the a loan agreement (the "PCS Loan Agreement"). The PCS Loan Agreement is
secured by LSAT LLC's interest in the Sprint PCS Stock and the Sprint PCS Stock
equity collar. At December 31, 2001, outstanding borrowings under the PCS Loan
Agreement were $97,503,000.

                                     III-12
<Page>

TRANSACTION BETWEEN LSAT LLC AND LIBERTY DIGITAL. Effective September 29, 2000,
LSAT LLC acquired a 1% managing common interest in a joint venture known as IB2
LLC, from a subsidiary of Liberty Digital for $652,000. Liberty Digital, a
consolidated subsidiary of Liberty Media, retained a preferred interest (the
"Preferred Interest") in IB2 LLC, which owns approximately 360,000 shares of the
common stock of iBEAM Broadcasting Corp. ("iBEAM"). 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
return of 9%, compounded annually (the "Put Option"). LSAT LLC has the right to
call the 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, LSAT
LLC can force Liberty Digital to exercise the Put Option prior to September 29,
2008.

         Changes in the fair market value of the Put Option subsequent to
September 29, 2000 were recognized as unrealized gains and losses on financial
instruments in the Company's consolidated statements of operations. During the
year ended December 31, 2001, the Company recorded an unrealized gain of
$3,241,000 related to the Put Option.

         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 adjusted the carrying amount of the Put Option liability to $28,488,000.
Such amount represents the Put Option purchase price to LSAT LLC plus an accrued
return to Liberty Digital of 9%, compounded annually.

SKY LATIN AMERICA FUNDING PAYMENTS. Under the terms of the partnership and other
agreements with third parties relating to the entities comprised by the
Company's various 10% investees that operate satellite television systems in
Latin America ("Sky Latin America"), LSAT LLC has certain funding obligations to
such entities. Prior to July 1, 2001, these funding obligations of LSAT LLC were
fulfilled through pro rata capital contributions from the Company and Liberty
Media in accordance with the operating agreement of LSAT LLC. From and after
July 1, 2001, Liberty Media and the Company funded their pro rata share of LSAT
LLC's obligations to the Sky Latin America entities with loans rather than
capital contributions. As of December 31, 2001, Liberty Media has advanced
$18,552,000 to fund its share of the capital calls to the Sky Latin America
entities. The loan from Liberty Media bears interest at 8% per annum and has no
specified repayment date. Interest expense on the loan for the year ended
December 31, 2001 was $285,000. All of such interest expense was accrued and
unpaid at December 31, 2001. Concurrently with the closing of the LSAT LLC and
Ascent Transactions, Liberty Media contributed to the Company, as part of
those transactions and for no additional consideration, promissory notes issued
by subsidiaries of Liberty Media, with an aggregate principal balance of
$18,552,000.

EXECUTIVE OFFICER LOANS. Messrs. Carroll and Sophinos, executive officers of the
Company, received loans in the principal amounts of $136,000 and $135,000,
respectively, to be used solely for the purpose of satisfying tax liabilities
related to the lapse of restrictions on shares of common stock awarded under the
Company's 1996 Stock Incentive Plan. Through December 31, 2001, the loans
accrued interest at an annual rate of 6.41%. Each of the loans originally
provided for principal and interest to be payable upon the occurrence of certain
events and in no event later than December 1, 2001. Subsequent to December 31,
2001, the Company agreed to extend the maturity dates of the loans to December
31, 2003, and lower the annual interest rates of the loans to 4% per annum.
Consistent with the terms of the original loans, interest payments may be
deferred by the borrowers until maturity. Each loan is secured in each case by
2,500 shares of Series A Common Stock and are otherwise nonrecourse to the
borrowers. As of December 31, 2001, the balances outstanding on the loans to
Messrs. Carroll and Sophinos, including accrued interest, were $150,000 and
$148,000 respectively. Effective April 27, 2001, Mr. Sophinos became the
President of On Command. Since that date, On Command has been responsible for
100% of Mr. Sophinos' compensation.

                                     III-13
<Page>

EXPENSE ALLOCATIONS FROM LIBERTY MEDIA. Liberty Media allocates rent, salaries,
benefits and certain other general and administrative expenses to the Company.
In addition, the Company reimburses Liberty Media for certain expenses paid by
Liberty Media on behalf of the Company. Although there is no written agreement
with Liberty Media for these services, the Company believes the allocated and
reimbursed amounts to be reasonable. Amounts owed to Liberty Media pursuant to
this arrangement ($53,000 at December 31, 2001) are non-interest bearing and are
generally paid on a monthly basis. The aggregate amount allocated and reimbursed
pursuant to this arrangement was $695,000 and $470,000 during 2001 and 2000,
respectively. Such amounts include $211,000 and $200,000, respectively,
representing the allocated compensation of Mr. Vogel, the Company's former CEO.

EXPENSE ALLOCATIONS TO ON COMMAND. During the second quarter of 2001, three of
the Company's employees (two of which were officers of the Company) began
performing duties for On Command. Accordingly, during 2001, the Company
allocated portions of the salaries and related benefits of such employees and
certain other administrative costs to On Command. Effective January 1, 2002, On
Command began paying 100% of the compensation of such employees. The aggregate
amount allocated to On Command during 2001 was $408,000 and such amount is
reflected as a reduction of selling, general and administrative expenses in the
Company's consolidated statement of operations.

TAX LIABILITY ALLOCATION AND INDEMNIFICATION AGREEMENT BETWEEN LIBERTY MEDIA
AND THE COMPANY. In connection with the LSAT LLC and Ascent Transactions, the
Company and Liberty Media entered into a Tax Liability Allocation and
Indemnification Agreement whereby the Company will be obligated to make a
cash payment to Liberty Media in each year that the Company (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 the Company and its
subsidiaries (determined as if the Company and its subsidiaries filed a
separate return) multiplied by the highest applicable corporate tax rate. In
the event that (1) the Company 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, the Company will be entitled
to a credit against current and future payments to Liberty Media under the
agreement. If the Company disaffiliates itself with Liberty Media and the
members of Liberty Media's affiliated group prior to the time that the
Company is able to use such credit, the Company will be entitled to a payment
from Liberty Media at the earlier of the time that (1) the Company 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 the Company held by Liberty Media and the
members of its affiliated group drops below 20%.

         In addition, under the proposed Tax Liability Allocation and
Indemnification Agreement, the Company 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 the Company's operations.

TRANSACTION BETWEEN LIBERTY MEDIA AND CARL E. VOGEL. In September 2000, Carl E.
Vogel, who was the Company's chief executive officer and president until his
resignation on October 8, 2001, purchased a 1.83% common stock interest in a
subsidiary of Liberty Media for $400,000. Such subsidiary owns an indirect
interest in LSAT, LLC, an entity in which the Company owns a 10.59% interest.
Liberty Media and Mr. Vogel entered into a shareholders agreement in which Mr.
Vogel could require Liberty Media to purchase, after five years, all or part of
his common stock interest in the subsidiary, in exchange for Liberty Media
common stock, at its then fair value. In addition, Liberty Media had the right
to purchase, in exchange for Liberty Media common stock, Mr. Vogel's common
stock interest for fair market value at any time. On October 10, 2001, Liberty
Media purchased Mr. Vogel's 1.83% common stock interest in the subsidiary for
$425,324 in cash, which represents a return of approximately 6.0%.

                                     III-14
<Page>

PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES AND
          REPORTS ON FORM 8-K

<Table>
<Caption>
                                                                                                   PAGE NO.
                                                                                                   --------
<S>                                                                                                 <C>
(a)(1) FINANCIAL STATEMENTS

Included in Part II of this Report:

         Independent Auditors' Report                                                               II-13
         Consolidated Balance Sheets,
            December 31, 2001 and 2000                                                              II-14
         Consolidated Statements of Operations,
            Years ended December 31, 2001, 2000, and 1999                                           II-16
         Consolidated Statements of Comprehensive Income (Loss)
            Years ended December 31, 2001, 2000 and 1999                                            II-17
         Consolidated Statements of Stockholders' Equity (Deficit),
            Years ended December 31, 2001, 2000 and 1999                                            II-18
         Consolidated Statements of Cash Flows,
            Years ended December 31, 2001, 2000 and 1999                                            II-20
         Notes to Consolidated Financial Statements,
            December 31, 2001, 2000 and 1999                                                        II-21

(a)(2) FINANCIAL STATEMENT SCHEDULES

Included in Part IV of this Report:

   (ii)    Separate Financial Statements for ASTROLINK International LLC:

         CONSOLIDATED FINANCIAL STATEMENTS

           Independent Auditors' Report                                                             IV-6

           Consolidated Balance Sheets                                                              IV-7

           Consolidated Statements of Operations                                                    IV-8

           Consolidated Statements of Members' Equity                                               IV-9

           Consolidated Statements of Cash Flows                                                    IV-10

          Notes to Consolidated Financial Statements                                                IV-11
</Table>

                                      IV-1

<Page>

(a)(3) EXHIBITS

         The following exhibits are filed herewith or are incorporated by
reference herein (according to the number assigned to them in Item 601 of
Regulation S-K) as noted:

2-Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession:

         2.1 Reorganization Agreement dated as of December 4, 1996, among
             Tele-Communications, Inc. ("TCI"), TCI Communications, Inc.
             ("TCIC"), Tempo Enterprises, Inc., TCI Digital Satellite
             Entertainment, Inc., TCI K-1, Inc. ("TCI K-1"), United Artists K-1
             Investments, Inc. ("UA K-1"), TCI SE Partner 1, Inc. ("TCISE 1"),
             TCI SE Partner 2, Inc. "(TCISE 2") and TCI Satellite Entertainment,
             Inc. (the "Company"). (c)

         2.2 Merger and Contribution Agreement dated as of February 6, 1998,
             among the Company, PRIMESTAR, Inc., Time Warner Entertainment
             Company L.P. ("TWE"), Advance/Newhouse Partnership ("Newhouse"),
             Comcast Corporation ("Comcast"), Cox Communications, Inc. ("Cox"),
             MediaOne of Delaware, Inc. ("MediaOne") and GE American
             Communications, Inc. ("GE Americom"). (e)

         2.3 Asset Transfer Agreement dated as of February 6, 1998, between the
             Company and PRIMESTAR, Inc. (e)

         2.4 Contribution and Exchange Agreement among TCI Satellite
             Entertainment, Inc., Liberty LSAT, Inc. and Liberty LSAT II, Inc.
             dated as of March 16, 2000. (b)

         2.5 Contribution Agreement by and among Liberty Media Corporation,
             Liberty Media International, Inc., LSAT Holdings, Inc., TCI
             Satellite Entertainment, Inc., TSAT Holding 1, Inc., each of the
             Liberty Members signatory hereto, Liberty Satellite, LLC, and LSAT
             Astro, LLC dated March 16, 2000. (b)

         2.6 Operating Agreement of Liberty Satellite, LLC dated March 16, 2000.
             (b)

         2.7 Amended and Restated Operating Agreement of LSAT Astro LLC dated
             March 16, 2000. (b)

3-Articles of Incorporation and Bylaws:

         3.1 Amended and Restated Certificate of Incorporation of the Company.
             Incorporated by reference to the Company's Quarterly Report on Form
             10-Q for the quarter ended September 30, 2000 (Commission File No.
             0-21317).

         3.2 Amended and Restated Bylaws of the Company. (d)

         3.3 Certificate of Designations, Series A Preferred Stock. (b)

         3.4 Certificate of Designations, Series B Preferred Stock. (b)

4-Instruments Defining the Rights of Security Holders:

         4.1 Specimen certificate representing shares of Series A Common Stock
             of the Company. (d)

         4.2 Specimen certificate representing shares of Series B Common Stock
             of the Company. (d)

10-Material Contracts

        10.1 Amended and Restated Liberty Satellite & Technology, Inc. 1996
             Stock Incentive Plan. (d)

        10.2 Qualified Employee Stock Purchase Plan of the Company. (c)

                                      IV-2
<Page>

        10.3 Indemnification Agreement dated December 4, 1996, by and between
             TCI and Gary S. Howard. (e)

        10.4 Option Agreement, dated as of December 4, 1996, by and between the
             Company and Gary S. Howard. (c)

        10.5 Option Agreement, dated as of December 4, 1996, by and between the
             Company and Larry E, Romrell. (c)

        10.6 Option Agreement, dated as of December 4, 1996, by and between the
             Company and David P. Beddow. (c)

        10.7 Share Purchase Agreement dated as of December 4, 1996, between TCI
             and the Company. (c)

        10.8 Option Agreement dated as of December 4, 1996, between TCI and the
             Company. (c)

        10.9 TCI Satellite Entertainment, Inc. 1997 Nonemployee Director Plan.
             (e)

       10.10 Asset Purchase Agreement by and among Hughes Electronics
             Corporation, PRIMESTAR, Inc., PRIMESTAR Partners L.P., Tempo
             Satellite, Inc. and the Stockholders of PRIMESTAR listed herein,
             dates as of January 22, 1999. (f)

       10.11 Asset Purchase Agreement among PRIMESTAR, Inc., PRIMESTAR Partners
             L.P., PRIMESTAR MDU, Inc., the Stockholders of PRIMESTAR, Inc.
             listed herein and Hughes Electronics Corporation dated as of
             January 22, 1999. (f)

       10.12 PRIMESTAR Payment Agreement dated as of January 22, 1999 among TCI
             Satellite Entertainment, Inc., PRIMESTAR, Inc., the Funding
             Parties and Paragon Communications. (g)

       10.13 Promissory Note, dated March 16, 2000, between TCI Satellite
             Entertainment, Inc. (now known as Liberty Satellite & Technology,
             Inc.) and Liberty Media Corporation. (h)

       10.14 Amended and Restated Loan Agreement by and between Liberty PCS
             Trust and DLJ Cayman Islands, LCD dated November 3, 2000. (a)

       10.15 Purchase Agreement by and among LSAT, Liberty AEG, Inc. and
             Liberty Media dated August 16, 2001. (j)

       10.16 First Amendment to the Purchase Agreement by and among LSAT,
             Liberty AEG, Inc. and Liberty Media dated November 30, 2001. (j)

       10.17 Second Amendment to the Purchase Agreement by and among LSAT,
             Liberty AEG, Inc. and Liberty Media dated February 7, 2002. (j)

       10.18 LSAT LLC Purchase Agreement by and among LMC/LSAT Holdings, Inc.,
             Liberty Brazil DTH Inc., Liberty Mexico DTH Inc., Liberty
             Multicountry DTH, Inc., Liberty International DTH, Inc., Liberty
             Latin Partners, Inc., LSAT and Liberty Media dated August 16,
             2001. (j)

       10.19 First Amendment to the LSAT LLC Purchase Agreement by and among
             LMC/LSAT Holdings, Inc., Liberty Brazil DTH Inc., Liberty Mexico
             DTH Inc., Liberty Multicountry DTH, Inc., Liberty International
             DTH, Inc., Liberty Latin Partners, Inc., LSAT and Liberty Media
             dated November 20, 2001. (j)

       10.20 Second Amendment to the LSAT LLC Purchase Agreement by and among
             LMC/LSAT Holdings, Inc., Liberty Brazil DTH Inc., Liberty Mexico
             DTH Inc., Liberty Multicountry DTH, Inc., Liberty International
             DTH, Inc., Liberty Latin Partners, Inc., LSAT and Liberty Media
             dated February 7, 2002. (j)

                                      IV-3
<Page>

          21 Subsidiaries of the Registrant. (a)

        23.1 Consent of KPMG LLP. (a)

        23.2 Consent of KPMG LLP. (a)

        -------------------------------------
         (a)  Filed herewith.
         (b)  Incorporated by reference to the Company's Annual Report on Form
              10-K for the year ended December 31, 1999 (Commission File No.
              0-21317).
         (c)  Incorporated by reference to the Company's Annual Report on Form
              10-K for the year ended December 31, 1996 (Commission File No.
              0-21317).
         (d)  Incorporated by reference to the Company's Registration Statement
              on Form 10 filed with the Securities and Exchange Commission
              ("SEC") on November 15, 1996 (Registration No. 0-21317).
         (e)  Incorporated by reference to PRIMESTAR, Inc.'s Registration
              Statement on Form S-4 filed with the SEC on February 9, 1998
              (Registration No. 333-45835).
         (f)  Incorporated by reference to the Company's Current Report on Form
              8-K, dated February 1, 1999.
         (g)  Incorporated by reference to Phoenixstar, Inc.'s Current Report on
              Form 8-K, dated May 13, 1999.
         (h)  Incorporated by reference to the Company's Quarterly Report on
              Form 10-Q for the quarter ended March 31, 2001.
         (j)  Incorporated by reference to the Company's definitive proxy
              materials filed with the SEC on February 11, 2002.

                                      IV-4
<Page>

(b) REPORTS ON FORM 8-K FILED DURING THE QUARTER ENDED DECEMBER 31, 2001:

<Table>
<Caption>
                                                    Financial
Date of                     Item                    statements
report                      filed                   filed
------                      -----                   -----
<S>                         <C>                     <C>
December 19, 2001           Items 5 and 7           Financial statements of ASTROLINK
                                                    International LLC for the year ended
                                                    December 31, 2000.
</Table>

                                      IV-5
<Page>

                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Members
ASTROLINK International LLC:


We have audited the accompanying consolidated balance sheets of ASTROLINK
International LLC and subsidiaries (a development stage limited liability
company) as of December 31, 2000 and 2001, and the related consolidated
statements of operations, members' equity, and cash flows for the period from
January 1, 1999 through April 21, 1999 (Predecessor period), the period from
April 22, 1999 (date of inception) through December 31, 1999, each of the years
ended December 31, 2000 and 2001, and for the period from April 22, 1999 (date
of inception) through December 31, 2001. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in note 3 to the consolidated financial statements, during October
2001 certain of the Company's Members announced that they would not provide
additional funding beyond those amounts previously committed. Subsequent to that
date, one of the Company's Members, assisted by management of the Company, began
negotiations with the other Members to reconstitute the Company.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ASTROLINK
International LLC and subsidiaries (a development stage limited liability
company) as of December 31, 2000 and 2001 and the results of their operations
and their cash flows for the period from January 1, 1999 through April 21, 1999
(Predecessor period), the period from April 22, 1999 (date of inception) through
December 31, 1999, each of the years ended December 31, 2000 and 2001, and the
period from April 22, 1999 (date of inception) through December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 11 to
the consolidated financial statements, to date the Company has not generated any
revenue and is dependent upon additional equity and/or debt financing to
complete construction and launch of its intended satellite system, which raises
substantial doubt about its ability to continue as a going concern. The
Company's plans with respect to these matters is also described in note 11. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

                                       KPMG LLP

McLean, Virginia
March 29, 2002

                                      IV-6
<Page>

                           ASTROLINK INTERNATIONAL LLC
                 (A Development Stage Limited Liability Company)
                           Consolidated Balance Sheets
                           December 31, 2000 and 2001

<Table>
<Caption>
                                                                              2000                     2001
                                                                          ---------------       ---------------
                                     ASSETS
<S>                                                                       <C>                         <C>
Current assets:
     Cash and cash equivalents                                            $    45,214,669             5,774,057
     Restricted cash                                                                   --             7,243,206
     Prepaid and other current assets                                             261,821             8,668,636
                                                                          ---------------       ---------------
                 Total current assets                                          45,476,490            21,685,899
Valued added tax receivable                                                     7,627,052             7,649,537
System under construction, net                                                792,097,278           478,429,567
Property and equipment, net of accumulated depreciation and
     amortization of $847,720 and $4,600,605 in 2000 and 2001,
     respectively                                                               2,157,143            46,716,019
Intangible assets                                                              17,721,000            17,721,000
                                                                          ---------------       ---------------
                                                                          $   865,078,963           572,202,022
                                                                          ===============       ===============

                         LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
     Accounts payable                                                     $       715,870             6,669,137
     Accounts payable to members                                               23,155,000            41,693,433
     Accrued contract termination liabilities                                          --            46,653,000
     Accrued contract termination liabilities to members                               --           127,362,988
     Accrued expenses                                                           4,949,458            11,975,077
                                                                          ---------------       ---------------
                 Total current liabilities                                     28,820,328           234,353,635
Deferred rent                                                                     128,175               164,024
                                                                          ---------------       ---------------
                 Total liabilities                                             28,948,503           234,517,659
                                                                          ---------------       ---------------
Commitments and contingencies
Members' equity:
     Class A units - authorized 135,010,000 units; issued and
        outstanding at December 31, 2000 and 2001                           1,336,037,500         1,336,037,500
     Class B units - authorized 7,466,391 units; no units issued and
        outstanding                                                                    --                    --
     Subscriptions receivable                                                (465,710,000)                   --
     Deficit accumulated during development stage                             (34,197,040)         (998,353,137)
                                                                          ---------------       ---------------
                 Total members' equity                                        836,130,460           337,684,363
                                                                          ---------------       ---------------
                                                                          $   865,078,963           572,202,022
                                                                          ===============       ===============
</Table>

See accompanying notes to consolidated financial statements

                                      IV-7
<Page>

                           ASTROLINK INTERNATIONAL LLC
                 (A Development Stage Limited Liability Company)
                      Consolidated Statements of Operations

<Table>
<Caption>
                                             PREDECESSOR      PERIOD FROM                                           PERIOD FROM
                                           --------------    APRIL 22, 1999                                        APRIL 22, 1999
                                            PERIOD FROM       (INCEPTION)                                           (INCEPTION)
                                             JANUARY 1,         THROUGH          YEAR ENDED        YEAR ENDED         THROUGH
                                            1999 THROUGH      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                           APRIL 21, 1999         1999              2000              2001              2001
                                           --------------    --------------    --------------    --------------    --------------
<S>                                        <C>               <C>               <C>               <C>               <C>
Revenues                                   $           --                --                --                --                --
Expenses:
  General and administrative                    2,659,773        11,697,771        31,431,521        65,929,746       109,059,038
  Write-down of system under construction              --                --                --       728,494,722       728,494,722
  Contract termination charges                         --                --                --       174,015,988       174,015,988
  Depreciation and amortization                        --           211,910           635,810         3,894,217         4,741,937
                                           --------------    --------------    --------------    --------------    --------------
      Total expenses                            2,659,773        11,909,681        32,067,331       972,334,673     1,016,311,685
                                           --------------    --------------    --------------    --------------    --------------
      Loss from operations                     (2,659,773)      (11,909,681)      (32,067,331)     (972,334,673)   (1,016,311,685)
Interest income                                        --         1,961,822         7,818,150         8,178,576        17,958,548
                                           --------------    --------------    --------------    --------------    --------------
      Net loss                             $   (2,659,773)       (9,947,859)      (24,249,181)     (964,156,097)     (998,353,137)
                                           ==============    ==============    ==============    ==============    ==============
</Table>

See accompanying notes to consolidated financial statements.

                                      IV-8
<Page>

                           ASTROLINK INTERNATIONAL LLC
                 (A Development Stage Limited Liability Company)
                   Consolidated Statements of Members' Equity

<Table>
<Caption>
                                                                                               DEFICIT
                                                                                             ACCUMULATED
                                     CLASS A UNITS          CLASS B UNITS                      DURING             TOTAL
                               ---------------------------  -------------   SUBSCRIPTIONS    DEVELOPMENT         MEMBERS'
                                 UNITS          AMOUNT      UNITS  AMOUNT    RECEIVABLE         STAGE            EQUITY
                               ----------   --------------  -----  ------   -------------   --------------    ------------
<S>                           <C>           <C>             <C>    <C>      <C>             <C>               <C>
PREDECESSOR:
Balance at January 1, 1998
  (unaudited)                          --   $           --    --   $   --             --                --              --
Contributions from Lockheed
  Martin (unaudited)                   --       11,025,513    --       --             --                --      11,025,513
Net loss (unaudited)                   --               --    --       --             --       (11,025,513)    (11,025,513)
                              -----------   --------------  ----   ------   ------------    --------------    ------------
Balance at January 1, 1999             --       11,025,513    --       --             --       (11,025,513)             --
Contributions from
  Lockheed Martin                      --        2,659,773    --       --             --                --       2,659,773
Net loss                               --               --    --       --             --        (2,659,773)     (2,659,773)
Balance at April 21, 1999              --               --    --       --             --                --              --
                              -----------   --------------  ----   ------   ------------    --------------    ------------
--------------------------------------------------------------------------------------------------------------------------

Balance at April 22, 1999
  (inception)                          --               --    --       --             --                --              --
Issuance of Class A Units
  (July 20, 1999)              92,000,000      920,000,000    --       --   (599,840,000)               --     320,160,000
Issuance of Class A Units
  (December 13, 1999)          43,010,000      430,100,000    --       --   (361,610,000)               --      68,490,000
Issuance costs of Class A
  Units                                --      (14,062,500)   --       --             --                --     (14,062,500)
Net loss                               --               --    --       --             --        (9,947,859)     (9,947,859)
                              -----------   --------------  ----   ------   ------------    --------------    ------------
Balance at December 31, 1999  135,010,000    1,336,037,500    --       --   (961,450,000)       (9,947,859)    364,639,641
Payments under
  subscriptions receivables            --               --    --       --    495,740,000                --     495,740,000
Net loss                               --               --    --       --             --       (24,249,181)    (24,249,181)
                              -----------   --------------  ----   ------   ------------    --------------    ------------
Balance at December 31, 2000  135,010,000    1,336,037,500    --       --   (465,710,000)      (34,197,040)    836,130,460
Payments under subscriptions
  receivables                          --               --    --       --    465,710,000                --     465,710,000
Net loss                               --               --    --       --             --      (964,156,097)   (964,156,097)
                              -----------   --------------  ----   ------   ------------    --------------    ------------
Balance at December 31, 2001  135,010,000   $1,336,037,500    --   $   --             --      (998,353,137)    337,684,363
                              ===========   ==============  ====   ======   ============    ==============    ============
</Table>

See accompanying notes to consolidated financial statements.

                                      IV-9
<Page>

                           ASTROLINK INTERNATIONAL LLC
                 (A Development Stage Limited Liability Company)
                      Consolidated Statements of Cash Flows

<Table>
<Caption>
                                              PREDECESSOR
                                            --------------      PERIOD FROM                                          PERIOD FROM
                                                PERIOD        APRIL 22, 1999                                        APRIL 22, 1999
                                                 FROM           (INCEPTION)                                          (INCEPTION)
                                               JANUARY 1,         THROUGH        YEAR ENDED        YEAR ENDED          THROUGH
                                             1999 THROUGH       DECEMBER 31,     DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                            APRIL 21, 1999        1999               2000             2001               2001
                                            --------------    --------------    --------------    --------------    --------------
<S>                                         <C>               <C>               <C>               <C>               <C>
Cash flows from operating
  activities:
  Net loss                                  $   (2,659,773)       (9,947,859)      (24,249,181)     (964,156,097)     (998,353,137)
  Adjustments to reconcile net
    loss to net cash used in
    operating activities:
      Depreciation and amortization                     --           211,910           635,810         3,894,217         4,741,937
      Loss on disposal of property
        and equipment                                   --                --                --           150,678           150,678
      Write-off of contributed assets                   --           225,000                --                --           225,000
      Write-down of system under
        construction                                    --                --                --       728,494,722       728,494,722
      Changes in assets and liabilities:
        Prepaid and other current assets                --          (706,998)          445,177        (8,406,815)       (8,668,636)
        Cash reserved for trust fund                    --                --                --        (7,243,206)       (7,243,206)
        Accounts payable and accrued
          liabilities                                   --         3,289,114         2,504,389       187,030,723       192,824,226
                                            --------------    --------------    --------------    --------------    --------------
          Net cash used in operating
            activities                          (2,659,773)       (6,928,833)      (20,663,805)      (60,235,778)      (87,828,416)
                                            --------------    --------------    --------------    --------------    --------------
Cash flows from investing activities:
  Valued added tax receivable                           --        (2,948,800)       (4,678,252)          (22,485)       (7,649,537)
  Purchases of property and equipment                   --          (290,107)         (660,756)      (48,603,771)      (49,554,634)
  Additions to system under construction                --      (320,800,000)     (448,142,278)     (396,288,578)   (1,165,230,856)
                                            --------------    --------------    --------------    --------------    --------------
          Net cash used in investing
            activities                                  --      (324,038,907)     (453,481,286)     (444,914,834)   (1,222,435,027)
                                            --------------    --------------    --------------    --------------    --------------
Cash flows from financing activities:
  Cash contribution from Lockheed Martin         2,659,773                --                --                --                --
  Proceeds from the issuance of
    Class A units                                       --       368,650,000       495,740,000       465,710,000     1,330,100,000
  Unit issuance costs                                   --        (8,750,000)       (5,312,500)               --       (14,062,500)
                                            --------------    --------------    --------------    --------------    --------------
          Net cash provided by financing
            activities                           2,659,773       359,900,000       490,427,500       465,710,000     1,316,037,500
                                            --------------    --------------    --------------    --------------    --------------
          Net increase (decrease) in cash
            and cash equivalents                        --        28,932,260        16,282,409       (39,440,612)        5,774,057
Cash and cash equivalents, beginning
  of period                                             --                --        28,932,260        45,214,669                --
                                            --------------    --------------    --------------    --------------    --------------
Cash and cash equivalents, end of period    $           --        28,932,260        45,214,669         5,774,057         5,774,057
                                            ==============    ==============    ==============    ==============    ==============
Supplemental disclosure of noncash
  investing activities:
    Contribution of assets by member        $           --        20,000,000                --                --                --
</Table>

See accompanying notes to consolidated financial statements.

                                     IV-10
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001


(1)  NATURE OF BUSINESS

     ASTROLINK International LLC (the Company) was formed on April 22, 1999 in
     the State of Delaware as a Limited Liability Company for the purpose of
     engaging in one or more telecommunications businesses and all incidental
     activities. The Company was formed by Lockheed Martin Global
     Telecommunication, Inc. (LMGT) (a wholly owned subsidiary of Lockheed
     Martin Corporation (LMC)). The Company's initial members were LMGT, TRW
     Inc. (TRW), and Telespazio, S.p.A. through Telespazio Luxembourg, S.A.
     (Telespazio). Liberty Media Group, through LSAT Astro LLC (LMG), became a
     Member in December 1999. The Company was originally formed to establish and
     operate a worldwide, digital, Ka-band telecommunications system consisting
     initially of four geosynchronous satellites and a space and ground control
     system to provide worldwide multimedia interactive broadband
     telecommunications services (the original ASTROLINK System(TM)).

     During 2001, certain of the Company's investors indicated that they would
     not provide additional funding to the Company beyond those amounts
     previously subscribed for. One of the Company's investors has proposed a
     reconstitution of the Company, whereby a business plan would be developed
     and pursued that would provide for the modification of the original
     ASTROLINK System to a system consisting of two geosynchronous satellites
     covering the Americas and European markets. See note 3.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

          The consolidated financial statements include the accounts of
          ASTROLINK International LLC and its wholly owned subsidiaries. All
          significant intercompany transactions and accounts have been
          eliminated.

          Prior to formation on April 22, 1999, the Company operated as a
          division of LMGT during the year ended December 31, 1998 and the
          period from January 1, 1999 through April 21, 1999. These periods
          are referred to as "Predecessor" in the accompanying consolidated
          financial statements.

     (b)  DEVELOPMENT STAGE ENTERPRISE

          The Company's consolidated financial statements
          are presented as those of a development stage enterprise, as
          prescribed by Statement of Financial Accounting Standards (SFAS) No.
          7, ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE ENTERPRISES.

     (c)  CASH AND CASH EQUIVALENTS

          The Company considers short-term, highly liquid investments with an
          original maturity of three months or less to be cash equivalents. Cash
          equivalents at December 31, 2000 and 2001 primarily consist of
          investments in U.S. government obligations and bank deposits, and
          amounted to approximately $42,189,000 and $1,266,000, respectively.
          These investments are stated at amortized

                                     IV-11
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001

          cost, which approximated the fair value due to the highly liquid
          nature and short maturities of the underlying securities.

     (d)  RESTRICTED CASH

          During 2001, the Company established a trust fund to pay severance to
          terminated employees in accordance with the Company's severance pay
          plans, as approved by the Company's Board of Directors. Restricted
          cash in such trust fund at December 31, 2001 amounted to $7,243,206.

     (e)  FURNITURE AND EQUIPMENT

          Property and equipment, including equipment with an original cost of
          $2,054,000 contributed by LMC and LMGT in July 1999, are carried at
          historical cost less accumulated depreciation and amortization.
          Depreciation and amortization is calculated using the straight-line
          method over the following estimated useful lives:

<Table>
<S>                                                         <C>
               Furniture and fixtures                       5 years
               Machinery, equipment, and computer
                 hardware and software                      3 years
               Leasehold improvements                       Shorter of estimated life or remaining term
</Table>

     (f)  SYSTEM UNDER CONSTRUCTION

          The Company has been in the process of designing and developing its
          broadband telecommunications service via a Ka-band satellite
          telecommunications system, and performing services as an overall
          system integrator, owner and operator of that satellite
          telecommunication system to be known as the ASTROLINK System. System
          under construction includes all costs incurred related to the
          construction of the space and ground components of the ASTROLINK
          System. Depreciation expense will be recognized on a
          satellite-by-satellite basis as the satellites are placed into service
          following delivery of each satellite to its mission orbit.
          Depreciation expense related to the ground components will commence
          with the placement into service of such components. To date, no
          satellites have been constructed and launched, nor have the ground
          components been completed.

     (g)  INTANGIBLE ASSETS

          Intangible assets represent the contracts, agreements, and licenses
          related to the space component of the ASTROLINK System which were
          contributed by LMGT in partial consideration for its Class A units.
          These intangible assets will be amortized on a straight-line basis
          over seven years, commencing with the placement of the satellites into
          service.

     (h)  IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED
          OF

          The Company accounts for long-lived assets in accordance with SFAS No.
          121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED
          ASSETS TO BE DISPOSED OF. This statement requires

                                     IV-12
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001

          that long-lived assets and certain identifiable intangibles be
          reviewed for impairment whenever events or changes in circumstances
          indicate that the carrying amount of an asset may not be recoverable.
          Recoverability of an asset to be held and used is measured by a
          comparison of the carrying amount of an asset to future net
          undiscounted cash flows expected to be generated by the asset. If such
          assets are considered to be impaired, the impairment to be recognized
          is measured as the amount by which the carrying amount of the assets
          exceed the fair value of the assets. Assets to be disposed of are
          reported at the lower of the carrying amount or fair value less costs
          to sell.

     (i)  INCOME TAXES

          As a limited liability company, the Company is not subject to U.S.
          federal income taxes directly. Rather, each holder of Class A Units of
          the Company (each Member) is subject to U.S. federal income taxation
          based on its ratable portion of the Company's income or loss.
          Certain of the Company's subsidiaries are subject to tax in various
          jurisdictions, however the taxable losses for these entities have been
          insignificant through December 31, 2001.

     (j)  UNIT-BASED COMPENSATION

          The Company accounts for employee unit-based compensation arrangements
          in accordance with the provisions of Accounting Principles Board (APB)
          Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
          interpretations including FASB Interpretation No. 44, ACCOUNTING FOR
          CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION, an interpretation
          of APB No. 25, and complies with the disclosure provisions of SFAS No.
          123, ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company's options
          granted are for units to acquire non-voting Class B units and are
          convertible into any class of securities that become registered during
          an initial public offering. The Company accounts for its option plan
          using variable plan accounting applicable to junior option plans.
          Under APB Opinion No. 25, compensation expense for variable plan
          accounting applicable to junior option plans is based upon the
          difference, if any, between the exercise price and the fair value of
          the Company's units at the end of the reporting period when it becomes
          probable that the conversion of the non-voting units to the voting
          units will occur. As the Company believes the fair value of its units
          has been equal to the exercise prices of all unit options at the date
          of grant, no compensation expense has been recognized in the
          accompanying consolidated financial statements for the years ended
          December 31, 2000 and 2001.

     (k)  MANAGEMENT ESTIMATES

          The preparation of the Company's consolidated 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
          and disclosure of contingent assets and liabilities, including the
          recoverability of the system under construction and the amounts of
          contract termination liabilities, at the date of the consolidated
          financial statements and the reported amounts of expenses during the
          reporting period. Actual results could differ from those estimates.

                                     IV-13
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001

     (l)  OTHER COMPREHENSIVE INCOME (LOSS)

          In June 1997, the Financial Accounting Standards Board (FASB) issued
          Statement of Financial Accounting Standards (SFAS) No. 130, REPORTING
          COMPREHENSIVE INCOME. SFAS No. 130 establishes standards for the
          reporting and display of comprehensive income (loss) and its
          components in the consolidated financial statements. The Company has
          no material amounts associated with the components of other
          comprehensive income (loss) in the accompanying consolidated financial
          statements.

     (m)  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

          In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
          INSTRUMENTS AND HEDGING ACTIVITIES. In June 2000, the FASB issued SFAS
          No. 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN
          HEDGING ACTIVITIES, an amendment of SFAS 133. SFAS No. 133 and SFAS
          No. 138 require that all derivative instruments be recorded on the
          balance sheet at their respective fair values. The Company adopted
          SFAS No. 133 and SFAS No. 138 on January 1, 2001. The Company has
          reviewed its contracts and has determined that it has no stand alone
          derivative instruments and does not engage in hedging activities.
          Accordingly, the adoption of SFAS No. 133 and SFAS No. 138 had no
          impact on the Company's consolidated financial statements.

     (n)  UNAUDITED FINANCIAL INFORMATION

          The accompanying consolidated statement of member's equity for the
          year ended December 31, 1998 is unaudited, and in the opinion of
          management, reflects all adjustments necessary for a fair presentation
          of such information.

(3)  BUSINESS DEVELOPMENTS AND PROPOSED RECONSTITUTION OF THE COMPANY

     (a)  CESSATION OF FURTHER FUNDING FROM MEMBERS, CONTRACT TERMINATIONS AND
          RELATED ACTIONS

          On October 25, 2001, LMGT advised the Company and publicly stated that
          it would not provide additional funding to the Company beyond those
          amounts previously subscribed for. Subsequent to that date, TRW made a
          similar announcement.

          As a result of these announcements, the Company terminated
          substantially all of its major procurement contracts for the original
          ASTROLINK System, including those with Members or Member-affiliates
          (see notes 5 and 10). The Company terminated these contracts "for
          convenience", which is permitted by the terms of the contracts.
          Also, in accordance with the terms of those contracts, the parties
          are to determine payments due, if any, in connection with the
          termination, which amounts are subject to review and, in some
          cases, negotiation by the parties before final settlement. As of
          December 31, 2001, based on termination claims received from the
          various contractors, Company estimates, and the terms of each
          contract, the Company has accrued approximately $174,015,988 to
          recognize the estimated termination liability for these contracts.
          Of that amount, approximately $127,362,988 relates to contracts
          with Members or Member-affiliates. The Company is in the early
          stages of negotiations with each vendor regarding these claims.

                                     IV-14
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001

          On March 6, 2002, the Company filed a Demand for Arbitration with the
          American Arbitration Association to initiate arbitration under the
          provisions of one of its procurement contracts with an affiliate of a
          Member. The Demand for Arbitration results from a dispute as to the
          Company's rights resulting from the termination of the contract by
          the Company in November 2001.

          On December 17, 2001, the Company's Board of Directors finalized plans
          to terminate 99 of the Company's employees, effective December 31,
          2001, representing approximately 77% of the Company's worldwide
          workforce. Through December 31, 2001, the Company had made severance
          payments of approximately $2,446,000 to these employees. In addition,
          the Company finalized plans to terminate the remaining 29 employees in
          2002. In December 2001, the Company established a trust fund to pay
          severance to terminated employees in accordance with the Company's
          severance pay plans, as approved by the Company's Board of Directors.
          Restricted cash in such trust fund at December 31, 2001 amounted to
          $7,243,206. As of December 31, 2001, the Company accrued approximately
          $7,934,000 for severance payments to terminated employees, including
          the amounts in the trust fund. These costs are included in general and
          administrative expenses in the accompanying consolidated statement of
          operations for the year ended December 31, 2001.

     (b)  PROPOSED RECONSTITUTION OF THE COMPANY

          One of the Members (Member X) has been in formal negotiations with
          management of the Company and each of the other Members of the Company
          to reach an agreement to provide for the reconstitution of the
          Company's operations on a reduced scale. Under this proposal, a
          successor entity to the Company formed in connection with the
          reconstitution (the Successor) would pursue a business plan that
          would provide for the construction of an initial system consisting of
          two satellites, which would provide services to the Americas and
          European regions of the world. Under the terms of the proposed
          agreement, Member X, or an affiliate of Member X, would acquire
          substantially all of the assets, including the contractual rights
          of the Company, to the extent related to the two satellites that
          would form the basis for the reduced-scale operating plan of the
          Successor. It is currently expected that the agreement will also
          include the following terms, among others:

          o    All procurement contracts with the other Members or
               Member-affiliates will be terminated or renegotiated on terms
               satisfactory to Member X and the Company, and the other parties
               to each of such procurement contracts, and the Company and each
               vendor will execute a full mutual release of all liabilities
               under each of such procurement contracts, including
               performance-related obligations, termination liabilities, past
               due amounts, late fees, penalties and interest.

          o    The other Members and their affiliates will agree to transfer
               title, free of any liens or encumbrances, and, concurrently, risk
               of loss, to the Successor of substantially all work-in-progress,
               assets, parts inventory, supplies, intellectual property, and
               other deliverables pursuant to the procurement contracts, to the
               extent related to the two satellites, and agree to store such
               items for up to 18 months at no charge to the Successor, subject
               to permitting certain subcontractors under such procurement
               contracts to retain some inventory that is not deemed to be
               material to the Successor with respect to the proposed
               reduced-scale operation of the business. This will be in full
               settlement of all disputes and/or proceedings with respect to
               such deliverables.

                                     IV-15
<Page>

                             ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001

          Although there can be no assurances that Member X will be able to
          reach definitive agreements with the other Members in accordance with
          the proposed reconstitution plan or a similar plan, management of
          the Company and Member X currently believe that reaching the
          agreements discussed above is the most reasonably likely scenario
          to be pursued among the several alternatives associated with the
          Company's future plans. See also 3(d), below.

          It is anticipated that the proposed reconstitution would resolve
          finally all disputes among the Members and between certain Members
          and the Company with respect to various matters, including claimed
          contract termination liabilities and the disposition or ownership of
          inventory and work-in-progress under the terminated procurement
          contracts.

          If no definitive agreements are reached among the Members and the
          Company for a reconstitution of the Company, whether under the
          currently proposed plan or another plan, the Company will be required
          to further evaluate its alternatives with respect to its future
          plans. In this event, it is anticipated that there could be various
          potential outcomes, including, but not limited to, liquidation of the
          Company, and ultimate dissolution of it and its subsidiaries. Such
          scenarios could result in additional substantial write-offs of the
          Company's assets.


     (c)  WRITE-DOWN RELATING TO SYSTEM UNDER CONSTRUCTION ASSET

          As a result of the Company's current reduced-scale operating plan,
          it has written down all capitalized costs except those costs
          necessary to support the new plan. Charges relating to these costs
          were approximately $728,495,000 for the year ended December 31,
          2001.

          In accordance with SFAS No. 121, the Company also assessed whether the
          costs incurred and capitalized associated with the reduced-scale
          operating plan had been impaired. Based on the Company's projected
          undiscounted cash flows from this plan, and after considering the
          estimated costs to complete construction and launch of the
          reduced-scale system as well as the risk of availability of adequate
          additional financing, management does not believe that the costs
          incurred and capitalized associated with the reduced-scale system have
          been impaired.

     (d)  RISKS AND UNCERTAINTIES RELATING TO THE RECONSTITUTION AND THE
          REDUCED-SCALE OPERATING PLAN

          The completion of the reconstitution is subject to numerous
          conditions, including negotiation and execution of definitive
          agreements, adequate financing, and receipt of governmental
          approvals which involve substantial risks and uncertainties. In
          addition, the Company's development effort relating to the
          reduced-scale operating plan involves substantial risks and
          uncertainties. Future operating results will be subject to
          significant business, economic, regulatory, technological, and
          competitive uncertainties and contingencies, including the ability
          to obtain and maintain the necessary licenses and other approvals
          to operate the network and provide services. These factors
          individually or in the aggregate could have an adverse effect on
          the Company's financial condition and future operating results. In
          addition, the Company will require substantial additional financing
          before construction is completed, see note 11. Failure to obtain
          the required long-term financing will prevent the Company from
          realizing its objective of operating its Ka-band telecommunications
          system. There can be no assurance that the Company will be
          successful in its efforts to reconstitute the development,
          construction and implementation of the reduced-scale operating
          plan, or that it will be able to obtain the necessary financing to
          complete and operate the system even if the reconstitution plan, as
          described above, is implemented.

(4)  MEMBERS' EQUITY

     On July 20, 1999, LMGT purchased 42,000,000 Class A units for an aggregate
     purchase price of $420,000,000. During 1999, 2000 and 2001, LMGT paid all
     amounts in accordance with this commitment.

     Also on July 20, 1999, TRW and Telespazio each purchased 25,000,000 Class A
     units for a purchase price of $250,000,000. TRW subscribed to purchase an
     additional 510,000 Class A units on December 13,

                                     IV-16
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001


     1999, for a purchase price of $5,100,000. During 1999, 2000 and 2001, TRW
     and Telespazio each paid all amounts of their respective commitments.

     On December 31, 1999, LMG purchased 42,500,000 Class A units for an
     aggregate purchase price of $425,000,000. In 1999, 2000 and 2001, LMG paid
     all amounts in accordance with this commitment.

(5)  TRANSACTIONS AND COMMITMENTS WITH MEMBERS

     (a)  SATELLITE PURCHASE AND LAUNCH SERVICES CONTRACTS WITH MEMBERS

          During 1999, 2000, and 2001, the Company entered into a series of
          contracts with a Member and certain of its affiliates for the
          procurement of four satellites, launch services, and a satellite
          control facility with related services, training and documentation.
          The total original aggregate commitment under the agreements was
          approximately $1,826,235,000, before considering the terminations
          discussed in note 3. The amounts under the contracts were due partly
          in monthly payments and partly upon the completion of certain
          milestones. During the period from April 22, 1999 through December 31,
          1999, and the years ended December 31, 2000 and 2001, the Company paid
          approximately $264,800,000, $348,521,000 and $300,942,000,
          respectively, to the Member under the terms of these contracts. At
          December 31, 2000 and 2001, $21,370,000 and $26,771,000 was payable to
          the Member under the original terms of these contracts.

     (b)  GROUND SEGMENT AND TELEMETRY, TRACKING AND COMMAND PRODUCTS, AND
          SERVICES CONTRACTS

          On April 29, 1999, the Company entered into two contracts with a
          Member for obtaining certain satellite ground segment and telemetry,
          tracking and command products, and services. The total original
          aggregate commitment under these contracts, as amended, was
          approximately $511,500,000, before considering the terminations
          discussed in note 3. This amount was due upon the completion of
          certain milestones. During the period from April 22, 1999 through
          December 31, 1999, and the years ended December 31, 2000 and 2001, the
          Company paid approximately $51,300,000, $81,400,000 and $135,242,000,
          respectively, to the Member under the terms of the contracts. At
          December 31, 2000 and 2001, approximately $375,000 and $13,001,000
          was payable to the Member.

     (c)  OPERATIONS AND MAINTENANCE CONTRACTS

          On July 27, 2001, the Company entered into two contracts with a Member
          for obtaining certain operations and maintenance services for the
          ASTROLINK System for 15 years. Amounts due under these contracts are
          billed on a time and materials basis. During the year ended December
          31, 2001, the Company paid approximately $1,315,000 to the Member
          under the terms of the contracts. At December 31, 2001, approximately
          $776,000 was payable to the Member.

     (d)  SATELLITE APPLICATIONS INTERFACE CONTRACTS

          During 1999 and 2000, the Company entered into contracts with a Member
          for obtaining a satellite applications interface and payload
          emulators. The total original commitment under the agreements

                                     IV-17
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001

          was approximately $34,525,000 with an option to purchase up to
          $1,525,000 in additional support services, before considering the
          terminations discussed in note 3. The amounts were due upon the
          completion of certain milestones or the delivery of optional support
          services. During the period from April 22, 1999 through December 31,
          1999, and the years ended December 31, 2000 and 2001, the Company paid
          approximately $4,700,000, $18,220,000 and $12,666,000, respectively,
          to the Member under the terms of the contracts. At December 31, 2000
          and 2001, approximately $1,410,000 and $1,146,000 was payable to the
          Member under the original terms of the contracts.

(6)  PROPERTY AND EQUIPMENT

     Property and equipment consists of the following at December 31, 2000 and
     2001:

<Table>
<Caption>
                                                        2000               2001
                                                    ------------       ------------
<S>                                                 <C>                <C>
Computer hardware and software                      $    536,766            679,239
Furniture and fixtures                                 1,429,418          1,288,679
Machinery and equipment                                  432,159            418,894
Leasehold improvements                                   606,520          1,261,934
Satellite Equipment                                           --         47,667,878
                                                    ------------       ------------
                                                       3,004,863         51,316,624
Less accumulated depreciation and amortization          (847,720)        (4,600,605)
                                                    ------------       ------------
                                                    $  2,157,143         46,716,019
                                                    ============       ============
</Table>

(7)  EMPLOYEE BENEFIT PLAN

     On July 20, 1999, the Company adopted a profit sharing and savings plan
     (the Plan) under Section 401(k) of the Internal Revenue Code. This Plan
     allows eligible employees to defer up to 20% of their annual compensation,
     subject to IRS rules and applicable limits to the Plan. During the period
     from April 22, 1999 through December 31, 1999, and the years ended December
     31, 2000 and 2001, the Company contributed 4% of each employee's annual
     compensation to the Plan, which amounted to approximately $124,000,
     $345,000 and $555,000, respectively.

                                     IV-18
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001

(8)  LEASES

     The Company has noncancelable operating leases for office space and
     equipment that expire on various dates through 2006. The future minimum
     lease payments under these leases as of December 31, 2001 are as follows:

<Table>
<Caption>
Year ending December 31,
<S>                                       <C>
2002                                      $1,595,415
2003                                       1,468,974
2004                                       1,482,400
2005                                         810,523
2006 and thereafter                        1,037,037
                                          ----------
                                          $6,394,349
                                          ==========
</Table>

     Rent expense for the years ended December 31, 2000 and 2001 was
     approximately $1,545,000 and $1,656,000, respectively.

(9)  UNIT OPTIONS

     The Company has a unit option plan that provides for the granting of
     options to employees of the Company to purchase Class B units. The Class B
     units are non-voting and are convertible into any class of securities that
     become registered during an initial public offering. The options vest over
     a five-year period and expire ten years after the date of grant. As of
     December 31, 2001, the Company had reserved 8,512,704 units for issuance
     under the option plan.

                                     IV-19
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001


     The Company has elected to follow APB No. 25 and related interpretations in
     accounting for its employee unit options rather than the alternative fair
     value accounting method allowed by SFAS No. 123. APB No. 25 provides that
     compensation expense under variable plan accounting applicable to junior
     option plans is based upon the difference, if any, between the exercise
     price and the fair value of the Company's units when it becomes probable
     that the conversion of the non-voting units to the voting class will occur.
     SFAS No. 123 requires companies that continue to follow APB No. 25 to
     provide pro forma disclosure of the impact of applying the fair value
     method of SFAS No. 123. The following table summarizes unit option
     activity:

<Table>
<Caption>
                                        CLASS B          PRICE
                                         UNITS          PER UNIT
                                       ----------       --------
<S>                                 <C>              <C>
     Balance at December 31, 1999              --       $   --
     Granted                            3,932,000           10.00
     Exercised                                 --           --
     Forfeited                           (419,000)          10.00
                                       ----------
     Balance at December 31, 2000       3,513,000       $   10.00
     Granted                            4,350,204           10.00
     Exercised                                 --           --
     Forfeited                           (641,000)          10.00
                                       ----------
     Balance at December 31, 2001       7,222,204       $   10.00
                                       ==========
</Table>

     There were 239,100 and 754,700 options exercisable at December 31, 2000 and
     2001, respectively. There were 1,290,500 units available for future grants
     as of December 31, 2001. The weighted average exercise price of unit
     options granted during the years ended December 31, 2000 and 2001 was $10.
     The weighted average remaining contractual life of the Company's unit
     options was approximately 9 years at December 31, 2001.

     Pro forma information regarding net loss is required by SFAS No. 123, and
     has been determined as if the Company had accounted for its employee unit
     options under the fair value method. The weighted average fair value of
     unit options granted during 2000 and 2001 was $2.56 and $2.00,
     respectively, per share using the Black-Scholes option pricing model with
     the following assumptions: expected dividend yield 0%, volatility 0%,
     average risk free interest rate 4.51% - 6.01%, and expected life of five
     years. For purposes of the pro forma disclosures, the estimated fair value
     of the unit options is amortized to expense over the unit options' vesting
     period. Had compensation expense for the unit options granted to employees
     been determined based on the fair value of the related unit options at the
     grant dates in accordance with SFAS No. 123, the Company's net loss for the
     years ended December 31, 2000 and 2001 would have increased by the pro
     forma amount indicated below:

<Table>
<Caption>
                                    2000              2001
                                ------------      ------------
<S>                             <C>               <C>
     Net loss, as reported      $ 24,249,181      $ 964,156,097
     Net loss, pro forma          25,678,088        967,102,770
</Table>

                                     IV-20
<Page>

                           ASTROLINK INTERNATIONAL LLC

                 (A Development Stage Limited Liability Company)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 2001


(10) OTHER CONTRACTUAL COMMITMENTS AND RELATED TERMINATIONS

     During 2000 and 2001, the Company entered into contracts with third party
     contractors for the development and manufacture of end-user terminals and
     service provider gateway terminals. Amounts under the contracts were due
     upon the completion of certain milestones. As described in note 3, the
     Company terminated all of its construction and related contracts during
     2001. During the years ended December 31, 2000 and 2001, the Company paid
     approximately $1,500,000 and $16,000,000, respectively, to the contractors
     under the terms of these contracts. At December 31, 2000 and 2001,
     approximately $1,000,000 and $4,675,000 was payable to the contractors
     under the original terms of these contracts. The Company has accrued an
     additional $46,653,000 related to the termination of these contracts.

     The Company is subject to a legal proceeding and claim relating to a
     software license agreement that arose in the ordinary course of its
     operations, which has not been finally adjudicated. The amount at issue
     in this proceeding is $1.2 million. Although there can be no assurance
     as to the ultimate disposition of this matter, it is the opinion of the
     Company's management, based upon the information available at this time,
     that the expected outcome of this matter will not have a material adverse
     effect on the results of operations and the financial position of the
     Company.

(11) LIQUIDITY

     To date, the Company has devoted all of its efforts to developing,
     constructing and marketing the original ASTROLINK System. Through December
     31, 2001, the Company has generated no revenue and has an accumulated
     deficit of approximately $1,021,000,000. The reduced-scale operating plan
     will require substantial additional financing to complete the construction
     and launch of the two satellites and to market and distribute the
     satellite-based services. Management's plans are to fund the remaining
     satellite construction and launch and operations with the additional sale
     of equity and/or debt securities through private and public sources (see
     note 3(b)). Currently, economic uncertainties exist regarding the
     successful acquisition of additional equity or debt financing and the
     attainment of positive cash flows from the Company's reduced-scale
     operating plan. These factors individually, or in the aggregate, could
     have an adverse effect on the Company's financial condition and future
     operating results and create an uncertainty as to the Company's ability
     to continue as a going concern. The consolidated financial statements
     do not include any adjustments that might be necessary should the
     Company be unable to continue as a going concern.

                                     IV-21
<Page>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                        By: /s/ Kenneth G. Carroll
                                            --------------------------
                                            Name: Kenneth G. Carroll
                                            Title:  Acting President

Dated April 3, 2002

         Pursuant to the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the date indicated:

<Table>
<Caption>
Signature                                                    Title                                       Date
---------                                                    -----                                       ----
<S>                                   <C>                                                           <C>
/s/ Gary S. Howard                    Chairman of the Board and Director                            April 3, 2002
-------------------
    Gary S. Howard

/s/ Alan M. Angelich                  Director                                                      April 3, 2002
---------------------
    Alan M. Angelich

/s/ Robert R. Bennett                 Director                                                      April 3, 2002
----------------------
    Robert R. Bennett

/s/ WILLIAM H. BERKMAN                Director                                                      April 3, 2002
-----------------------
    William H. Berkman

/s/ William R. Fitzgerald             Director                                                      April 3, 2002
--------------------------
    William R. Fitzgerald

/s/ John W. Goddard                   Director                                                      April 3, 2002
--------------------
    John W. Goddard

/s/ J. Curt Hockemeier                Director                                                      April 3, 2002
-----------------------
    J. Curt Hockemeier

/s/ Kenneth G. Carroll                Acting President,                                             April 3, 2002
-----------------------               Chief Financial Officer and Treasurer
    Kenneth G. Carroll                (Principal Financial Officer and Accounting Officer)
</Table>

                                     IV-22