James Unruh, Unisys chairman and chief executive officer said, "The sale of our defence business is the last major step in repositioning our existing portfolio of businesses. It will enable us to focus our entire energy and resources on our continued transformation from a traditional computer company to a services-led information management company.

"Our strategy is working. In 1994, information services, our single largest revenue stream, grew 24 percent. Our client/server business experienced substantial double-digit growth in the second half of the year. In February we acquired a European software company specializing in state-of-the-art object-based application tools to launch a significant move into the client/server software marketplace. We have the in-depth client industry knowledge, world class professional services, and proven technology necessary to create innovative information-based solutions that create value for our clients..."

The transaction will include Unisys military electronics systems integration, programme management, software and custom product design and manufacturing businesses. The sale also includes some non-defence product operations, principally postal systems; weather systems; and air traffic control systems that have historically been part of Unisys defence systems business. Operations being sold employ approximately 8,500 people and had revenue of $1.4 billion in 1994.

Proceeds from the sale are to be used for investments in the company's core businesses, general corporate purposes and possibly for repurchase of its securities. The transaction, which is subject to customary regulatory approvals, is expected to be completed by September 30, 1995.

UNISYS ON CREDIT WATCH WHILE WAITING TO CLOSE SALE

U.S.-based Duff & Phelps Credit Rating Co., last Thursday, placed the senior debt, subordinated debt and preferred stock of Unisys Corporation on Rating Watch. Duff & Phelps' current ratings are BB (Double B) on Unisys' senior notes and debentures,

Canada's Aerospace & Defence Weekly

Volume 9, Number 12 March 29, 1995


Comment

It's too late. The timing is all wrong for Canada to pull its troops out of UNPROFOR. Defence Minister Collenette is certainly correct in his assessment. Currently the United Nation's position in the former Yugoslavia is so untenable that the slightest hiccup could upset the apple cart. The region is, as always it seems, on the brink of all-out war — a war that could spread swiftly to involve Macedonia, Russia, Albania, Turkey and God-knows which other nations. With NATO standing in the wings, a full-blown extraction plan ready to implement should U.N. Secretary General Boutros-Ghali blow the whistle; and with the uncertainty of a quasi-renewal of the UNPROFOR mandate in Croatia; no one knows what to expect in the coming weeks. It is entirely possible that the United Nations will be on its way out of the former Yugoslavia by September anyway. Whatever the case, it is clear that the ball game is about to change completely.

Loral Buys Unisys Defence

Unisys Corporation has signed a definitive agreement to sell Unisys defence business to Loral Corporation for $862 million.

 

Publisher and Editor In Chief: Micheal J. O'Brien

Editorial Staff Writer:

Frederick J. Harris

Contributing Editors:

Jim Henderson (Toronto)

Mike Martin (Ottawa)

Patrick McManus (Halifax)

William Kane (Washington DC)

John Reed (London, England)

Moshe Karem (Jerusalem, Israel)

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BB- on the convertible subordinated notes, and B+ on the convertible preferred stock.

The action reflects Unisys' definitive agreement to sell its defence business to Loral Corporation for $862 million and the assumption that Unisys would use the proceeds principally to reduce its fixed obligations.

The benefits from reduced leverage (debt to invested capital was 43 percent at year end 1994) and improved coverage would outweigh the loss of $1.4 billion in sales from the defence business and reduced earnings diversification. Further, the divestiture focuses Unisys on its commercial businesses which grew 4 percent in 1994. On a pro forma basis, key growth areas of Information Services/Systems Integration and Departmental Servers/Desktop Systems would increase to 29 percent and 13 percent of total revenues respectively.

Further rating action by D&P Credit Rating,says the company's George Podrasky, will be dependent upon closing the sale of the defence business, the final use of proceeds, and Unisys' ability to execute its business strategy in a dynamic information technology market. Unisys' strategy emphasizes growth in the open systems and services businesses to offset the decline in the traditional mainframe business. Gross margins are under pressure, however, as the new areas carry lower gross margins than computer mainframes and related maintenance and software.

Duff & Phelps notes that 1994 was disappointing in terms of revenue growth and profitability with a $186 million pretax charge taken in the fourth quarter 1994 to reduce Unisys' cost structure. Favorably, the second half showed improvement in order activity and timely delivery of new products.

With pro forma 1994 sales of approximately $6 billion, Unisys is one of the top ten U.S.-based providers of information hardware, services and software. End market focus is in the financial services, public sector and government, airlines and communications with Unisys having a historically strong position in transaction processing. Unisys had about $1.9 billion of debt and $1.6 billion of preferred stock outstanding at December 31, 1994.

CANADIANS DEPLOY TO HAITI

The advance party of the Canadian Contingent in the United Nations Mission in Haiti arrived in that country on 19 March, 1995. The remainder of the contingent is being moved this week and is expected to be fully deployed by Thursday 30 March, 1995 in OPERATION PIVOT.

UNMIH, some 6,216 strong, is slated to officially take over from the Multi-National Force now in the country on Friday (31 March, 1995). Canada's Minister of National Defence, David Collenette, will take part in the official hand over along with US President Bill Clinton and the U.N Secretary General. The force's tasks are to sustain the established secure and stable environment, protect international personnel and key installations, to professionalize the Haitian armed forces and to assist the Haitian government in establishing an environment conducive to the organization of free and fair elections.

The Canadian Contingent, commanded by Colonel Rick Findley, is stationed in the Port-Au-Prince area in one of the five U.N. Sectors. It is providing helicopter support for the U.N. force, a construction engineer company to work within the force engineer battalion and a platoon for the force logistics battalion. It is accompanied by another group of approximately 125 Canadian police officers and will serve for six months.

NEW CHIEF WARRANT OFFICER FOR CF

A thirty-one year veteran of service in the Canadian Forces, much of it as a Search and Rescue Technician will become the Canadian Forces Chief Warrant Officer this summer. CWO J.L.G.Parent, MMM, CD, who is now serving as Air Command CWO in Winnipeg, will replace Chief Petty Officer J.D.Carroll, OMM, CD who is retiring.

NATIONAL JET FIRST AUSTRALIAN OPERATOR OF DASH 8 SERIES 300

National Jet Systems Pty Ltd. of Adelaide, Australia will acquire a de Havilland Dash 8 aircraft from the Bombardier Regional Aircraft Division. The news was released during the Australian International Airshow (Airshow DownUnder '95) held at the Avalon Airport near Melbourne.

Delivery of the first Dash 8 Series 300 50-seat aircraft to operate in Australia is scheduled for April 1995.


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A second Dash 8 Series 300 has also been optioned for delivery following shortly.

Warren Seymour, executive chairman of National Jet Systems, advised that the aircraft would be utilized under contract for operations in the Northern Territory and to provide scheduled passenger service in association with Qantas out of Darwin.

In addition to this Dash 8 Series 300 acquisition, National Jet Systems currently operates six Learjet aircraft in an air defence role for the Australian government as well as two Dash 8 Series 100 aircraft — one of which operates under contract in New Guinea, while the other provides personnel transport for mining operations in Western Australia. The company also recently selected three Dash 8 Series 200-B aircraft (a hot and humid performance variant of the 100 Series) for a coast watch contract with the Australian Customs Service.

These will join fifteen 37-passenger de Havilland Dash 8 Series 100 aircraft already operating throughout Australia and in scheduled service with Qantas regional airlines — Eastern Australia, Sunstate and Southern Australia airlines.

Market demand for the state-of-the-art Dash 8 series of turboprop aircraft, which are utilized by over 60 carriers in 24 countries as well as for a variety of roles, prompted de Havilland Inc. to announce an increase in production from two to three aircraft per month in September last year. Dash 8 sales total 418 aircraft; 394 delivered aircraft and 24 firm backlogged orders.

SPAR WINS TOSHIBA CONTRACT

Spar Aerospace Limited has won a follow-on contract to support Toshiba Corporation of Japan in the development of the Japanese robotic arm as that country's contribution to the International Space Station. This contract, worth $700,000, extends the on-going engineering support for a further two year period to 1997 and is intended to assist Toshiba in the final phase of design, manufacturing and testing of their robotic arm called the Japanese Experiment Module Remote Manipulator System (JEM RMS).

"Spar has been providing technical assistance to Toshiba since the JEM RMS programme inception in 1990 in the areas of design review and analysis, dynamic simulation, quality and safety issues, and manned space flight requirements," said Chris Woodland, Spar's JEM Programme Manager. "This contract exemplifies the confidence Toshiba has in our capabilities to perform these tasks."

Spar has relied on its proven experiments and expertise in the area of space telerobotics achieved on the Canadarm and Mobile Servicing System programmes to gain the complete confidence of the customer, and Spar's long-standing relationship with Toshiba has established Spar in the Japanese marketplace.

FLEET SUBSIDIARY WINS COMPONENT ORDER FOR 150 B-737s

Fleet Aerospace, Inc. has announced that its subsidiary, Aeronca, Inc., located in Ohio, received an order from Southwest Airlines for the design and production of engine fan cowl doors for Southwest's fleet of Boeing 737's. The order for replacement doors for 150 of Southwest's aircraft has a minimum value of $15 million U.S. and options for replacement on up to an additional 50 aircraft could increase the value of the contract by an additional $5 million. Design will begin immediately and shipments are scheduled to begin in early 1996. In addition, Aeronca will retain ownership of all tooling and data rights, including FAA certification, related to the production of these fan cowl doors. Accordingly, replacement units will be offered for sale to all other airlines that currently operate Boeing 737's. There are currently over 1200 of the applicable series of Boeing 737's in service.

GERMAN PILOTS TRAIN IN CANADA

Six student pilots from the German Air Force and Navy are undergoing pilot training at the Southport Aerospace Centre, Portage La Prairie, Manitoba. The initial training is being provided by Bombardier Canada's Canadian Aviation Training Centre using Slingsby T67-C aircraft. This is the same service provided to the Canadian Forces under a five year contract for primary flying training. The next level of training will be a Multi-Engine Course at 3 Canadian Forces Flying Training School using Beach King Air aircraft.

This opportunity to train allied pilots is the result of an intense Canadian Forces international marketing plan which sells excess military aerospace training capacity to other countries. In so doing all participants, including Canada, benefit from the savings realized when fixed infrastructure costs are shared by a


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larger client base.

PETE REYNOLDS FIRST DIRECTOR OF BOMBARDIER FLIGHT TEST CENTRE

John Holding, executive vice-president, engineering, Bombardier Aerospace Group - North America, has appointed Peter Reynolds as Bombardier's first director of the group's flight test operations. In this new position, Reynolds will oversee the activities of Bombardier's flight test centre at Learjet in Wichita.

"With the number of new aircraft in development among the Bombardier Aerospace companies, we felt it was important to ensure that we maximize our resources," stated Mr. Holding.

Reynolds, who ranks among general aviation's top test pilots with more than 9,300 hours of flying time, will continue to oversee the flight test programme for the new Learjet 45 aircraft, the first of which is now in the final assembly stage at Learjet. He will also be responsible for the Bombardier Global Express flight test programme, scheduled to begin in 1996.

Since opening in June 1991, the flight test centre has served as the base for certification of the Canadair Regional Jet airliner, the Canadair CL-415 amphibious aircraft and the Learjet 60 transcontinental business jet.

A fellow in the prestigious Society of Experimental Test Pilots, Reynolds joined Learjet in 1973 as an avionics and production test pilot and was named experimental test pilot in 1975. He was appointed chief of engineering flight test for Learjet in 1989.

Reynolds is the only general aviation pilot to be a finalist in NASA's Space Shuttle astronaut selection process. He earned a Bachelor of Science degree in engineering sciences from Purdue University in 1966 and a Master of Science in mechanical engineering from the University of Colorado in 1968.

MD 600N RECEIVES PRODUCTION APPROVAL

First introduced last year as the MD 630N, the MD 600N large-cabin helicopter designed by McDonnell Douglas Helicopter Systems is now approved for production.

Formal approval for production of the helicopter was to be announced today from parent McDonnell Douglas Corporation. Development and testing of the helicopter has continued since its first flight on November 22. Company officials expect full development and certification to be completed in 1996. First deliveries would follow immediately.

The aircraft was developed, then flown, in almost total secrecy by McDonnell Douglas over a four-month period in 1994 at its Mesa facility and unveiled publicly in January.

The MD 600N is a 7-8 place derivative of the company's popular MD 520N. It will compete with other large single-turbine helicopters, a market segment not previously served by McDonnell Douglas.

Performance figures released by the company for the 600N set a maximum cruise speed at sea level of 154 mph; Vne sea level of 175 mph; a maximum range at sea level of 374 miles; a maximum endurance of 3.7 hours; maximum rate of climb at Sea level (ISA) of 1,700 ft./min.; a maximum operating altitude of 20,000 feet; a maximum hook capacity of 3,000; hover in ground effect to 10,500 ft.; hover out of ground effect to 6,800 ft.; and a gross weight of 4,100 lb.

CHALLENGER 604 FLIES WITH GE CF34-3B ENGINES

A prototype Canadair Challenger 604 outfitted with new twin General Electric CF34-3B turbofan engines successfully completed its first flight March 17 at Bombardier's flight test centre at Learjet in Wichita, Kansas. The milestone, some five weeks ahead of schedule, marks the first time that the 4,000-nautical-mile Challenger has flown with the new powerplant.

According to Bruce Robinson, test pilot on this flight, "every engine interface functioned properly and the flight was, altogether, very smooth."

Assisted by co-pilot Craig Kennedy and flight tester engineer Ted Squelch, Robinson explored the flight envelope during the three-hour flight, reaching an altitude of 41,000 feet (12,497 m) and recording a top speed of Mach .85 (562 mph; 904 km/h).

"We enjoyed a strong takeoff and climbed very quickly to 41,000 feet," added Robinson, who has been involved in the Challenger 604 flight test programme since first flight. "The engines performed very well."


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The Challenger flight test team, with on-site support of General Electric personnel, will now conduct climb and cruise performance testing, both of which are enhanced with the installation of the -3B engine.

Launched in June 1993, the Challenger 604 business jet is being designed to combine a target 4,000-nautical-mile (7,408-km) intercontinental range with strong short- and medium-range efficiencies. Other targets include a normal cruise speed of Mach .80, a high speed cruise of Mach .83 and a maximum altitude of 41,000 feet (12,497 m).

Transport Canada type approval of the Challenger 604 is scheduled for October 1995 followed by FAA certification one month thereafter. Factory deliveries are scheduled to begin later this year.

To date, the two Canadair Challenger aircraft participating in the 10-month flight test and certification programme have recorded approximately 300 hours of total accumulated flight time.

Aircraft 5991, which first flew September 18, 1994, is a 601-3R production aircraft extensively modified into a 604 prototype configuration, used primarily for systems development.

It features all of the system changes designed for the Challenger 604 aircraft including a new Collins Pro Line 4 avionics suite, a new landing gear and rolling assembly, increased fuel capacity and an underbelly fairing.

The CF34-3B powerplant is characterized by specific fuel consumption that is approximately three percent lower than earlier CF34 models. Other operational improvements provide the Challenger 604 with a higher climb thrust, higher flat rating (ISA +15) and improved runway performance in hot conditions and at high altitudes. U.S. Federal Aviation Administration certification of the CF34-3B engine is expected this spring.

POWERFUL R-R TRENT 800 FLIES

The Rolls-Royce Trent 800, which will power the new Boeing 777, has completed an incident-free first flight of 4 hours 15 minutes on the Boeing 747 Flying Test Bed.

Rolls-Royce's most powerful engine, the first to be certified at 90,000 pounds takeoff thrust, took to the air at 11:15 a.m. Pacific Standard Time from Boeing Field today.

During its flight the Trent 800 reached an altitude of 35,000 feet and cruised at Mach .83 (450 mph). The initial test flight was designed to check baseline performance calibration. More demanding tests will follow in two subsequent flights making up the remainder of the programme which is being reduced from 15 to 12 hours based on favorable first flight experience. Follow-on testing will include engine performance at a maximum altitude of 43,000 feet, slam accelerations and decelerations as well as engine relights and a full-power 90,000-pound-thrust takeoff.

The Trent engine series was launched in 1988 and design was completed in 1993. First engine run followed later that year. Early 1994 saw twin decisions to raise certification thrust on the Trent 800 from 84,000 pounds to 90,000 pounds and to advance the development programme by three months. Certification was achieved in January of this year and the first engine delivered to Boeing the following month.

CALENDAR

April 9-11 — The Aerospace Industries Association of Canada's (AIAC) Thirty-Third Semi-Annual General Meeting will be held at the Westin Hotel in Ottawa. The theme of the event is "Canadian Aerospace: Reality in a New World". Speakers will include Diane Francis, Editor, Financial Post; Finance Minister Paul Martin; Wolfgang Demisch of BT Securities Corporation, New York; and Karel Ledeboer of the International Air Transport Association. For additional information contact the AIAC in Ottawa at (613) 232-4297.

May 9/11 — Dataware Technologies is offering at no charge to The Wednesday Report's readers its "1995 Spring Seminar Series", a comprehensive half-day seminar series that offers a closer look at advanced electronic publishing solutions. Issues addressed by the seminar will include when to outsource and when to develop in-house; when either CD-ROM or `online' is more appropriate; and how CD-ROM and online can compliment one another. The seminar — to be held in Ottawa on May 9 and in Toronto on May 11 — will also address questions surrounding CD-recordable technology and publishing across the Internet. For more information, or to register, call 1-800-229-8055 and ask for the Seminar Desk.

May 30-31 — The COPWIN '95 seminar will be held at the National Arts Centre in Ottawa sponsored by the Canadian Defence Preparedness Association (CDPA). The objective of COPWIN '95 is to promote earlier industrial involvement in the capital acquisition process. The Department of National Defence's long-term equipment acquisition and R&D plans will be discussed, including all new projects over $500,000. The focus on the requirements will be through the 15 year planning cycle, reflecting the impact of the '94 defence white paper


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and the February '95 Budget. In support of DND's `Cooperation with Industry', CDPA is pleased to welcome members and non-members alike to participate in COPWIN '95. Contact the Canadian Defence Preparedness Association, 500 - 100 Gloucester Street, Ottawa ON K2P 0A4, or telephone (613) 235-5337; fax, (613) 235-0784.

June 1 — The Canadian Defence Preparedness Association will hold a two-day Maritime & SAR Helicopters Exhibition & Seminar to provide government officials and Canadian industry a forum in which to interact with helicopter manufacturers and to explore the current military helicopter requirements and various equipment options to meet these requirements. The seminar will take place at Hanger #10, International Airport, Ottawa. Fees include both June 1 and 2. Registrations must be made by May 22, 1995. For information, contact CDPA, 500 - 100 Gloucester St., Ottawa, ON, K2P 0A4; phone (613) 235-5337 or fax (613) 235-0784.

June 1 — The Military Vehicles Exhibition and Seminar, to be held at the Ottawa International Airport, is a two day seminar and exhibition sponsored by the Canadian Defence Preparedness Association to provide government and industry representatives the opportunity to discuss current military vehicle requirements and a range of possible solutions. Fees are payable in advance. Registrations must be made by May 22, 1995, after which date cancellations will not be accepted. For registration information contact Canadian Defence Preparedness Association, 500 - 100 Gloucester Street, Ottawa, ON, K2P 0A4; phone (613) 235-5337 or fax (613) 235-0784.

August 9-13 — Airshow Canada's 1995 international aviation & aerospace tradeshow will be held at Abbotsford in British Columbia. The event incorporates the 1995 CBAA (Canadian Business Aircraft Association) trade show and aircraft display. For further information contact Airshow Canada at P.O. Box 6, Abbotsford, BC, Canada, V2S 4N9. Telephone: 604-852-4600. Telefax: 604-852-3704.

April 17-18, 1996 — AFCEA has announced Technet Canada '96, presented by AFCEA Canada (Armed Forces Communication and Electronics Association), to be held at the Ottawa Congress Centre. The event will provide opportunities for exhibitors from within the information community to showcase their products and services in the fields of communications, electronics and intelligence. To book show space, call AFCEA's `show office' at 613-594-8788 or fax 613-236-4351.


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