<PAGE>
<PAGE>      1
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                  FORM 10-K



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

For the fiscal year ended December 31, 1995   Commission file number 1-7795

                              UNC INCORPORATED
           (Exact name of registrant as specified in its charter)

               DELAWARE                            54-1078297
  (State of incorporation)         (I.R.S. employer identification number)

  175 Admiral Cochrane Drive
  Annapolis, Maryland                                   21401
  (Address of principal executive offices)           (Zip code)

                                (410)266-7333
            (Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class            Name of Each Exchange on Which Registered
-------------------            -----------------------------------------
Common Stock,
 Par Value $0.20 Per Share                New York Stock Exchange
 9 1/8% Senior Notes due 2003             New York Stock Exchange
 7 1/2% Convertible Subordinated 
  Debentures due 2006                     New York Stock Exchange

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 (or for such shorter period that the
Registrant was required to file such reports), 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 the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant at January 22, 1996 was approximately $107,659,292.

The number of shares of Registrant's Common Stock outstanding on February 28,
1996 was 17,798,981 (excluding 700,000 shares held in treasury).

                           (Cover page continued)
<PAGE>
<PAGE>      2
                     DOCUMENTS INCORPORATED BY REFERENCE


Portions of the Registrant's definitive Proxy Statement, expected to be filed
by April 29, 1996, specifically excluding the sections titled "Statement of
Management Development and Compensation Committee on Executive Compensation"
and "Comparison of Five-Year Cumulative Total Return Among UNC Incorporated,
NYSE Market Value Index and Peer Group Index", in connection with the
solicitation of proxies for its 1996 Annual Meeting of Shareholders, are
incorporated into Items 10, 11, 12 and 13 under Part III.
<PAGE>
<PAGE>      3
                      UNC INCORPORATED AND SUBSIDIARIES
                      ---------------------------------

Item 1.     Business

      The Company is a leading supplier of products and services to the
aviation industry.  The Company's primary business is the aviation
aftermarket, which accounts for approximately 90% of its revenues.  These
operations include the overhaul and repair of aircraft engines and
accessories, the repair and remanufacturing of engine components, and the
provision of training and maintenance services to the United States and
foreign military.  Approximately 10% of the Company's revenues in 1995 were
derived from manufacturing engine and airframe parts for original equipment
manufacturers.

      The Company has over 8,000 customers including:  business aircraft
operators; major, national, regional, foreign, charter and package/cargo
airlines; engine and airframe OEMs; and the United States and foreign
military.  The Company operates sixteen facilities and performs services at
approximately 80 government sites.

                          ENGINE OVERHAUL DIVISION

      UNC Engine Overhaul Division is comprised of three operations, UNC
Airwork, UNC Engine & Engine Parts and UNC Metcalf.  Together these three
operations perform turbine engine overhaul and maintenance, provide parts
provisioning for business and helicopter operators and regional airlines, and
provide industrial power packages for land based industrial use.

      UNC Airwork is a leading independent provider of turbine engine overhaul
services.  UNC Airwork overhauls and repairs over 40 different engine models
for a wide range of corporate and commercial customers.  In 1994, the
auxiliary power unit repair capabilities of UNC Accessory Services were
transferred to UNC Airwork operations in Millville, New Jersey.  Also in 
1994, the small engine overhaul operations conducted at Pacific Airmotive in
Burbank, California were consolidated into UNC Airwork's facilities in
Millville, New Jersey and Miami, Florida.  This consolidation places all major
engine overhaul capabilities in two strategic locations, making for a more
cost effective use of each unit's capabilities.

      UNC Engine and Engine Parts provides parts and accessory support for
small gas turbine engines, as well as industrial packages.  Specializing in
the support of the PT6 engine manufactured by Pratt & Whitney, this unit has
also expanded capabilities to meet the needs of PT6T Twin Pac, JT15D, Allison
250 and APU operators.  UNC Engine and Engine Parts maintains an inventory of
PT6 spare engines and also has one of the largest PT6 inventories of parts and
accessories in the industry.

      Acquired in 1993, UNC Metcalf specializes in the overhaul and repair of
industrial turbine engine, particularly the Solar Centaur and Saturn models. 
UNC Metcalf provides support services that extend into all areas of operations
including engineering, installation, maintenance, parts repair and rebuild. 
Additionally, UNC Metcalf has developed certain proprietary repair processes
which provide customers with a low cost alternative to parts replacement.  UNC
Metcalf also provides complete "turnkey" service including on site contract
maintenance and operations.
<PAGE>
<PAGE>     4
      Revenues of the Engine Overhaul Division were $130.6 million in 1995
(24.5% of the Company's 1995 revenues).

                         ACCESSORY SERVICES DIVISION

      UNC Accessory Services consists of four certified FAA repair station
facilities providing accessory overhaul, repair and test services to aircraft
operators, including business aircraft operators, major airlines,
international airlines, national airlines, regional airlines and package and
freight carriers. Services are also provided to independent aircraft engine
overhaul facilities and aftermarket distributors.  UNC Accessory Services
supports over fifty categories of aircraft accessories, covering more than
thirty thousand different parts.  The items serviced include landing gear,
constant speed drives, radar components, generators, transponders, pneumatic
valves, cooling turbines, flight control actuators, propellers, fuel system
components, hydraulic system components, and anti-skid brake system
components.  New capabilities for regional turbo-prop aircraft and newer
generation turbine aircraft continue to be added.

      UNC Accessory Services was founded in 1951 and acquired by the Company
in 1989.  UNC Accessory Services is an authorized service center for leading
original equipment manufacturers, including Allied Signal Aerospace Products,
APPH and Chandler Evans.  The Company believes it to be the largest
independent supplier of accessory support.

      Revenues of the Component Services Division were $45.6 million in 1994
(8.5% of the Company's 1995 revenues).

                                MANUFACTURING

      UNC's Manufacturing Division supplies turbine engine and airframe
component parts for the prime engine and aircraft original equipment
manufacturers and the military.  UNC Manufacturing provides advanced
capabilities from design to production that result in high technology, precise
tolerance and advanced alloy parts.  This Division consists of UNC Johnson
Technology, UNC Tri-Manufacturing, UNC Tri-Remanufacturing, UNC Artex and UNC
Aerostructures.

      UNC Johnson Technology, founded in 1963 and acquired by the Company in
July 1993, provides high technology turbine nozzles and vane manufacturing and
repair, and specialized non-conventional machining of super alloys such as
electro-chemical deep hole drilling, laser drilling, and electrical-discharge
machining.  Customers include Pratt & Whitney, the Department of Defense, and
General Electric.

      UNC Tri-Manufacturing, founded in 1955 and acquired by the Company in
1988, is a leading manufacturer of precision components, aircraft parts and
assemblies for turbine engines for commercial and military aviation
applications.  Primary customers include General Electric, Pratt & Whitney and
the Department of Defense.

      UNC Aerostructures, founded in 1965 and acquired by the Company in 1993,
is an experienced manufacturer of structural components and sheet metal sub-
assemblies for major aircraft manufactures such as Boeing.  UNC Aerostructures
provides a wide manufacturing capability serving virtually all major airframe
and aerospace companies, leading industrial subcontractors and the U.S.
<PAGE>
<PAGE>     5
Military.  Customers include, Boeing, Northrop, Vought, Bell Helicopter,
Lockheed and Grumman.

      UNC Tri-Remanufacturing, which was started by the Company in 1991,
reconditions engine components to serviceable condition.  The remanufacturing
business is supported by market driven repair development and customers'
desires to lower repair and overhaul costs.  UNC Tri-Remanufacturing's
customers are the commercial airlines who perform their own engine overhauls,
OEM engine overhaul shops and the military.  These customers generally lack
the expertise, the ability to develop approved repairs, and the volume of work
on each different part to justify in-house performance of this work.

      UNC Artex, founded in 1957 and whose assets were acquired by the Company
in April 1993, expands the Company's repair and remanufacturing capabilities
through highly specialized repairs of components including engine gearboxes
and cases, as well as aircraft component housings and other engine and
aircraft parts and accessories.  UNC Artex's primary customers are the major
commercial airlines.  

      Revenues for the Manufacturing Division were $103.6 million in 1995 (19%
of the Company's 1995 revenues).

                              AVIATION SERVICES

      UNC Aviation Services Division is a market leader in the provision of
aircraft maintenance, overhaul, logistics support, aviation training services
and systems integration to the U.S. military, as well as to domestic and
foreign government agencies.  The Division has over 63 years of cumulative
experience with an unblemished record of distinguished contract performance. 
The Division has three operating units, UNC Federal Services, UNC Contract
Field Services and UNC International Services.  Work is performed at military
aviation and ground training sites throughout the United States.  Contracts
are both fixed price and time and materials for multiple years with options. 
This business is managed centrally from the Company's Annapolis, Maryland
headquarters.

      UNC Federal Services is a recognized leader of aircraft maintenance and
air-crew training to the U.S. military.  The market for these military
contract services results from the Department of Defense turning to the
private sector to obtain services for less than they would cost if they were
performed by government personnel.  Awards of these contracts are generally
based on best value to the government.  As a result, success in obtaining the
awards of these contracts requires both high technical rating and low price.

      In 1995, Aviation Services Division won a contract for Contractor
Logistics Support of a four-service fleet of VIP C-20 aircraft at four
locations:  Andrews AFB, Maryland; Kaneoe NAS and Hicham Field, Hawaii; and
Ramstein AFB, Germany.  They also were awarded a U.S. Army
Communications/Electronics Command Omnibus Contract, which provides systems
integration services for development and installation of avionics and
communications equipment in aircraft and ground vehicles at Lakehurst, New
Jersey and Ft. Belvoir, Virginia.  The Division also won the Air Education and
Training Commands Contract to provide instructors for flight simulation
instruction at six bases:  Randolph AFB, Texas; Reese AFB, Texas; Sheppard
AFB, Texas; Columbus AFB, Mississippi; Laughlin AFB, Texas; and Vance AFB,
Oklahoma.
<PAGE>
<PAGE>     6
      UNC Contract Field Services has for 35 years provided depot level and
below depot level maintenance, repair and logistical services for virtually
every Department of Defense weapon system.  Through the Contract Field Teams
(CFT) program, the Company serves the U.S. Army, Navy, Air Force, NASA and
Coast Guard.  In 1995, Field Teams began a major new effort at the Army's
Strategic Mobility Logistics Base, Charleston, South Carolina.  Here the
Division is the Army's major support contractor for maintenance and upgrade
of war reserve equipment aboard prepositioned ships deployed around the world.

      UNC International Services provides maintenance program management and
logistical services to customers worldwide.  The Company is the largest U.S.
service contractor to the Royal Saudi Air Force providing F-5 technical and
logistical support, C-130 logistical support and other services.  The Division
also holds a major contract with the Royal Saudi Naval Forces to provide
technical support at Jeddah and Jubail shipyards, with a support element in
Philadelphia, Pennsylvania.

      The Aviation Services Division had revenues of $251.2 million in 1995
(47% of the Company's 1995 revenues).

                              TRADING DIVISION

      During 1993, the Company established a Trading Division for the purpose
of expanding its business in the airframe and engine parts market and
generating revenues from other aircraft and engine related transactions.  In
addition the Company is consolidating its engine and accessory marketing
within this Division located in Miami, Florida.  In 1993 the Division acquired
a Boeing DC-10-30 aircraft under a leverage lease which it subsequently sold
in 1994.  In addition, the Division acquired a Boeing 767 aircraft in 1994
which it has disassembled and is refurbishing or repairing, as required, and
disposing of in the aftermarket through sale, lease or the creation of
exchange pools or similar transactions.

      Revenues for the Trading Division in 1995 were $5.2 million (1% of the
Company's 1995 revenues).

COMPETITION

      The businesses and markets in which the Company operates are highly
competitive.

      The Company's engine overhaul operations competes primarily with, and
largely at the discretion of, the aircraft OEMs including Allied Signal,
General Electric, Pratt & Whitney and Rolls-Royce.  These operations also face
significant competition from a large number of other domestic and foreign
entities such as Aviall, Standard Aero, National Airmotive, BizJet, KC
Aviation (an aviation services subsidiary of Kimberly-Clark), Bombardier,
Duncan Aviation and others.  The Company's overhaul operations also compete
with sales of used engines.  

      The Company's accessory services operations compete with a large number
of smaller service facilities and with certain OEMs that provide aftermarket
services for their products.
<PAGE>
<PAGE>     7
      Quality and reliability of service, prompt turn-around time, price and
customer service are major competitive factors in the engine overhaul and
accessory services businesses.

      In providing contract aviation services to the military, the Company's
major competitors are Dyncorp, Reflectone, Serv-Air, Northrop, Raytheon,
Grumman and Lockheed.  The Division is one of only four companies holding a
recurring contract under the Contract Field Team program.  The program allows
these companies to provide maintenance services to the Government on an as
needed basis through individual orders.  Other CFT contracts are held by
DynCorp, Lockheed, and Raytheon (Serv-Air).

      With respect to the Company's manufacturing operations, UNC Tri-
Manufacturing's principal competitors are The Barnes Group, Ketema and
Chemtronics, and UNC Johnson Technology's  competition exists in the form of
OEM in-house capabilities and Chromalloy, Meyer Tool, Howmet and Walbar.  UNC
Aerostructures competes with Ace Clearwater, Dynabil Industries, Monitor
Aerospace, AeroChem and ChemFab.  UNC Tri-Remanufacturing and UNC Artex's
principal competitors are Windsor Airmotive, Chromalloy, NORDAM PSD and
Pyromet.  Price, quality and customer service are major competitive factors
in this business.

RESEARCH AND DEVELOPMENT; PATENTS:

      The Company does not currently have any employees who are engaged full-
time in research and development activities; however, certain employees from
time to time render services of a research and development nature as part of
their regular duties.  The Company owns a number of patents, but does not
consider that patent protection is essential to the successful operation of
its businesses.

GOVERNMENT REGULATION:

      UNC Airwork, UNC Accessory Services, UNC Tri-Remanufacturing, UNC
Johnson Technology and UNC Artex are all licensed FAA repair stations in their
respective specialties.  UNC Accessory Services, UNC Tri-Remanufacturing and
UNC Artex are certified by the FAA and hold current C.A.S.E. Registry as well
as various approvals by international aviation administration organizations. 
The principal activities of the Company's discontinued submarine propulsion
unit manufacturing business are regulated by the Department of Energy ("DOE"). 
The Company is also subject to comprehensive regulations designed to maximize
safety in the handling of hazardous materials.  In addition, certain
properties of the Company relating to its discontinued minerals business are
affected by special federal and state environmental laws and regulations.  See
the description of environmental proceedings included in Note 11 to the
Company's Notes to Consolidated Financial Statements.

BACKLOG:

      As of December 31, 1995, the total contract price of the backlog of
orders for manufactured engine and airframe parts and aviation contract
services for the military, including option years, believed to be firm was
approximately $646.1 million, and approximately 56% of the orders or services
represented thereby have been or are currently expected to be filled during
1996.  As of December 31, 1994, such total was approximately $670.2 million. 
<PAGE>
<PAGE>     8

EMPLOYEES:

      As of December 31, 1995, the Company had 5,730 employees.

EXPORT SALES:

      For information related to sales to foreign countries, reference is made
to Note 17 to the Company's Notes to Consolidated Financial Statements.

ITEM 2.     PROPERTIES.

      The principal executive offices of the Company are located at 175
Admiral Cochrane Drive, Annapolis, Maryland.  The executive offices are
subject to a lease expiring in 1997 with renewal options and an option to
purchase and are comprised of approximately 34,000 square feet in a modern
office building.  

      The following table sets forth certain information regarding the
Company's operating facilities as of December 31, 1995.
<TABLE>
<CAPTION>
                                           Approximate
                  Location                Square Footage          Title
                  --------                --------------          -----
<S>                                           <C>                 <C>
      Engine Overhaul Division(1)
         Millville, New Jersey                 260,000            Leased
         Miami, Florida                         46,000            Leased
         Odessa, Texas                          36,500            Leased
         Coconut Creek, Florida                  4,000            Leased

      Accessory Services Division
         Bayshore, New York                     41,000            Owned
         Ft. Lauderdale, Florida                21,000            Leased
         Grand Prairie, Texas                   41,700            Owned
         Millville, New Jersey                  20,000            Leased
   
      Manufacturing Division
         Terre Haute, Indiana                  212,000            Owned
         Terre Haute, Indiana                   66,000            Leased
         Muskegon, Michigan                    105,000            Owned
         Everett, Washington                   135,000            Leased
         Addison, Texas                         20,000            Leased
   
      Aviation Services Division
         Annapolis, Maryland                     5,100            Leased
         Oklahoma City, Oklahoma                36,700            Leased
         San Antonio, Texas                     10,000            Leased
         Pensacola, Florida                      2,600            Leased
      ______________________

      (1)   The Engine Overhaul Division also leases facilities in five states
            aggregating approximately 12,600 square feet.
</TABLE>
<PAGE>
<PAGE>     9
      The Company owns its former engine parts manufacturing plant in Norwich,
Connecticut containing approximately 72,000 square feet and owns its former
engine overhaul plan in Burbank, California containing approximately 120,000
square feet.

ITEM 3.  LEGAL PROCEEDINGS.

      See the description of a litigation and contingencies appearing in Note
11 of Notes to Consolidated Financial Statements.

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

      Not Applicable.

                                   PART II

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

      The principal market for the common stock of UNC Incorporated is the New
York Stock Exchange.  At December 31, 1995, there were 6,432 holders of record
of common stock.  The accompanying table sets forth the high and low prices
for UNC's common stock in the periods indicated.  See Note 7 of Notes to
Consolidated Financial Statements for a description of restrictions on the
payment of dividends.

                              1995                    1994
Quarter Ended            High        Low         High        Low  
-------------           ------      ------      ------      ------
March 31                $ 6.25      $ 4.63      $11.75      $ 9.13
June 30                 $ 6.00      $ 4.75      $10.25      $ 5.13
September 30            $ 6.75      $ 5.25      $ 6.50      $ 5.25
December 31             $ 6.63      $ 5.00      $ 6.50      $ 4.88
                        ------------------      ------------------

The closing price on December 29, 1995 and 30, 1994 was $6.00 and $6.00,
respectively.

The closing price of the Company's common stock on February 23, 1996 was
$7.50.
<PAGE>
<PAGE>     10
ITEM 6.     SELECTED FINANCIAL INFORMATION
(Dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>
                                                    Year Ended December 31,             
                              --------------------------------------------------------  
                                1995        1994        1993        1992        1991    
                              --------    --------    --------    --------    --------
<S>                           <C>         <C>         <C>         <C>         <C>
OPERATING RESULTS
 Revenues                     $536,243    $525,833    $438,293    $365,152    $360,571
                              ========    ========    ========    ========    ========
 Earnings (loss) from:
   Continuing operations
     before extraordinary
     item                     $  1,923    $(67,932)   $ 11,594    $ 11,369    $(25,485)
   Discontinued operations                                                      34,100
   Extraordinary item -
     early retirement of debt                             (532)                 (1,700)
                              --------    --------    --------    --------    --------
   Net earnings (loss)        $  1,923    $(67,932)   $ 11,062    $ 11,369    $  6,915
                              ========    ========    ========    ========    ========
 Earnings (loss) per share:
   Continuing operations
     before extraordinary
     item                     $    .11    $  (3.89)   $    .67    $    .66    $  (1.49)
   Discontinued operations                                                        1.99
   Extraordinary item                                     (.03)                   (.10)
                              --------    --------    --------    --------    --------
   Net earnings (loss)        $    .11    $  (3.89)   $    .64    $    .66    $    .40
                              ========    ========    ========    ========    ========
Weighted average number of
  shares outstanding            17,666      17,474      17,356      17,279      17,128

FINANCIAL POSITION DATA
   Working capital            $124,098    $100,174    $150,200    $128,150    $ 88,379
   Current ratio              2.3 to 1    1.7 to 1    2.5 to 1    3.1 to 1    1.5 to 1
   Total assets               $446,261    $468,034    $506,133    $391,082    $455,094
   Total long-term debt,
     including current 
     portion                  $205,081    $214,323    $197,283    $125,723    $177,829
   Shareholders' equity       $100,152    $ 98,897    $165,486    $155,639    $143,492
   Total debt to
     capitalization              67.2%       68.4%       54.4%       44.7%       55.3%
   Return on average
     shareholders' equity         1.9%                    6.9%        7.6%        4.9%

OTHER
   Capital expenditures       $  6,767    $ 10,299    $ 11,250    $  6,602    $  7,280
   Depreciation and
     amortization             $ 12,491    $ 12,727    $ 11,477    $ 10,378    $ 10,196
   Employees                     5,730       5,410       6,430       3,383       3,852
   Shareholders                  6,432       6,715       7,029       7,371       8,936
</TABLE>
<PAGE>
<PAGE>      11
See Notes 2, 14 and 18 of Notes to Consolidated Financial Statements for
matters affecting continuing operations and Note 3 of Notes to Consolidated
Financial Statements for a description of acquisitions.  Capital expenditures
in 1994 included $0.5 million for the acquisition of the contract backlog of
Anadite and $1.9 million in 1993 for the acquisition of the contract backlog
of Heintz.

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

Results of Continuing Operations

Overview

      The Company's operations are conducted in one business segment which
includes: the overhaul of aircraft engines, industrial gas turbine engines and
aircraft accessories, the manufacture and remanufacture of jet engine and
aircraft components and providing maintenance and training, repair and
logistical contract services.

1995 Compared with 1994
-----------------------
      Revenues were $536.2 million in 1995 compared with $525.8 million in
1994, an increase of $10.4 million (2%).  This increase in revenues was a
result of an increase of $25.7 million (29%) in international sales, offset
by a reduction in revenues due primarily to the closing of the overhaul
facility located in Burbank, California and the sale of two operating
divisions in connection with the Company's restructuring program.  Operating
income was $22.4 million in 1995 compared with an operating loss of $61.0
million in 1994.  Included in the 1994 results were a restructuring provision
of $58.7 million, a one-time charge of $9.6 million for adjustments described
below and a $14.0 million multi-employer pension withdrawal adjustment.  See
1994 Compared with 1993 and Note 2 of Notes to Consolidated Financial
Statements for a discussion of the Company's restructuring program.  Without
these adjustments operating income would have been $21.3 million in 1994.

      Revenues for the Engine Overhaul Division in 1995 increased $1.5 million
(1%) to $130.6 million.  The higher revenues are due to an increase in small
engine overhauls for international customers and in the overhaul and repair
of industrial turbine engines.  These revenue increases were partially offset
by the loss of revenue resulting from the closing of the engine overhaul
facility in Burbank, California, at the end of 1994, as part of the Company's
restructuring program.  Operating income in 1995 was $7.6 million compared
with an operating loss of $8.0 million in 1994.  Included in the 1994 results
was a $14.0 million non-recurring charge for the withdrawal from a multi-
employer pension plan (See Note 14 of Notes to Consolidated Financial
Statements) and a one-time charge of $1.0 million for an increase in the
allowance for doubtful accounts for receivables related to litigation and the
bankruptcy of certain customers.  Without these adjustments operating income
would have been $7.0 million in 1994 compared with $7.6 million in 1995.

      Revenues of the Accessory Services Division in 1995 increased $3.9
million (9%) to $45.6 million principally due to increased volume from
international customers.  Operating income decreased $1.3 million in 1995
principally due to lower volume on domestic business which was replaced with
<PAGE>
<PAGE>     12
increased international business at lower margins due to increased competitive
actions by original equipment manufacturers ("OEM").  The 1994 period included
one-time charges of approximately $0.2 million for an increase in the
allowance for doubtful accounts.

      The Company's Manufacturing Division revenues in 1995 decreased $2.8
million (3%) to $103.6 million compared with 1994.  The decrease in revenues
is due to lower volume at the Company's engine components manufacturing
facility in Indiana and to a reduction in revenues generated by the Company's
chemical milled aircraft and engine components facility in Texas which was
sold in June 1995, as part of the Company's restructuring strategy.  These
decreases were partially offset by higher volume at the Company's Michigan
engine components manufacturing facility due to increased activities on U.S.
government programs and higher volume at other manufacturing facilities,
principally due to new orders at the aerostructures manufacturing facility in
the State of Washington.  Operating income was $10.7 million in 1995 compared
with $6.6 million in 1994.  The 1994 period included a one-time charge of $3.5
million for an adjustment to cost estimates on long-term manufacturing
contracts.  This charge resulted from a reevaluation of total cost to be
incurred under long-term production contracts with OEM customers, necessitated
by a reduced level of orders and the impact of recent price concessions that
were provided to the OEMs under these contracts.  As a result of these events,
it was determined that the increasing overhead rates, resulting in higher
overhead charges to the contracts, in conjunction with higher production
costs, resulting from these lower volumes required an adjustment to the
carrying value of inventory under the contracts.

      Aviation Services Division revenues of $251.2 million increased $5.1
million (2%) in 1995.  The increase in 1995 is due in part to higher revenues
generated on U.S. government contracts for pilot training and contract field
teams services, and for activities on an international contract that was
awarded in the latter part of 1994.  These increases in revenues were
partially offset by a reduction in aircraft maintenance activities on U.S.
government contracts and the sale of UNC Helicopter in December 1994, as part
of the Company's restructuring strategy.  Operating income decreased $1.9
million (17%) to $9.6 million in 1995 due to a reduction in volume of flying
hours and one-time increases during the previous year.

      In December 1994, the Company's Trading Division purchased a used Boeing
767 aircraft for $5.0 million, of which $1.0 million was paid in 1994 and $4.0
million in 1995.  The aircraft was disassembled and the parts are being
refurbished or repaired, as required, and are being disposed of in the
aftermarket through sale, lease or the creation of exchange pools or similar
transactions.  During 1995 the Division generated revenues of $3.3 million and
operating income of $1.1 million from parts sales.  Also, included in 1995
revenues and operating income is $2.0 million for services provided to the
Mohegan Indians in connection with the sale of property in Connecticut.  The
1994 period includes $2.6 million of revenues and operating income from the
leveraged lease of a McDonnell Douglas DC-10-30 aircraft which was sold in
December 1994.

      Selling, general and administrative expenses in 1995 were $57.0 million
or 10.6% of sales compared with $69.8 million or 13.3% of sales in 1994.  The
decrease in selling, general and administrative expenses in 1995 is due to the
closing of the Burbank engine overhaul facility, the sale of UNC Helicopter
in December 1994, the sale of the Texas chemical milled aircraft and engine
<PAGE>
<PAGE>     13
components facility in June 1995, and other cost savings resulting from the
restructuring program initiated in the second quarter of 1994.  Also included
in 1994 was a one-time charge of approximately $6.1 million for an increase
in the allowance for doubtful notes and accounts (included in this amount are
the allowance adjustments described above) and the write-off of expenses
incurred in connection with an acquisition that was not consummated.  Selling
general and administrative cost also includes an investment for increased
international marketing efforts by the Company's international offices located
in Singapore, The Netherlands and Miami, Florida, serving Latin America.  As
a result, international sales have increased $25.7 million (29%) and $27.9
million (47%) in 1995 and 1994, respectively.  See Note 17 of Notes to
Consolidated Financial Statements.

      Interest expense increased $1.0 million (5%) in 1995, principally due
to higher average debt levels.

      The income tax provision for 1995 of $1.0 million results from the
Company reporting $3.0 million in earnings before income taxes and
extraordinary item.  In 1994, the Company recognized an income tax benefit of
$13.5 million as a result of incurring a loss before income taxes and
extraordinary item of $81.4 million.  See Note 12 of Notes to Consolidated
Financial Statements for a reconciliation of the statutory federal income tax
rate to the Company's effective tax rate.
      
      The decrease in the deferred tax valuation allowance of $1.3 million in
1995 was due to the realization of current income tax benefits resulting from
the reversal of temporary differences against financial statement income.  The
amount of deferred tax valuation allowance is determined based upon
management's evaluation of the net realizability of the future income tax
benefits, considering expiration of net operating losses, predictability of
future income, including the impact of the Company's restructuring program,
and the timing of reversal of temporary differences.

      The Defense Department is continuing to close various military bases. 
A portion of the workload of these bases is being relocated to bases where the
Company already performs aircraft maintenance functions.  Further
consolidation of military training and maintenance contracts is expected as
bases are eliminated and other defense cuts reduce the value of individual
contracts.  However, the Company expects that continued pressures on defense
spending could increase the outsourcing of services currently being provided
by military and other government personnel to lower cost providers such as the
Company.  Additional opportunities for work from Army, Air Force and Navy
depots may result from the recommendations made by the Congressionally-
mandated Department of Defense Industry Depot Maintenance Task Force on which
UNC is represented.  In May 1995, the Company was awarded a major delivery
order under its Contract Field Teams contract to develop the plans, procedures
and processes to implement the U.S. Army's Strategic Mobility Logistics
Program at Charleston, South Carolina.  Also in May, the Company was awarded
a one year contract with four one-year options by the U.S. Army's
Communications and Electronics Command at Ft. Monmouth, N.J. with a potential
value of approximately $105 million.  In July 1995, the Company was awarded
a $38 million seven year subcontract for maintenance and supply support of the
Air Force's worldwide C-20 Gulfstream VIP aircraft fleet, and in August, the
Company was awarded a one year contract with four one-year options aggregating
approximately $38 million to provide flight simulator instruction at six Air
Education and Training Command bases.  
<PAGE>
<PAGE>     14
      The Company's Manufacturing Division continues to receive pricing
pressure from certain customers, principally OEMs, as these OEMs continue to
significantly reduce the number of suppliers and their own procurement staffs. 
The Company remains a part of the reduced OEM supplier base and has obtained
new contracts that may not have been available when the base of suppliers was
larger.  The Division has provided price concessions to its principal OEM
customers during each of the past four years in anticipation of continuing to
receive future orders and to maintain OEM business relationships.  As a result
of the depressed conditions in the industry over the past several years, the
additional orders have not been sufficient to offset the declining volume of
business.  The Company has instituted on-going productivity enhancements and
cost reduction programs, in an effort to mitigate the effect of these price
concessions and reduced volumes.  However, as a result of the impact that
these concessions and reduced volumes have had on the cost structure of the
Division, the Company adjusted the carrying value of certain inventories
related to these long-term manufacturing agreements by $3.5 million in 1994. 
The OEM customers continue to apply pricing pressure on all suppliers, and the
Company expects continuing pressures from these OEM customers on future
pricing.

      Continued effort on the part of the U.S. government to reduce defense
spending is affecting the demand for military aircraft engines and could also
have an impact on the Company's manufacturing operations.  This trend is being
offset by the Defense Department bypassing OEMs and placing orders directly
with subcontractors such as the Company.  Recently, the Company has been
awarded contracts to produce T56, F10 and F404 High Pressure Turbine Nozzle
Segments valued at $16 million, $9 million and $7 million, respectively.  The
Company's manufacturing operations will capitalize on the opportunities in the
military market while focussing its efforts on building the commercial market. 
During the second half of 1993 and the first quarter of 1994, the Company
expanded its commercial contract backlog as well as its customer base by
acquiring the contract backlog of two financially pressured competitors.  The
inventory and production related to these contracts were transferred to
existing Company facilities.

1994 Compared with 1993
-----------------------
      The Company took steps in 1994 to reduce its cost structure and asset
base in light of the continuing depressed economic conditions in the aviation
industry.  The Company's analysis of industry market conditions indicates that
the soft industry cycle will continue through 1996 and that many of our
markets will see little real growth during this period.  As a result in the
second quarter of 1994 the Company recorded a $58.7 million provision for
restructuring which includes the shutting down of a marginal operation, an
allowance for the sale and disposition of two other businesses, the
consolidation and downsizing of other operations, and the write down of
inventory and under utilized property, plant and equipment that had been
identified for sale to generate additional cash flow.  The provision for
restructuring consists of $42.3 million to cover the closing of a facility,
the sale and disposition of two other businesses, the consolidation of two
plants and the downsizing of other facilities.  The Company has closed its
engine overhaul facility in Burbank, California and consolidated its engine
overhaul business principally at its facilities in Millville, New Jersey, and
Miami, Florida.  The Company positioned for sale and disposition its chemical
milled aircraft and engine components facility in Weatherford, Texas, which
was sold in 1995, and its helicopter overhaul and refurbishment facility in
Ozark, Alabama, which was sold in December 1994.  These actions were taken due
<PAGE>
<PAGE>     15
to the under utilization of the Weatherford facility caused by the depressed
market condition being experienced by OEM's in connection with the
construction of new aircraft and a sharp reduction in the number of military
helicopter overhauls that were expected in the foreseeable future at the Ozark
facility.  The Company has also consolidated two of its accessory overhaul
plants located in Long Island, New York into one facility.  The balance of the
provision of $16.4 million relates principally to the write down to estimated
realizable value of certain inventory and under utilized property, plant and
equipment that has been identified for sale on the open market.  When fully
implemented the restructuring program is expected to generate $85.0 million
of cash, net of restructuring expenses.

      During the first six months of this restructuring program the Company
closed its engine overhaul operations in Burbank, California and transferred
these operations to its Millville, New Jersey and Miami, Florida facilities
and sold its helicopter overhaul and refurbishment business.  In addition, the
Company began liquidating the assets identified for sale under this program
and generated approximately $10 million of cash, net of restructuring
expenses.  The Company completed the auction of certain fixed assets at its
Pacific Airmotive subsidiary in January 1995, generating approximately $2.6
million in cash.

      At year end the Company's employee head count was 5,410, down slightly
more than 1,000 employees compared with the beginning of the year, reflecting
the results of improved cost controls and restructuring efforts.  

      Revenues were $525.8 million in 1994 compared with $438.3 million in
1993, an increase of $87.5 million (20%) and operating income for 1994
reflects a loss of $61.0 million compared with income of $23.4 million in
1993.  Included in the 1994 results were a restructuring provision of $58.7
million, a one-time charge of $9.6 million for adjustments related to the
carrying value of certain long-term manufacturing contracts, increases in
allowance for doubtful accounts as well as other operating items described
below, and a $14.0 million fourth quarter 1994 multi-employer pension
withdrawal adjustment.  Without these adjustments operating income would have
been $21.3 million in 1994.

      Revenues for the Engine Overhaul Division in 1994 decreased $24.9
million (16%) to $129.1 million.  The reduction in revenues is principally due
to decreases in JT8 overhauls, resulting from the Company's decision to
withdraw from the JT8 overhaul business in late 1993.  The JT8 reductions were
partially offset by a revenue increase of $3.1 million generated by UNC
Metcalf acquired in the third quarter of 1993.

      Operations of the Engine Overhaul Division generated a loss of
$8.0 million in 1994 compared with income of $4.2 million in 1993.  Included
in the 1994 results is a $14 million non-recurring charge for the withdrawal
from a multi-employer pension plan (see Note 14 of Notes to Consolidated
Financial Statements) and a one-time charge of $1.0 million for an increase
in the allowance for doubtful accounts for receivables related to litigation
and the bankruptcy of certain customers.  Without these adjustments operating
income would have been $7.0 million in 1994.

      Revenues for the Accessory Services Division in 1994 decreased $8.3
million (17%) to $41.7 million, principally due to increased pricing pressures
from existing competition in the accessory services markets.  Operating income
<PAGE>
<PAGE>     16
was $1.3 million in 1994 and $6.5 million in 1993.  Included in the 1994
results was a one-time charge of $0.2 million for an increase in the allowance
for doubtful accounts related to the settlement of certain receivables. 
Without this adjustment income would have been $1.5 million in 1994.  The
decrease in operating income in 1994 is principally due to the reduction in
volume.

      The Company's Manufacturing Division revenues for 1994 of $106.4 million
increased $15.6 million (17%) compared with 1993.  The increase in 1994
revenues is principally due to revenues generated by UNC Johnson Technology
and UNC Aerostructures, Washington acquired in the third quarter of 1993,
offset by lower volume at the Company's other manufacturing facilities. 
Operating income was $6.6 million in 1994 compared with $12.6 million in 1993. 
The 1994 period includes a one-time charge of $3.5 million for an adjustment
to cost estimates on long-term manufacturing contracts.  This charge resulted
from a reevaluation of total cost to be incurred under these long-term
production contracts with OEM customers, necessitated by a reduced level of
orders and the impact of recent price concessions that were provided the OEMs
under these contracts.  As a result of these events, it was determined that
the increasing overhead rates, resulting in higher overhead charges to the
contracts, in conjunction with higher production cost, resulting from these
lower volumes, required an adjustment to the carrying value of inventory under
these contracts.  Without this adjustment operating income would have been
$10.1 million in 1994.

      Aviation Services Division revenues of $246.1 million increased $103.9
million in 1994.  The increase in revenues is principally due to revenues
contributed by UNC Lear Siegler acquired in October 1993 and consolidated into
the Aviation Services Division.  Operating income increased $5.0 million after
adjusting for a $2.0 million nonrecurring claim against the U.S. government
(for costs incurred prior to 1993) which was recorded in the first quarter of
1993.  The increase in operating income is principally due to earnings
contributed from the acquisition of UNC Lear Siegler and resulting savings
from the consolidation of its operations.

      In December 1994, the Company's Trading Division sold its McDonnell
Douglas DC-10-30 aircraft that was acquired in September 1993 under a
leveraged lease.  Revenues and operating income from the leveraged lease in
1994 and 1993 were $2.6 million and $1.3 million, respectively.

      Selling, general and administrative expenses in 1994 were $69.8 million
or 13.3% of sales compared with $54.0 million or 12.3% of sales in 1993.  The
increase in selling, general and administrative expense in 1994 is due to
expenses of the companies acquired during 1993 and increased international
marketing efforts.  Additionally, included in the 1994 period is a one-time
charge of approximately $6.1 million related to increases in allowances for
doubtful notes and accounts (included in this amount are the allowance
adjustments described above) and the write-off of expenses of $0.7 million
incurred in connection with an acquisition that was not consummated.  Without
this one-time charge selling, general and administrative expenses would have
been approximately 12.2% of sales in 1994.

      Interest expense increased $4.7 million in 1994 principally due to
higher average debt levels resulting from acquisitions made in 1993, the full
year effect of the Senior Notes issued in July 1993 and higher interest rates.
<PAGE>
<PAGE>     17
      The income tax benefit for 1994 of $13.5 million was $9.7 million higher
than the $3.8 million benefit for 1993.  This increase is due to the
recognition of income tax benefits, net of allowances, on the pre-tax losses
incurred in 1994.  See Note 12 of Notes to Consolidated Financial Statements
for a reconciliation of the statuary federal income tax rate to the Company's
effective tax rate.

      The increase in the deferred tax valuation allowance of $13.7 million
in 1994 was due to the uncertainty of realizing the tax benefits from net
operating losses and certain tax assets generated by the 1994 restructuring
provision, the provision for the withdrawal from a multi-employer pension plan
and other one-time charges.  The amount of deferred tax valuation allowance
is determined based upon management's evaluation of the net realizability of
the future income tax benefits considering expiration of net operating losses,
predictability of future income, including the impact of the Company's
restructuring program, and the timing of reversal of temporary differences.
      
Liquidity and Capital Resources
-------------------------------
      Net cash flows from investing activities provided $25.9 million in 1995,
of which $33.6 million was generated by the sale of assets, principally those
identified in the restructuring program, including $25.0 million from the sale
of the Company's Connecticut property, $4.9 from the sale of other property
and equipment and $3.7 million from the sale of inventories included in the
restructuring program.  The funds generated by the investing activities were
used to fund $6.8 million in capital expenditures, $0.9 million in payments
to the former owners of an acquired business under the terms of an earn-out
agreement, $9.2 million reduction of debt and $17.8 million of operating
activities.  The use of funds in operating activities consisted of $15.9
million generated by earnings after adjusting for non-cash items, offset by
a $24.6 million investment in additional working capital and $9.1 million used
primarily to reduce noncurrent liabilities.

      Many of the Company's restructuring goals have been achieved since the
program was implemented in June 1994.  The Company has generated $47.8 million
from the sale of assets, including $25.0 million from the sale of the
Company's Connecticut property, $12.0 million from the sale of other under
utilized property and equipment, $10.8 million from the sale of other assets,
including its helicopter overhaul and refurbishing business in Ozark, Alabama
and its chemical milled aircraft and engine component business in Weatherford,
Texas.  In addition, the Company has closed its JT8 engine overhaul facility
in Burbank, California and consolidated the engine overhaul business at its
facilities in Millville, New Jersey, and Miami, Florida.  Two accessory
services facilities in Long Island, New York, have also been consolidated. 
The disposal of these assets and consolidation of operations, along with
implementation of productivity enhancements and staff reductions, have
resulted in a reduced cost structure for the Company.

      In addition to the cash described above, since June 30, 1994 the Company
generated approximately $7.9 million of proceeds from the collection of
certain disputed receivables and notes that were written down at the time of
the restructuring in connection with efforts made by the Company to accelerate
the collection of these troubled receivables and generate additional cash.

      Since the restructuring program was implemented, the Company has
incurred $16.6 million of cash expenditures against its restructuring accrual.
<PAGE>
<PAGE>     18
These cash expenditures include employee severance and related costs of $2.5
million, $14.1 million of costs associated with the sale, closing and
consolidations of businesses and operations, including $3.8 million of third-
party costs associated with the shutdowns, consolidations and sales programs. 
The Company believes that the remaining restructuring accrual of $3.9 million
should be adequate to complete the program.

      Capital expenditures in 1995 amounted to $6.8 million compared with
$10.3 million in 1994.  It is anticipated that capital expenditures in 1996
will be on a level comparable with the 1994 expenditures, excluding the impact
of the acquisition of Garrett Aviation Services, and will be financed from
internally generated funds, lease arrangements and, if necessary, revolving
credit borrowings.

      The Company has approximately $34.6 million of net operating loss
carryforwards that can be applied against future taxable income. 
Consequently, the Company does not expect to pay significant federal income
taxes for the next couple of years.

      In May 1995, the Company entered into a new revolving credit agreement
which provides for a five-year credit line through May 2000, with a borrowing
capacity of up to $90 million, subject to borrowing base limitations as
defined in the agreement and reduced by outstanding letters of credit.  The
Company's unused availability under the facility was $33.0 million at December
31, 1995.  The $9.2 million debt reduction in 1995 includes the purchase in
the open market and the retirement of approximately $3.6 million of 7 1/2%
Convertible Subordinated Debentures due 2006 to satisfy, in part, the first
annual sinking fund payment of $4.2 million, which commences in March 1996,
the reduction of the Revolving Senior Bank Debt by $2.8 million, and other
debt by $2.8 million.  In January 1996, the Company purchased in the open
market an additional $0.6 million of the 7 1/2% Convertible Subordinated
Debentures to satisfy the balance of the 1996 sinking fund requirement.  The
Company's debt-to-capitalization ratio at December 31, 1995, was 67.2%
compared with 68.4% at December 31, 1994.  At December 31, 1995, the Company's
working capital was $124.1 million, with a current ratio of 2.3 to 1 compared
with $100.2 million, with a current ratio of 1.7 to 1 at December 31, 1994.

      In October 1995, the Company reached an agreement with Gildea Investment
Company ("Gildea") and other investors to provide up to $25 million of equity
financing on an as needed basis to assist in financing future acquisitions. 
The equity investment will be in the form of senior cumulative convertible
preferred stock ("the Preferred") issued by the Company.  The Preferred will
be issued at $100 per share with an annual cumulative dividend rate of 8.5%,
with no mandatory redemption, and will be convertible to common stock at a
price of $7 per share.  The Company will have the option to pay dividends in
the form of a pay-in-kind cumulative preferred stock.  Under the terms reached
with Gildea, the Company will only issue the new equity on an as needed basis
for prospective acquisitions.  Gildea has the option to invest up to $10
million if a like amount of the Preferred has not been issued by the Company
by April 4, 1996.

      On January 15, 1996, the Company entered into an agreement to acquire
substantially all of the assets and certain liabilities of Garrett Aviation
Services, a leading provider of aviation services in the business aviation
aftermarket.  The purchase price is approximately $145 million which the
Company intends to finance through the issuance of $125 million of long-term
senior subordinated notes and $25 million of 8.5% cumulative convertible
<PAGE>
<PAGE>     19
Preferred Stock.  In addition, borrowings under the Company's Revolving Senior
Bank Debt will be necessary to the extent the purchase price plus transaction
cost exceeds the amount of funds generated from the issuance of the notes and
Preferred Stock described above.  The acquisition is contingent upon, among
other things, receiving certain governmental approval and financing on terms
that are satisfactory to the Company.  The Company is currently soliciting the
holders of its 9 1/8% Senior Notes to amend certain covenants in order to
permit additional borrowings and amend the restrictions on the payment of cash
dividends.  As of February 23, 1996, the Company received consent from the
required majority of note holders to amend the covenants.  It is anticipated
that the acquisition will be completed in the latter part of April 1996.  The
Company may be required to pay a break-up fee of up to potentially $5.0
million if, under certain circumstances such as a breach of the agreement, the
acquisition is not consummated.  See Note 3 of Notes to Consolidated Financial
Statements.

      The Company discontinued its minerals and offshore products and services
operations in 1984, its telecommunications operation in 1988 and its submarine
propulsion unit manufacturing operation and its environmental services
operation in 1990.  In connection with these actions, the Company has
approximately $15.7 million accrued to cover the cost of certain long-term
remediation activities, wind-down and final closure of certain long-term U.S.
government contracts, resolution of certain litigation and disposition of
remaining properties.  The Company anticipates that these activities will be
completed over the next three years.

Environmental
-------------
      The Company's operations are subject to a variety of federal, state and
local laws and regulations relating to the environment.  The Company believes
that its facilities are operated substantially in compliance with applicable
environmental laws and regulations on an overall basis.  However, as described
below, some areas require remedial action.

      A subsidiary of the Company, United Nuclear Corporation, has been
involved in environmental reclamation of a former uranium mill and mill
tailings facility since 1988.  The reclamation plan has been approved by the
U.S. Nuclear Regulatory Commission and the U.S. Environmental Protection
Agency and reclamation activities are proceeding on schedule.  Site
reclamation under this plan is scheduled to be completed by the end of 1997. 
The cost of this remediation was $2.1 million in 1995, $2.2 million in 1994
and $1.7 million in 1993.  It is anticipated, based on the approved
reclamation plan, that the cost of future remediation through 1997 will be
approximately $4.0 million.  Such cost has been accrued as part of the
discontinued operation.

      The Company sold one of its manufacturing facilities, Chemical Dynamics,
Inc., in June 1995 to the former owner of the subsidiary.  Under the terms of
the agreement, the former owner assumed, among other things, all known
environmental risks related to the operations of the business.

      During 1993, the State of New Mexico passed the New Mexico Mining Act
("Act"), which imposes certain reclamation and other regulatory obligations
on operators of existing and new mining operations.  A number of mines
operated by the Company's subsidiary, United Nuclear Corporation, at various
times during the period 1970 through 1982, may be covered by the Act. 
<PAGE>
<PAGE>     20
However, it is impossible to determine, based on the provisions of the Act and
regulations issued by the State, the extent to which these mines may be
covered by the Act and, if covered, to estimate the cost of remediation or the
timing and extent of remedial action which may be required.

      Lockheed-Martin Corporation ("Lockheed") began an action in United
States District Court of the Central District of California under the
Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA") in August 1994.  In that action, Lockheed seeks to have owners and
operators of property situated above the San Fernando Valley aquifer
contribute to the costs incurred or to be incurred by Lockheed to clean up
contaminated groundwater constituting the aquifer.  A subsidiary of the
Company, Pacific Airmotive Corporation ("PAC"), was made one of the defendants
in the action.  The Company and a second subsidiary, Airwork Corporation, were
added as defendants in December 1995.  Based on several series of soil tests
conducted on PAC's property and consultants' reports since approximately 1989,
the Company concluded, and continues to conclude, that there is no
demonstration that contaminants of concern identified in the groundwater by
the U.S. Environmental Protection Agency have been transmitted from the
surface of PAC's property to the underlying groundwater approximately 200 feet
below ground surface.  PAC is also pursuing alternative remedies against Purex
Industries, Inc. which owned and operated the property prior to 1985.  The
Company and Airwork have filed motions to dismiss the action as to them on the
grounds, among others, that they did not own or operate PAC's property, or
control PAC's operations.  The Company is not able to determine whether it or
a subsidiary of the Company will be held liable as a result of the Lockheed
action, or to establish a range of loss.

      Based on the Company's assessment of the matters described above, the
Company believes that these and other environmental matters will not have a
material adverse impact on the Company's financial condition, results of
operations or liquidity.  For further details with respect to environmental
matters, see Note 11 of Notes to Consolidated Financial Statements.

Impact of Inflation
-------------------
      The Company believes that inflation did not have a material effect on
the results of operations or financial condition in 1995.

New Accounting Standards
------------------------
      During 1995 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 - "Accounting for Stock-Based
Compensation."  This statement becomes effective in 1996 and encourages,
rather than requires, companies to recognize compensation expense based on the
estimated fair value of employee stock options and other equity instruments
issued to employees at the date the instruments are granted.  Companies that
choose to continue to follow the measurement guidance in APB Opinion No. 25 -
 Accounting for Stock Issued to Employees will be required to disclose pro
forma net income and earnings per share as if the accounting method in
Statement of Financial Accounting Standards No. 123 had been applied. 
Management will continue to follow the measurement guidance in APB Opinion No.
25 when accounting for stock issued to Company employees.
<PAGE>
<PAGE>     21
      Also issued in 1995 was Statement of Financial Accounting Standards No.
121 - "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of."  This statement becomes effective in 1996 and
requires that assets to be held and used be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset in question may not be recoverable.  Companies will have to estimate
future cash flows expected from using the asset and its eventual disposition. 
If this amount is less than the carrying amount of the asset, there is an
impairment loss.  The impairment loss is measured by the difference between
the asset's fair value and its carrying amount.  Assets to be disposed of,
with certain exceptions, would be reported as the lower of cost or fair value
less the cost to sell the asset.   The Company currently follows the
provisions of this Standard.

ITEM. 8     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
UNC Incorporated and Subsidiaries
Consolidated Statements of Earnings
<TABLE>
<CAPTION>
(Dollars in thousands except per share amounts)
                                                         Year Ended December 31,   
                                                     ------------------------------
                                                       1995       1994       1993  
                                                     --------   --------   --------
<S>                                                  <C>        <C>        <C>
Sales and operating revenues                         $536,243   $525,833   $438,293
Costs and expenses                                    
   Costs and operating expenses                       456,935    444,375    360,869
   Selling, general and administrative expenses        56,952     69,768     53,987
   Restructuring charge                                           58,706   
   Multi-employer pension plan withdrawal charge                  14,000           
                                                     --------   --------   --------
                                                      513,887    586,849    414,856
                                                     --------   --------   --------
Operating income (loss)                                22,356    (61,016)    23,437
Other income (expense)
   Interest expense                                   (19,514)   (18,549)   (13,865)
   Other                                                  116     (1,850)    (1,821)
                                                     --------   --------   --------
                                                      (19,398)   (20,399)   (15,686)
                                                     --------   --------   --------
Earnings (loss) before income taxes and
 extraordinary item                                     2,958    (81,415)     7,751
Income tax benefit (provision)                         (1,035)    13,483      3,843
                                                     --------   --------   --------
Earnings (loss) before extraordinary item               1,923    (67,932)    11,594
Extraordinary item - early retirement of debt,       
  net of income taxes                                                          (532)
                                                     --------   --------   --------
Net earnings (loss)                                  $  1,923   $(67,932)  $ 11,062
                                                     ========   ========   ========
Earnings (loss) per share
   Earnings (loss) before extraordinary item         $    .11   $  (3.89)  $    .67
   Extraordinary item                                                          (.03)
                                                     --------   --------   --------
   Net earnings (loss)                               $    .11   $  (3.89)  $    .64
                                                     ========   ========   ========
</TABLE>
<PAGE>
<PAGE>      22
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Dollars in thousands except per share amounts)

                                                         December 31,   
                                                     -------------------
                                                       1995       1994  
                                                     --------   --------
<S>                                                  <C>        <C>
Assets
Current assets
  Cash                                               $  1,671   $  2,619
  Accounts receivable, less allowance
    for doubtful accounts of $3,186
    and $3,706, respectively                          102,462     89,279
  Unbilled costs and accrued profits on
    contracts in progress                              11,128     14,097
  Inventories                                          91,130     85,110
  Assets held for sale                                  5,099     49,174
  Other                                                10,156      8,168
                                                     --------   --------
Total current assets                                  221,646    248,447
Assets held for sale - noncurrent                      12,796      2,300
Property, plant and equipment, at cost
  Land, buildings and improvements                     22,087     22,081
  Machinery and equipment                              60,362     51,397
                                                     --------   --------
                                                       82,449     73,478
Less accumulated depreciation and amortization         34,381     28,789
                                                     --------   --------
Net property, plant and equipment                      48,068     44,689
Cost in excess of net assets of acquired
  companies, less accumulated amortization
  of $28,175 and $23,397, respectively                136,298    140,128
Other noncurrent assets                                27,453     32,470
                                                     --------   --------
Total assets                                         $446,261   $468,034
                                                     ========   ========
</TABLE>
<PAGE>
<PAGE>      23
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Dollars in thousands except per share amounts)

                                                                    December 31,   
                                                                -------------------
                                                                  1995       1994  
                                                                --------   --------
<S>                                                             <C>        <C>
Liabilities and Shareholders' Equity
Current liabilities
  Current portion of long-term debt                             $  1,748   $ 42,971
  Accounts payable                                                39,614     38,918
  Income taxes                                                     1,392      3,521
  Accruals and other current liabilities                          54,794     62,863
                                                                --------   --------
Total current liabilities                                         97,548    148,273

Long-term debt, less current portion
  Revolving Senior Bank Debt, interest rate
   at December 31, 1995, 8.71% due 2000                           37,181   
  9 1/8% Senior Notes due 2003                                   100,000    100,000
  7 1/2% Convertible Subordinated Debentures due 2006             64,800     69,000
  Other                                                            1,352      2,352
                                                                --------   --------
Total long-term debt, less current portion                       203,333    171,352
Other noncurrent liabilities                                      45,228     49,512
                                                                --------   --------
Total liabilities                                                346,109    369,137

Shareholders' equity
  Series preferred stock, par value $1 per share;
    Authorized 12,000,000 shares; 250,000
    designated Series A Junior Participating
    Preferred stock, none issued                                     
  Common stock, par value $0.20 per share;
    Authorized 50,000,000 shares, issued
    18,393,868 and 18,242,134 shares, respectively                 3,679      3,648
  Additional paid-in capital                                     123,717    122,940
  Retained earnings (deficit)                                    (15,450)   (17,373)
                                                                --------   --------
                                                                 111,946    109,215
  Less 
    Treasury stock, at cost (700,000 shares)                       8,750      8,750
    Minimum pension liability adjustment                           1,801        540
    Unearned compensation - restricted stock                       1,243      1,028
                                                                --------   --------
Total shareholders' equity                                       100,152     98,897
                                                                --------   --------
Total liabilities and shareholders' equity                      $446,261   $468,034
                                                                ========   ========
</TABLE>
<PAGE>
<PAGE>      24
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(Dollars in thousands)
                                                           Year Ended December 31,   
                                                       ------------------------------
                                                         1995       1994       1993  
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Cash flows from operating activities
  Net earnings (loss)                                  $  1,923   $(67,932)  $ 11,062
  Adjustments to reconcile net earnings (loss) to net
   cash provided (used) by operating activities:
    Depreciation and amortization                        12,491     12,727     11,477
    Provision for pension withdrawal liability                      14,000
    Provision for restructuring                                     58,706
    Provision for losses on accounts receivable           1,637      4,296      1,602
    Income from leveraged lease                                     (2,475)    (1,263)
    Deferred income taxes (benefit)                         (28)   (14,587)    (5,258)
    Gain on disposition of assets and other                 (52)      (350)      (583)
    Extraordinary loss on retirement of debt                                      625 
      Changes in assets and liabilities, net of
     effect of acquisitions and divestitures:
      (Increase) decrease in accounts receivable        (15,355)    (4,228)        33
      (Increase) decrease in unbilled costs and
        accrued profits on contracts in progress          2,969     14,065     (8,974)
      (Increase) in inventories                          (4,974)   (19,665)    (9,082)
      (Increase) decrease in other current assets           484      5,688     (7,111)
      (Increase) decrease in other noncurrent assets     (2,538)       389       (640)
      Increase (decrease) in accounts payable               709        341     (3,408)
      Increase (decrease) in accruals and other
       current liabilities                               (5,816)   (10,255)     5,855
      Increase (decrease) in income taxes payable        (2,660)     1,459      1,195
      (Decrease) in other noncurrent liabilities         (1,666)    (6,559)    (1,446)
      (Decrease) in discontinued operations
       liabilities                                       (4,936)    (5,115)    (5,721)
                                                       --------   --------   --------
      Total adjustments                                 (19,735)    48,437    (22,699)
      Net cash provided (used) by                      ---------  ---------  --------
       operating activities                             (17,812)   (19,495)   (11,637)
                                                       --------   --------   --------
</TABLE>
<PAGE>
<PAGE>      25
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (Cont.)
<TABLE>
<CAPTION>
(Dollars in thousands)
                                                           Year Ended December 31,
                                                       ------------------------------
                                                         1995       1994       1993
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Cash flows from investing activities:
  Net proceeds from sale of assets                       33,600     11,713     10,843
  Additions to property, plant and equipment             (6,767)   (10,299)   (11,250)
  Acquisition of subsidiaries, net of cash acquired        (947)    (4,911)   (48,477)
  Proceeds from sale of leveraged lease                              6,758
  Investment in leveraged lease                                                (2,697)
  Other transactions, net                                               39          1
      Net cash provided (used) by                      --------   --------   --------
       investing activities                              25,886      3,300    (51,580)
                                                       --------   --------   --------
Cash flows from financing activities:
  Additions to debt                                     382,005    201,085    228,632
  Reductions in debt                                   (391,247)  (184,045)  (265,966)
  Issuance of 9 1/8% Senior Notes                                             100,000
  Exercise of stock options                                 220        280         77
      Net cash provided (used) by                      --------   --------   --------
       financing activities                              (9,022)    17,320     62,743
                                                       --------   --------   --------
Net increase (decrease) in cash                            (948)     1,125       (474)
Cash at beginning of year                                 2,619      1,494      1,968
                                                       --------   --------   --------
Cash at end of year                                    $  1,671   $  2,619   $  1,494
                                                       ========   ========   ========
</TABLE>
<PAGE>
<PAGE>      26
UNC Incorporated and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
(Dollars in thousands)
                                                Additional
                             Common Stock        Paid-in     Retained   
                           Shares    Par Value   Capital     Earnings    Other       Total 
                         ----------  ---------  ----------   --------   --------   --------
<S>                      <C>         <C>        <C>          <C>        <C>
Balance at
  December 31, 1992      18,002,334   $  3,600  $121,292     $ 39,497   $ (8,750)* $155,639

Net earnings                                                   11,062                11,062
Award of restricted
  stock under the
  employees' stock plan      65,000         13       381                                394
Exercise of stock
  options                    18,000          4        73                                 77
Minimum pension
  liability adjustment                                                    (1,345)    (1,345)
Unearned compensation -
  restricted stock                                                          (341)      (341)
                         ----------  ---------  --------     --------   --------   --------
Balance at               
  December 31, 1993      18,085,334      3,617   121,746       50,559    (10,436)   165,486

Net loss                                                      (67,932)              (67,932)
Award of restricted
 stock under the
 employees' stock plan       97,000         19       926                                945
Exercise of stock
 options                     59,800         12       268                                280
Minimum pension 
 liability adjustment                                                        805        805
Unearned compensation -
 restricted stock                                                           (687)      (687)
                         ---------   ---------  --------     --------   --------   --------
Balance at               
 December 31, 1994      18,242,134       3,648   122,940      (17,373)   (10,318)    98,897

Net income                                                      1,923                 1,923
Award of restricted
 stock under the
 employees' stock plan      104,534         21       567                                588
Exercise of stock
 options                     47,200         10       210                                220
Minimum pension
 liability adjustment                                                     (1,261)    (1,261)
Unearned compensation -
  restricted stock                                                          (215)      (215)
                         ---------   ---------  --------     --------   --------   --------
Balance at
  December 31, 1995     18,393,868   $   3,679  $123,717     $(15,450)  $(11,794)  $100,152
                        ==========   =========  ========     ========   ========   ========
</TABLE>
*Treasury Stock
<PAGE>
<PAGE>      27
Notes to Consolidated Financial Statements

1.    Summary of Significant Accounting Policies
      ------------------------------------------
      (a) Basis of Presentation.  The accompanying financial statements
include the accounts of UNC Incorporated and its Subsidiaries ("the Company")
after elimination of all significant intercompany accounts and transactions.

      (b) Long-Term Contracts.  Revenues under fixed-price production
contracts are primarily recognized under the percentage-of-completion method
and are measured principally on a cost-to-cost basis.  Cost estimates are
reviewed periodically as the work progresses, and adjustments are reflected
in the period in which revisions to such estimates are deemed necessary. 
Revenues under fixed rate per hour service contracts are recognized as
services are performed based on actual hours incurred under the contracts. 
Performance award fees incorporated in certain government contracts are
recognized when there is sufficient information to assess expected contract
performance.  Provisions for estimated losses on contracts are recorded when
identified.

      (c) Inventories.  Valuation of inventories is at the lower of cost or
market, utilizing the first-in, first-out and average cost methods.

      (d) Depreciation and Amortization.  The Company's property, plant and
equipment are depreciated and amortized over their estimated useful lives by
the straight-line method, using periods ranging from 10 to 30 years for
buildings and improvements and from 3 to 10 years for machinery and equipment.

      (e) Cost in Excess of Net Assets of Acquired Companies.  The excess of
acquisition cost over the fair value of tangible and identifiable intangible
net assets of acquired companies at date of acquisition is amortized on a
straight-line basis over periods ranging from 10 to 40 years.  The Company
assesses the recoverability of cost in excess of net assets of acquired
companies by determining whether the amortization of this intangible asset
over its remaining life can be recovered through estimated future undiscounted
operating cash flows.  If it is not recoverable, the carrying value of the
cost in excess of net assets of acquired companies will be reduced by the
estimated shortfall of discounted cash flows.

      (f) Pension Plans and Post-retirement Benefits.  Substantially all non-
union employees of the Company are covered under defined contribution plans. 
The cost of these plans is a fixed percentage of the participants' eligible
compensation.  In addition, the Company provides benefits to a limited number
of active and retired employees under an unfunded contributory defined benefit
post retirement health care plan.  Also, the Company participates in multi-
employer defined benefit pension plans for certain active and retired union
employees.  The Company's policy is to fund these benefits in accordance with
the provisions of the collective bargaining agreements.

      (g) Income Taxes.  Deferred income taxes are provided on a liability
method whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and credit carryforwards, and deferred tax
liabilities are recognized for taxable temporary differences.  Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax basis.  Deferred tax assets are reduced by a
valuation allowance when it is "more likely than not" that some portion or all
<PAGE>
<PAGE>     28
of the deferred tax assets will not be realized.  Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment.

      (h)  Environmental Liabilities.  The Company accrues environmental costs
on an undiscounted basis when it is probable that a liability has been
incurred and the amount can be reasonably estimated.  To the extent such costs
are covered by U.S. government contracts, these costs are treated as contract
cost and recognized as incurred.

      (i) Earnings Per Share.  The calculation of earnings per share of common
stock is based on the weighted average number of shares outstanding, assuming
the exercise of stock options where the impact is dilutive.  The weighted
average number of shares of common stock outstanding for the years 1995, 1994
and 1993 were 17,666,000, 17,474,000 and 17,356,000, respectively.

      (j)  Use. of 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 and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ from those
estimates.

2.    Restructuring
      -------------
      In the second quarter of 1994, the Company recorded a restructuring
charge of $58.7 million ($47 million after-tax) in connection with a strategic
program to reduce its cost structure and asset base in light of the continuing
depressed economic conditions in the aviation industry.  The restructuring
charge consisted of a $21.8 million non-cash charge applicable to the
writedown of the estimated net realizable value of the assets, including $4.6
million of goodwill, associated with the sale and disposition of two business
units, the closing of a facility and the consolidation of two other plants,
and a $20.5 million provision for cost associated with the sale, closing and
consolidation of two business units and facilities, including severance and
related cost.  The remaining $16.4 million restructuring charge consists of
non-cash charges of $3.0 million related to the writedown of the carrying
value of certain under utilized plant and equipment that were identified for
sale under the restructuring program and a $13.4 million writedown of the
carrying value of inventory that was identified for sale to third party
brokers and others under the restructuring program.  The balance of the
reserve for future expenditures related to restructuring at December 31, 1995,
was $3.9 million.

3.    Acquisitions and Prospective Acquisition
      ----------------------------------------
      On January 15, 1996, the Company entered into an agreement to acquire
substantially all of the assets and certain liabilities of Garrett Aviation
Services, a leading provider of aviation services in the business aviation
aftermarket.  The purchase price is approximately $145 million which the
Company intends to finance through the issuance of $125 million of long-term
senior subordinated notes and $25 million of 8.5% cumulative convertible
Preferred Stock.  In addition, borrowing under the Company's Revolving Senior
Bank Debt will be necessary to the extent the purchase price plus transaction
costs exceeds the amount of funds generated from the issuance of the notes and
<PAGE>
<PAGE>     29
Preferred Stock.  The Company is currently in the process of soliciting the
holders of the 9 1/8% Senior Notes to amend certain covenants in order to
permit the borrowing of additional debt and amend the restrictions on the
payment of cash dividends to permit the payment of dividends on the Preferred
Stock.  As of February 23, 1996, the Company received consent from the
required majority of note holders to amend the covenants.  The acquisition is
contingent upon, among other things, receiving governmental approval under the
Hart Scott Rodino Act and financing on terms that are satisfactory to the
Company.  It is anticipated that the acquisition will be completed in the
latter part of April 1996.  Under certain circumstances, if the acquisition
is not ultimately consummated, the Company may be required to pay a break-up
fee of up to potentially $5.0 million. 

      During 1993, the Company acquired the entities described below, which
were accounted for by the purchase method of accounting.  The results of
operations of the acquired companies are included in the Company's statement
of earnings for the periods in which they were owned by the Company.

      In April 1993, the Company acquired substantially all of the assets and
technology, and assumed certain liabilities of Artex Tool Corporation and
Stockton Enterprises (collectively "Artex") for $5.2 million which was funded
through a borrowing under the Company's revolving credit agreement.  Artex is
engaged in the remanufacture and repair of aircraft engine gear box housings,
wheels and other aircraft and engine parts and accessories.  Following its
acquisition this operation was renamed UNC Artex.  Under the terms of the
purchase agreement, the Company may be required to make additional payments
of up to $1.2 million, contingent upon Artex achieving certain profit levels
during the three year period ending May 1, 1996.  The excess of the purchase
price over the estimated fair value of the tangible and identifiable
intangible net assets acquired is amortized over a period of twenty-five years
using the straight-line method.  Any future amounts earned under the terms of
this agreement will be recorded as additional cost in excess of net assets of
acquired companies.

      In July 1993, the Company acquired substantially all of the assets and
technology, and assumed certain liabilities of Johnson Technology ("Johnson"),
a division of Freedom Forge Corporation for $14.5 million in cash and $4
million in notes, payable in annual installments through July 1997.  The cash
portion of the purchase price was funded from proceeds received from the sale
of 9 1/8% Senior Notes (see Note 7 of Notes to Consolidated Financial
Statements).  Johnson provides proprietary turbine nozzle and vane
<PAGE>
<PAGE>     30
manufacturing and repairs, and specialized non-conventional machining of super
alloys such as electro-chemical deep hole drilling, laser milling, and
electro-discharge machining.  Following its acquisition, this operation was
renamed UNC Johnson Technology.  Under the terms of the purchase agreement,
the Company may be required to make additional payments contingent upon
Johnson achieving certain gross profit levels during a five year period ending
in September 1998 of up to $5 million of which $0.9 million was paid in 1995,
and $1.0 million in 1994.  The excess of the purchase price over the estimated
fair value of the tangible and identifiable intangible net assets acquired is
amortized over a period of forty years using the straight-line method. 
Contingent amounts earned under the terms of this agreement are recorded as
additional cost in excess of net assets of acquired companies.

      In August 1993, the Company acquired the assets and technology and
assumed certain liabilities of All Fab, Inc. ("All Fab"), an aerostructure
supplier for a major airframe manufacturer.  All Fab serves the aviation
industry as a manufacturer of major aircraft structural components and sheet
metal sub-assemblies.  Following its acquisition, this operation was renamed
UNC Aerostructures, Washington.  The purchase price consisted of $2.7 million
in cash and $3.1 million in notes.  The notes consist of a $1.8 million note
bearing interest at 8% and a $1.3 million note bearing interest at the prime
rate plus one half of one percent, payable in variable installments through
December 1998.  The excess of the purchase price over the estimated fair value
of the tangible and identifiable intangible net assets acquired is amortized
over a period of forty years using the straight-line method.

      In August 1993, the Company acquired substantially all the assets and
technology, and assumed certain liabilities of Metcalf Servicing Company
("Metcalf") for $4.5 million in cash and the Company elected to retire
$1.3 million of bank indebtedness of Metcalf.  Metcalf serves the industrial
turbine engine market with overhauls, parts repair and contract maintenance
services.  Following its acquisition, this operation was renamed UNC Metcalf
Servicing, Inc.  The excess of the purchase price over the estimated fair
value of the tangible and identifiable intangible net assets acquired is
amortized over a period of twenty-five years using the straight-line method.

      In October 1993, the Company acquired substantially all the assets and
assumed certain liabilities of Lear Siegler Management Services Corp. ("Lear
Siegler").  Lear Siegler provides contract services for the operation,
maintenance and repair of aircraft, land vehicles and marine vehicles for the
U.S. Department of Defense and the armed services of foreign governments. 
Following its acquisition, this operation was renamed UNC Lear Siegler.  The
purchase price was $17.4 million.  The excess of the purchase price over the
estimated fair value of the tangible and identifiable intangible net assets
acquired is amortized over a period of twenty-five years using the straight-
line method.

      Under the terms of the earn-out provisions of agreements related to
acquisitions prior to 1993, the Company paid $3.7 million in 1994, and $3.7
million in 1993.  The earn-out provisions under these agreements have expired.

4.    Contracts in Progress
      ---------------------
      Unbilled costs and accrued profits on production contracts in progress
consist of the following:
<PAGE>
<PAGE>      31
<TABLE>
<CAPTION>
                                                    December 31,     
                                                ---------------------
(Dollars in thousands)                            1995         1994  
                                                --------     --------
<S>                                             <C>          <C>
U.S. government contracts and
  subcontracts:
  Costs incurred and accrued profits
    on contracts in progress                    $ 26,516     $ 14,192
  Less progress billings to date                  21,674        7,389
  Unbilled costs and accrued profits            --------     --------
    on contracts in progress                       4,842        6,803

Commercial contracts:
  Costs incurred and accrued profits
    on contracts in progress                       6,286        7,294
Total unbilled costs and accrued                --------     --------
  profits on contracts in progress              $ 11,128     $ 14,097
                                                ========     ========
</TABLE>

      Amounts billed under contracts in progress and included in accounts
receivable at December 31, 1995 were $3.1 million under U.S. government prime
and subcontracts and $2.4 million under commercial contracts.  At December 31,
1994 these amounts were $3.1 million and $2.2 million, respectively.  

      Also, included in accounts receivable at December 31, 1995 and 1994 were
other amounts due from the U.S. government totaling $37.7 million and $42.2
million, respectively, including unbilled amounts of $14.9 million and $18.3
million in 1995 and 1994, respectively.

      Unbilled amounts are recoverable from the customer upon shipment of the
product, presentation of bills or completion of the contract.  The Company
believes that a substantial portion (approximately 80%) of these unbilled
amounts will be collected in 1996.

      Included in accounts receivable at December 31, 1995 and 1994 is $2.0
million of cost applicable to a $3.2 million claim for equitable adjustment
filed by the Company under a contract with the U.S. government.  The claim,
which includes direct costs, overhead, general and administrative costs and
profit, arises from constructive change orders on the part of the government,
defective specifications, government caused delays and other issues in
connection with a contract to provide aircraft nozzle segment assemblies to
the U.S. Air Force.  The Company has been advised by outside legal counsel
that a basis for entitlement exists and that recovery of the recorded amount
of the claim is probable.

      Also included in accounts receivable at December 31, 1995 and 1994 is
a claim for $630,000 which the Company believes was improperly withheld by the
U.S. government in connection with a contract to provide aircraft intermediate
level maintenance, repair and overhaul services at six Naval Air Stations. 
The claim arises from the U.S. government unilaterally imposing a previously
undisclosed conversion formula to the determination of the amount earned,
contrary to contract terms.  In December 1993, the Company received a
favorable ruling on the claim from the Armed Services Board of Contract
Appeals which overturned the government's previous position and instructed the
<PAGE>
<PAGE>     32
government to reconsider the matter.  The Company believes it will prevail in
realizing the amount of the claim that has been recorded in accordance with
the terms of the contract.

5.    Inventories
      -----------
      Inventories as of December 31, 1995 and 1994, consist of the following:
<TABLE>
<CAPTION>
                                                    December 31,     
                                                ---------------------
(Dollars in thousands)                            1995         1994  
                                                --------     --------
<S>                                             <C>          <C>
Component parts and materials                   $ 70,317     $ 61,282
Work in progress                                  17,436       21,161
Supplies                                           3,377        2,667
                                                --------     --------
                                                $ 91,130     $ 85,110
                                                ========     ========
</TABLE>
6.    Assets Held for Sale
      --------------------
      Assets held for sale, which are stated at their estimated net realizable
value, consist principally of real estate and improvements and inventories of
the Company's former JT8 engine overhaul business that was closed in 1994, and
certain other inventory and underutilized property and equipment that has been
identified for sale under the Company's restructuring program.  Also included
in assets held for sale is real estate of the Company's discontinued minerals
business.  The Company expects to recover the recorded value of these assets
over the next three years.

7.    Long-Term Debt
      --------------
      Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                    December 31,     
                                                ---------------------
(Dollars in thousands)                            1995         1994  
                                                --------     --------
<S>                                             <C>          <C>
Revolving Senior Bank Debt,
 interest rate at December 31, 1995,
 8.71% due 2000                                 $ 37,181
Revolving Senior Bank Debt,
  prime plus 1/2% due 1995                                   $ 40,000
9 1/8% Senior Notes due 2003                     100,000      100,000
7 1/2% Convertible Subordinated                   
  Debentures due 2006                             65,431       69,000
Other                                              2,469        5,323
                                                --------     --------
                                                 205,081      214,323
Less current portion                               1,748       42,971
                                                --------     --------
                                                $203,333     $171,352
                                                ========     ========
</TABLE>
<PAGE>
<PAGE>     33
      In May 1995, the Company entered into a new revolving credit agreement
which provides for a five year credit line through May 2000 with a borrowing
capacity of up to $90 million, subject to borrowing base limitations as
defined in the agreement and reduced by outstanding letters of credit.  The
Company's unused availability under the credit line was $33.0 million at
December 31, 1995.  Interest is payable on the borrowings at a base rate, as
defined in the agreement, or the LIBOR rate plus, in each case, an applicable
margin based upon the Company's performance under certain financial ratios. 
The interest rate at December 31, 1995, was 8.71%.  The Company has agreed to
pay an annual commitment fee on the unused portion of the line at rates
ranging from 1/2 of 1% to 1/4 of 1% dependent on meeting certain financial
ratios.  The revolving credit is collateralized by the Company's accounts
receivable and inventories.  The agreement contains covenants which, among
other things, include provisions for the maintenance of certain financial
ratios and prohibits the payment of cash dividends,except for cash dividends
paid in connection with the senior cumulative convertible preferred stock to
be issued under the October 1995 agreement with Gildea Investment Company. 
See Note 9 of Notes to Consolidated Financial Statements.

      On July 29, 1993 the Company issued $100.0 million of 9 1/8% Senior
Notes due July 15, 2003.  The Notes are redeemable, at the option of the
Company, on or after July 15, 1998 at declining premiums through 2000 and at
their principal amount thereafter.  The debt indenture contains certain
covenants which, among other things, allow additional borrowings based on
certain financial ratios and restrict the payment of cash dividends.  In
connection with the proposed acquisition of Garrett Aviation Services, the
Company is in the process of soliciting current note holders to amend certain
covenants in order to permit additional borrowings and amend the restrictions
on the payment of cash dividends.  As of February 23, 1996, the Company
received consent from the required majority of note holders to amend the
covenants.

      The 7 1/2% Convertible Subordinated Debentures due 2006 are convertible
into shares of the Company's common stock at a conversion price of $15.40 per
share and are redeemable (subject to certain restrictions) at the option of
the Company at declining premiums through 1996 and at the principal amount
thereafter.  Annual sinking fund payments of $4.2 million commence in March
1996.  During 1995 the Company purchased approximately $3.6 million face
amount of debentures to satisfy, in part, the March 1996 sinking fund payment. 
In January 1996, the Company purchased in the open market an additional $0.6
million of the 7 1/2% Convertible Subordinated Debentures to satisfy the
balance of the 1996 sinking fund requirement.

      Included in other assets at December 31, 1995 and 1994, respectively,
was approximately $3.5 million and $3.9 million of unamortized issue costs
incurred in connection with the issuance of the 9 1/8% Senior Notes and the
7 1/2% Convertible Subordinated Debentures. 

      Annual maturities of long-term debt during the next five years are
$1,748,000 in 1996, $5,317,000 in 1997, $4,317,000 in 1998, $4,318,000 in 1999
and $41,381,000 in 2000.

      The estimated fair values of the 7 1/2% Convertible Subordinated
Debentures, and the 9 1/8% Senior Notes, based on quoted market prices, were
approximately $58.2 million and $98.0 million, respectively, at December 31,
1995 and $53.2 million and $89.0 million, respectively, at December 31, 1994. 
<PAGE>
<PAGE>     34
The Company believes that the carrying value of its remaining debt, which
consists principally of revolving credit, approximates market value based on
interest rates that are available to the Company for the issuance of debt with
similar terms and maturities.

8.    Other Liabilities
      -----------------
      Accruals and other current liabilities consist of the following:

<TABLE>
<CAPTION>
                                                     December 31,   
                                                 --------------------
(Dollars in thousands)                             1995        1994  
                                                 --------    --------
<S>                                              <C>         <C>
Payroll and related expenses                     $ 28,339    $ 26,807
Pension plans                                       6,106       5,910
Accrued interest                                    5,812       6,473
Accruals related to discontinued operations         3,075       4,671
Accruals related to restructuring                   3,858       7,812
Other                                               7,604      11,190
                                                 --------    --------
                                                 $ 54,794    $ 62,863
                                                 ========    ========
</TABLE>

      The Company discontinued its minerals and offshore products and services
operations in 1984, its telecommunications operation in 1988 and its submarine
propulsion unit manufacturing operation and its environmental services
operation in 1990.  In connection with these actions, the Company has
approximately $15.7 million, $12.6 million included in noncurrent liabilities,
accrued to cover the cost of certain long-term remediation activities, wind
down and final closure of certain long-term U.S. government contracts,
resolution of certain  litigation and disposition of remaining properties. 
The Company anticipates that these activities will be completed over the next
three years.

9.    Preferred Stock
      ---------------
      In October 1995, the Company reached an agreement with Gildea Investment
Company ("Gildea") and other investors to provide up to $25 million of equity
financing on an as needed basis to assist in financing future acquisitions. 
The equity investment will be in the form of a senior cumulative convertible
preferred stock ("the Preferred") issued by the Company.  The Preferred will
be purchased at $100 per share with a cumulative annual dividend rate of 8.5%,
with no mandatory redemption, and will be convertible into common stock at a
price of $7 per share.  The Company will have the option to pay dividends in
cash or in the form of a pay-in-kind cumulative preferred stock.  Gildea has
the option to invest $10 million if a like amount of Preferred has not been
issued by the Company by April 4, 1996.

10.   Preferred Stock Purchase Rights
      -------------------------------
      On September 25, 1987, the Board of Directors of the Company declared
a dividend of one Preferred Share Purchase Right for each share of common
<PAGE>
<PAGE>     35
stock outstanding on October 19, 1987.  Each Right entitles the holder to
acquire one one-hundredth of a share of newly created Series A Junior
Participating Preferred Stock at an exercise price of $50 per one one-
hundredth of a Preferred Share.  The Rights trade with the common stock and
are not exercisable or transferable apart from the common stock until 10 days
after a person or group acquires, or announces a tender offer for 20% or more
of the Company's outstanding common stock.

      If the Company is acquired in a merger or other business combination,
each Right will entitle its holder to purchase, at the Right's then-current
exercise price, a number of the acquiring company's shares having a market
value at that time of twice the Right's exercise price.  In addition, if
someone acquires 20% or more of the Company's outstanding common stock, each
Right will entitle its holder (other than the acquiring person) to purchase,
at the Right's then-current exercise price, a number of the Company's common
shares having a market value of twice the Right's exercise price.

      Prior to the acquisition by someone of beneficial ownership of 20% or
more of the Company's common stock, the Rights are redeemable for $.01 per
Right either at the option of the Board of Directors or automatically in
connection with the consummation of any tender offer at a cash price per share
equal to or greater than the price approved by stockholders at a special
meeting which would be called under certain circumstances in accordance with
procedures contained in the Rights Plan.  The Rights expire on October 19,
1997.

11.   Litigation and Contingencies
      ----------------------------
      Since 1985 the former Western Union has been seeking recoupment (the
"Claim") from various providers of international telex services ("ITPs") for
interconnect charges with respect to the use of Western Union's domestic telex
network during the late 1970s and early 1980s.  Among these ITPs was TRT
Communications, Inc. ("TRT"), which the Company had acquired in September
1985.  As part of the Company's acquisition of TRT, the Company had received
certain representations and warranties from the seller of TRT with respect to
the Claims.  In January 1995, nearly seven years after a 1988 remand from the
U.S. Court of Appeals for the District of Columbia (the "Appeals Court"),
which had vacated an earlier determination by the FCC with respect to the
Claims, the FCC determined that the Claims were appropriate.  The FCC's
determination was again appealed to the Appeals Court which on February 6,
1996 rendered a judgment upholding the FCC's determination with respect to
these matters.  As a result, TRT may be liable to the former Western Union for
Claims and interest of approximately $5.0 million.  However, the Company sold
its interest in TRT in 1988 and, in connection therewith, the Company provided
the purchaser with certain specific indemnities.  The Company has been
informed that its purchaser has in turn sold TRT to a third party with whom
the Company has no contract for indemnity.  As a consequence, the Company does
not believe that it has any indemnity liability to the current owner of TRT. 
The Company intends to seek a rehearing by the Appeals Court, to assert a
protective claim against the seller of TRT, and to reject any claim by the
current owner of TRT.  Both the Company and its outside legal counsel believe
the Company has meritorious defenses against any claim under its
indemnification agreement.

      Lockheed-Martin Corporation ("Lockheed") began an action in United
States District Court of the Central District of California under the
<PAGE>
<PAGE>     36
Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA") in August 1994.  In that action, Lockheed seeks to have owners and
operators of property situated above the San Fernando Valley aquifer
contribute to the costs incurred or to be incurred by Lockheed to clean up
contaminated groundwater constituting the aquifer.  A subsidiary of the
Company, Pacific Airmotive Corporation ("PAC"), was made one of the defendants
in the action.  The Company and a second subsidiary, Airwork Corporation, were
added as defendants in December 1995.  Based on several series of soil tests
conducted on PAC's property and consultants' reports since approximately 1989,
the Company concluded, and continues to conclude, that there is no
demonstration that contaminants of concern identified in the groundwater by
the U.S. Environmental Protection Agency have been transmitted from the
surface of PAC's property to the underlying groundwater approximately 200 feet
below ground surface.  PAC is also pursuing alternative remedies against Purex
Industries, Inc. which owned and operated the property prior to 1985.  The
Company and Airwork have filed motions to dismiss the action as to them on the
grounds, among others, that they did not own or operate PAC's property, or
control PAC's operations.  The Company is not able to determine whether it or
a subsidiary of the Company will be held liable as a result of the Lockheed
action, or to establish a range of loss.

      The Company during 1995 was involved in litigation with respect to a
promissory note issued by the Company in July 1981 in connection with the
acquisition of Normco Contractors, Inc. ("Normco"), a former subsidiary of the
Company that was discontinued in 1984 and sold in 1985.  The plaintiff, a
former owner of Normco, brought action to obtain payment of $2.2 million
allegedly due under the note.  The Company did not make payment on the note
because the Company believed that, under the terms of the note and the related
purchase agreement, payment was contingent upon Normco attaining certain
operating profit levels that were not achieved.  The plaintiff's motion for
summary judgment was granted in March 1992.  However, in July 1993 the
appellate court reversed and remanded the case for trial.  Following trial in
April 1994, a jury verdict was rendered in plaintiff's favor for the amount
of the note plus interest and attorney's fees.  The Company appealed the
verdict on the grounds of prejudicial conduct by the trial judge as well as
on legal grounds that were essentially the same as those argued in its
previous successful appeal.  The Appellate Court ruled in favor of the
plaintiff, and the Company paid the judgment of approximately $3.5 million in
October 1995.  The Company is currently evaluating seeking recovery of all or
part of the judgment from the legal firm that represented the Company in the
1981 acquisition of Normco.

      In June 1995, the Company sold its chemical milled aircraft and engine
component business located in Weatherford, Texas, Chemical Dynamics, Inc., to
the former owner of the business.  Under the terms of the agreement, the
purchaser assumed, among other things, all known environmental risks related
to the operation of the business.

      The Company and a subsidiary, UNC Airwork Corporation, are defendants
in litigation commenced in New York by Energy Services, Inc. ("ESI") seeking
$3.4 million in alleged contract damages relating to a proposal to provide and
install electrical generating and other related equipment for a third party. 
The Company and Airwork believe they have meritorious defenses to ESI's
claims.  Airwork has filed a counterclaim against ESI and an affiliate, Energy
Maintenance Corporation ("EMC") for more than $3.7 million.  In December 1994,
the trial court granted Airwork's motion for partial summary judgment against
<PAGE>
<PAGE>     37
EMC, on a separate claim, in the amount of $458,000.  The trial court
subsequently awarded $1.5 million of ESI's claims against the Company and
Airwork on a theory of unjust enrichment, based apparently on the opinion that
the Company, Airwork and ESI in 1992 were implementing an agreement between
Airwork and ESI's affiliate dated August 19, 1991.  The Company and Airwork
are preparing for trial on Airwork's claim for more than $3.7 million, and
will appeal the trial court's award to ESI.  The Company believes it is
probable that ESI and an affiliate will be found liable for Airwork's
remaining claims, and that any recovery against the Company and Airwork is not
predictable.  

      During 1993, the State of New Mexico passed the New Mexico Mining Act
("Act"), which imposes certain reclamation obligations on owners and operators
of existing and new mining operations.  The State has asserted that a number
of mines operated by the Company's subsidiary, United Nuclear Corporation
("United Nuclear"), at various times during the period 1970 through 1982 may
be covered by the Act.  Regulations for compliance with the Act were issued
in 1994.  However, the regulations did not clarify the extent to which mines
previously operated by United Nuclear may be covered by the Act.
Consequently, it is impossible to estimate the cost of remediation or the
timing and extent of remedial action that may be required.  The Company has
been advised by outside counsel that United Nuclear's defenses have merit, and
it is contesting the State's assertions.  

      A uranium mill and mill tailings facility of a subsidiary of the
Company, United Nuclear, located in Church Rock, New Mexico was placed on the
National Priorities List by the U.S. Environmental Protection Agency ("EPA")
in 1982, pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA").  EPA issued an Administrative Order in
1989 requiring remediation of ground water on or adjacent to the site that is
the same as those contained in the reclamation plan submitted to the Nuclear
Regulatory Commission ("NRC") in 1988 by United Nuclear in accordance with its
license with the NRC.  United Nuclear has been remediating the site in
accordance with the Administrative Order and the NRC license and has incurred
cost for such remediation of $2.1 million, $2.2 million and $1.7 million in
1995, 1994 and 1993, respectively.  The Company has accrued approximately $4.0
million in the accompanying consolidated balance sheet for the balance of
remediation required under the approved reclamation plan.

      The Company's former Naval Products Division has been named under
CERCLA, along with a number of other parties, as a Potentially Responsible
Party at several waste disposal sites.  In each case, the Division has been
named as a de minimus party.  The Company believes that any cost, estimated
to be less than a total of $100,000, that may be assessed to the Division is
recoverable under its U.S. government contracts.

      The Company and its subsidiaries are also parties to various other legal
actions and administrative proceedings and subject to various claims arising
in the ordinary course of business.  The Company believes that the disposition
of these matters will not have a material adverse effect on the financial
condition, results of operations or liquidity of the Company.

12.   Income Taxes
      ------------
      During 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 109 (SFAS No. 109), "Accounting for
<PAGE>
<PAGE>     38
Income Taxes" which supersedes SFAS No. 96.  Similar to SFAS No. 96, SFAS No.
109 retains an asset and liability approach to accounting for income taxes. 
This standard also requires recognition of income tax benefits for loss
carryforwards, credit carryforwards and certain temporary differences for
which tax benefits have not previously been recorded.  The tax benefits
recognized must be reduced by a valuation allowance where it is more likely
than not that the benefits may not be realized.  The Company adopted SFAS No.
109 as of January 1, 1993.  There was no cumulative effect of this change in
accounting for income taxes on the consolidated financial statements.

      The income tax provision for continuing operations consists of the
following:
<TABLE>
<CAPTION>
                                        Year Ended December 31,      
                                    ---------------------------------
(Dollars in thousands)                1995        1994        1993  
                                    --------    --------    --------
<S>                                 <C>         <C>         <C>
Federal:  Current                   $    260    $    103    $    396
          Deferred                       (97)    (14,230)     (5,664)
                                    --------    --------    --------
                                         163     (14,127)     (5,268) 

State:  Current                          803       1,001       1,019
        Deferred                          69        (357)        406
                                    --------    --------    --------
                                         872         644       1,425
                                    --------    --------    --------
Total tax provision (benefit)       $  1,035    $(13,483)   $ (3,843)
                                    ========    ========    ========
</TABLE>

      The tax provision for continuing operations differs from the amount
computed using the statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
                                                    Year Ended December 31,     
                                                --------------------------------
(Dollars in thousands)                            1995        1994        1993  
                                                --------    --------    --------
<S>                                             <C>         <C>         <C>
Tax expense (benefit) at statutory rate         $  1,006    $(27,681)   $  2,635
Amortization and write-off of cost in excess
 of net assets of acquired companies               1,078       1,009       1,019
State taxes, net of federal tax benefit
  and reduction of state tax accrual                 600         425       1,238
Change in the valuation allowance for
 deferred tax assets                              (1,331)     13,692      (8,242)
Foreign sales tax benefits                          (487)       (381)       (302)
Other                                                169        (547)       (191)
                                                --------    --------    --------
Tax provision (benefit) at actual rate          $  1,035    $(13,483)   $ (3,843)
                                                ========    ========    ========
</TABLE>
<PAGE>
<PAGE>     39
      The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
(Dollars in thousands)                                        1995        1994  
                                                            --------    --------
<S>                                                         <C>         <C>
Deferred tax assets:
   Accounts receivable, principally due to allowance
        for doubtful accounts                               $  1,070   $     503
   Inventories, principally due to additional cost
        inventoried for tax purposes and financial
        statement allowances                                   1,679       1,666
   Employee benefits, principally due to accrual
        for financial reporting purposes                      13,510      11,264
   Accrual for costs of restructuring                          8,750      12,112
   Accrual for disposal of discontinued operations             5,020       5,820
   Net operating loss carryforward                            11,771      14,540
   Alternative minimum tax credit carryforwards                1,730       1,730
   Other                                                       5,756       4,549
   Less - valuation allowance                                (15,710)    (17,041)
                                                            --------   ---------
   Total deferred tax assets                                  33,576      35,143
                                                            --------   ---------
Deferred tax liabilities:
   Plant and equipment, principally due to basis               
        differences                                           (8,993)     (8,617)
   Contract income recognized for financial 
        reporting purposes                                      (921)     (1,232)
   Intangibles                                                  (979)
   Other                                                         (64)       (320)
                                                            --------   ---------
   Total deferred tax liabilities                            (10,957)    (10,169)
                                                            --------   ---------
            Net deferred tax asset                          $ 22,619   $  24,974
                                                            ========   =========
</TABLE>

      The decrease in the deferred tax valuation allowance of $1,331,000 in
1995 was due to the realization of current income tax benefits resulting from
the reversal of temporary differences against financial statement income.  The
increase in the deferred tax valuation allowance of $13,692,000 in 1994 was
due to the uncertainty of realizing the tax benefits from net operating losses
and certain tax assets generated by the 1994 restructuring provision, the
provision for the withdrawal from a multi-employer pension plan and other one-
time charges.  The net change in the valuation allowance in 1993 was a
decrease of $10,070,000 of which $2,451,000 resulted from the realization of
tax benefits of temporary differences which reversed during the year and
$7,619,000 resulted from the Company's re-evaluation of the realizability of
future income tax benefit occasioned by various events, including the
acquisition of four new businesses, which resulted in an
<PAGE>
<PAGE>      40
adjustment to goodwill of $1,829,000, the awarding of approximately
$227,000,000 in new contracts and the decision to withdraw from the
unprofitable third-party JT8 engine overhaul product line.  The amount of
deferred tax valuation allowance is determined based upon management's
evaluation of the net realizability of the future income tax benefits,
considering expiration of net operating losses, predictability of future
income, including the impact of the Company's restructuring program, and the
timing of reversal of temporary differences.

      At December 31, 1995 and 1994, other current assets include net deferred
tax assets of approximately $5.7 million and $3.2 million and other noncurrent
assets include net deferred tax assets of approximately $16.9 million and
$21.7 million, respectively.  Also, at December 31, 1995 and 1994, current
liabilities include income taxes payable of $1.4 million and $3.5 million,
respectively.

      At December 31, 1995, the Company has net operating loss carryforwards
of $34,621,000 for income tax reporting purposes of which $8,727,000 expire
in 2008, $19,576,000 expire in 2009, and $6,318,000 expire in 2010.  The
Company also has net operating loss carryforwards of $29,602,000 available for
purposes of federal alternative minimum tax of which $1,454,000 expire in
2008, $22,777,000 expire in 2009 and $5,371,000 expire in 2010.  At December
31, 1995, the Company has alternative minimum tax credit carryforwards of
approximately $1,730,000 which are available to reduce future Federal regular
income taxes over an indefinite period.

      In connection with an examination of the Company's federal income tax
returns for the years 1990 through 1992, the Internal Revenue Service ("IRS")
has proposed certain tax adjustments that could result in an additional tax
liability.  The Company disagrees with a large majority of the proposed
adjustments and has asserted certain offsetting tax adjustments in its favor. 
The Company has filed a written protest challenging the proposed adjustments
and supporting its right to the offsetting adjustments.  Management and its
tax counsel are of the opinion that the issues making up most of the
additional tax liability proposed by the IRS are either not factually or
legally supportable and that the Company's offsetting adjustments are
meritorious.  In addition, management is of the opinion that any additional
net tax liability that might ultimately result from the IRS audit would not
have a material adverse effect on the Company's consolidated financial
condition, results of operation or liquidity.

13.   Incentive Compensation Plans
      ----------------------------
      The Company has stock plans, approved by the shareholders, which provide
for the granting of options and restricted stock to officers and key
employees.  Options are granted at no less than fair market value on the date
of grant, become exercisable in increments, in some instances partially
conditioned on the attainment of specific performance objectives, and expire
between six and ten years from the date of grant.

      The 1990 Stock Option Plan for Key Employees reserved 1,125,000 shares
of common stock, either previously unissued shares or shares held in treasury,
for issuance upon the exercise of options or as stock appreciation rights or
as restricted stock awards.  The exercise of an option is conditioned upon the
holder, (i) purchasing at fair market value, within ninety days of the grant,
stock equal to twenty-five percent of the number of options granted, and (ii)
continuing as beneficial owner of all such stock through the time of exercise.

<PAGE>
<PAGE>     41
Options are granted at no less than fair market value on the date of grant,
expire in ten years and vest in five annual installments of twenty percent
each January 1 following the date of grant.  The 1985 stock plan for Key
Employees terminated as of December 31, 1994, and no further options will be
granted under that plan.  However, 677,820 options remain outstanding and will
be exercisable in future years in accordance with the terms of the plan.

      As of December 31, 1995, officers and employees eligible under the 1985
and 1990 plans have purchased 234,000 shares of the Company's common stock in
the open market in order to qualify under the terms of these plans and held
outstanding options to purchase an additional 1,597,862 shares.

      A summary of certain plan information related to stock options is as
follows:
<TABLE>
<CAPTION>
                                                   Year Ended December 31,      
                                               ---------------------------------
(Number of Shares)                               1995         1994       1993   
                                               ---------    ---------  ---------
<S>                                            <C>          <C>        <C>
Outstanding at beginning of year               1,912,996    1,788,896  1,735,946
Granted                                          150,000      423,000    159,000
Exercised                                        (47,200)     (59,800)   (18,000)
Expired or canceled                             (417,934)    (239,100)   (88,050)
                                               ---------    ---------  ---------
Outstanding at end of year                     1,597,862    1,912,996  1,788,896
                                               =========    =========  =========
Exercisable at end of year                     1,279,387    1,126,521  1,281,521
Available for grant at end of year                     0            0    132,470
Price range of options
  Outstanding                                     $3.19-       $3.19-     $3.19-
                                                   9.75         9.75       8.63
  Exercised                                       $4.44-       $3.88-     $3.88-
                                                   5.75         6.57       5.75
</TABLE>

14.   Pension Plans and Other Post-retirement Benefits
      ------------------------------------------------
      The Company sponsors defined contribution plans that cover substantially
all of its employees.  Contributions are based upon a percentage of the
employee's compensation.  The cost of these plans was $6,273,000, $4,552,000
and $3,354,000 in 1995, 1994 and 1993, respectively.

      A defined benefit plan is also maintained for a limited number of former
union personnel of an overhaul facility that the Company closed in 1994.  The
cost of this plan was $98,000 in 1995, $81,000 in 1994 and $193,000 in 1993. 
In connection with the restructuring program in the second quarter of 1994,
the Company recorded a curtailment loss of $460,000 as a result of the closing
of this facility and the termination of the employees who were covered under
this defined benefit plan.  The projected benefit obligation and the fair
value of plan assets at December 31, 1995 were $1,568,000 and $985,000,
respectively.  The weighted-average discount rate used in determining the
actuarial present value of the projected benefit obligation was 7.25% in 1995. 
The expected long-term rate of return on assets was 7.25% in 1995.  Plan
assets consist principally of investments in commercial paper, marketable
securities, certificates of deposit and U.S. government obligations.  
<PAGE>
<PAGE>     42
      A subsidiary of the Company, UNC Airwork Corporation ("Airwork"), has
been a participating employer in a multi-employer pension plan covering its
hourly employees who are members of United Auto Workers ("UAW") Local 2315.
The plan is administered by trustees appointed by the UAW.  Through December
1994, Airwork has made contributions under the plan on the basis of a portion
of its hourly payroll based on collective bargaining, and has expensed such
contributions on a current basis.  The Company's contribution to the plan, as
required by the union contract, was $383,000 in 1994, and $313,000 in 1993. 
The Company has not made any payments to the plan in 1995 because it withdrew
from the plan in January 1995.

      During 1994, the plan's trustees informed participating employers that
the plan's obligations were substantially underfunded, that funding
deficiencies were incurred in the previous three plan years, and that a
substantial increase in employer contributions would be required.  This
underfunded status of the plan is not a result of Airwork not meeting its
contractual obligations, as Airwork has consistently complied with its funding
responsibilities in accordance with the terms of the collective bargaining
agreement.  On January 31, 1995, the UAW provided participating employers with
an amendment to their respective collective bargaining agreements that would
have the effect of terminating the plan as to each employer entering into such
an amendment and, by doing so, withdrawing from the plan.  Airwork entered
into such an amendment, recognizing that participating employers not
withdrawing from the plan would be liable for underfunding on an ongoing
basis, that under the circumstances most employers would withdraw from the
plan, and that, as probably the largest participating employer, Airwork's
liability could be substantial.  As a result of the UAW's action, and
confirming Airwork's expectations, employers representing approximately 95%
of the plan participants withdrew from the plan on January 31, 1995.

      Under the rules and regulations of the Internal Revenue Service ("IRS")
regarding multi-employer plans, all employers who participate in an
underfunded multi-employer plan and withdraw are assessed a withdrawal
liability.  Payment of the withdrawal liability is made over future years
while annual funding deficiencies, if not waived by the IRS, would be  paid
at the time the waiver is denied.  As a result of its withdrawal from the
plan, Airwork recognized as a non-recurring expense in 1994 of its portion of
the plan's unfunded liabilities and annual funding deficiencies which it
estimated to be approximately $14.0 million.  The Company is currently
negotiating with the Plan Trustees regarding annual funding payments to the
plan for the withdrawal liability and anticipates payments in an undetermined
amount will begin in 1996.

   The Company also contributes to other multi-employer plans that cover
approximately 566 employees.   The cost of these plans was $630,000, $591,000
and $816,000 in 1995, 1994 and 1993, respectively.

      The Company has non-qualified unfunded supplemental executive retirement
plans covering certain officers and directors for which the Company has
purchased cost recovery life insurance.  The Company is the sole owner and
beneficiary of such policies.  The amount of coverage is designed to provide
sufficient revenues to recover substantially all costs of the plans if the
assumptions made regarding mortality experience, policy earnings and other
factors are realized.  As of December 31, 1995 and 1994 the projected benefit
obligation was $16,231,000 and $12,972,000, respectively, and the accumulated
benefit obligation was $15,883,000 and $12,640,000, respectively, which is
included in other noncurrent liabilities in the accompanying balance sheet. 
<PAGE>
<PAGE>     43
The cost of these plans was $2,095,000, $2,280,000 and $1,232,000 for 1995,
1994 and 1993, respectively.  The discount rate used in determining the
pension liabilities was 7.25% at December 31, 1995 and 8% at December 31,
1994.  At December 31, 1995, the additional minimum liability exceeded the
unamortized transition amount by $1,801,000, net of deferred income taxes.
At December 31, 1994, the additional minimum liability exceeded the
unamortized transition amount by $540,000, net of deferred income taxes. 
These amounts have been reflected in the accompanying consolidated balance
sheets as reductions in stockholders' equity at December 31, 1995 and 1994.

      Post-retirement health care and life insurance benefits are provided to
a limited number of participating employees who become eligible for benefits
after reaching normal retirement age while employed by the Company.  The plan,
which is an unfunded contributory defined benefit plan, covers approximately
3% of the Company's employees.  Effective January 1, 1993, the Company adopted
the provisions of the Statement of Financial Accounting Standards (SFAS) No.
106, "Employers' Accounting for Post-retirement Benefits Other Than Pensions." 
SFAS No. 106 requires the Company to accrue the estimated cost of such retiree
benefits payments, other than pensions, during the employee's active service
period.  The Company previously expensed the cost of these benefits as claims
were paid.  The Company is amortizing the unrecognized net loss and
unrecognized transition obligation over 20 years.

      The actuarial and recorded liabilities for the post-retirement health
care and life insurance benefits at December 31, were as follows:

<TABLE>
<CAPTION>
(Dollars in thousands)                           1995         1994  
                                               --------     --------
<S>                                            <C>          <C>
Accumulated post-retirement
  benefit obligation:
   Retirees                                    $  1,425     $  1,320
   Full eligible active plan participants            39           48
   Other active participants                        316          627
Total accumulated post-retirement benefit      --------     --------
  obligation                                      1,780        1,995
Unrecognized net loss (gain)                         58         (329)
Unrecognized transition obligation               (1,357)      (1,437)
                                               --------     --------
Accrued post-retirement benefit cost           $    481     $    229
                                               ========     ========
</TABLE>

      The net periodic post-retirement benefit cost for 1995 was $350,000 and
included $112,000 of service cost, $152,000 of interest and $86,000
amortization of the transition obligation.  The cost for 1994 was $360,000 and
included $76,000 of service costs, $172,000 of interest and $112,000
amortization of the transition obligation.

      For measurement purposes, a 7.25% and an 8% discount rate was used in
determining the accumulated post-retirement benefit obligation as of December
31, 1995 and 1994, respectively.  Also, a 10% annual rate of increase in the
per capita cost of covered health care benefits was assumed for 1995; the rate
was assumed to decrease gradually to 6% for 2002 and remain at that level
thereafter.  The health care cost trend rate assumption has a significant
effect on the amounts reported.  A 1% increase in the assumed health care cost
<PAGE>
<PAGE>     44
trend rates would increase the accumulated post-retirement benefit obligation
as of December 31, 1995 by approximately $202,000 and the aggregate of the
service and interest cost components of net periodic post-retirement benefit
cost for the year then ended by approximately $24,000.

      The Company also contributes in accordance with a union agreement to a
multi-employer health benefit plan.  The cost of this plan was $2,592,000,
$1,865,000 and $959,000 in 1995, 1994 and 1993, respectively.

15.   Leases
      ------                                                
      In December 1994 the Company sold a McDonnell Douglas DC-10-30 aircraft
which had previously been covered under a leveraged lease.  The net proceeds
received of $6.8 million approximated the Company's investment in the lease. 
Income from the leveraged lease in 1994 and 1993 was $2.6 million and
$1.3 million, respectively ($1.5 million and $0.8 million net of income taxes
in 1994 and 1993, respectively).

      The Company entered into several agreements for the sale and leaseback
of certain equipment which resulted in gains totaling approximately $2.6
million in 1993.  The gains were deferred and are being amortized as a
reduction to rent expense over the lease terms.  The leases are classified as
operating leases and the rental commitments and rental expenses are included
in the following summary.

      The Company has noncancellable operating leases covering certain real
property and equipment used in its operations.  Minimum rental commitments
under these leases are 1996, $8,290,000; 1997, $7,087,000; 1998, $6,765,000;
1999, $5,943,000; 2000, $4,167,000; and thereafter, $1,769,000.  Rental
expenses for the years 1995, 1994 and 1993 were $9,186,000, $8,720,000, and
$5,702,000, respectively.

16.   Cash Flows
      ----------
      Cash payments for income taxes were $1.2 million, $0.8 million, and $1.8
million  in 1995, 1994 and 1993, respectively.  In these years, interest
payments were $19.6 million, $17.6 million, and $10.7 million, respectively.

      In connection with the acquisition of companies, the Company assumed
liabilities of $44.5 million in 1993 (see Note 3 of Notes to Consolidated
Financial Statements).

17.   Business Segment Information
      ----------------------------
      The Company's operations are conducted within one business segment which
includes: the overhaul of aircraft engines, industrial gas turbine engines,
and aircraft accessories, the manufacture and remanufacture of jet engine and
aircraft components and providing maintenance and training, repair and
logistical contract services.
<PAGE>
<PAGE>     45
<TABLE>
<CAPTION>
                                                   Year Ended December 31,   
                                               --------------------------------
(Dollars in thousands)                           1995         1994       1993  
                                               --------     --------   --------
<S>                                            <C>          <C>        <C>
Sales to federal government                    $228,512     $223,127   $148,849
                                               ========     ========   ========
Capital additions                              $  6,767     $ 10,299   $ 11,250
                                               ========     ========   ========
Depreciation and amortization expense          $ 12,491     $ 12,727   $ 11,477
                                               ========     ========   ========
</TABLE>

The Company maintains foreign marketing offices in Amsterdam, The Netherlands
and Singapore.  Identifiable assets at these locations are not material.

Export sales from the Company's United States operations to unaffiliated
customers were as follows:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,    
                                               --------------------------------
(Dollars in thousands)                           1995         1994       1993  
                                               --------     --------   --------
<S>                                            <C>          <C>        <C>
Europe, Africa, Middle East                    $ 71,283     $ 60,338   $ 30,706
Latin America                                    18,035       13,821     13,237
Asia, Pacific Rim                                15,333        6,660      7,719
Canada                                            8,358        6,497      7,713
                                               --------     --------   --------
Total                                          $113,009     $ 87,316   $ 59,375
                                               ========     ========   ========
</TABLE>

Net sales of tangible products in 1995, 1994 and 1993 amounted to $335.2
million, $303.6 million and $322.4 million, respectively, and costs and
operating expenses related to tangible goods amounted to $273.5 million,
$244.4 million and $259.1 million, respectively.
<PAGE>
<PAGE>     46
18.   Quarterly Summary (Unaudited)
      -----------------------------
<TABLE>
<CAPTION>                    
(Dollars in thousands               First      Second      Third      Fourth     Total
except per share amounts)          Quarter     Quarter    Quarter     Quarter     Year 
                                  ---------   ---------  ---------   --------- --------
<S>                               C>          <C>         <C>        <C>       <C>
Year Ended December 31, 1995
----------------------------
Revenues                          $ 125,703   $ 131,342   $ 137,437  $ 141,761 $ 536,243
Operating income                      5,233       6,365       6,401      4,357    22,356 

Net earnings                             49         959         839         76     1,923
Net earnings per share                              .05         .05        .01       .11

Year Ended December 31, 1994
----------------------------
Revenues                          $ 138,412   $ 122,326   $ 129,721  $ 135,374 $ 525,833
Operating income (loss)               8,450     (63,746)      5,178    (10,898)  (61,016)
Net earnings (loss)                   2,462     (54,634)         30    (15,790)  (67,932)
Net earnings (loss) per share           .14       (3.12)                  (.90)    (3.89)
</TABLE>

      See Note 2 for a description of the restructuring charge in the second
quarter of 1994.

      See Note 14 for a description of the multi-employer pension withdrawal
adjustment in the fourth quarter of 1994.

19.   Guarantor Subsidiaries
      ----------------------
      In July 1993, the Company issued $100 million principal amount of 9 1/8%
Senior Notes due 2003 (see Note 7 of Notes to Consolidated Financial
Statements).  The notes are guaranteed by all of the Company's subsidiaries
in the manner described below.  The combined guarantors are jointly and
severally liable under the subsidiary guarantees.

      The Company's obligations under the Notes are unconditionally guaranteed
by each of the Company's subsidiaries (the "Guarantees").  Each Guarantee is
a senior unsecured obligation of the subsidiary providing such Guarantee and
ranks pari passu with all senior unsecured indebtedness of such subsidiary. 
The subsidiaries also have guaranteed the indebtedness outstanding under the
Company's revolving credit facility (the "Subsidiary Bank Guarantees").  The
Subsidiary Bank Guarantees are collateralized, in general, by the accounts
receivable and inventory of the subsidiaries and therefore effectively rank
senior to the Guarantees.  The Guarantees are in effect only for as long as
the Subsidiary Bank Guarantees remain in effect.  If the Guarantees are
terminated the Notes will be obligations solely of the Company and will be
effectively subordinated to all existing and future indebtedness of the
subsidiaries.
<PAGE>
<PAGE>     47
      The following condensed consolidating information presents:

(1)   Condensed financial statements as of December 31, 1995 and 1994 and for
      the years ended December 31, 1995, 1994 and 1993 of (a) the Company on
      a parent company only basis (Parent Company), (b) the Combined
      Guarantors, and (c) the Company on a consolidated basis.

(2)   The Parent Company with its investments in subsidiaries accounted for
      on the equity method.

(3)   Elimination entries necessary to consolidate the Parent Company and its
      subsidiaries.
<PAGE>
<PAGE>      48
                                      UNC INCORPORATED
                            Condensed Consolidating Balance Sheet
                                   As of December 31, 1995
                                   (Dollars in thousands)
<TABLE>
<CAPTION>
                                         Parent      Combined                   
                                         Company    Guarantors   Eliminations   Consolidated
                                         -------    ----------   ------------   ------------
<S>                                      <C>        <C>          <C>            <C>
Assets
------
Current assets:
  Cash                                   $    123   $  1,548                    $   1,671
  Accounts receivable, net                    410    102,052                      102,462
  Unbilled costs and accrued             
    profits on contracts in progress                  11,128                       11,128
  Inventories                                         91,130                       91,130
  Assets held for sale                        114      4,985                        5,099
  Other                                     1,125      9,031                       10,156
                                         --------   --------                    ---------
    Total current assets                    1,772    219,874                      221,646
                                         --------   --------                    ---------
Assets held for sale noncurrent             2,834      9,962                       12,796
Property, plant & equipment, net              706     47,362                       48,068
Cost in excess of net assets
  of acquired companies, net                         136,298                      136,298
Other noncurrent assets                     9,748     17,705                       27,453
Investments in and advances                                                     
  to subsidiaries                         343,366                $(343,366)           
                                         --------   --------     ---------      ---------
    Total assets                         $358,426   $431,201     $(343,366)     $ 446,261  
                                         ========   ========     =========      =========
</TABLE>
<PAGE>
<PAGE>      49
                                      UNC INCORPORATED
                        Condensed Consolidating Balance Sheet (Cont.)
                                   As of December 31, 1995
                                   (Dollars in thousands)
<TABLE>
<CAPTION>
                                         Parent      Combined                   
                                         Company    Guarantors   Eliminations   Consolidated
                                         -------    ----------   ------------   ------------
<S>                                      <C>        <C>          <C>            <C>
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
  Current portion of long-term debt      $  1,631   $    117                    $   1,748
  Accounts payable                          2,784     36,830                       39,614
  Accruals and other current liabilities   21,253     34,933                       56,186
                                         --------   --------                    ---------
    Total current liabilities              25,668     71,880                       97,548
                                         --------   --------                    ---------
Long-term debt                            202,981        352                      203,333
Other noncurrent liabilities               20,875     24,353                       45,228
                                         --------   --------                    ---------
    Total liabilities                     249,524     96,585                      346,109
                                         --------   --------                    ---------
Common stock and additional paid
  in capital                              127,396                                 127,396
Retained earnings (deficit)               (15,450)                                (15,450)
Equity of subsidiaries and
  advances of parent                                 343,366     $(343,366)              
                                         --------   --------     ---------      ---------
                                          111,946    343,366      (343,366)       111,946
    Less:
    Treasury stock at cost                                                 
     (700,000 shares)                                  8,750                        8,750
    Minimum pension liability adjustment    1,801                                   1,801
    Unearned compensation-restricted                                                   
     stock                                  1,243                                   1,243
                                         --------   --------     ---------      ---------
  Total shareholders' equity              108,902    334,616      (343,366)       100,152
                                         --------   --------     ---------      ---------
Total liabilities and 
  shareholders' equity                   $358,426   $431,201     $(343,366)     $ 446,261  
                                         ========   ========     =========      =========
</TABLE>
<PAGE>
<PAGE>      50
                                      UNC INCORPORATED
                            Condensed Consolidating Balance Sheet
                                   As of December 31, 1994
                                   (Dollars in thousands)
<TABLE>
<CAPTION
                                         Parent      Combined                   
                                         Company    Guarantors   Eliminations   Consolidated
                                         -------    ----------   ------------   ------------
<S>                                      <C>        <C>          <C>            <C>
Assets
------
Current assets:
  Cash                                   $  1 519   $  1,100                    $   2,619
  Accounts receivable, net                    640     88,639                       89,279
  Unbilled costs and accrued             
    profits on contracts in progress                  14,097                       14,097
  Inventories                                         85,110                       85,110
  Assets held for sale                     18,449     30,725                       49,174
  Other                                     1,168      7,000                        8,168
                                         --------   --------                    ---------
    Total current assets                   21,776    226,671                      248,447
                                         --------   --------                    ---------
Assets held for sale noncurrent                        2,300                        2,300
Property, plant & equipment, net              790     43,899                       44,689
Cost in excess of net assets
  of acquired companies, net                         140,128                      140,128
Other noncurrent assets                    10,011     22,459                       32,470
Investments in and advances                                                     
  to subsidiaries                         304,392                $(304,392)              
                                         --------   --------     ---------      ---------
    Total assets                         $336,969   $435,457     $(304,392)     $ 468,034  
                                         ========   ========     =========      =========
</TABLE>
<PAGE>
<PAGE>     51
                                      UNC INCORPORATED
                        Condensed Consolidating Balance Sheet (Cont.)
                                   As of December 31, 1994
                                   (Dollars in thousands)
<TABLE>
<CAPTION
                                         Parent      Combined                   
                                         Company    Guarantors   Eliminations   Consolidated
                                         -------    ----------   ------------   ------------
<S>                                      <C>        <C>          <C>            <C>
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
  Current portion of long-term debt      $ 14,400   $ 28,571                    $  42,971
  Accounts payable                          1,387     37,531                       38,918
  Accruals and other current liabilities   25,643     40,741                       66,384
                                         --------   --------                    ---------
    Total current liabilities              41,430    106,843                      148,273
                                         --------   --------                    ---------
Long-term debt                            171,000        352                      171,352
Other noncurrent liabilities               16,892     32,620                       49,512
                                         --------   --------                    ---------

    Total liabilities                     229,322    139,815                      369,137
                                         --------   --------                    ---------
Common stock and additional paid
  in capital                              126,588                                 126,588
Retained earnings (deficit)               (17,373)                                (17,373)
Equity of subsidiaries and
  advances of parent                                 304,392     $(304,392)              
                                         --------   --------     ---------      ---------
                                          109,215    304,392      (304,392)       109,215
    Less:
    Treasury stock at cost                                                 
     (700,000 shares)                                  8,750                        8,750
    Minimum pension liability adjustment      540                                     540
    Unearned compensation-restricted                                                   
     stock                                  1,028                                   1,028
                                         --------   --------     ---------      ---------
  Total shareholders' equity              107,647    295,642      (304,392)        98,897
                                         --------   --------     ---------      --------- 
Total liabilities and 
  shareholders' equity                   $336,969   $435,457     $(304,392)     $ 468,034  
                                         ========   ========     =========      =========
</TABLE>
<PAGE>
<PAGE>     52
                                      UNC INCORPORATED
                        Condensed Consolidating Statement of Earnings
                                Year Ended December 31, 1995
                                   (Dollars in thousands)
<TABLE>
<CAPTION>
                                         Parent      Combined                   
                                         Company    Guarantors   Eliminations   Consolidated
                                         --------   ----------   ------------   ------------
<S>                                      <C>        <C>          <C>            <C>
Sales and operating revenues             $          $ 536,243                   $ 536,243
Costs and expenses
  Costs and operating expenses                        456,935                     456,935
  Selling, general and                                              
    administrative expenses                 16,423     40,529                      56,952
  Allocated expenses                       (19,739)    19,739                            
                                         ---------  ---------                   ---------
                                            (3,316)   517,203                     513,887
                                         ---------  ---------                   ---------
Operating income                             3,316     19,040                      22,356

Other income (expense)
  Interest expense                         (17,987)    (1,527)                    (19,514)
  Other                                        141        (25)                        116
  Equity in income of 
    subsidiaries                            11,367               $ (11,367)              
                                         ---------  ---------    ---------      ---------
                                            (6,479)    (1,552)     (11,367)       (19,398)  
                                         ---------  ---------    ---------      ---------
Earnings (loss) before income taxes         (3,163)    17,488      (11,367)         2,958
Income tax benefit (provision)               5,086     (6,121)                     (1,035)
                                         ---------  ---------    ---------      ---------
Net earnings                             $   1,923  $  11,367    $ (11,367)     $   1,923
                                         =========  =========    =========      =========
</TABLE>
<PAGE>
<PAGE>     53
                                      UNC INCORPORATED
                    Condensed Consolidating Statement of Earnings (Loss)
                                Year Ended December 31, 1994
                                   (Dollars in thousands)
<TABLE>
<CAPTION>
                                         Parent      Combined                   
                                         Company    Guarantors   Eliminations   Consolidated
                                         -------    ----------   ------------   ------------
<S>                                      <C>        <C>          <C>            <C>
Sales and operating revenues             $   2,600  $ 523,233                   $ 525,833
Costs and expenses
  Costs and operating expenses                        444,375                     444,375
  Selling, general and administrative                               
    expenses                                18,213     51,555                      69,768
  Restructuring charge                       4,800     53,906                      58,706
  Multi-employer pension plan withdrawal
    charge                                             14,000                      14,000
  Allocated expenses                       (22,803)    22,803                            
                                         ---------  ---------                   ---------
                                               210    586,639                     586,849
                                         ---------  ---------                   ---------
Operating income (loss)                      2,390    (63,406)                    (61,016)

Other income (expense)
  Interest expense                         (14,924)    (3,625)                    (18,549)
  Other                                     (1,911)        61                      (1,850)
  Equity in income (loss) of 
    subsidiaries                           (55,838)              $  55,838               
                                         ---------  ---------    ---------      ---------
                                           (72,673)    (3,564)      55,838        (20,399)  
                                         ---------  ---------    ---------      ---------
Earnings (loss) before income taxes        (70,283)   (66,970)      55,838        (81,415)
Income tax benefit                           2,351     11,132                      13,483
                                         ---------  ---------    ---------      ---------
Net earnings (loss)                      $ (67,932) $ (55,838)   $  55,838      $ (67,932)
                                         =========  =========    =========      =========
</TABLE>
<PAGE>
<PAGE>     54
                                      UNC INCORPORATED
                        Condensed Consolidating Statement of Earnings
                                Year Ended December 31, 1993
                                   (Dollars in thousands)
<TABLE>
<CAPTION>
                                         Parent      Combined                   
                                         Company    Guarantors   Eliminations   Consolidated
                                         -------    ----------   ------------   ------------
<S>                                      <C>        <C>          <C>            <C>
Sales and operating revenues             $   1,263  $ 437,030                   $ 438,293
Costs and expenses
  Costs and operating expenses                        360,869                     360,869
  Selling, general and administrative                               
    expenses                                12,856     41,131                      53,987
  Allocated expenses                       (15,481)    15,481                            
                                         ---------  ---------                   ---------
                                            (2,625)   417,481                     414,856
                                         ---------  ---------                   ---------
Operating income                             3,888     19,549                      23,437

Other income (expense)
  Interest expense                         (11,897)    (1,968)                    (13,865)
  Other                                     (1,869)        48                      (1,821)
  Equity in income of subsidiaries          17,658               $ (17,658)              
                                         ---------  ---------    ---------      ---------
                                             3,892     (1,920)     (17,658)       (15,686)  
                                         ---------  ---------    ---------      ---------
Earnings before income taxes and 
  extraordinary items                        7,780     17,629      (17,658)         7,751
Income tax benefit                           3,814        29                        3,843
                                         ---------  ---------    ---------      ---------
Earnings before extraordinary items         11,594     17,658      (17,658)        11,594
Extraordinary item-early retirement of
  debt, net of income taxes                   (532)                                  (532)
                                         ---------  ---------    ---------      ---------
Net earnings                             $  11,062  $  17,658    $ (17,658)     $  11,062
                                         =========  =========    =========      =========
</TABLE>
<PAGE>
<PAGE>     55
                                      UNC INCORPORATED
                       Condensed Consolidating Statement of Cash Flows
                                Year Ended December 31, 1995
                                   (Dollars in thousands)
<TABLE>                                       
<CAPTION>
                                         Parent       Combined                  
                                         Company     Guarantors      Consolidated
                                         -------     ----------      ------------
<S>                                      <C>         <C>             <C>
Net cash provided (used) by operating
  activities                             $ (15,591)  $  (2,221)      $ (17,812)
                                         ---------   ---------       ---------
Cash flows from investing activities:
  Net proceeds from sale of assets          26,159       7,441          33,600
  Additions to property, plant and   
    equipment                                 (239)     (6,528)         (6,767)
  Acquisition of subsidiaries                             (947)           (947)
  Net cash and short-term investments    ---------   ---------       ---------
   provided (used) by investing 
   activities                               25,920         (34)         25,886
                                         ---------   ---------       ---------
Cash flows from financing activities:
  Additions to debt                        382,005                     382,005
  Reductions in debt                      (362,793)    (28,454)       (391,247)
  Other transactions                           220                         220
  Net cash transfers to (from) parent      (31,157)     31,157                
    Net cash provided (used) by          ---------   ---------       ---------              
     financing activities                  (11,725)      2,703          (9,022)
                                         ---------   ---------       ---------
Net increase (decrease) in cash             (1,396)        448            (948)
Cash at beginning of year                    1,519       1,100           2,619
                                         ---------   ---------       ---------
Cash at end of year                      $     123   $   1,548       $   1,671
                                         =========   =========       =========
</TABLE>
<PAGE>
<PAGE>     56
                                      UNC INCORPORATED
                       Condensed Consolidating Statement of Cash Flows
                                Year Ended December 31, 1994
                                   (Dollars in thousands)
<TABLE>                                       
<CAPTION>
                                         Parent       Combined                  
                                         Company     Guarantors      Consolidated
                                         -------     ----------      ------------
<S>                                      <C>         <C>             <C>
Net cash provided (used) by operating
  activities                             $ (14,137)  $  (5,358)      $ (19,495)
                                         ---------   ---------       ---------
Cash flows from investing activities:
  Net proceeds from sale of assets                      11,713          11,713
  Additions to property, plant and   
    equipment                                 (381)     (9,918)        (10,299)
  Acquisition of subsidiaries                           (4,911)         (4,911)
  Proceeds from sale of leveraged lease      6,758                       6,758
  Other transactions, net                                   39              39
    Net cash and short-term investments  ---------   ---------       ---------
     provided (used) by investing 
     activities                              6,377      (3,077)          3,300
                                         ---------   ---------       ---------
Cash flows from financing activities:
  Additions to debt                        161,085      40,000         201,085
  Reductions in debt                      (159,185)    (24,860)       (184,045)
  Other transactions                           280                         280
  Net cash transfers to (from) parent        6,242      (6,242)                   
    Net cash provided (used) by          ---------   ---------       ---------
     financing 
     activities                              8,422       8,898          17,320
                                         ---------   ---------       ---------
Net increase in cash                           662         463           1,125
Cash at beginning of year                      857         637           1,494
                                         ---------   ---------       ---------
Cash at end of year                      $   1,519   $   1,100       $   2,619
                                         =========   =========       =========
</TABLE>
<PAGE>
<PAGE>     57
                                      UNC INCORPORATED
                       Condensed Consolidating Statement of Cash Flows
                                Year Ended December 31, 1993
                                   (Dollars in thousands)
<TABLE>                                       
<CAPTION>
                                          Parent       Combined                 
                                          Company     Guarantors   Consolidated
                                         --------     ----------   ------------
<S>                                      <C>          <C>          <C>
Net cash provided (used) by operating
  activities                             $    (384)   $ (11,253)   $ (11,637)
                                         ---------    ---------    ---------
Cash flows from investing activities:
  Net proceeds from sale of assets                       10,843       10,843
  Additions to property, plant and   
    equipment                                 (331)     (10,919)     (11,250)
  Acquisition of subsidiaries, net of
    cash acquired                                       (48,477)     (48,477)
  Investment in leveraged lease             (2,697)                   (2,697)
  Other transactions, net                       68          (67)           1
    Net cash and short-term investments  ---------    ---------    ---------
     provided (used) by investing 
     activities                             (2,960)     (48,620)     (51,580)
                                         ---------    ---------    ---------
Cash flows from financing activities:
  Additions to debt                        193,132       35,500      228,632
  Reductions in debt                      (210,632)     (55,334)    (265,966)
  Issuance of 9-1/8% Senior Notes          100,000                   100,000
  Other transactions, net                       77                        77
  Net cash transfers to (from) parent      (80,022)      80,022                   
    Net cash                             ---------    ---------    ---------
     provided (used) by financing 
     activities                              2,555       60,188       62,743    
Net increase (decrease) in cash and      ---------    ---------    ---------
  short-term investments                      (789)         315         (474)
Cash at beginning of year                    1,646          322        1,968
                                         ---------    ---------    ---------
Cash at end of year                      $     857    $     637    $   1,494
                                         =========    =========    =========
</TABLE>
<PAGE>
<PAGE>     58
Report of Independent Accountants

The Board of Directors and Shareholders
UNC Incorporated:

     We have audited the consolidated financial statements and the financial
statement schedule of UNC Incorporated and Subsidiaries listed in Item 14 to
this Annual Report on Form 10-K as of December 31, 1995 and 1994 and for the
years then ended.  These financial statements and financial statement schedule
are the responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  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 UNC
Incorporated and Subsidiaries as of December 31, 1995 and 1994 and the results
of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.  In addition, in our
opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information required to be included
therein.




                                                   COOPERS & LYBRAND L.L.P.
Washington, D.C.
February 26, 1996
<PAGE>
<PAGE>     59
Independent Auditors' Report

The Board of Directors and Shareholders
UNC Incorporated:

     We have audited the accompanying consolidated statements of earnings,
changes in shareholders' equity and cash flows of UNC Incorporated and
Subsidiaries for the year ended December 31, 1993.  In connection with our
audit of the aforementioned consolidated financial statements, we also have
audited the related financial statement schedule for the year ended December
31, 1993, as listed in the accompanying index under Item 14.  These
consolidated financial statements and the financial statement schedule are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these consolidated financial statements and the financial
statement schedule based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards.  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 audit provides a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and the
cash flows of UNC Incorporated and Subsidiaries for the year ended December
31, 1993, in conformity with generally accepted accounting principles.  Also,
in our opinion, the related financial statement schedule for the year ended
December 31, 1993, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.



                                  KPMG PEAT MARWICK LLP


Washington, D.C.
February 9, 1994

<PAGE>
<PAGE>     60
ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
               FINANCIAL DISCLOSURE.

     KPMG Peat Marwick were previously the principal certifying accountants
for the Company.  Following discussions between KPMG Peat Marwick and
representatives of the Company, the parties determined that KPMG Peat Marwick
would cease to serve as the Company's auditors effective February 22, 1994. 
The Company's Audit Committee was advised of these discussions and approved
of this action.

     In connection with the audits of the Company's consolidated financial
statements for the fiscal year ended December 31, 1993, and in the subsequent
interim period through February 22, 1994, there were no disagreements between
the Company and KPMG Peat Marwick on any matter of accounting principles or
practices, financial statement disclosures or auditing scope or procedures,
which disagreements, if not resolved to KPMG Peat Marwick's satisfaction,
would have caused them to make reference in connection with their opinion to
the subject of the disagreement.

     The audit report of KPMG Peat Marwick on the consolidated financial
statements of the Company and its Subsidiaries as of and for the year ended
December 31, 1993, did not contain any adverse opinion or disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope, or
accounting principles, except that, as required with respect to changes in
accounting principles, the 1993 audit report made reference to the Company's
adoption in 1993 of the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes.

     Members of the management of the Company interviewed four of the "Big 6"
public accounting firms and requested that two of these firms present
proposals to the Audit Committee.  On March 17, 1994, the two firms presented
their proposals to the Audit Committee, which, after due consideration,
recommended to the Company's Board of Directors that the firm of Coopers &
Lybrand be appointed as the Company's independent accountants for the year
ending December 31, 1994.  The Board of Directors approved of the appointment
of the firm of Coopers & Lybrand on March 21, 1994, subject to ratification
by the Company's Annual Meeting of Shareholders to be held on April 29, 1994.


<PAGE>
<PAGE>     61
                                  PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

     (a)  Directors of the Company.  The information regarding directors in
response to Item 401 of Regulation S-K which will appear in the definitive
Proxy Statement of the Company in connection with the solicitation of proxies
for its 1996 Annual Meeting of Shareholders is incorporated herein by
reference.

     (b)  Executive Officers of the Company.

     The following table sets forth the names and ages of all executive
officers of the Company, their positions and office with the Company, and the
period during which each person has served as such.
<TABLE>
<CAPTION>
                                 Positions and                    Served as
                              Office Currently Held               Officer
Name                    Age     with the Company                  Since (1)
----                    ---   ---------------------               ---------
<S>                     <C>   <C>                                 <C>
Dan A. Colussy          64    Chairman of the Board, President      1984
                              and Chief Executive Officer
                              and Director

Robert L. Pevenstein    49    Senior Vice President and             1987
                              Chief Financial Officer

John H. Moellering      57    Executive Vice President,             1993
                              Aviation Services Division

John J. Bonasia         62    Senior Vice President,                1990
                              Engine Overhaul Division

Robert A. Gustafson     49    Senior Vice President,                1994
                              Accessory Services Division

Gerald J. Knapp         53    Senior Vice President,                1991
                              Human Resources

Richard H. Lange        62    Senior Vice President, General        1987
                              Counsel and Secretary

Gregory M. Bubb         44    Vice President and Treasurer          1988

Paul X. McLain          55    Vice President, Financial Controls    1982

______________________
</TABLE>
      (1)  The dates indicated include service in offices other than current
office, but do not include any previous service as a Director.

      There is no family relationship between any director, executive officer,
or person nominated or chosen by the Company to become a director or executive
officer and any other such person, director or executive officer.
<PAGE>
<PAGE>     62
      The following information relates to the business experience during the
past five years of each Executive Officer named above:

      Mr. Colussy has served as Chairman, President and Chief Executive
Officer of the Company since October 1995.  Previously he was Chairman and
Chief Executive Officer of the Company since October 1994, and prior thereto
he was Chairman, President and Chief Executive Officer since April 1989 and
President and Chief Executive Officer since December 1984.

      Mr. Pevenstein has served as Senior Vice President and Chief Financial
Officer of the Company since February 1992 and previously as Vice President
Finance and Chief Financial Officer since October 1987.  He joined the Company
as Controller in September 1987.  

      Mr. Moellering joined the Company as Executive Vice President and Chief
Operating Officer, UNC Aviation Services in October 1993.  Previously he was
President and Chief Executive Officer of Lear Siegler Management Services
Corporation from 1990 to 1993 and prior to that he was Corporate Vice
President with Automatic Data Processing, Inc. from 1987 to 1990.

      Mr. Bonasia has served as Senior Vice President, Engine Overhaul
Division since October 1994.  Prior to such time he served in various senior
management positions with the Company for more than five years. 

      Mr. Gustafson joined the Company as Senior Vice President, Accessory
Services Division in October 1994.  Previously he was Group Vice President -
Aviation Division and President Page Avjet Corporation for the BBA Group PLC
from 1991 to 1994 and Group Vice President - AAR Service Companies of AAR
Corporate from 1990 to 1991.

      Mr. Knapp has served as Senior Vice President, Human Resources since May
1994, he joined the Company as Vice President, Human Resources in April 1991. 
Prior to such time he was Manager, Human Resources Management, for Thomason
Consumer Electronics, Inc. for more than five years.

      Mr. Lange has served as Senior Vice President, General Counsel and
Secretary since May 1994, he was elected Vice President, General Counsel and
Secretary of the Company in July 1987.  

      Mr. Bubb has served as Vice President and Treasurer since May 1992.  He
joined the Company as Treasurer in March 1988.   

      Mr. McLain joined the Company as Vice President, Financial Controls in
August 1982.
<PAGE>
<PAGE>     63
ITEM 11.    EXECUTIVE COMPENSATION.

      The information regarding executive compensation in response to Item 402
of Regulation S-K which will appear in the definitive Proxy Statement of the
Company in connection with the solicitation of proxies for its 1996 Annual
Meeting of Shareholders is incorporated herein by reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      The information regarding security ownership of certain beneficial
owners and management in response to Item 403 of Regulation S-K which will
appear in the definitive Proxy Statement of the Company in connection with the
solicitation of proxies for its 1996 Annual Meeting of Shareholders is
incorporated herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      The information regarding certain relationships and related transactions
in response to Item 404 of Regulation S-K which will appear in the definitive
Proxy Statement of the Company in connection with the solicitation of proxies
for its 1996 Annual Meeting of Shareholders is incorporated herein by
reference.

                                   PART IV

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

(a)   The following documents are filed as part of this Report:

      (1) and (2)  Financial Statements and Financial Statement Schedules.

                                                             Page Number
Financial Statements:                                       in this Report
--------------------                                        --------------
      Consolidated statements of earnings -
      years ended December 31, 1995, 1994 and 1993                21

      Consolidated balance sheets - as of
      December 31, 1995 and 1994                                  22 - 23
      Consolidated statements of cash flows -
      years ended December 31, 1995, 1994 and 1993                24 - 25

      Consolidated statements of changes in
      shareholders' equity - years ended
      December 31, 1995, 1994 and 1993                            26    

      Notes to consolidated financial statements                  27 - 57

      Report of Independent Accountants                           58

      Independent Auditors' Report                                59
<PAGE>
<PAGE>     64
                                                             Page Number
Index to Consolidated Financial Statement Schedules:        in this Report
---------------------------------------------------         --------------
   Schedule VIII  Valuation and qualifying
                  accounts - for the three 
                  years ended December 31, 1995                   73

   Schedules other than those listed above have been omitted since they are
   either not required, are not applicable, or the required information is
   shown in the consolidated financial statements or related notes.

   (3)      Exhibits:

   3.1      Certificate of Incorporation, as amended by Certificate of
            Designations of Series A Preferred Stock, of the Company (filed
            as Exhibit 4-H to Company's Registration Statement No. 33-13762
            and incorporated herein by reference).

   3.2      Form of Certificate of Designations of Series A Junior
            Participating Preferred Stock of Company (filed as Exhibit A to
            the Company's Form 8.A dated October 9, 1987, and incorporated
            herein by reference).

   3.3      Amended and Restated By-Laws of the Company (including resolutions
            of the Board of Directors of the Company on February 5, 1992
            amending the By-Laws of the Company) (filed as Exhibit 3-C to the
            Company's Annual Report on Form 10-K for the year ended December
            31, 1991 -- File No. 1-7795 and incorporated herein by reference).

   4.1      Rights Agreement, dated as of September 25, 1987, between the
            Company and Manufacturers Hanover Trust Company (filed as Exhibit
            No. 1 to the Company's Form 8-A dated October 9, 1987 and
            incorporated herein by reference).

   4.2      Indenture, dated as of May 1, 1986, between the Company and
            Maryland National Bank, Trustee, relating to the Company's 7 1/2%
            Convertible Subordinated Debentures due 2006 (filed as Exhibit 4-A
            to the Company's Registration Statement No. 33-5136 and
            incorporated herein by reference).

   4.3      First Supplemental Indenture, dated as of April 26, 1987, between
            Maryland National Bank, Trustee (supplementing the Indenture,
            dated May 1, 1986, between the Company and Maryland National Bank,
            Trustee, relating to the Company's 7 1/2% Convertible Subordinated
            Debentures due 2006) (filed as Exhibit 4-J to Registrant's
            Registration Statement No. 33-13762 and incorporated herein by
            reference).

   4.4      Indenture, dated as of July 15, 1993, between the Company and
            Continental Bank, National Association, Trustee, relating to the
            Company's 9-1/8% Senior Notes due 2003 (filed as Exhibit 4-B to
            the Company's Quarterly Report on Form 10-Q for the quarter ended
            June 30, 1993 -- File No. 1-7795 and incorporated herein by
            reference). 
<PAGE>
<PAGE>     65
   4.5      First Supplemental Indenture, dated as of August 14, 1993, between
            the Company and Continental Bank, National Association, Trustee
            (supplementing the Indenture, dated July 15, 1993, between the
            Company and Continental Bank, National Association, Trustee,
            relating to the Registrant's 9-1/8% Senior Notes due 2003) 

   4.6      Second Supplemental Indenture, dated as of November 5, 1993,
            between the Company and Continental Bank, National Association,
            Trustee (supplementing the Indenture, dated July 15, 1993, between
            the Company and Continental Bank, National Association, Trustee,
            relating to the Registrant's 9-1/8% Senior Notes due 2003)

   10.1     1977 Stock Plan for Key Employees of United Nuclear Corporation
            and Its Subsidiaries, as amended on June 25, 1982 (filed as
            Exhibit 10-F(i) to the Company's Annual Report on Form 10-K for
            the year ended December 31, 1982 -- File No. 1-7795 and
            incorporated herein by reference).

   10.2     1985 Stock Plans for Key Employees of UNC Resources, Inc. and Its
            Subsidiaries (filed as Exhibit 28-C to the Company's Registration
            Statement No. 2-99656, and incorporated herein by reference).

   10.3     Resolutions adopted by the Board of Directors of the Company on
            February 27, 1987, amending the 1985 Stock Plans for Key Employees
            of UNC Resources, Inc. and Its Subsidiaries (filed as
            Exhibit 10-A(ii) to the Company's Annual Report on Form 10-K for
            the year ended December 31, 1986 -- File No. 1-7795 and
            incorporated herein by reference).

   10.4     Extract from September 20, 1984 minutes of the Board of Directors
            of the Company interpreting various general provisions of all
            stock plans (filed as Exhibit 10-C(iv) to the Company's Annual
            Report on Form 10-K, as amended by Form 8 dated April 7, 1986 for
            the year ended December 31, 1985 -- File No. 1-7795 and
            incorporated herein by reference).

   10.5     Resolutions adopted by the Board of Directors of the Company on
            December 17, 1987, minutes of the Board of Directors of UNC
            Incorporated, ratifying and confirming action of the Management
            Development and Compensation Committee on December 16, 1987
            amending the outstanding stock options issued pursuant to the
            Company's stock option plans (filed as Exhibit 10-A(vi) to the
            Company's Annual Report on Form 10-K for the year ended
            December 31, 1987 -- File No. 1-7795 and incorporated herein by
            reference).

   10.6     UNC Incorporated Share Purchase/Incentive Plan (filed as Exhibit 4
            to the Company's S-8 Registration Statement No. 33-37586 dated
            November 2, 1990 and incorporated herein by reference).

   10.7     UNC Incorporated 1990 Stock Option Plan for Key Employees (filed
            as Exhibit 4 to the Company's S-8 Registration Statement
            No. 33-37585 dated November 2, 1990 and incorporated herein by
            reference).
<PAGE>
<PAGE>     66
   10.8     Resolutions adopted by the Board of Directors of the Company on
            March 22, 1991, amending the 1990 Stock Option Plan for Key
            Employees referred to in Exhibit 10-7 hereof to (1) permit
            qualifying shares purchases to be made either from the Company or
            on the open market and (2) comply with Rule 16b-3 (filed as
            Exhibit 19-A to the Company's Annual Report on Form 10-K for the
            year ended December 31, 1992 -- File No. 1-7795 and incorporated
            herein by reference).

   10.9     UNC Resources, Inc. Outside Directors Compensation Plan (filed as
            Exhibit 10-F to the Company's Annual Report on Form 10-K, as
            amended by Form 8 dated April 7, 1986, of the year ended
            December 31, 1985 -- File No. 1-7795 and incorporated herein by
            reference).

   10.10    Outside Directors Separation from Service Plan of Company
            effective July 31, 1987 (filed as Exhibit 19-B to the Company's
            Quarterly Report on Form 10-Q for the quarter ended June 30, 1987
            -- File No. 1-7795 and incorporated herein by reference).

   10.11    UNC Resources, Inc. Incentive Compensation Plan (filed as
            Exhibit 10-H to the Company's Annual Report on Form 10-K, as
            amended by Form 8 dated April 7, 1986, for the year ended
            December 31, 1985 -- File No. 1-7795 and incorporated herein by
            reference).

   10.12    Resolutions adopted by the Board of Directors of the Company on
            March 22, 1991, amending Section 6.1 of the UNC Resources, Inc.
            Incentive Compensation Plan referred to in Exhibit 10.11 hereof
            to permit the committee to base incentive awards for employees of
            a specific unit on the performance of other units and the Company
            as a whole (filed as Exhibit 19-B to the Company's Annual Report
            on Form 10-K for the year ended December 31, 1992 -- File
            No. 1-7795 and incorporated herein by reference).

   10.13    Amended and Restated Supplemental Executive Retirement Plan for
            Key Employees of Company and its Subsidiaries effective July 31,
            1987 (filed as Exhibit 19-A to the Company's Quarterly Report on
            Form 10-Q for the quarter ended June 30, 1987 -- File No. 1-7795
            and incorporated herein by reference).

   10.14    Resolutions adopted by the Board of Directors of the Company on
            October 30, 1987, amending the change in control language
            contained in the Amended and Restated Supplemental Executive
            Retirement Plan for Key Employees of the Company referred to in
            Exhibit 10.13 hereof and in the Outside Directors Separation from
            Service Plan of the Company referred to in Exhibit 10-9 hereof
            (filed as Exhibit 10-H to the Company's Annual Report on Form 10-K
            for the fiscal year ended December 31, 1990 -- File No. 1-7795 and
            incorporated herein by reference).

   10.15    Resolutions adopted by the Board of Directors of the Company on
            October 23, 1992, amending Sections 8(a) and 8(b) of the Amended
            and Restated Supplemental Executive Retirement Plan for Key
            Employees of the Company referred to in Exhibit 10.13 hereof to
            require two years of service before a participant is entitled to
            benefits under the plan and a participant's years of service to
<PAGE>
<PAGE>     67
            commence on the date such employee becomes a participant under the
            plan, respectively.

   10.16    Resolutions adopted by the Board of Directors of the Company on
            March 22, 1991, deleting Section 2(o)(i) of the Amended and
            Restated Supplemental Executive Retirement Plan for Key Employees
            of the Company referred to in Exhibit 10.13 hereof relating to the
            offset from Plan benefits of the actuarial equivalent of the
            Company's annual contributions to the Participants' Retirement
            Income Savings Plan account (filed as Exhibit 19-C to the
            Company's Annual Report on Form 10-K for the year ended
            December 31, 1992 -- File No. 1-7795 and incorporated herein by
            reference).

   10.17    Form of Agreement relating to a change in control executed by the
            Company with certain key employees (filed as Exhibit 10-Q to the
            Company's Annual Report on Form 10-K for the year ended
            December 31, 1987 -- File No. 1-7795 and incorporated herein by
            reference).

   10.18    Form of Agreement relating to severance pay and benefits executed
            by the Company with certain key employees (filed as Exhibit 10-O
            to the Company's Annual Report on Form 10-K for the year ended
            December 31, 1986 -- File No. 1-7795 and incorporated herein by
            reference).

   10.19    Employment Agreement, dated as of November 1, 1984, between UNC
            Resources, Inc. and Dan A. Colussy (filed as Exhibit 10-T to the
            Company's Annual Report on Form 10-K for the year ended
            December 31, 1984 -- File No. 1-7795 and incorporated herein by
            reference).

   10.20    Agreement, dated as of October 20, 1987, between the Company and
            Dan A. Colussy amending the Employment Agreement referred to in
            Exhibit 10.19 hereof (filed as Exhibit 10-U to the Company's
            Annual Report on Form 10-K for the year ended December 31, 1987 -
            - File No. 1-7795 and incorporated herein by reference).

   10.21    Agreement, dated as of December 18, 1989, between the Company and
            Dan A. Colussy amending the employment agreement referred to in
            Exhibit 10.19 hereof, (filed as Exhibit 10-EE to Company's Annual
            Report on Form 10-K for the year ended December 31, 1989 -- File
            No. 1-7795 and incorporated herein by reference).

   10.22    Second Amended and Restated Credit Agreement, dated as of
            July 24, 1992, among the Company, the Company's wholly-owned
            subsidiary Airwork Corporation, the several banks and other
            financial institutions from time to time parties to this Agreement
            and Chemical Bank, a New York banking corporation, as agent for
            the Banks hereunder (filed as Exhibit 10 to the Company's
            Quarterly Report on Form 10-Q for the quarter ended June 30, 1992
            -- File No. 1-7795 and incorporated herein by reference).

   10.23    Waiver and Amendment, dated as of December 7, 1992, to the Second
            Amended and Restated Credit Agreement dated as of July 24, 1992,
            among UNC Incorporated, a Delaware corporation, Airwork
<PAGE>
<PAGE>     68
            Corporation, a Delaware corporation, the several banks and other
            financial institutions from time to time parties thereto and
            Chemical Bank, a New York banking corporation, as agent for the
            Banks, referred to in Exhibit 10.22 hereof (filed as Exhibit 10-C
            to the Company's Annual Report on Form 10-K for the year ended
            December 31, 1992 -- File No. 1-7795 and incorporated herein by
            reference).

   10.24    Waiver and Amendment, dated as of December 28, 1992, to the Second
            Amended and Restated Credit Agreement dated as of July 24, 1992,
            among UNC Incorporated, a Delaware corporation, Airwork
            Corporation, a Delaware corporation, the several banks and other
            financial institutions from time to time parties thereto and
            Chemical Bank, a New York banking corporation, as agent for the
            Banks, referred to in Exhibit 10.22 hereof (filed as Exhibit 10-D
            to the Company's Annual Report on Form 10-K for the year ended
            December 31, 1992 -- File No. 1-7795 and incorporated herein by
            reference).

   10.25    Amendment, dated as of May 27, 1993, to the Second Amended and
            Restated Credit Agreement dated as of July 24, 1992, among UNC
            Incorporated, a Delaware corporation, Airwork Corporation, a
            Delaware corporation, the several banks and other financial
            institutions from time to time parties thereto and Chemical Bank,
            a New York banking corporation, as agent for the Banks, referred
            to in Exhibit 10.22 hereof.

   10.26    Waiver and Amendment, dated as of July 20, 1993, to the Second
            Amended and Restated Credit Agreement dated as of July 24, 1992,
            among UNC Incorporated, a Delaware corporation, Airwork
            Corporation, a Delaware corporation, the several banks and other
            financial institutions from time to time parties thereto and
            Chemical Bank, a New York banking corporation, as agent for the
            Banks, referred to in Exhibit 10.22 hereof (filed as Exhibit 10
            to the Company's Quarterly Report on Form 10-Q for the quarter
            ended September 30, 1993 -- File No. 1-7795 and incorporated
            herein by reference).

   10.27    Waiver and Amendment, dated as of October 22, 1993, to the Second
            Amended and Restated Credit Agreement dated as of July 24, 1992,
            among UNC Incorporated, a Delaware corporation, Airwork
            Corporation, a Delaware corporation, the several banks and other
            financial institutions from time to time parties thereto and
            Chemical Bank, a New York banking corporation, as agent for the
            Banks, referred to in Exhibit 10.22 hereof.

   10.28    Operating Agreement of Aviation Alliance & Capital Group, L.C.,
            dated as of the 10th day of November, 1992, by and among
            Integrated Aircraft Services Corp., Transcapital Air Alliance
            Corporation and UNC Air Capital Incorporated (filed as Exhibit 10-
            E to the Company's Annual Report on Form 10-K/A for the year ended
            December 31, 1992 -- File No. 1-7795 and incorporated herein by
            reference).

   10.29    Sale and Purchase Agreement dated July 30, 1993 between UNC
            Johnson Technology, Inc. and Freedom Forge Corporation (filed as
<PAGE>
<PAGE>     69
            Exhibit 1 to the Company's Annual Report on Form 8-K dated July
            30, 1993 -- File No. 1-7795 and incorporated herein by reference).

   10.30    Amendment, dated as of February 7, 1994, to the Second Amended and
            Restated Credit Agreement, dated as of July 24, 1992, among UNC
            Incorporated, UNC Airwork Corporation; the several banks and other
            financial institutions from time to time parties to the Credit
            Agreement and Chemical Bank, a New York banking corporation; as
            agent for the Banks, referred to in Exhibit 10.22 hereof (filed
            as Exhibit 10.30 to the Company's Quarterly Report on Form 10-Q
            for the quarter ended June 30, 1994 -- File No. 1-7795 and
            incorporated herein by reference).

   10.31    Amendment and Waiver, dated as of August 8, 1994, to the Second
            Amended and Restated Credit Agreement, dated as of July 24, 1992,
            among UNC Incorporated or UNC Airwork Corporation, the several
            banks and other financial institutions from time to time parties
            thereto and Chemical Bank as agent for the Banks, referred to in
            Exhibit 10.22 hereof (filed as Exhibit 10.31 to the Company's Form
            10-Q for the quarter ended September 30, 1994 -- File No. 1-7795
            and incorporated herein by reference).

   10.32    Employment Agreement, dated as of November 22, 1994, between
            Gerald M. Czarnecki and UNC Incorporated (filed as Exhibit 10.32
            to the Company's Form 10-K for the year ended December 31, 1994--
            File No. 1-7795 and incorporated herein by reference).

   10.33    Amendment, dated as of December 29, 1994, to the Second Amended
            and Restated Credit Agreement, dated as of July 24, 1992, among
            UNC Incorporated, UNC Airwork Corporation; the several banks and
            other financial institutions from time to time parties thereto and
            Chemical Bank as agent for the Banks (filed as Exhibit 10.33 to
            the Company's Form 10-K for the year ended December 31, 1994--File
            No. 1-7795 and incorporated herein by reference).

   10.34    Amendment, dated as of March 29, 1995, to the Second Amended and
            Restated Credit Agreement, dated as of July 24, 1992, among UNC
            Incorporated, UNC Airwork Corporation; the several banks and other
            financial institutions from time to time parties thereto and
            Chemical Bank as agent for the Banks (filed as Exhibit 10.34 to
            the Company's Form 10-K for the year ended December 31, 1994--File
            No. 1-7795 and incorporated herein by reference).

   10.35    Credit Agreement, dated as of May 30, 1995, by and among UNC
            Incorporated, the Lenders who are or may become a party to this
            Credit Agreement, First Union Commercial Corporation, as
            administrative agent and as collateral agent, and First Union
            National Bank of North Carolina, as the issuing bank for letters
            of credit issued hereunder (filed as Exhibit 10.35 to the
            Company's Form 10-Q for the quarter ended June 30, 1995--File No.
            1-7795 and incorporated herein by reference).

   10.36    Security Agreement, dated as of May 30, 1995, by UNC Incorporated,
            a Delaware corporation, to and for the Benefit of First Union
            Commercial Corporation, a North Carolina corporation, as
<PAGE>
<PAGE>     70
            collateral agent (filed as Exhibit 10.36 to the Company's Form 10-
            Q for the quarter ended June 30, 1995--File No. 1-7795 and
            incorporated herein by reference).

   10.37    Stock Purchase Agreement, dated as of October 4, 1995, by and
            among UNC Incorporated and certain Purchasers regarding the
            purchase from the Company of up to 250,000 shares of newly created
            series of Preferred Stock.

   10.38    Asset Purchase Agreement dated January 15, 1996, by and among UNC
            Incorporated, UNC/CFC Acquisition Co., CFC Aviation Services,
            L.P., CFC Aviation Company, L.L.C., CFC Aviation, Inc., Carlisle
            Enterprises, L.P., First Capital Corporation of Chicago, and Cross
            Creek Partners III.

   10.39    Amendment No. 2 to Credit Agreement dated February 1996, by and
            among UNC Incorporated, UNC/CFC Acquisition Co., First Union
            Commercial Corporation, as administrative agent, First Union
            Commercial Corporation, as collateral agent, the various
            corporations identified as Guarantors and the various banks and
            lending institutions.

   11       Statement re: Computation of Earnings per Share.

   16       Letter dated March 1, 1994 of KPMG Peat Marwick (filed as Exhibit
            16 to the Company's Report on Form 8-K dated March 1, 1994 -- File
            No. 1-7795 and incorporated herein by reference).

   21       Subsidiaries of the Company.

   23.1     Independent Auditors' Consent - KPMG Peat Marwick LLP

   23.2     Independent Auditors' Consent - Coopers & Lybrand L.L.P.

   24       Powers of Attorney.

   27       Financial Data Schedule (electronically filed).
   ____________________
(b)   Reports on Form 8-K:

   No reports on Form 8-K were filed by the Company during the quarter ended
   December 31, 1995.

(c)   Exhibits Filed:

   A listing of exhibits required to be filed is given in the Sequential
   Exhibit Index.

(d)   Financial Schedules:

   The information regarding Financial Statement Schedules in this item is
   provided in Item 14(a) 1 and 2.
<PAGE>
<PAGE>     71
                                 SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    UNC INCORPORATED

March 28, 1996
                                    By:  /s/ Robert L. Pevenstein   
                                         ---------------------------
                                         Robert L. Pevenstein
                                         Senior Vice President 
                                         and Chief Financial Officer
                                         (principal financial and
                                         accounting officer)
<PAGE>
<PAGE>     72
      Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature                  Title                            Date
---------                  -----                            ----
<S>                        <C>                              <C>
/s/ Dan A. Colussy         Chairman of the Board,           March 28, 1996
------------------------   President, Chief Excutive
(Dan A. Colussy)           Officer and Director

/s/ Robert L. Pevenstein   Senior Vice President and        March 28, 1996
------------------------   Chief Financial Officer
(Robert L. Pevenstein)     (principal financial and
                           accounting officer)

Berl Bernhard*             Director                         March 6, 1996
------------------------
(Berl Bernhard)

John K. Castle*            Director                         March 11, 1996
------------------------
(John K. Castle)

William C. Hittinger*      Director                         March 6, 1996
------------------------
(William C. Hittinger)

J. L. Holloway III*        Director                         March 8, 1996
------------------------
(J. L. Holloway III)

George V. McGowan*         Director                         March 8, 1996
------------------------
(George V. McGowan)

Jack Moseley*              Director                         March 7, 1996
------------------------
(Jack Moseley)

Lawrence A. Skantze*       Director                         March 7, 1996
------------------------
(Lawrence A. Skantze)

Beverly B. Byron*          Director                         March 4, 1996
------------------------
(Beverly B. Byron)

* By /s/ Richard H. Lange 
     ---------------------
     (Richard H. Lange)
      Attorney-in-Fact
<PAGE>
<PAGE>     73
                      UNC INCORPORATED AND SUBSIDIARIES

              Schedule VIII - Valuation and Qualifying Accounts
                 For the Three Years Ended December 31, 1995

</TABLE>
<TABLE>
<CAPTION>
                                                  Additions
                                    Balance at    Charged to                    Balance
                                    Beginning     Costs and                     at End
       Description                  of Year       Expenses      Deductions (1)  of Year
       -----------                  ---------     ---------     --------------  -------
Allowance for Doubtful
 Accounts Receivable:
<S>                                 <C>           <C>           <C>             <C>
Year ended December 31, 1995        $ 3,706,000   $ 1,637,000   $ 2,157,000(1)  $ 3,186,000
                                    ===========   ===========   ===========     ===========
Year ended December 31, 1994        $ 6,366,000   $ 4,296,000   $ 6,956,000(1)  $ 3,706,000
                                    ===========   ===========   ===========     ===========
Year ended December 31, 1993        $ 5,041,000   $ 1,602,000   $   277,000(1)  $ 6,366,000
                                    ===========   ===========   ===========     ===========
Deferred Income Tax Asset
 Valuation Allowance:

Year ended December 31, 1995        $17,041,000                 $ 1,331,000(2)  $15,710,000
                                    ===========                 ===========     ===========
Year ended December 31, 1994        $ 3,349,000   $13,692,000                   $17,041,000
                                    ===========   ===========   ===========     ===========
Year ended December 31, 1993                                    $ 8,242,000(2)
                                    $13,420,000                 $ 1,829,000(3)  $ 3,349,000
                                    ===========                 ===========     ===========
</TABLE>
(1)   Uncollected receivables written off, net of recoveries.

(2)   Reduction in valuation allowance based on management's evaluation of the
      net realizability of the future income tax benefits considering
      expiration of net operating losses, predictability of future income,
      including the impact of the Company's restructuring program, and timing
      of reversal of temporary differences.  See Management's Discussion and
      Analysis and Note 12 of Notes to Consolidated Financial Statements.

(3)   Reduction in valuation allowance of $1,829,000 as a result of a change
      in the assessment of the realizability of certain tax assets due to the
      future earnings of acquired companies.
<PAGE>
<PAGE>     74
                          SEQUENTIAL EXHIBIT INDEX

      The following exhibits are being filed herewith:

Exhibit
Number                        Description
------                        -----------
10.37             Stock Purchase Agreement, dated as of October 4, 1995, by
                  and among UNC Incorporated and certain Purchasers regarding
                  the purchase from the Company of up to 250,000 shares of
                  newly created series of Preferred Stock.

10.38             Asset Purchase Agreement dated January 15, 1996, by and
                  among UNC Incorporated, UNC/CFC Acquisition Co., CFC
                  Aviation Services, L.P., CFC Aviation Company, L.L.C., CFC
                  Aviation, Inc., Carlisle Enterprises, L.P., First Capital
                  Corporation of Chicago, and Cross Creek Partners III.

10.39             Amendment No. 2 to Credit Agreement dated February 1996, by
                  and among UNC Incorporated, UNC/CFC Acquisition Co., First
                  Union Commercial Corporation, as administrative agent,
                  First Union Commercial Corporation, as collateral agent,
                  the various corporations identified as Guarantors and the
                  various banks and lending institutions.

11                Statement re: Computation of Earnings per Share.

21                Subsidiaries of the Company.

23.1              Independent Auditors' Consent - KPMG Peat Marwick LLP

23.2              Independent Accountants' Consent - Coopers & Lybrand L.L.P.

24                Powers of Attorney.

27                Financial Data Schedule (electronically filed).

____________________