Yup, Yup, Yup - definite restore. Check the thread search for rust removal (olaxic acid).
I am not a huge fan of old wheels, and the seat could be replaced (save them to the side). Chuck the reflectors and the old bike rack (unless you want them). The frame could clean up nicely. Unfortunately, you have a bunch of rust- but there's potential.

Be careful around decals and I would recommend keeping paint original if possible. Very nice old bike.