(FORTUNE Magazine) – 42 THE U.S. GETS BACK IN FIGHTING SHAPE Forget about American manufacturers turning into worldclass wimps. by Alex Taylor III

50 SECRETS OF THE SUPERSTARS The most profitable FORTUNE 500 companies have a few pointed messages to deliver about product quality and costs. by Carol J. Loomis

65 CEOs GIRD FOR GLOBAL BATTLE In this FORTUNE 500/CNN Moneyline CEO Poll, business chiefs say they'll conquer with quality and productivity. by Brian Dumaine

69 GROWING FAST ON THE 500's FRINGE These 25 companies are the hottest prospects on the farm team. by Peter Nulty

77 A NEW ERA OF RISE AND RUIN Modern business has never seen anything like it: In just five years over 100 companies have been replaced on the FORTUNE 500. Where did they go? Ask your friendly mergers and acquisitions specialist. by John Paul Newport Jr.

92 FACTORIES THAT SHINE U.S. manufacturers are giving foreign competitors some lessons. by Anthony Ramirez

MANAGING 113 THE EVER-BIGGER BOOM IN CONSULTING The demand for advice is surging worldwide, fees are heading higher, and new competitors are slugging it out for clients. by Anne B. Fisher

137 READY FOR YOUR ANNUAL MEETING? Though the most important shareholders seldom show up, the gadflies do. , Preparation is your secret weapon. by Christopher Knowlton

CORPORATE PERFORMANCE 157 WHAT MOTOROLA LEARNS FROM JAPAN Its self-proclaimed bandits ''borrow'' their Asian rivals' best ideas. by Ronald Henkoff

172 RUCKUS IN THE REDWOODS Critics liken Houston raider Charles Hurwitz's management of Pacific Lumber to a Texas chain saw massacre. by Ellen Schultz

188 COMPANIES TO WATCH

MONEY & MARKETS 193 CUTE TRICKS ON THE BOTTOM LINE The figures you've been reading in the latest annual reports are no more trustworthy than last year's, and it isn't just little guys playing games. How about GM and GE? by Gary Hector

THE ECONOMY 205 A LATIN DEBT PLAN THAT MIGHT WORK Secretary Brady's proposal lays out a plausible scheme for solving the monstrous problem. But it will work only if the debtor countries, which now owe a total of $1.3 trillion, clean up their messy economies. That's a big if. by Jeremy Main

COMPENSATION 217 TAKE THE MYSTERY OUT OF CEO PAY Too many dollars get concealed in proxy statements -- or aren't reported at all. Companies should have to tell shareholders more. by Graef S. Crystal and Francis T. Vincent Jr.

THE FORTUNE 500 Stories and indexes start on page 345

346 THE BIGGEST BLOWOUT EVER Presenting the most prosperous 500 since FORTUNE published its first directory in 1955. by Reed Abelson and Rahul Jacob

354 THE FORTUNE 500 LARGEST INDUSTRIALS

376 DEFINITIONS, EXPLANATIONS, AND NOTES

377 ARRIVALS, DEPARTURES, AND MONEY LOSERS

380 THE 500 RANKED WITHIN INDUSTRIES

394 INDUSTRY MEDIANS AND TOTALS

398 ALPHABETICAL INDEX + 400 MIGRATORY HABITS OF THE 500 The Northeast used to have a hammerlock on headquarters of the largest industrial companies. No more. Here's where they're flying and why. by Alan Farnham

SELLING 225 SOARING SALES AT DUTY-FREE SHOPS Their customers have time on their hands and a yen for designer goods. by Henry Weil

TECHNOLOGY 237 MANAGING WITH ELECTRONIC MAPS They can help sell soft drinks, produce oil, and break up traffic jams. The systems are getting cheaper and more popular. by Gene Bylinsky

THE WORLD 257 JAPAN'S RISING DEFENSE INDUSTRY Its military contractors want to waive the rules that ban overseas sales, and some are pressing for more spending at home. Should U.S. companies be worried? by Carla Rapoport

LOOKING AHEAD 265 HOW TO QUIT LOSING IN THE OLYMPICS If the U.S. wants more gold in 1992, the system needs fixing -- now. by David J. Morrow

COMPETITION 283 ASIA'S RELUCTANT GROWTH CHAMPS Thailand and Malaysia are coming up fast. But don't call them NICs. by Ford S. Worthy

SPECIAL REPORT 296 HOW ROSS JOHNSON BLEW THE BUYOUT The untold story of how his own naivete, a disastrously flawed strategy, and Wall Street's towering egos combined to doom a CEO's bid for glory in the biggest deal of all time. by Bill Saporito

DEPARTMENTS 6 EDITOR'S DESK 11 INDEX 16 NEWS/TRENDS Exxon befouled, Milken's precedent-setting $1.2 billion case, how to do business in the Soviet Union, the boom in airplane sales, and more.

23 FORTUNE FORECAST Households and homebuilders will handily survive high interest rates. by Maureen F. Allyn

29 PERSONAL INVESTING Toys, tobacco, and metals lead a comeback in FORTUNE 500 stocks. by Andrew Evan Serwer

Also: Why Hershey Foods smells sweet and Portfolio Talk with Alan Greene of New York's David J. Greene investment advisory firm.

319 FORTUNE PEOPLE Kemmons Wilson jumps back in to the hotel business, Jack Simplot's new stock plan, and Warren Buffett's favorite recipe. by Mark Alpert

320 ON THE RISE

323 OTHER VOICES George L. Priest, of Yale Law School, inveighs against liability costs, and John R. Graham tells why cold calls from brokers leave him cold.

329 BOOKS & IDEAS Jeffrey Sonnenfeld shows how CEOs cope with retirement: For many it means ''a plunge into the abyss of insignificance.'' by Roderick Gilkey

333 LETTERS TO FORTUNE Recollections of GE's Jack Welch from his former employees, the question of sabbaticals, ethics and the elderly, and cheers for Cleveland.

339 KEEPING UP by Daniel Seligman

Photographer Gerd Ludwig captures a Worthington Industries worker checking steel thickness.

COVER: The 500 was constructed by Nicholas Fasciano and photographed by Roberto Brosan.