(FORTUNE Magazine) – PROFITS FLOODED into the world's largest corporations in 1993, rising 133% above last year's. But the cascade of gold (more than $116 billion) wasn't quite as luxurious as those numbers imply. Since 1991, profits of U.S. (and some foreign) companies have been skewed by the Financial Accounting Standards Board's Statement 106, which compels companies to deduct accumulated health care liabilities owed retirees. The Greek mathematician Archimedes may have claimed that he could move the world, given a lever and a place to stand, but accountants have moved it three years straight, using just a pencil.

Tens of billions in profits earned by the industrials on FORTUNE's unique list of the world's 500 largest have been obliterated (or turned to losses) by this accounting change. The earnings of General Motors, the world's largest company, went south $20.9 billion by one such pen stroke in 1992. That year, charges totaling $68.5 billion hit the 500, tapering off to $14 billion in 1993 (the last year companies could take their lumps). So 1993's impressive profit gain comes off a year artificially depressed. Cancel out the accounting charges, and the increase looks much more modest: 10%. Sales, too, were skewed, though not by accounting. Total sales for the 500 ($5,402.8 billion) declined 1.3%, a drop that would have looked worse but for exchange rates. Last year the rate FORTUNE used for most Japanese companies was 124.8 yen to the dollar; this year, 107.9. Sales of Japanese companies therefore look bigger in dollars. The dollar kept sinking as we went to press. How dramatic is yen magic? Ninety-four of 135 Japanese companies on this year's list reported sales declines, but expressed in dollars, those declines appear as increases. The same currency kick helped lift ten Japanese onto the list, including three whose sales increased in both dollars and yen: Sapporo Breweries, Mitsui Engineering & Shipbuilding, and Lion, a consumer products company whose line includes toothbrushes, toothpaste, and Charmy Green, a dish- and vegetable-washing detergent. Mergers, acquisitions, and restructurings also distorted results. Italian cement maker Italcementi saw sales rise 136.5% as a result of acquisitions. British conglomerate Tomkins leaped onto the list after swallowing Ranks Hovis McDougall, Britain's biggest baker. The same conglomerate owns Smith & Wesson, making Tomkins the world's only guns-and-bread provider. Newcomer Nippon Paper Industries is a merger of two companies from last year's list -- Jujo Paper and Sanyo-Kokusaku Pulp, Nos. 330 and 397, respectively. The year's biggest profit gain -- 4,917%, by British food company Hillsdown Holdings -- was a result of an ongoing restructuring that depressed profits in 1992 and later led to Hillsdown's selling 13 abattoirs. Referring to the affected slaughterers, CEO David Newton said, ''We wish them all every success under new ownership.'' As do we. All they'll need is a lever and a place (dry, preferably) to stand.

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PepsiCo grew by 52,000 workers, but total employment for the 500 dropped. Britain's Hillsdown Holdings, the biggest profit gainer, shed 13 abattoirs. Because of yen appreciation, sales of 94 Japanese companies went up in dollars, down in yen. The accounting charge for health care liabilities dinged profits again -- $14 billion in 1993. BMW outperformed the German auto industry and acquired British carmaker Rover. Newcomer Zeneca sells the world's most commonly prescribed breast cancer drug, Nolvadex. Nissan Diesel Motor, No. 491 last year, dropped off the list, a casualty of Japan's recession. Cadbury Schweppes, maker of gin-friendly tonic, also owns 26% of Dr. Pepper and all of A&W. Sapporo, a newcomer to the list, sells Haagen-Dazs ice cream, and bottled water, as well as beer. % The president of Tonen Corp. was pushed out by shareholders for his company's poor return on equity. Bertelsmann of Germany replaced Lagardere Groupe as the biggest publisher and printer. Unigate delivers milk to customers' homes, sometimes leaving bottles under bushes to keep them cool.

CHART: NOT AVAILABLE CREDIT: DESIGN AND GRAPHICS BY JEAN HELD CAPTION: THE 500's TRACK RECORD THE COUNTRIES WITH THE MOST COMPANIES THE WINNERS THE LOSERS BIGGEST COMPANIES IN THE WORLD BY INDUSTRY THE WORLD'S LARGEST INDUSTRIAL CORPORATIONS