The desire for such better communications notwithstanding, Gary Kabureck, Xerox vice president and chief accounting officer, questions whether there is "too much detail" in annual reports. Using the forest-for-the-trees analogy, Kabureck notes that the audited financial section of his company's 10-K "has grown from 31 pages in 1999, and is now 67 pages -- and that's using a similar font and type size."

Kabureck, who is one of the vice chairs of FEI committee on corporate reporting, said that a committee member working at a "high-tech" company quipped that a reader of his 10-K would have to get "halfway through the disclosures to realize what we sell."

Can We "Start from Scratch"?

The 10-K is an "overly legal document," says David McGirr, CFO of Lexington, Mass.-based Cubist Pharmaceuticals. "Roughly 65% of the pages are really the legal stuff," while the remaining 35% contains the truly relevant financial information. "The 10-K should be an important document that should be helpful" to investors, rather than one filled with information about "everything that could possibly happen," he argues. "We're a small, profitable pharmaceutical company, which has a Dec. 31 year end." His 10-K, coming out at the end of February, only gives his finance staff "about two weeks' break" before it has to work on Cubist's 10-Q.

McGirr would like to see the SEC and the financial community "start from scratch" on a 10-K redesign -- a process that might aim for a reduction in the report's sheer size, while avoiding just "adding and adding and adding" to it. In some instances, the current need to make each section of the document a self-contained entity forces a preparer to insert "exactly the same paragraph" multiple times, he says. "If the information is already there, reproducing it 20 pages later doesn't add much" -- at least in terms of investor value.