z i m m e r h o l d i n g s , i n c . a n d s u b s i d i a r i e s 2 0 0 2 f o r m 1 0 - k contractual obligations the company has entered into contracts with various third parties in the normal course of business which will require future payments . the following table illustrates the company 2019s contractual obligations : than 1 1 - 3 4 - 5 after 5 contractual obligations total year years years years .
what percent of total contractual obligations is comprised of operating leases?
critical accounting policies equipment based on historical patterns of use and physical and technological characteristics of assets , as the financial results of the company are affected by the appropriate . in accordance with statement of financial selection and application of accounting policies and methods . accounting standards ( 2018 2018sfas 2019 2019 ) no . 144 , 2018 2018accounting for significant accounting policies which , in some cases , require the impairment or disposal of long-lived assets , 2019 2019 the management 2019s judgment are discussed below . company reviews property , plant and equipment for revenue recognition 2013 a significant portion of the com- impairment whenever events or changes in circumstances pany 2019s revenue is recognized for field based product upon indicate that the carrying value of an asset may not be notification that the product has been implanted or used . recoverable . an impairment loss would be recognized for all other transactions , the company recognizes when estimated future cash flows relating to the asset revenue when title is passed to customers , generally are less than its carrying amount . upon shipment . estimated returns and allowances are derivative financial instruments 2013 critical aspects of recorded as a reduction of sales when the revenue is the company 2019s accounting policy for derivative financial recognized . instruments include conditions which require that critical inventories 2013 the company must determine as of each terms of a hedging instrument are essentially the same as balance sheet date how much , if any , of its inventory may a hedged forecasted transaction . another important ele- ultimately prove to be unsaleable or unsaleable at its ment of the policy requires that formal documentation be carrying cost . reserves are established to effectively maintained as required by the sfas no . 133 , 2018 2018accounting adjust any such inventory to net realizable value . to for derivative instruments and hedging activities . 2019 2019 fail- determine the appropriate level of reserves , the company ure to comply with these conditions would result in a evaluates current stock levels in relation to historical and requirement to recognize changes in market value of expected patterns of demand for all of its products . a hedge instruments in earnings as they occur . manage- series of algorithms is applied to the data to assist ment routinely monitors significant estimates , assump- management in its evaluation . management evaluates the tions and judgments associated with derivative need for changes to valuation reserves based on market instruments , and compliance with formal documentation conditions , competitive offerings and other factors on a requirements . regular basis . further information about inventory stock compensation 2013 the company applies the provi- reserves is provided in notes to the consolidated financial sions of apb opinion no . 25 , 2018 2018accounting for stock statements . issued to employees , 2019 2019 in accounting for stock-based instruments 2013 the company , as is customary in the compensation ; therefore , no compensation expense has industry , consigns surgical instruments for use in been recognized for its fixed stock option plans as orthopaedic procedures with the company 2019s products . options are granted at fair market value . sfas no . 123 , the company 2019s accounting policy requires that the full 2018 2018accounting for stock-based compensation 2019 2019 provides an cost of instruments be recognized as an expense in the alternative method of accounting for stock options based year in which the instruments are placed in service . an on an option pricing model , such as black-scholes . the alternative to this method is to depreciate the cost of company has adopted the disclosure requirements of instruments over their useful lives . the company may sfas no . 123 and sfas no . 148 , 2018 2018accounting for stock- from time to time consider a change in accounting for based compensation-transition and disclosure . 2019 2019 informa- instruments to better align its accounting policy with tion regarding compensation expense under the alterna- certain company competitors . tive method is provided in notes to the consolidated financial statements . property , plant and equipment 2013 the company deter- mines estimated useful lives of property , plant and .