We lease office space, buildings, land, vehicles and equipment. Lease agreements with an initial term of 12 months or less are not recorded on the balance sheet. Instead, we recognize the lease expense as incurred over the lease term.

Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to five years. The exercise of lease renewal options is at our sole discretion. Some agreements also include options to purchase the leased property. The estimated life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We determine if a contract or arrangement is, or contains, a lease at inception. Balances related to operating leases are included in right-of-use assets in our Consolidated Balance Sheet. Balances related to financing leases are immaterial and are included in property and equipment, other current liabilities, and long-term lease liability in our Consolidated Balance Sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As none of our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset includes any prepaid lease payments and additional direct costs and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The following table provides information about the financial statement classification of our lease balances reported within the Consolidated Balance Sheets as of September 30, 2020 and October 1, 2019, in thousands:

	September 30, 2020		October 1, 2019
Assets
Operating lease assets	$	5,124	$	146
Finance lease assets		26		49
Total lease assets	$	5,150	$	195
Liabilities
Current
Operating lease liabilities	$	113	$	99
Finance lease liabilities		11		22
Non-current
Operating lease liabilities		5,048		15
Finance lease liabilities		16		27
Total lease liabilities	$	5,188	$	163

The following table provides information about the financial statement classification of our lease expenses reported in the Consolidated Statements of Operations for the year ended September 30, 2020, in thousands:

Lease cost	Classification	Year Ended September 30, 2020
Operating lease cost	Cost of sales	$	208
Operating lease cost	Selling, general and administrative expenses		84
Finance lease cost	Cost of sales		16
Finance lease cost	Selling, general and administrative expenses		8
Short-term lease cost	Cost of sales		164
Total lease cost		$	480

Future minimum lease payments under non-cancelable leases as of September 30, 2020 are as follows, in thousands:

	Operating Leases		Finance Leases		Total
2021	$	325	$	12	$	337
2022		318		8		326
2023		314		7		321
2024		312		2		314
2025		298		—		298
Thereafter		6,944		—		6,944
Total lease payments		8,511		29		8,540
Less: Interest		3,350		2		3,352
Present value of lease liabilities	$	5,161	$	27	$	5,188

Operating lease payments include $3.9 million related to options to extend lease terms that are reasonably certain of being exercised.

The following table provides information about the remaining lease terms and discount rates applied as of September 30, 2020:

	September 30, 2020
Weighted average remaining lease term
Operating leases	23.49 years
Finance leases	2.79 years
Weighted average discount rate
Operating leases		4.17	%
Finance leases		4.17	%