Landstar’s noncancelable leases are primarily comprised of finance leases for the acquisition of new trailing equipment. Each finance lease for the acquisition of trailing equipment is a five year lease with a $1 purchase option for the applicable equipment at lease expiration. Substantially all of Landstar’s operating lease

right-of-use

assets and operating lease liabilities represent leases for orientation centers for BCO Independent Contractors and office space used to conduct Landstar’s business. These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives or other

build-out

clauses. Further, the leases do not contain contingent rent provisions. Landstar also leases certain trailing equipment to supplement the Company-owned trailer fleet under

“month-to-month”

lease terms, which are not required to be recorded on the balance sheet due to the less than twelve month lease term exemption. Sublease income is primarily comprised of weekly trailing equipment rentals to our BCO Independent Contractors.

Most of Landstar’s operating leases include one or more options to renew. The exercise of lease renewal options is typically at Landstar’s sole discretion, and, as such, the majority of renewals to extend the lease terms are not included in the

right-of-use

assets and lease liabilities as they are not reasonably certain of exercise. Landstar regularly evaluates the renewal options, and when they are reasonably certain of exercise, Landstar includes the renewal period in the lease term.

As most of Landstar’s operating leases do not provide an implicit rate, Landstar utilized its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. Landstar has a centrally managed treasury function; therefore, based on the applicable lease terms and the current economic environment, we apply a portfolio approach for determining the incremental borrowing rate.

The components of lease cost for finance leases and operating leases for the thirty nine weeks ended September 28, 2019 were (in thousands):


Finance leases:
Amortization of right-of-use assets	$	19,196
Interest on lease liability		2,767

Total finance lease cost		21,963
Operating leases:
Lease cost		3,556
Variable lease cost		—
Sublease income		(3,931	)

Total operating lease (income)/cost		(375	)

Total lease cost	$	21,588

A summary of the lease classification on our consolidated balance sheet as of September 28, 2019 is as follows (in thousands):


Assets:
Operating lease right-of-use assets	Other assets	$	2,783
Finance lease assets	Operating property, less accumulated depreciation and amortization		142,376

Total lease assets		$	145,159

Liabilities:

The following table reconciles the undiscounted cash flows for the finance and operating leases to the finance and operating lease liabilities recorded on the balance sheet at September 28, 2019 (in thousands):


	Finance Leases		Operating Leases
2019 Remainder	$	10,729	$	276
2020		40,863		680
2021		26,453		615
2022		17,290		621
2023		10,262		550
Thereafter		925		299

Total future minimum lease payments		106,522		3,041
Less amount representing interest (2.1% to 4.4%)		5,757		258

Present value of minimum lease payments	$	100,765	$	2,783

Current maturities of long-term debt		39,375
Long-term debt, excluding current maturities		61,390
Other current liabilities				680
Deferred income taxes and other noncurrent liabilities				2,103

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of September 28, 2019 were:


	Finance Leases			Operating Leases
Weighted average remaining lease term (years)		3.1			4.3
Weighted average discount rate		3.3	%		4.0	%