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 twenty six weeks ended June 27, 2020 were (in thousands):


Finance leases:
Amortization of right-of-use assets	$	12,372
Interest on lease liability		1,689

Total finance lease cost		14,061
Operating leases:
Lease cost		1,518
Variable lease cost		—
Sublease income		(2,413	)

Total operating lease (income)/cost		(895	)

Total lease cost	$	13,166

A summary of the lease classification on our consolidated balance sheet as of June 27, 2020 is as follows (in thousands):

Assets:

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 June 27, 2020 (in thousands):


	Finance Leases		Operating Leases
2020 Remainder	$	22,849	$	340
2021		32,858		643
2022		23,709		645
2023		16,686		515
2024		6,742		448
Thereafter		793		92

Total future minimum lease payments		103,637		2,683
Less amount representing interest (2.1% to 4.4%)		5,266		221

Present value of minimum lease payments	$	98,371	$	2,462


Current maturities of long-term debt		38,219
Long-term debt, excluding current maturities		60,152
Other current liabilitie s				648
Deferred income taxes and other noncurrent liabilities				1,814

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of June 27, 2020 were:


	Finance Leases			Operating Leases
Weighted average remaining lease term (years)		3.2			4.3
Weighted average discount rate		3.2	%		4.0	%

Operating lease
right-of-use
assets

Other assets

Finance lease asset
s

Operating property, less accumulated depreciation and amortization

Total lease assets