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

facilities

maintained in support of the Company’s network of

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 26, 2020 were (in thousands):


Finance leases:
Amortization of right-of-use assets	$	18,534
Interest on lease liability		2,447

Total finance lease cost		20,981

Operating leases:
Lease cost		2,300
Variable lease cost		—
Sublease income		(3,513	)

Total net operating lease income		(1,213	)


Total net lease cost	$	19,768

A summary of the lease classification on our consolidated balance sheet as of September 26, 2020 is as follows (in thousands):

Assets:


Operating lease right-of-use assets	Other assets	$	2,391
Finance lease assets	Operating property, less accumulated depreciation and amortization		140,064

Total lease assets		$	142,455

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 26, 2020 (in thousands):


	Finance Leases		Operating Leases
2020 Remainder	$	11,269	$	166
2021		33,830		651
2022		24,358		653
2023		16,681		523
2024		6,742		454
Thereafter		793		154

Total future minimum lease payments		93,673		2,601
Less amount representing interest (2.1% to 4.4%)		6,380		210

Present value of minimum lease payments	$	87,293	$	2,391


Current maturities of long-term debt		34,723
Long-term debt, excluding current maturities		52,570
Other current liabilities				640
Deferred income taxes and other noncurrent liabilities				1,751

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of September 26, 2020 were:


	Finance Leases			Operating Leases

Weighted average remaining lease term (years)		3.0			4.2
Weighted average discount rate		3.2	%		4.0	%