Company: FWRG
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001789940-25-000086
Chunk: 26

Company: First Watch Restaurant Group, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 1
Chunk 26
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, the counterparties based on the three-month SOFR rate.On May 17, 2024, Management entered into two additional variable-to-fixed interest rate swaps. These interest rate swaps have an aggregate notional amount of $60.0 million and mature on June 30, 2027. Under the terms of the interest rate swaps, the Company will pay a weighted average fixed rate of 4.42% on the notional amount and will receive payments from, or make payments to, the counterparties based on the three-month SOFR rate.The fair value measurement of the interest rate swaps was based on the contractual terms and market-based inputs. The interest rate swaps were valued using a discounted cash flow analysis on the expected cash flows using observable inputs including interest rate curves and credit spreads. Although the majority of the inputs used to value the instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and the counterparties. The impact of the credit valuation adjustments was not determined to be significant to the overall valuation. As a result, the derivative was classified as Level 2 in the fair value hierarchy.Amounts reported in Other comprehensive income (loss) related to the interest rate swaps are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the thirty-nine weeks ended September 28, 2025, a total of $0.1 million was reclassified from Other comprehensive income (loss) as a reduction to Interest expense. Over the next 12 months, Management estimates that $0.9 million will be reclassified as an increase to interest expense.

9.    Leases

The following table includes detail of lease assets and liabilities:(in thousands)Consolidated Balance Sheet ClassificationSEPTEMBER 28, 2025DECEMBER 29, 2024Finance lease assets - currentOther current assets$1,365 $— Operating lease right-of-use assetsOperating lease right-of-use assets609,820 527,674 Finance lease assetsProperty, fixtures and equipment, net10,962 2,724 Total lease assets$622,147 $530,398 Operating lease liabilities - current(1)Current portion of operating lease liabilities$72,785 $55,704 Operating lease liabilities - non-currentOperating lease liabilities645,455 555,576 Finance lease liabilities - current(1)Current portion of