WESTERN DIGITAL CORP 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk Except as disclosed below, there have been no material changes to our market risk exposure during the nine months ended March 28, 2025. See Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2024 Annual Report on Form 10-K for further information about our exposure to market risk. Foreign Currency Risk We performed sensitivity analyses as of March 28, 2025, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of foreign currency exchange rates relative to the U.S. dollar, with all other variables held constant. The analyses cover all of our foreign currency derivative contracts used to offset the underlying exposures. The foreign currency exchange rates used in performing the sensitivity analyses were based on market rates in effect at March 28, 2025. The sensitivity analyses indicated that a hypothetical 10% adverse movement in foreign currency exchange rates relative to the U.S. dollar would result in a foreign exchange fair value loss of $68 million at March 28, 2025. Interest Rate Risk We have generally held a balance of fixed and variable rate debt. As of March 28, 2025, our variable rate debt outstanding consisted of our Term Loan A-3, which is based on various index rates as discussed further in Note 8, Debt , of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. As of March 28, 2025, the outstanding balance on our variable rate debt was $2.5 billion and a one percent increase in the variable rate of interest would increase our annual interest expense by $25 million.