WESTERN DIGITAL CORP 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk Other than changes to our interest rate risk as a result of an increase in the amount of our variable-rate debt, there have been no material changes to our market risk exposure during the three months ended October 2, 2026 from those disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2026 Annual Report on Form 10-K. Foreign Currency Risk We performed sensitivity analyses as of October 2, 2026, 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 October 2, 2026. 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 $81 million at October 2, 2026. Interest Rate Risk We have historically held a balance of fixed and variable rate debt. As of October 2, 2026, our variable rate debt outstanding consisted of borrowings under our Revolving Credit Facility, which are based on index rates as discussed further in Note 5, Debt , of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. As of October 2, 2026, the outstanding balance on our Revolving Credit Facility was $650 million, and a 1% increase in the variable rate of interest would increase annual interest expense by $7 million.