<PAGE>
 
                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q
  (Mark One)

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
             For the quarterly period ended June 30, 1997

                                       OR

     [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

  For the transition period from___________to________________
  Commission File number 1-8158


                           VARCO INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

       California                                   95-0472620
  (State or other jurisdiction of       (I.R.S. Employer Identification No.)
  incorporation or organization)

                   743 North Eckhoff Street, Orange, Ca 92868
                    (Address of principal executive offices)
                                   (Zip code)

                                 (714) 978-1900
              (Registrant's telephone number, including area code)

                                 Not Applicable
      (Former name, former address and former fiscal year, if changed since last
report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes__X__  No____

                                  31,775,922

        (Number of shares of Common Stock outstanding at June 30, 1997)
<PAGE>
 
                          PART I-FINANCIAL INFORMATION


Item 1.  Financial Statements.

     Pursuant to General Instruction D to Form 10-Q, the Condensed Consolidated
Statements of Cash Flows, Condensed Consolidated Balance Sheets and Condensed
Consolidated Statements of Income of Varco International, Inc., (the "Company")
and its subsidiaries included in the registrant's Second Quarter Report to
Shareholders for the three months ended June 30, 1997, filed as Exhibit 19
hereto are incorporated herein by reference.  Such financial statements should
be read in light of the following:

     Adjustments. The financial statements contained in Exhibit 19 hereto
include all adjustments which in the opinion of management are of a normal
recurring nature, considered necessary to present fairly the results of
operations for the interim periods presented.

     Net Income Per Share.  Net income per share is based upon an average
32,522,094 and 31,184,899 shares outstanding for the six months ended June 30,
1997, and 1996 respectively, and upon an average of 32,577,976 and 31,447,509
shares outstanding for the three months ended June 30, 1997, and 1996
respectively.

     Inventories.  The Company estimates the components of inventory at June 30,
1997, and December 31, 1996, to be as follows:

<TABLE>
<CAPTION>
                        June 30, 1997      December 31, 1996
   <S>                  <C>                <C>

   Raw Materials         $  5,849,000         $  6,545,000
   Work in Process         37,310,000           22,646,000
   Finished Goods          81,732,000           77,150,000
   LIFO Reserves          (12,479,000)         (14,468,000)
                         $112,412,000         $ 91,873,000
                         ============         ============
</TABLE>

     Fixed Assets. Fixed assets are stated net of accumulated depreciation of
$58,010,000 at June 30, 1997, and $54,534,000 at December 31, 1996.

     Common Stock and Additional Paid-In-Capital. On June 30, 1997, the Company
Common Stock account was $22,145,000 and Additional Paid-In-Capital accounts
were $123,270,000.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations.

     Pursuant to General Instruction D to Form 10-Q, Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in the
registrant's Second Quarter Report to Shareholders for the three months ended
June 30, 1997, filed as Exhibit 19 hereto, is incorporated herein by reference.

                           PART II-OTHER INFORMATION

Item 2.   Changes in Securities
<PAGE>
 
     In July 1992 the Company sold $50.0 million aggregate principal amount of
its 8.95% Senior Notes Due June 30, 1999 (the "Senior Notes") to a group of ten
institutional investors pursuant to a Note Agreement dated as of July 1, 1992
(as amended, the "Note Agreement"). The principal of the Senior Notes is payable
in five equal annual installments of $10.0 million, the first of which was made
on June 30, 1995.

     The Note Agreement prohibits any "Restricted Payment" subsequent to July
17, 1992 unless after giving effect thereto, (i) the aggregate amount of all
Restricted Payments subsequent to such date would not exceed $5,000,000 plus the
cumulative sum of 50% of the Company's consolidated net income (or minus 100% in
the case of a deficit) subsequent to March 31, 1992 and (ii) the Company could
incur at least $1.00 of additional indebtedness under the Note Agreement
covenant limiting indebtedness. The term "Restricted Payment" includes (a) any
dividend (other than dividends payable in shares of capital stock) or other
distributions on any shares of capital stock of the Company; (b) any purchase,
redemption or other acquisition of any shares of the capital stock of the
Company or any rights or options to purchase or acquire such shares; and (c) any
"Restricted Investment", which is generally defined as any investment other than
an investment in a subsidiary of the Company or an investment in certain
designated government or rated securities. In addition, the Company may
purchase, redeem or otherwise acquire shares of its capital stock or make
Restricted Investments from the net cash proceeds of the substantially
concurrent sales of shares of capital stock or from the sale of securities
convertible into such shares upon conversion.

     On June 27, 1997 the Company entered into a seven-year unsecured revolving
credit agreement with three banks  (the "Credit Agreement"). The Credit
Agreement provides for a credit facility of $65.0 million, inclusive of a $20.0
million letter of credit sub-facility.  The maximum available under the Credit
Agreement is reduced in equal quarterly amounts over the last four years of the
Credit Agreement.

     The Credit Agreement prohibits any "Restricted Junior Payment" unless (1)
at the time thereof no default exists under the Credit Agreement or will be
caused thereby and (2) the cumulative amount of all Restricted Junior Payments
subsequent to June 27, 1997, would not exceed the sum of $5,000,000 plus 25% of
the Company's consolidated net income arising after June 30, 1997.  "Restricted
Junior Payment" is generally defined as (1) any dividend or other distribution
on any class of the Company's capital stock, except a dividend payable solely in
shares of that class; (2) any redemption, purchase or other acquisition for
value of any shares of any class of the capital stock of the Company; (3) any
payment made to retire or obtain the surrender of any outstanding warrants,
options or similar rights to acquire any shares of any class of the capital
stock of the Company; and (4) any payment on the Senior Notes other than
regularly scheduled payments of principal and interest thereon.

Item 4.  Submission of Matters to a Vote of Security Holders

         (a) The annual meeting of Shareholders of the Company was held on 
May 20, 1997.

         (c) Matters voted upon at the 1997 Annual Meeting of Shareholders of 
the Company.

         1.   Election of Directors

<TABLE>
<CAPTION>
     Name               Votes For       Votes Withheld
     <S>                <C>             <C>
 
     G. Boyadjieff      29,563,152      30,401
     G. Dotson          29,563,152      30,401
     A. Horn            29,563,152      30,401
</TABLE> 
<PAGE>
 
<TABLE>
<CAPTION>
     <S>                <C>             <C>
     J. Knowlton        29,563,142      30,411
     L. Pircher         29,563,152      30,401
     W. Reinhold        29,563,142      30,411
     C. Suggs           29,563,152      30,401
     R. Teitsworth      29,563,152      30,401
     E. White           29,563,152      30,401
     J. Woods           29,563,152      30,401
</TABLE>
     2.  Proposal to ratify Ernst & Young LLP as the independent auditors of 
the Company.

<TABLE> 
<CAPTION> 
     <S>            <C>                 <C> 
     Votes For      Votes Against       Abstentions

     29,566,023     15,598              11,832
</TABLE> 
 

Item 6.   Exhibits and Reports on Form 8-K
 

      (a)   Exhibits

 
      4.1  Credit Agreement, dated as of June 27, 1997, among Varco
International, Inc., the financial institutions listed therein as Lenders, and
Union Bank of California, N.A., as Agent.
 
      4.2  First Amendment to Credit Agreement, dated as of July 15, 1997, to
Credit Agreement included as Exhibit 4.1 hereto.

      10  Second Amendment to the Varco International, Inc. Supplemental
 Executive Retirement Plan.

      11  Statement  re computation of per share earnings  for the three months 
 and six months ended  June 30, 1997 and 1996.

      19  Varco International, Inc. Second Quarter Report to Shareholders, Three
 Months  Ended June 30, 1997.

      27  Financial Data Schedule

      (b)  Reports on Form 8-K.

           No reports on Form 8-K were filed during the quarter for which this
 report is filed.
<PAGE>
 
                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                            VARCO INTERNATIONAL, INC.


Date: August 12, 1997                       By: /s/ Richard A. Kertson
                                            Vice President-Finance
                                            and Chief Financial Officer
 



Date: August  12, 1997                      By: /s/ Donald L. Stichler
                                            Controller-Treasurer
                                            and Secretary
<PAGE>
 
                                 EXHIBIT INDEX


<TABLE> 
<CAPTION> 
<C>  <S> 
4.1  Credit Agreement, dated as of June 27, 1997, among Varco International,
     Inc., the financial institutions listed therein as Lenders, and Union Bank
     of California, N.A., as Agent.
 
4.2  First Amendment to Credit Agreement, dated as of July 15, 1997, to Credit
     Agreement included as Exhibit 4.1 hereto.

10   Second Amendment to the Varco International, Inc. Supplemental Executive
     Retirement Plan.

11   Statement re computation of per share earnings for the three months and six
     months ended June 30, 1997 and 1996.

19   Varco International, Inc. Second Quarter Report to Shareholders, Three
     Months Ended June 30, 1997.

27   Financial Data Schedule
</TABLE>