<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 March 31, 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 
        incorporation or organization)               Identification No.)


                  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 ____


                                  31,670,790

        (Number of shares of Common Stock outstanding at March 31, 1997)
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                         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 First Quarter
Report to Shareholders for the three months ended March 31, 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
of 32,385,000 and 30,728,000 shares outstanding for the three months ended March
31, 1997, and 1996 respectively.

          Inventories.  The Company estimates the components of inventory at
March 31, 1997, and December 31, 1996, to be as follows:
<TABLE>
<CAPTION>
 
                          March 31, 1997     December 31, 1996
                          ---------------    ------------------
<S>                       <C>                <C>
 
   Raw Materials          $  6,361,000         $  6,545,000
   Work in Process          28,647,000           22,646,000
   Finished Goods           83,575,000           77,150,000
   LIFO Reserves           (13,496,000)         (14,468,000)
                          ------------         ------------
                          $105,087,000         $ 91,873,000
                          ============         ============
</TABLE>

          Fixed Assets.  Fixed assets are stated net of accumulated depreciation
of $56,497,000 at March 31, 1997, and $54,534,000 at December 31, 1996.

          Common Stock and Additional Paid-In-Capital. On March 31, 1997, the
Company Common Stock account was $22,039,000 and Additional Paid-In-Capital
accounts were $122,510,000.

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 First Quarter Report 
<PAGE>

 
to Shareholders for the three months ended March 31, 1997, filed as Exhibit 19
hereto, is incorporated herein by reference.


                           PART II-OTHER INFORMATION

Item 2.   Changes in Securities

     On March 24, 1995, the Company commenced a "Dutch Auction" type tender
offer (the "Tender Offer") to purchase up to 5,300,000 shares of its Common
Stock at a purchase price not greater than $8.00 per share nor less than $6.75
per share. Pursuant to the Tender Offer, which terminated on April 21, 1995, the
Company purchased 3,150,560 shares of its Common Stock at a purchase price of
$8.00 per share.

     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.

     Pursuant to a waiver and amendment dated as of March 8, 1995, the holders 
of the Senior Notes (1) waived compliance with the limitations on Restricted 
Payments discussed above, (2) agreed that the amount expended in the Tender 
Offer would not constitute a Restricted Payment, and (3) amended certain 
covenants to take into account the effect of the consummation of the Tender 
Offer on certain financial ratios.

     On February 25, 1993 the Company entered into an unsecured revolving credit
agreement with Citicorp USA, Inc. and Citibank, N.A. (as amended, the "Credit 
Agreement"). Effective as of March 17, 1995 the Credit Agreement was amended to 
(1) extend the maturity date from March 31, 1996 to October 31, 1998; (2) 
increase the total maximum facility from $20.0 to $35.0 million, consisting of a
loan facility of $25.0 million and a letter of credit facility of $10.0 million;
and (3) to amend certain covenants to permit the Tender Offer and to take into 
account the effect of the consummation of the Tender Offer on certain financial 
ratios.

     Under the terms of the Credit Agreement, the amount available for the 
payment of dividends on, and repurchases of, Common Stock is limited to 25% of 
the Company's consolidated net income arising after January 1, 1992, computed on
a cumulative basis. In addition, pursuant to the December 31, 1995 amendment to 
the Credit Agreement discussed above, the Company could repurchase at any time 
prior to December 31, 1996 shares of its Common Stock for an aggregate cost not 
exceeding $50.0 million, including shares purchased pursuant to the Tender 
Offer. The Company may also purchase or otherwise acquire shares of Common Stock
from the proceeds of the substantially concurrent sale of shares of Common 
Stock.
 

Item 6.   Exhibits and Reports on Form 8-K
 

     (a)  Exhibits



     11   Statement  re computation of per share earnings  for the three months
 ended  March 31, 1997 and 1996.

 
     19   Varco International, Inc. First Quarter Report to Shareholders, Three
 Months  Ended March 31, 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.
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                                   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: May 12, 1997            By: /s/ Richard A. Kertson
                                  ----------------------
                              Vice President-Finance
                              and Chief Financial Officer



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


11   Statement re computation of per share earnings for the three months  ended
     March 31, 1997 and 1996.


19   Varco International, Inc. First Quarter Report to Shareholders, Three
     Months Ended March 31, 1997.

27   Financial Data Schedule