<PAGE>

                                   FORM 10-Q
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

(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, 2001

                                       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  000-31579

                                HYDRIL COMPANY
                 ---------------------------------------------
            (Exact name of registrant as specified in its charter)

               DELAWARE                                 95-2777268
  (State or other jurisdiction of                     (IRS Employer
  incorporation or organization)                    Identification No.)

3300 North Sam Houston Parkway East Houston, Texas       77032-3411
     (Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code   (281) 449-2000

    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 [ ]

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

      Shares outstanding at August 1, 2001:
      Common stock, $.50 par value, 14,310,771 shares outstanding
      Class B common stock, $.50 par value, 7,945,572 shares outstanding
<PAGE>

                                 HYDRIL COMPANY

                                     INDEX

                         PART I--FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                              Page
                                                                                              ----
<S>                                                                                           <C>
     Item 1.  Financial Statements
       Consolidated Balance Sheets--June 30, 2001 (unaudited) and December 31, 2000              3
       Unaudited Consolidated Statements of Operations--For the Three and Six Months Ended
        June 30, 2001 and 2000                                                                   5
       Unaudited Consolidated Statements of Cash Flows--For the Six Months Ended
        June 30, 2001 and 2000                                                                   6
       Notes to Unaudited Consolidated Financial Statements                                      7

     Item 2.  Management's Discussion and Analysis of Financial Condition and Results of
              Operations                                                                        11

     Item 3.  Quantitative and Qualitative Disclosures About Market Risk                        14

                           PART II--OTHER INFORMATION

     Item 2.  Changes in Securities and Use of Proceeds                                         14

     Item 4.  Submission of Matters to a Vote of Security Holders                               14

     Item 6.  Exhibits and Reports on Form 8-K                                                  15
</TABLE>

                                                                               2
<PAGE>

                                 HYDRIL COMPANY
                  Part I, Item 1:  Consolidated Balance Sheets
             (In Thousands, Except Share and Per Share Information)

<TABLE>
<CAPTION>

                                                                    June 30,     December 31,
                                                                      2001           2000
                                                                    ---------    ------------
<S>                                                                <C>           <C>
                                                                   (unaudited)
CURRENT ASSETS:
 Cash and cash equivalents                                          $  59,266       $  73,279
 Receivables:
  Trade, less allowance for doubtful
   accounts: 2001, $2,157; 2000, $2,706                                54,201          35,962
  Contract costs and estimated earnings in excess of billings           1,142           1,227
  Other                                                                 1,698           2,820
                                                                    ---------       ---------
      Total receivables                                                57,041          40,009
                                                                    ---------       ---------
 Inventories:
  Finished goods                                                       26,702          27,508
  Work-in-process                                                       9,393           4,600
  Raw Materials                                                         7,660           8,039
                                                                    ---------       ---------
      Total inventories                                                43,755          40,147
                                                                    ---------       ---------
 Deferred tax asset                                                     7,597           7,597
 Other current assets                                                   2,952           2,642
                                                                    ---------       ---------
      Total current assets                                            170,611         163,674
                                                                    ---------       ---------
PROPERTY:
 Land and improvements                                                 18,344          18,231
 Buildings and equipment                                               40,743          39,031
 Machinery and equipment                                              129,034         126,000
 Construction-in-progress                                               9,662           5,487
                                                                    ---------       ---------
      Total                                                           197,783         188,749
Less accumulated depreciation and amortization                       (112,096)       (109,679)
                                                                    ---------       ---------
      Property, net                                                    85,687          79,070
                                                                    ---------       ---------
OTHER LONG-TERM ASSETS:
 Deferred tax asset                                                     4,080           7,169
 Other assets                                                           4,865           4,733
                                                                    ---------       ---------
      TOTAL                                                         $ 265,243       $ 254,646
                                                                    =========       =========
</TABLE>

            See notes to unaudited consolidated financial statements

                                                                               3
<PAGE>

                                 HYDRIL COMPANY
                  Part I, Item 1:  Consolidated Balance Sheets
             (In Thousands, Except Share and Per Share Information)

<TABLE>
<CAPTION>

                                                                    June 30,     December, 31,
                                                                      2001           2000
                                                                    --------     -------------
                                                                  (unaudited)
<S>                                                               <C>           <C>
CURRENT LIABILITIES:
 Accounts payable                                                   $ 22,426         $ 22,530
 Billings in excess of contract costs and estimated earnings           5,421            4,063
 Accrued liabilities                                                  13,565           17,973
 Lines of credit                                                       1,021                -
 Current portion of long-term debt                                       505              534
 Current portion of capital leases                                       187              266
 Income taxes payable                                                    828            1,397
                                                                    --------         --------
      Total current liabilities                                       43,953           46,763
                                                                    --------         --------
LONG-TERM LIABILITIES:
 Long-term debt, excluding current portion                            60,000           60,233
 Capital lease obligations                                                --               53
 Deferred tax liability                                                  476              319
 Other                                                                15,640           15,549
                                                                    --------         --------
      Total long-term liabilities                                     76,116           76,154
                                                                    --------         --------
CONTINGENCIES (NOTE 3)
STOCKHOLDERS' EQUITY:
 Capital stock:
  Preferred Stock-authorized, 10,000,000 shares of $1 par
   value; none issued or outstanding
  Common stock-authorized 75,000,000 shares of $.50 par
   value; 14,201,661 and 8,641,200 shares issued and
   outstanding at June 30, 2001 and December 31, 2000,
   respectively                                                        7,101            4,321
  Class B common stock-authorized, 32,000,000 shares of
   $.50 par value; 8,048,847 and 13,410,908 shares issued
   and outstanding at June 30, 2001 and December 31, 2000,
   respectively                                                        4,024            6,705
 Additional paid in capital                                           40,520           38,333
 Retained earnings                                                    93,529           82,370
                                                                    --------         --------
      Total stockholders' equity                                     145,174          131,729
                                                                    --------         --------
       TOTAL                                                        $265,243         $254,646
                                                                    ========         ========
</TABLE>

            See notes to unaudited consolidated financial statements

                                                                               4
<PAGE>

                                 HYDRIL COMPANY
        Part I, Item 1:  Unaudited Consolidated Statements of Operations
               (In Thousands, Except Share and Per Share Amounts)

<TABLE>
<CAPTION>
                                         Three Months Ended                      Six Months Ended
                                              June 30,                               June 30,
                                    --------------------------------        ------------------------------
                                        2001                 2000               2001               2000
                                    -----------          -----------        -----------        -----------
<S>                                 <C>                  <C>                <C>                <C>
REVENUES                            $    60,110          $    45,497        $   115,632        $    90,256
COST OF SALES                            39,523               32,272             77,141             65,112
                                    -----------          -----------        -----------        -----------
GROSS PROFIT                             20,587               13,225             38,491             25,144
                                    -----------          -----------        -----------        -----------
SELLING, GENERAL &
 ADMINISTRATION EXPENSES:
  Engineering                             2,397                1,521              4,881              3,107
  Sales and marketing                     3,836                3,260              7,472              6,684
  General and administration              3,915                3,656              7,442              6,682
                                    -----------          -----------        -----------        -----------
         Total                           10,148                8,437             19,795             16,473
                                    -----------          -----------        -----------        -----------
OPERATING INCOME                         10,439                4,788             18,696              8,671

INTEREST EXPENSE                         (1,172)              (1,373)            (2,266)            (2,737)
INTEREST INCOME                             728                  373              1,763                685
OTHER INCOME (EXPENSE):
  Rental income                            (113)                  (9)              (271)                10
  Gain on marketable securities              --                3,576                 --              3,576
  Other                                    (544)                 (22)              (487)               (59)
                                    -----------          -----------        -----------        -----------
         Total                             (657)               3,545               (758)             3,527
                                    -----------          -----------        -----------        -----------
INCOME  BEFORE INCOME TAXES               9,338                7,333             17,435             10,146
PROVISION FOR INCOME TAXES                3,361                2,494              6,276              3,450
                                    -----------          -----------        -----------        -----------
NET INCOME                          $     5,977          $     4,839        $    11,159        $     6,696
                                    ===========          ===========        ===========        ===========
NET INCOME PER SHARE:
 BASIC                              $      0.27          $      0.25        $      0.50        $      0.35
                                    ===========          ===========        ===========        ===========
 DILUTED                            $      0.26          $      0.25        $      0.49        $      0.35
                                    ===========          ===========        ===========        ===========
WEIGHTED AVERAGE SHARES
 OUTSTANDING:
 BASIC                               22,214,393           19,379,040         22,135,678         19,379,040
 DILUTED                             22,705,194           19,379,040         22,608,623         19,379,040
</TABLE>

            See notes to unaudited consolidated financial statements

                                                                               5
<PAGE>

                                 HYDRIL COMPANY
        Part I, Item 1:  Unaudited Consolidated Statements of Cash Flows
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                 Six Months Ended
                                                                     June 30,
                                                             -----------------------
                                                               2001             2000
                                                             --------         -------
<S>                                                         <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                          $ 11,159         $ 6,696
                                                             --------         -------
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Depreciation                                                4,411           4,153
    Deferred income taxes                                       3,475           1,205
    Provision for doubtful accounts                               (88)             50
    Loss on asset disposition                                      --             626
    Gain on put mediation settlement                               --          (3,576)
    Change in operating assets and liabilities:
      Receivables                                             (17,029)         (4,876)
      Contract costs and estimated earnings in
       excess of billings                                          85             639
      Inventories                                              (3,608)          5,408
      Other current and noncurrent assets                         (69)           (353)
      Accounts payable                                           (104)         (1,379)
      Billings in excess of contract costs and
       estimated earnings                                       1,358          (4,916)
      Accrued liabilities                                      (4,408)           (917)
      Income taxes payable                                       (569)           (152)
      Other long-term liabilities                                  91            (169)
                                                             --------         -------
        Net cash provided by (used in) operating
         activities                                            (5,296)          2,439
                                                             --------         -------
NET CASH FROM INVESTING ACTIVITIES:
  Proceeds from disposition of assets                              --              42
  Proceeds from put mediation settlement                           --           3,576
  Capital expenditures                                        (10,200)         (3,440)
                                                             --------         -------
        Net cash provided by (used in) investing
         activities                                           (10,200)            178
                                                             --------         -------
NET CASH FROM FINANCING ACTIVITIES:
  Proceeds from borrowings                                      1,071           1,297
  Repayment of debt                                              (312)           (244)
  Repayment of capital leases                                    (132)           (126)
  Net proceeds from exercise of stock options                     856              --
                                                             --------         -------
        Net cash provided by financing activities               1,483             927
                                                             --------         -------
NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                            (14,013)          3,544
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                          73,279          26,275
                                                             --------         -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $ 59,266         $29,819
                                                             --------         -------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid                                              $  2,137         $ 2,428
  Income taxes (refunded) paid:
    Domestic                                                      192              25
    Foreign                                                     2,560           1,920
</TABLE>

            See notes to unaudited consolidated financial statements

                                                                               6
<PAGE>

                                 HYDRIL COMPANY

     Part I, Item 1:  Notes to Unaudited Consolidated Financial Statements

NOTE 1 -- BASIS OF PRESENTATION

     Principles of Consolidation - The consolidated financial statements include
the accounts of Hydril Company and its wholly owned subsidiaries.  Intercompany
accounts and transactions are eliminated in consolidation.

     Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.  Actual results could
differ from those estimates.

     Recent Accounting Standards - In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities". SFAS 133 requires an entity to recognize all derivatives as
an asset or liability measured at its fair value. Depending on the intended use
of the derivative, changes in its fair value will be reported in the period of
change as either a component of earnings or a component of other comprehensive
income. SFAS 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000.  The Company adopted SFAS 133 effective January 1, 2001.
The adoption of this policy did not require any transition adjustment and did
not materially affect the Company's results of operations or financial
condition.

     Reclassifications - Certain prior year amounts within the consolidated
financial statements have been reclassified to conform to the current year's
presentation.

     Interim Presentation - The accompanying consolidated interim financial
statements and disclosures have been prepared by the Company in accordance with
accounting principles generally accepted in the United States of America and in
the opinion of management reflect all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair presentation in all material
respects of the financial position and results for the interim periods.  These
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form 10-
K for the year ended December 31, 2000.  The results of operations for the three
and six months ended June 30, 2001 are not necessarily indicative of results to
be expected for the full year.

NOTE 2 -- LONG-TERM CONTRACTS

     The components of long-term contracts as of June 30, 2001 and December 31,
2000 consist of the following:

<TABLE>
<CAPTION>
                                                                         June 30, 2001                 December 31, 2000
                                                                         -------------                 -----------------
                                                                                       (in thousands)
<S>                                                                       <C>                            <C>
Costs and estimated earnings on uncompleted contracts                     $  7,272                        $  21,044
Less:  billings to date                                                    (11,551)                         (23,880)
                                                                          --------                        ---------
Excess of costs and estimated earnings over billings                      $ (4,279)                       $  (2,836)
                                                                          ========                        =========
Included in the accompanying balance sheets under
 the following captions:
Contract costs and estimated earnings in excess of billings               $  1,142                        $   1,227
Billings in excess of contract costs and estimated earnings                 (5,421)                          (4,063)
                                                                          --------                        ---------
     Total                                                                $ (4,279)                       $  (2,836)
                                                                          ========                        =========
</TABLE>

                                                                               7
<PAGE>

     From 1996 through 1999, the Company entered into 17 fixed-price contracts
to provide pressure control equipment and subsea control systems for pressure
control equipment.  All of the subsea control systems and all of the pressure
control equipment for these contracts were shipped prior to December 31, 2000.

     Losses incurred on these projects, including late delivery penalties, were
$0 and $1,500,000 for the six months ended June 30, 2001 and 2000, respectively.
There were no such losses for the three months ended June 30, 2001 and 2000.
Provisions for estimated losses are determined by comparing total sales price to
costs incurred plus estimated costs to complete the contract.  Provision for
estimated losses have been made, to the extent applicable, for all projects not
completed as of June 30, 2001.  As of June 30, 2001 and December 31, 2000, the
Company has accrued a reserve for project losses of $767,000 and $3,263,000,
respectively, relating to final installation and completion activities.

NOTE 3 -- CONTINGENCIES

     The Company is involved in legal proceedings arising in the ordinary course
of business.  In the opinion of management, these matters are such that their
outcome will not have a material adverse effect on the financial position or
results of operations of the Company.

     The Company has been identified as a potentially responsible party at a
waste disposal site in California.  Based on the number of other potentially
responsible parties, the total estimated site cleanup costs and its estimated
share of such costs, the Company does not expect this matter to materially
affect its results of operations or financial condition.  The Company's
anticipated obligation with respect to the California site has been adequately
reserved for, in the opinion of management.

NOTE 4 --LONG TERM DEBT

     The Company's borrowings as of June 30, 2001 and December 31, 2000 were as
follows:

<TABLE>
<CAPTION>
                                                 June 30, 2001         December 31, 2000
                                                 -------------         -----------------
                                                              (in thousands)
<S>                                              <C>                        <C>
Senior notes                                         $60,000                 $60,000
Revolving lines of credit:
  Foreign                                              1,021                      --
IBM note financing                                       505                     767
                                                     -------                 -------
        Total                                         61,526                  60,767
Less current portion                                  (1,526)                   (534)
                                                     -------                 -------
        Total long-term debt                         $60,000                 $60,233
                                                     =======                 =======
</TABLE>

     The $60,000,000 senior secured notes bear interest at a rate of 6.85% per
annum, which is payable quarterly.  The senior notes mature June 30, 2003 and
may not be prepaid prior to this date unless the Company pays the noteholders a
make-whole premium based on prevailing market interest rates.  The long-term
note agreement for these notes has one financial event of default covenant, a
minimum tangible net worth test, with which the Company was in compliance at
June 30, 2001.  Additional financial tests under the long-term note agreement,
if not passed, restrict the Company's ability to incur additional indebtedness
or make acquisitions, investments and restricted payments, such as pay dividends
and repurchase capital stock.  At June 30, 2001, the Company satisfied these
financial incurrence tests.

     The Company has available a secured U.S. revolving line of credit of
$25,000,000.  The credit line will mature March 31, 2003.  The Company may, at
its election, borrow at either a prime or LIBOR based interest rate.  Interest
rates under the credit line fluctuate depending on the Company's leverage ratio
and are prime plus a spread ranging from zero to 25 basis points or LIBOR plus a
spread ranging from 125 to 225 basis points.  At June 30, 2001, there were no
outstanding borrowings under this credit facility.  There are covenants under
this credit line which require the Company to maintain certain financial ratios.
The Company was in compliance with these covenants at June 30, 2001.

     The credit line and the senior notes are secured by a pledge of the
Company's accounts receivable, inventory, equipment, intellectual property,
material real property, and stock of subsidiaries.

                                                                               8
<PAGE>

     From time to time, the Company also has committed and uncommitted lines of
credit for use in its international operations.  At June 30, 2001, there was
$1,021,000 outstanding under these lines and the weighted average interest rate
was 5.7%.

NOTE 5 -- EQUITY

     In May 2001, pursuant to registration rights granted to certain
stockholders in connection with the Company's initial public offering, 5,234,616
shares of common stock were registered by the Company and sold to the public by
certain existing stockholders at $26.50 per share.  The selling stockholders
held Class B common stock which was converted into common stock prior to being
sold to the public.  Hydril did not receive any proceeds from this offering.

     On June 1, 2001, each of the Company's nonemployee directors received a
grant of nonqualified stock options to purchase 2,494 shares of common stock as
provided under the Company's 2000 Incentive Plan.  These options were granted at
an exercise price of $30.075 per share, have a term of ten years, are fully
vested upon the completion of one year of service, and are exercisable in
cumulative annual installments of one-third each beginning on the first
anniversary of the date of grant.

NOTE 6 -- OTHER INCOME AND EXPENSE

     Other expense for the three months ended June 30, 2001 includes $560,000 in
expenses incurred in facilitating the offering of common stock by certain
stockholders of the Company (see Note 5).  Other income for the three months
ended June 30, 2000 includes a $3,576,000 gain from a legal settlement with a
financial institution from which the Company purchased put options related to an
investment in marketable securities.

NOTE 7 -- EARNINGS PER SHARE

     The Company has presented basic and diluted income (loss) per share ("EPS")
on the consolidated statement of operations.  Basic EPS excludes dilution and is
computed by dividing income (loss) available to common stockholders by the
weighted average number of common shares outstanding for the period.  Dilutive
EPS is based on the weighted average number of shares outstanding during each
period and the assumed exercise of dilutive stock options less the number of
treasury shares from the proceeds using the average market price for the
Company's common stock for each of the periods presented.  When potentially
dilutive securities are anti-dilutive, they are not included in dilutive EPS.
Basic weighted average shares outstanding for the three and six months ended
June 30, 2001, were 22,214,393 and 22,135,678, while dilutive weighted average
shares outstanding for the three and six months ended June 30, 2001, were
22,705,194 and 22,608,623, respectively.

     For 2000, the only potentially dilutive securities are outstanding options
to purchase 702,000 shares under the Company's 1999 Stock Option Plan.  However,
for the three and six months ended June 30, 2000, these securities were anti-
dilutive and therefore were not included in the EPS calculations.  The weighted
average shares outstanding for the three and six months ended June 30, 2000,
were 19,379,040.

NOTE 8 -- SEGMENT AND RELATED INFORMATION

     In accordance with SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information", the Company has identified the following
reportable segments: Premium Connection and Pressure Control.

     The Company's premium connection segment manufactures premium connections
that are used in harsh drilling environments.  Hydril applies premium threaded
connections to tubulars owned by its customers and purchases pipe in certain
international markets for threading and resale.  Hydril manufactures premium
threaded connections and provides services at facilities located in Houston,
Texas; Westwego, Louisiana; Bakersfield, California; Nisku, Alberta, Canada;
Aberdeen, Scotland; Veracruz, Mexico; Batam, Indonesia; Port Harcourt and Warri,
Nigeria.

     The Company's pressure control segment manufactures a broad range of
pressure control equipment used in oil and gas drilling and well completion
typically employed in harsh environments.  The Company's pressure control
products are primarily safety devices that control and contain fluid and gas
pressure during

                                                                               9
<PAGE>

drilling, completion and maintenance in oil and gas wells. The Company also
provides replacement parts, repair and field services for its installed base of
pressure control equipment. Hydril manufactures pressure control products at two
plant locations in Houston, Texas.

     The accounting policies of the segments are the same as those described in
the summary of significant accounting policies.  The Company evaluates
performance based on operating income or loss.

     Financial data for the business segments for the three and six months ended
June 30, 2001 and 2000 is as follows:  (in thousands)

<TABLE>
<CAPTION>
                                                                Three Months Ended                      Six Months Ended
                                                                      June 30,                               June 30,
                                                            --------------------------           ---------------------------
                                                              2001               2000              2001                2000
                                                            -------            -------           --------            -------
<S>                                                         <C>                <C>               <C>                 <C>
Revenues
  Premium Connection                                        $37,993            $24,389           $ 68,365            $46,002
  Pressure Control                                           22,117             21,108             47,267             44,254
                                                            -------            -------           --------            -------
            Total                                           $60,110            $45,497           $115,632            $90,256
                                                            =======            =======           ========            =======
Operating Income (loss)
  Premium Connection                                        $ 8,180            $ 7,226           $ 13,842            $13,207
  Pressure Control                                            4,609                843              9,564              1,322
  Corporate Administration                                   (2,350)            (3,281)            (4,710)            (5,858)
                                                            -------            -------           --------            -------
            Total                                           $10,439            $ 4,788           $ 18,696            $ 8,671
                                                            =======            =======           ========            =======
Depreciation Expense
  Premium Connection                                        $ 1,408            $ 1,215           $  2,746            $ 2,404
  Pressure Control                                              424                452                838                906
  Corporate Administration                                      412                403                827                843
                                                            -------            -------           --------            -------
            Total                                           $ 2,244            $ 2,070           $  4,411            $ 4,153
                                                            =======            =======           ========            =======
Capital Expenditures
  Premium Connection                                        $ 2,706            $ 1,981           $  7,027            $ 2,858
  Pressure Control                                            1,631                171              2,767                436
  Corporate Administration                                       46                 90                406                146
                                                            -------            -------           --------            -------
            Total                                           $ 4,383            $ 2,242           $ 10,200            $ 3,440
                                                            =======            =======           ========            =======
</TABLE>

                                                                              10
<PAGE>

Part I, Item 2:  Management's Discussion and Analysis of Financial Condition and
Results of Operations

     This quarterly report on Form 10-Q contains forward-looking statements.
These statements relate to future events or our future financial performance,
including our business strategy and product development plans, and involve known
and unknown risks and uncertainties.  These risks and uncertainties and
assumptions, which are more fully described in Hydril Company's Annual Report on
Form 10-K for the year ended December 31, 2000 filed with the Securities and
Exchange Commission, include the impact of oil and natural gas prices and
worldwide economic conditions on drilling activity and the demand for and
pricing of Hydril's products and Hydril's assumptions relating thereto.  These
factors may cause our company's or our industry's actual results, levels of
activity, performance or achievements to be materially different from those
expressed or implied by the forward-looking statements.  In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "could," "expects," "intends," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," "continue," or the negative of these terms
or other comparable terminology.

                                    OVERVIEW

     Hydril Company is engaged worldwide in engineering, manufacturing and
marketing premium connections and pressure control products used for oil and gas
drilling and production.  Our premium connections are used in drilling
environments where extreme pressure, temperature, corrosion and mechanical
stress are encountered, as well as in environmentally sensitive drilling.  These
harsh drilling conditions are typical for deepwater, deep-formation and
horizontal wells.  Our pressure control products are primarily safety devices
that control and contain fluid and gas pressure during drilling, completion and
maintenance of oil and gas wells in the same environments.  We also provide
aftermarket replacement parts, repair and field services for our installed base
of pressure control equipment.  These products and services are required on a
recurring basis because of the impact of the extreme conditions in which
pressure control products are used.

     Demand for our products and services is cyclical and substantially
dependent on the activity levels in the oil and gas industry and its willingness
to spend capital on the exploration and development of oil and gas reserves. The
level of these capital expenditures is highly sensitive to current and expected
oil and gas prices. Our premium connections are marketed primarily to oil and
gas operators.  Sales of premium connection products are driven by the level of
worldwide drilling activity, in particular the number of rigs drilling to depths
in excess of 15,000 feet and the number of rigs drilling in water depths greater
than 1,500 feet.  We sell our pressure control products primarily to drilling
contractors.  The main factors that affect sales of pressure control capital
equipment products are the level of construction of new drilling rigs and the
rate at which existing rigs are refurbished.  Demand for our pressure control
aftermarket replacement parts, repair and field services primarily depends upon
the level of worldwide offshore drilling activity.

    RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000

Revenues

     Total revenues increased $14.6 million, or 32%, to $60.1 million for the
three months ended June 30, 2001 compared to $45.5 million for the three months
ended June 30, 2000.  Our premium connection revenues increased $13.6 million,
or 56%, to $38.0 million for the three months ended June 30, 2001 as compared to
$24.4 million for the prior year period.  This increase is primarily the result
of higher sales in the international markets and the Gulf of Mexico.
Additionally, the level of deepwater drilling activity and drilling for deep gas
increased during the second quarter of 2001 as compared with the prior year
period, which also contributed to higher revenues for premium connections.
Pressure control revenues increased $1.0 million, or 5%, to $22.1 million for
the three months ended June 30, 2001 as compared to $21.1 million for the same
period in 2000.  This slight increase is primarily attributable to a 19% rise in
revenues from aftermarket products and services, partially offset by a 12%
decline in capital equipment revenues.  Aftermarket revenues increased as a
result of higher worldwide offshore rig counts in the second quarter, while
capital equipment revenues declined due to the completion of several major
capital equipment projects.

Gross Profit

     Gross profit increased $7.4 million to $20.6 million for the three months
ended June 30, 2001 from $13.2 million for the three months ended June 30, 2000.
The increase was primarily due to higher revenues

                                                                              11
<PAGE>

from pressure control aftermarket products, higher prices in both of our
segments, increased profitability in our project business, and higher sales
volumes in our premium connection international markets.

Selling, General and Administrative Expenses

     Selling, general, and administrative expenses for the second quarter of
2001 were $10.1 million compared to $8.4 million for the prior year period.  The
increase was due to higher engineering and sales expenses to support increased
demand for our products.  As a percentage of sales, selling, general, and
administrative expenses decreased from 19% for the second quarter of 2000, to
17% for the second quarter of 2001.

Operating Income

     Operating income increased $5.6 million to $10.4 million for the three
months ended June 30, 2001, compared to $4.8 million for the same period in
2000.  Operating income for our premium connection segment increased from $7.2
million for the second quarter of 2000 to $8.2 million for the second quarter of
2001.  Operating income for our pressure control segment increased $3.8 million
to $4.6 million for the quarter ended June 30, 2001 as compared to the same
period in 2000.  Corporate and administrative expenses were $2.4 million for the
second quarter of 2001 compared to $3.3 million for the same period in 2000.

Interest Expense

     Interest expense was $1.2 million for the second quarter of 2001 compared
to $1.4 million for the same quarter in 2000.  This decline represents lower
average outstanding bank debt during the quarter.

Other Income and Expense

     Other expense was $0.7 million for the three months ended June 30, 2001,
and consists primarily of expenses incurred in facilitating the offering of
common stock by certain of our stockholders in the second quarter of 2001.
Other income for the three months ended June 30, 2000 was $3.5 million which
includes a $3.6 million gain from a legal settlement related to the purchase of
put options to sell marketable securities.

     RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000

Revenues

     Total revenues increased $25.3 million, or 28%, to $115.6 million for the
six months ended June 30, 2001 compared to $90.3 million for the six months
ended June 30, 2000.  Our premium connection revenues increased $22.4 million,
or 49%, to $68.4 million for the six months ended June 30, 2001 as compared to
$46.0 million for the prior year period.  This increase is primarily the result
of increased demand from higher rig counts in our North America and
international markets.  Pressure control revenues increased $3.0 million, or 7%,
to $47.3 million for the six months ended June 30, 2001 as compared to $44.3
million for the same period in 2000.  This increase is attributable to a 31%
increase in revenues from aftermarket products which was partially offset by a
16% decrease in revenues from capital equipment.  Aftermarket revenues have been
strong due to the increasing worldwide offshore rig count and capital equipment
orders have decreased because of fewer rig upgrades and new-builds.

Gross Profit

     Gross profit increased $13.3 million to $38.5 million for the six months
ended June 30, 2001 from $25.1 million for the six months ended June 30, 2000.
The increase was primarily due to higher revenues from pressure control
aftermarket products, price increases in both of our segments, higher profit
from long-term pressure control projects, and increasing volume in our premium
connection business.

Selling, General and Administrative Expenses

     Selling, general, and administrative expenses for the first six months of
2001 were $20.0 million compared to $16.5 million for the prior year period.
The increase was due to higher engineering and sales expenses as well as
increased administrative costs relating to being a public company.  As a
percentage of sales, selling, general, and administrative expenses decreased
from 18% for the first six months of 2000 to 17% for the same period in 2001.

                                                                              12
<PAGE>

Operating Income

     Operating income increased $10.0 million to $18.7 million for the six
months ended June 30, 2001, compared to $8.7 million for the same period in
2000.  Operating income for our premium connection segment increased slightly
from $13.2 million for the first six months of 2000 to $13.8 million for the
same period in 2001.  Operating income for our pressure control segment
increased $8.3 million to $9.6 million for the six months ended June 30, 2001 as
compared to the same period in 2000.  Corporate and administrative expenses were
$4.7 million for the six months ended June 30, 2001 compared to $5.9 million for
the same period in 2000.

Interest Expense

     Interest expense was $2.3 million for the first six months of 2001 compared
to $2.7 million for the same period in 2000.  This decline represents lower
average outstanding bank debt during the first half of 2001.

Other Income and Expense

     Other expense was $0.8 million for the six months ended June 30, 2001, and
consists primarily of expenses incurred in facilitating the offering of common
stock by certain of our stockholders in the second quarter of 2001.  Other
income for the six months ended June 30, 2000 was $3.5 million which includes a
$3.6 million gain from a legal settlement related to the purchase of put options
to sell marketable securities.

                        LIQUIDITY AND CAPITAL RESOURCES

     Our primary liquidity needs are to fund capital expenditures, such as
expanding and upgrading manufacturing facilities and capacity, to fund new
product development and to provide additional working capital.  Our primary
source of funds has been cash flow from operations, proceeds from borrowings
under our bank facilities, a private placement of senior secured notes and
reimbursement of costs related to the joint industry project to develop a subsea
mudlift drilling system in which we are participating.

     In addition, in October 2000, we completed an initial public offering in
which 8,600,000 shares of our common stock were sold to the public at $17.00 per
share.  Of the 8,600,000 shares, 2,672,668 shares were sold by us and 5,927,332
shares were sold by stockholders.  We received net proceeds from the offering of
$39.6 million after underwriting discounts and commissions and other related
expenses.

Operating Activities

     For the six months ended June 30, 2001, cash used in operating activities
was $5.3 million due to higher international premium connection working capital
requirements to support a higher demand for our products in these markets.  Cash
provided by operations in the first half of 2000 was $2.4 million which was the
result of improved operating results and lower working capital requirements for
the U.S.

Investing Activities

     Net cash used in investing activities for the six months ended June 30,
2001 was $10.2 million which is attributable to capital spending. Of this, $7.0
million was for our premium connection segment primarily related to capacity
expansion in North America, $2.8 million was for our pressure control segment to
upgrade the equipment in our Houston plant, and $0.4 million was for general
corporate purposes.

     Net cash provided by investing activities during the first half of 2000 was
$0.2 million.  Capital expenditures were $3.4 million, of which $2.9 million was
for our premium connection segment, $0.4 million was for our pressure control
segment, and $0.1 million for general corporate purposes, which was offset by a
$3.6 million cash settlement.  In May 2000, we settled through mediation a
dispute with a financial institution related to our purchase of put options on
marketable securities in 1998.  As a result of this settlement, we received,
after expenses, approximately $3.6 million.

Credit Facilities

     Hydril has a secured domestic revolving line of credit for working capital
requirements that provides up to $25 million in committed revolving credit
borrowings through March 31, 2003.  We may borrow, at our election, at either a
prime or LIBOR based interest rate. Interest rates under the facility fluctuate
depending on our leverage ratio and are prime plus a spread ranging from zero to
25 basis points or LIBOR plus a spread

                                                                              13
<PAGE>

ranging from 125 to 225 basis points. At June 30, 2001, there were no
outstanding borrowings under this credit facility.

     The credit line is secured by a pledge of the Company's accounts
receivable, inventory, equipment, intellectual property, material real property,
and stock of subsidiaries.

     From time to time, the Company uses committed and uncommitted lines of
credit in its international operations.  At June 30, 2001, there was $1.0
million outstanding under these lines and the weighted average interest rate was
5.7%.

Backlog

     The pressure control capital equipment backlog was $58.6 million at June
30, 2001, $15.2 million at December 31, 2000 and $9.9 million at June 30, 2000.
We include in this backlog orders for pressure control capital equipment and
projects.  Backlog of premium connections and pressure control aftermarket parts
and service are not a meaningful measure of business prospects due to the quick
turnover of such orders.  The increase in our backlog primarily reflects a $37
million order received during the first quarter of 2001 and an $11 million order
received in the second quarter of 2001 for blowout prevention and control system
equipment.  It is possible for orders to be cancelled, however, in the event of
cancellations all costs incurred would be billable to the customer.  We
recognize the revenue and gross profit from pressure control long-term projects
using the percentage of completion accounting method and revenues from the two
recent project orders will be recorded in the second half of 2001, 2002 and
2003.

Part I, Item 3:  Quantitative and Qualitative Disclosures about Market Risk

     There have been no significant changes since December 31, 2000 in the
Company's exposure to market risk.

Part II, Item 2: Changes in Securities and Use of Proceeds

     In October 2000, we completed an initial public offering of 8,600,000
shares of common stock, which were sold at $17.00 per share.  Of the 8,600,000
shares, 2,672,668 shares were sold by Hydril and 5,927,332 shares were sold to
the public by existing stockholders.  Gross proceeds to Hydril were $45.4
million and gross proceeds to the selling stockholders were $100.8 million.  The
shares of common stock sold in the offering were registered under the Securities
Act of 1933, as amended, pursuant to a Registration Statement on Form S-1
(registration number 333-38954) that was declared effective September 26, 2000.
The offering commenced on September 27, 2000.

     In connection with the October 2000 offering, Hydril incurred $3.2 million
in underwriting discounts and commissions, and $2.6 million in other related
expenses.  The net proceeds to Hydril from the offering, after deducting the
foregoing expenses, were $39.6 million.  Since the effective date of the
offering, we have used $8.4 million of the proceeds for the initial costs to
expand capacity at our premium connection facilities in the U.S and Canada, $1.9
million for the expansion of our advanced composite tubing production and
development and commercialization of subsea mudlift drilling, and $2.2 million
to upgrade machinery and equipment in our Houston pressure control plants.  None
of Hydril's proceeds from the offering have been or will be paid to directors,
officers, affiliates of Hydril, or persons owning 10% or more of any class of
Hydril's common stock.

Part II, Item 4: Submission of Matters to a Vote of Security Holders

     Our annual meeting of shareholders was held on May 22, 2001.  There were
131,242,208 votes represented at the meeting in person or by proxy, out of
142,538,060 votes entitled to be cast, constituting a quorum.  The following are
the results of the vote:


<TABLE>
<CAPTION>
Proposals:

                                            For       Against   Withheld   Abstain    Broker Non-Votes
                                        -----------   -------   --------   -------    ----------------
<S>                                     <C>           <C>       <C>        <C>        <C>
Election of Directors
  Kenneth S. McCormick                  131,190,333         -     51,875         -                  -
  Christopher T. Seaver                 130,692,433         -    549,775         -                  -
  Lew O. Ward                           131,189,658         -     52,550         -                  -

Approval of Appointment
  of Deloitte & Touche LLP
  as Independent Public
  Accountants                           131,238,708     2,700          -       800                  -
</TABLE>

                                                                              14
<PAGE>

Part II, Item 6: Exhibits and Reports on Form 8-K

Reports on Form 8-K:

     During the quarter ended June 30, 2001, no reports were filed on Form 8-K.

                                                                              15
<PAGE>

                                   SIGNATURE

     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.


                                         HYDRIL COMPANY


Date:  August 7, 2001                    By: /s/  Michael C. Kearney
                                             -----------------------------
                                                  Michael C. Kearney
                                    Chief Financial Officer and Vice President-
                                      Administration (Authorized officer and
                                    principal accounting and financial officer)

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