<PAGE>   1

===============================================================================

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                 -------------

                                   FORM 10-Q

          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 for the Quarterly Period Ended March 31, 2000

                                 -------------

                        Commission File Number 001-13593

                         IRI INTERNATIONAL CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)

               DELAWARE                                 75-2044681
   (State or Other Jurisdiction of        (I.R.S. Employer Identification. No.)
   Incorporation or Organization)

                1000 LOUISIANA, SUITE 5900, HOUSTON, TEXAS 77002
              (Address of Principal Executive Offices) (Zip Code)

                                 (713) 651-8002
              (Registrant's Telephone Number, Including Area Code)

                                      NONE
              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)

                                 -------------

     Indicate by check X 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 [ ]

   Number of shares outstanding of each class of common stock, $0.01 par value
   per share, at May 12, 2000:


                            39,908,331 Common Shares


================================================================================






<PAGE>   2


                                     PART I
                             FINANCIAL INFORMATION

ITEM 1   FINANCIAL STATEMENTS.



<PAGE>   3

                 IRI INTERNATIONAL CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
               (In Thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                       MARCH 31,        DECEMBER 31,
                                ASSETS                                                    2000              1999
                                                                                      -----------       -----------
                                                                                      (Unaudited)
<S>                                                                                  <C>              <C>
Current assets:
 Cash and cash equivalents.................................................           $    25,563        $    35,688
 Marketable securities, at fair value (cost of $22,280 at March 31, 2000
  and $13,437 at December 31, 1999)........................................                19,781             14,686
 Accounts receivable, less allowance for doubtful accounts of $1,798 at
  March 31, 2000 and $1,740 at December 31, 1999...........................                23,080             14,476
 Income taxes receivable...................................................                 2,717              2,717
 Inventories...............................................................                93,547             92,572
 Costs & estimated earnings in excess of billings on uncompleted contracts                  3,050              1,400
 Deferred income taxes.....................................................                 2,343              1,388
 Other current assets......................................................                 1,124              1,242
                                                                                       -----------        -----------
    Total current assets...................................................               171,205            164,169

Property, plant and equipment, net.........................................                44,994             45,697
Deferred income taxes......................................................                 2,220              3,945
Other assets...............................................................                 3,218              3,282
                                                                                       -----------        -----------
    Total assets...........................................................           $   221,637        $   217,093
                                                                                       ===========        ===========

                   LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued liabilities..................................           $    12,547        $     9,589
 Customer advances.........................................................                 1,611              1,938
 Income taxes payable......................................................                 1,170                996
 Other liabilities.........................................................                 1,998              1,797
                                                                                       -----------        -----------
    Total current liabilities..............................................                17,326             14,320
Accrued postretirement benefits............................................                 1,427              1,427
Other long-term liabilities................................................                    46                 46
                                                                                       -----------        -----------
    Total liabilities......................................................                18,799             15,793

Commitments and contingencies
Shareholders' equity and comprehensive income:
 Preferred stock, $1.00 par value; 25,000,000 shares
  authorized, none issued..................................................                    --                 --
 Common stock, $0.01 par value; 100,000,000 shares authorized,
  39,900,000 shares issued and outstanding.................................                   399                399
 Additional paid-in capital................................................               168,902            168,884
 Retained earnings.........................................................                33,945             32,403
 Accumulated other comprehensive loss......................................                  (408)              (386)
                                                                                       -----------        -----------
    Total shareholders' equity and comprehensive income....................               202,838            201,300
                                                                                       -----------        -----------
                                                                                      $   221,637        $   217,093
                                                                                       ===========        ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

<PAGE>   4



                 IRI INTERNATIONAL CORPORATION AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                              ------------------------------
                                                                                 2000                1999
                                                                              ----------         -----------
<S>                                                                           <C>                <C>
Revenues.................................................................     $  33,114           $   22,543
Cost of goods sold.......................................................        24,578               15,828
                                                                              ----------         -----------
    Gross profit.........................................................         8,536                6,715
Selling and administrative expense.......................................         6,294                6,065
Restructuring charge.....................................................             --                 805
                                                                              ----------         -----------
    Operating income (loss)..............................................         2,242                 (155)
Other income (expense):
 Interest income.........................................................           343                  322
 Interest expense........................................................           (92)                (129)
 Other, net..............................................................            (9)              (1,866)
                                                                              ----------         -----------
                                                                                    242               (1,673)
                                                                              ----------         -----------
    Income (loss) before income taxes....................................         2,484               (1,828)
Income tax expense (benefit).............................................           942                 (326)
                                                                              ----------         -----------
    Net income (loss)....................................................     $   1,542           $   (1,502)
                                                                              ==========         ===========
Net income (loss) per basic share........................................     $    0.04           $    (0.04)
                                                                              ==========         ===========
Net income (loss) per diluted share......................................     $    0.04           $    (0.04)
                                                                              ==========         ===========
Average basic shares outstanding.........................................        39,900               39,900
                                                                              ==========         ===========
Average diluted shares outstanding.......................................        40,747               39,900
                                                                              ==========         ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

<PAGE>   5


                 IRI INTERNATIONAL CORPORATION AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             AND COMPREHENSIVE LOSS
                                 (In Thousands)

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                             ADDITIONAL                   ACCUMULATED   TOTAL SHAREHOLDERS'
                                                 COMMON       PAID-IN      RETAINED      OTHER COMPRE-   EQUITY AND COMPRE-
                                                 STOCK        CAPITAL      EARNINGS       HENSIVE LOSS    HENSIVE INCOME
                                             ---------------------------------------------------------- -------------------
<S>                                           <C>           <C>            <C>          <C>              <C>
Balances at December 31, 1999................  $     399       168,884       32,403              (386)     $     201,300

Stock option compensation....................         --            18           --                --                 18

Comprehensive income:
 Net income..................................         --            --        1,542                --              1,542
 Foreign currency translation adjustment.....         --            --           --               (22)               (22)

    Total comprehensive income...............                                                                      1,520
                                             ---------------------------------------------------------- -------------------
Balances at March 31, 2000..................   $     399       168,902       33,945              (408)     $     202,838
                                             ========================================================== ===================
</TABLE>

See accompanying notes to condensed consolidated financial statements.

<PAGE>   6

                 IRI INTERNATIONAL CORPORATION AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                -----------------------------------
                                                                                  MARCH 31,             MARCH 31,
                                                                                     2000                  1999
                                                                                ------------          -------------
<S>                                                                             <C>                   <C>
Cash flows from operating activities:
 Net income (loss)........................................................          $   1,542          $    (1,502)
 Adjustments to reconcile net income (loss) to net cash
  used in operations:
   Depreciation and amortization..........................................              1,391                1,276
   Amortization of goodwill...............................................                314                  313
   Amortization of negative goodwill......................................                   -              (1,342)
   Gain on sale of assets.................................................                   -                   -
   Deferred income taxes..................................................                770                    -
   Change in employee benefit accounts....................................               (267)                 (54)
   Stock option compensation..............................................                 18                  218
   Foreign currency translation adjustment................................                (22)                   -
   Changes in assets and liabilities, net of effects of acquisitions:
    Marketable securities.................................................             (5,095)             (16,334)
    Accounts receivable...................................................             (8,604)               7,600
    Inventories...........................................................               (975)               4,290
    Other current assets..................................................             (1,532)               2,782
    Other noncurrent assets...............................................                 17                   (4)
    Income taxes payable..................................................                174                    -
    Accounts payable and accrued liabilities, customer
     advances and other liabilities.......................................              2,906               (7,314)
                                                                                    ----------           ----------
          Net cash used in operations.....................................             (9,363)             (10,071)
                                                                                    ----------           ----------
Cash flows from investing activities:
 Capital expenditures.....................................................               (717)                (415)
 Proceeds from sale of assets.............................................                 29                    -
                                                                                    ----------           ----------
          Net cash used in investing activities...........................               (688)                (415)
                                                                                    ----------           ----------
Cash flows from financing activities -
 payments on capital lease obligation.....................................                (74)                 (68)
                                                                                    ----------           ----------
Decrease in cash and cash equivalents.....................................            (10,125)             (10,554)

Cash and cash equivalents at beginning of period..........................             35,688               37,475
                                                                                    ----------           ----------

Cash and cash equivalents at end of period................................          $  25,563          $    26,921
                                                                                    ==========           ==========
Supplemental cash flow information:
 Interest paid............................................................          $      92          $       129
                                                                                    ==========           ==========
 Income taxes paid (refunded).............................................          $      (2)         $       300
                                                                                    ==========           ==========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

<PAGE>   7


                 IRI INTERNATIONAL CORPORATION AND SUBSIDIARIES

                  Condensed Consolidated Financial Statements

                                 March 31, 2000


<PAGE>   8


(1) GENERAL

    The accompanying condensed consolidated financial statements of IRI
    International Corporation and subsidiaries (the Company) as of March 31,
    2000 and for the three ended March 31, 2000 and 1999 have been prepared
    pursuant to the rules and regulations of the Securities and Exchange
    Commission and are unaudited; however, they include all adjustments
    (consisting only of normal recurring adjustments) which, in the opinion of
    management, are necessary for a fair presentation for such periods.
    Accounting measurements at interim dates inherently involve greater
    reliance on estimates than at year end. The results of operations for the
    interim periods presented are not necessarily indicative of the results to
    be expected for the entire year.

    Certain footnote disclosures normally included in annual consolidated
    financial statements prepared in accordance with generally accepted
    accounting principles have been omitted herein. The interim information
    should be read in conjunction with the Company's Annual Report on Form 10-K
    for the year ended December 31, 1999.

(2) INVENTORIES

    Inventories consist of the following at March 31, 2000 and December 31,
    1999 (in thousands) (unaudited):

<TABLE>
<CAPTION>
                                     2000      1999
                                   -------- ----------
<S>                              <C>        <C>
               Raw materials       $ 36,705   35,524
               Work-in-process       12,625   13,929
               Finished goods        44,217   43,119
                                   -------- ----------
                     Total         $ 93,547   92,572
                                   ======== ==========
</TABLE>


(3) COMMITMENTS AND CONTINGENCIES

    The Company has contract commitments with customers aggregating $56.7
    million at March 31, 2000. At March 31, 2000, the Company was contingently
    liable for approximately $2.9 million in letters of credit which guarantee
    the Company's performance for payment to third parties in accordance with
    specified contractual terms and conditions. Management does not expect any
    material losses to result from these off-balance-sheet instruments as it
    anticipates full performance on the related contracts.


<PAGE>   9


                 IRI INTERNATIONAL CORPORATION AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements


(4) NET INCOME (LOSS) PER COMMON SHARE

    Stock options outstanding at March 31, 2000 of 2,586,500 shares were
    considered in the computation of net income per common share, resulting in
    847,000 potentially dilutive shares for the quarter then ended. Stock
    options outstanding at March 31, 1999 of 2,471,500 shares were not
    considered in the computation of net income per common share for the quarter
    then ended because the exercise price exceeded the average market price for
    the respective period.

(5) NEW ACCOUNTING PRONOUNCEMENTS

    Statement of Financial Accounting Standards No. 133, Accounting for
    Derivative Instruments and Hedging Activities, was issued by the Financial
    Accounting Standards Board in June 1998. SFAS 133 standardizes the
    accounting for derivative instruments, including derivative instruments
    embedded in other contracts. Under the standard, entities are required to
    carry all derivative instruments in the statement of financial position at
    fair value. The accounting for changes in the fair value (i.e., gains or
    losses) of a derivative instrument depends on whether it has been
    designated and qualifies as part of a hedging relationship and, if so, on
    the reason for holding it. If specified conditions are met, entities may
    elect to designate a derivative instrument as a hedge of exposures to
    changes in fair values, cash flows, or foreign currencies. If the hedged
    exposure is a fair value exposure, the gain or loss on the derivative
    instrument is recognized in earnings in the period of change together with
    the offsetting loss or gain on the hedged item attributable to the risk
    being hedged. If the hedged exposure is a cash flow exposure the effective
    portion of the gain or loss on the derivative instrument is reported
    initially as a component of other comprehensive income (outside earnings)
    and subsequently reclassified into earnings when the forecasted transaction
    affects earnings. Any amounts excluded from the assessment of hedge
    effectiveness, as well as the ineffective portion of the gain or loss, is
    reported in earnings immediately. Accounting for foreign currency hedges is
    similar to the accounting for fair value and cash flow hedges. If the
    derivative instrument is not designated as a hedge, the gain or loss is
    recognized in earnings in the period of change.

    The Company will adopt SFAS 133 beginning January 1, 2001. The Company has
    not yet determined the impact that SFAS 133 will have on consolidated
    financial statements. Management believes that the determination will not
    be meaningful until closer to the date of initial adoption.

(6) SEGMENT FINANCIAL INFORMATION

    The Company operates through three business segments consisting of Oilfield
    Equipment, Downhole Tools and Specialty Steel. Financial information by
    segments for the three months ended March 31, 2000 and 1999 is summarized
    below (in thousands) (unaudited):

<TABLE>
<CAPTION>

                                   OILFIELD    DOWNHOLE  SPECIALTY   CORPORATE
                                   EQUIPMENT   PRODUCTS    STEEL     AND OTHER    TOTAL
                                   ---------   --------  ---------   ---------    ------
<S>                                <C>         <C>       <C>         <C>          <C>
QTR ENDED MARCH 31, 2000:
  Sales to unaffiliated customers    20,210     12,757     1,423      (1,276)     33,114
  Operating income (loss)             3,529      3,169        (3)     (4,453)      2,242
  Depreciation and amortization         140        821        11         419       1,391
  Capital Expenditures                    4        713        --          --         717
</TABLE>

                                       3

<PAGE>   10



                 IRI INTERNATIONAL CORPORATION AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements


<TABLE>
<CAPTION>
<S>                                <C>         <C>       <C>         <C>          <C>
QTR ENDED MARCH 31, 1999:
  Sales to unaffiliated customers    10,967     11,326     1,170        (920)     22,543
  Operating income (loss)               605      2,023       738      (3,521)       (155)
  Depreciation and amortization         129      1,078        11          58       1,276
  Amortization of negative goodwill       -          -         -       1,342       1,342
  Capital Expenditures                    -        415         -           -         415
</TABLE>

                                       4

<PAGE>   11
ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our condensed
consolidated financial statements and the notes thereto.

OVERVIEW

     General

     We manufacture land-based drilling and well-servicing rigs and rig
component parts for use in the domestic and international markets. The
condition of the oil and gas industry and worldwide levels of exploration,
development and production activity, including the number of oil and gas wells
being drilled, the depth and drilling conditions of such wells, the number of
well completions and the level of workover activity have a substantial impact
on our revenues. Exploration, development and production activity is largely
dependent on the prevailing view of future oil and natural gas prices which
have been significantly volatile for the last 20 years. Oil and natural gas
prices are influenced by factors affecting the supply of and demand for oil and
gas, including the level of drilling activity, worldwide economic activity,
interest rates and the cost of capital, environmental regulation, tax policies,
political requirements of national governments, coordination by OPEC and the
cost of producing oil and gas. Demand for our products in certain emerging
market countries may be greatly influenced by their need for internal
development, energy self-sufficiency or hard currency earnings rather than the
conventional factors relating to the price of oil and natural gas.

     As a result of increases in the price of oil over the course of the
previous year, customer spending and rig utilization rates have increased. The
increases in our revenues, operating income, results of operations and backlog
for the first quarter of 2000, as compared to the first quarter of 1999,
reflects the higher level of activity in the industry, and the benefits of
measures taken by the Company to reduce cost and improve productivity.

     On March 16, 2000 we announced the signing of a definitive merger agreement
with National-Oilwell, Inc., ("National-Oilwell") a worldwide leader in the
design, manufacture and sale of comprehensive systems and components used in oil
and gas drilling and production, as well as in the provision of supply chain
integration services to the upstream oil and gas industry.

     The merger agreement, unanimously approved by each company's board of
directors, calls for our shareholders to receive .3385 share of
National-Oilwell common stock for each common share of the Company.
National-Oilwell will issue approximately 14.4 million shares of its common
stock for all common shares of the Company issued and outstanding and all
options to purchase common shares of the Company, which options will become
fully vested at closing. This transaction is expected to be accounted for as a
pooling of interests and be tax-free to both companies and our shareholders.

     Foreign Exchange Transactions

     We have attempted to limit our exposure to foreign currency fluctuations.
Sales denominated in foreign currencies are primarily made by foreign branches
of the Downhole Products segment. With the exception of our Canadian
subsidiary, we maintain our cash, cash equivalents and investments in U.S.
dollar denominated accounts (except to the extent needed for local operating
expenses). We have not engaged in and do not currently intend to

<PAGE>   12
engage in any significant derivative instruments or currency trading
transactions to compensate for adverse currency fluctuations among foreign
currencies.

RESULTS OF OPERATIONS

Sales of new rigs manufactured by us can produce large fluctuations in revenues
depending on the size and the timing of the construction of orders. Individual
orders of rig packages range from $1 million to $25 million and cycle times for
the design, engineering and manufacturing of rig packages range from six to
nine months. These fluctuations in the size and timing of orders, may affect
our quarterly revenues and operating income.

     Results of Segment Operations

     The following discussion of the results of operations of our oil field
equipment, downhole products and specialty steel segments does not reflect the
allocation of corporate overhead and unallocated administrative expenses and
amortization of goodwill and negative goodwill on an individual segment basis.
Certain information that reconciles the discussion of the results of operations
of the individual segments to our condensed consolidated financial statements
is as follows (unaudited):

<TABLE>
<CAPTION>
                                                          THE COMPANY
                                                         (IN THOUSANDS)
                                                    ------------------------
                                                       THREE MONTHS ENDED
                                                           MARCH 31,
                                                    ------------------------
                                                        2000         1999
                                                    ------------  ----------
<S>                                                 <C>           <C>
Revenues
  Oilfield equipment.............................      $20,210     $10,967
  Down hole tools................................       12,757      11,326
  Specialty steel................................        1,423       1,170
  Eliminations...................................       (1,276)       (920)
                                                       -------     -------
   Total.........................................      $33,114     $22,543
                                                       =======     =======

  Segment operating income (loss)
  Oil field equipment............................       $3,529      $  605
  Downhole tools.................................        3,169       2,023
  Specialty steel................................           (3)        738
                                                       -------     -------
   Total.........................................        6,695       3,366

  Corporate overhead and unallocated
   administrative expenses.......................       (4,139)     (3,744)
  Amortization of negative goodwill..............           --       1,342
  Amortization of  goodwill......................         (314)       (314)
  Restructuring costs............................           --        (805)
                                                       -------     -------
   Operating income...........................          $2,242       $(155)
                                                       =======     =======
</TABLE>

     Oil Field Equipment

     Revenues for this segment increased 84.3% from the first three months of
1999 to $20.02 million in the first three months of 2000, due to the partial
income recognition of new orders received in the fourth quarter of 1999 from
customers in Russia and the Middle East. Gross margin was 21.9% for the first
quarter of 2000 as compared to 12.2% for the first quarter of 1999. The lower
margin in the first quarter of 1999 reflects an unusually low average margin on
contracts that the company performed during that period.

     Downhole Products

     This segment had revenues of $12.8 million for the first quarter of 2000,
which constituted an increase of 12.6% from the first quarter of 1999. In
addition, operating income grew by 56.6% from the first quarter of 1999 to $3.2
million in the first quarter of this year. Operating margin improved to 24.8%
in the first quarter of this year

                                       4

<PAGE>   13

from 17.9% in the first quarter of the previous year, due to lower expense
levels and a 28% growth in rental revenue which provided a higher gross margin.

     Specialty Steel

     Revenues increased to $1.4 million for the first quarter of 2000, from $1.2
million in the first quarter of 1999, largely due to an increase in the number
of contracts with the military for gun tubes. However, operating income was down
from $0.7 million in 1999 to a loss of $3,000, resulting from lower margin
business.

     Corporate and Administrative Expenses

     The $ 0.4 million increase for the first three months of 2000, as compared
to the first three months of 1999, resulted from: (1) $0.3 million expenditure
made by the Oilfield Equipment segment in connection with a sales tax audit,
offset by a $0.2 million reduction in administrative salaries and (2) a $0.3
million increase in depreciation expense for computer systems and a $0.1
million increase in fees for professional services, offset by a $0.1 million
reduction in salaries of administrative personnel in the Downhole Products
segment. Corporate and administrative expenses were 12.5% of revenues, down from
16.6% of revenue for the prior year period.

     Other Income (Expense)

     The decrease in other expense for the first quarter of 2000 as compared to
the first quarter of 1999 was primarily the result of decreased losses from
investments in marketable securities in 2000. Gains on investments in marketable
securities netted $16,000 during the first quarter of 2000, as compared to
losses of $1.7 million during the first quarter of 1999.

     Income Taxes

     The change in the effective income tax rate to 38% for the first quarter of
2000 from (17.8)% is primarily attributable to the net operating income for 2000
as compared to a net operating loss in 1999. The change was partially due to the
fact that there was no negative goodwill amortization in the first quarter of
2000, while there was negative goodwill amortization in each of the first three
quarters of 1999.

ACCOUNTING POLICIES

      Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities, was issued by the Financial
Accounting Standards Board in June 1998. SFAS 133 standardizes the accounting
for derivative instruments, including derivative instruments embedded in other
contracts. Under the standard, entities are required to carry all derivative
instruments in the statement of financial position at fair value. The accounting
for changes in the fair value (i.e., gains or losses) of a derivative instrument
depends on whether it has been designated and qualifies as part of a hedging
relationship and, if so, on the reason for holding it. If specified conditions
are met, entities may elect to designate a derivative instrument as a hedge of
exposures to changes in fair values, cash flows, or foreign currencies. If the
hedged exposure is a fair value exposure, the gain or loss on the derivative
instrument is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item attributable to the risk being
hedged. If the hedged exposure is a cash flow exposure the effective portion of
the gain or loss on the derivative instrument is reported initially as a
component of other comprehensive income (outside earnings) and subsequently
reclassified into earnings when the forecasted transaction affects earnings. Any
amounts excluded from the assessment of hedge effectiveness, as well as the
ineffective portion of the gain or loss, is reported in earnings immediately.
Accounting for foreign currency hedges is similar to the accounting for fair
value and cash flow hedges. If the derivative instrument is not designated as a
hedge, the gain or loss is recognized in earnings in the period of change.

      The Company will adopt SFAS 133 beginning January 1, 2001. The Company has
not yet determined the impact that SFAS 133 will have on consolidated financial
statements. Management believes that the determination will not be meaningful
until closer to the date of initial adoption.


                                       5

<PAGE>   14

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2000, we had cash and cash equivalents and marketable
securities of $45.3 million, compared to $50.4 million at December 31, 1999.
Our working capital was $153.9 million compared to $149.8 million at December
31, 1999. This increase in working capital at March 31, 2000 resulted from an
increase in marketable securities, accounts receivable, inventories, deferred
income taxes and other current assets, partially offset by a decrease in cash
and cash equivalents, and an increase in current liabilities. At March 31,
2000, the ratio of our current assets to current liabilities was approximately
9.9:1.

     Without taking into account the proposed merger with National-Oilwell, we
believe that our balance sheet, significant liquidity and cash flow from
operations will be sufficient to meet our short term and long term liquidity
needs. We believe that any credit facilities that we may need in the future
will be available on commercially acceptable terms, though there can be no
assurances in this regard.

     Credit Facility

     The Company had a $9.7 million revolving credit facility with a maturity
date of March 31, 2000. The revolving credit facility was replaced in December
1999 with a new $10.0 million revolving credit facility, which matures on
December 28, 2000 and provides exclusively for bank guarantees and commercial
and standby letters of credit. At March 31, 2000, approximately $7.2 million
was available for bank guarantees and letters of credit under the new revolving
credit facility. The Company had no outstanding indebtedness at March 31, 2000.

CAPITAL EXPENDITURES

     Capital expenditures for the three months ended March 31, 2000 totaled
approximately $0.7 million, which was used to purchase (1) several buildings,
which are currently being used by the Downhole Products segment as storage
facilities and for the servicing of equipment, and (2) rental tools for the
Downhole Products segment. We are funding capital expenditures with available
cash and cash flow from operations.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

     With the exception of the historical information contained in this report,
the matters described herein contain forward-looking statements that involve
risk and uncertainties including but not limited to economic and competitive
factors outside of our control. These factors more specifically include:

     -    dependence on the oil and gas industry;
     -    competition from various entities;
     -    the impact of government regulations;
     -    the instability of certain foreign economies (including Russia and
          countries of the Asia-Pacific region);
     -    currency fluctuations;
     -    risks of expropriation; and
     -    changes in law affecting international trade and investment.

Forward-looking statements are typically identified by the words "believe,"
"expect," "anticipate" "intend," "estimate," and similar expressions. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of their dates.

INFLATION

     Inflation has not had a material impact on our operating costs.

                                       6

<PAGE>   15

ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     This discussion of our exposure to market risks and our risk-management
activities includes forward looking statements. These forward looking
statements involve risks and uncertainties, including economic and competitive
factors outside our control.

     Our primary risk exposures come from interest rate risks, foreign exchange
rate risks, and equity price risks. Our exposure to interest rate risks are
minimal with respect to indebtedness. We repaid substantially all our
outstanding indebtedness in November 1997. However, at March 31, 2000, we had
approximately $21.2 million of cash and cash equivalents in interest bearing
accounts. The rate of return on these accounts will vary with the prevailing
interest rates. We do not engage in any significant interest rate swaps or
other derivative activities designed to limit our exposure to changes in
interest rates.

     Our direct exposure to foreign exchange risks is minimal. Except as
discussed above in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Foreign Exchange Transactions" with
respect to our Downhole Products segment, all of our sales are denominated in
U.S. dollars. However, foreign exchange rate fluctuations may affect our
revenues indirectly to the extent that a stronger U.S. dollar affects our
ability to compete on the basis of price. We do not engage in any significant
hedging or currency trading activities to limit our sensitivity to changes in
foreign exchange rates and/or interest rates.

     At March 31, 2000, we had marketable securities of $19.8 million. From
time to time, we purchase equitable securities for trading purposes.
Fluctuations in interest rates and equity prices could adversely affect the
value of our marketable securities.

     We do not believe there has been any material change in market risks
relating to our business operations since the end of 1999.

                                       7

<PAGE>   16



PART II  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORT ON FORM 8-K

         (a)      Exhibits

         The exhibits listed on the exhibit Index following the signature page
hereof are filed herewith in response to this item.

         (b)      Reports on Form 8-K

         None.

                                       8

<PAGE>   17


                                   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 hereunto duly authorized.

Date: May 15, 2000              IRI INTERNATIONAL CORPORATION

                                     By: /s/ ROBERT L. HARGRAVE
                                        ---------------------------------------
                                                    Robert L. Hargrave
                                              Chief Financial and Accounting
                                                         Officer

                                       9

<PAGE>   18


                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO.     DESCRIPTION
<S>             <C>
*2.1            Agreement of Merger among National-Oilwell, Inc., Arrow
                Acquisition, Inc. and IRI International Corporation, dated as
                of March 15, 2000

**3.1           Form of Restated Certificate of Incorporation of IRI
                International Corporation

**3.2           Amended and Restated Bylaws of the Company

10.1            Employment Agreement between IRI International Corporation and
                Robert Hargrave

10.2            First Amendment to Credit Agreement between IRI International
                Corporation and Bank One, Texas, dated as of April 5, 2000

27.1            Financial Data Schedule (submitted as an exhibit only in the
                electronic format of this Quarterly Report on Form 10-Q)
</TABLE>

---------
*    Exhibit incorporated herein by reference to National-Oilwell, Inc.'s
     Registration Statement on Form S-4, dated as of May 10, 2000.

**   Exhibit incorporated herein by reference to the Company's registration
     statement on Form S-1 (Registration No. 333-31157) dated September 8,
     1997, as amended.