The mathematical models representing machine tool chatter dynamics have been cast as differential equations with delay. The suppression of regenerative chatter by spindle speed variation is attracting increasing attention. In this paper, we study nonlinear delay differential equations with periodic delays which models the machine tool chatter with continuously modulated spindle speed. The explicit time-dependent delay terms, due to spindle speed modulation, are replaced by state dependent delay terms by augmenting the original equations. The augmented system of equations is autonomous and has two pairs of pure imaginary eigenvalues without resonance. We make use of Lyapunov-Schmidt Reduction method to determine the periodic solutions and analyze the tool motion. Analytical results show both modest increase of stability and existence of periodic solutions close to the new stability boundary.