<PAGE>   1
                       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, 1997

                                       OR

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

                         Commission file number 0-18001

                              THE PRESLEY COMPANIES
             (Exact name of registrant as specified in its charter)

         Delaware                                               33-0475923
  (State or jurisdiction of                                  (I.R.S. Employer
incorporation or organization)                               Identification No.)

          19 Corporate Plaza                                      92660
       Newport Beach, California                                (Zip Code)
(Address of principal executive offices)

                                 (714) 640-6400
              (Registrant's telephone number, including area code)

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

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

     YES    X                                                      NO
          -----                                                       -----

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

<TABLE>
<CAPTION>
                                                                Outstanding at
Cass of Common Stock                                            March 31, 1997
---------------------                                           --------------
<S>                                                               <C>       
Series A, par value $.01                                          17,838,535
Series B, restricted voting convertible, par value $.01           34,357,143
</TABLE>

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

<PAGE>   2

                              THE PRESLEY COMPANIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                          Page No. 
                                                                                          -------  
<S>                                                                                       <C>      
PART I.    FINANCIAL INFORMATION                                                                   
                                                                                                   
Item 1.    Financial Statements:                                                                   
                                                                                                   
           Consolidated Balance Sheets - March 31, 1997 and                                        
               December 31, 1996........................................................    3      
                                                                                                   
           Consolidated Statements of Operations - Three Months Ended                              
               March 31, 1997 and 1996..................................................    4      
                                                                                                   
           Consolidated Statement of Stockholders' Equity - Three Months                           
               Ended March 31, 1997.....................................................    5      
                                                                                                   
           Consolidated Statements of Cash Flows - Three Months Ended                              
               March 31, 1997 and 1996..................................................    6      
                                                                                                   
           Notes to Consolidated Financial Statements...................................    7      
                                                                                                   
Item 2.    Management's Discussion and Analysis of  Financial Condition                            
             and Results of Operations..................................................    8      
                                                                                                   
PART II.   OTHER INFORMATION............................................................   15       
                                                                                                   
SIGNATURES .............................................................................   16      
</TABLE>





                                       2


<PAGE>   3
                              THE PRESLEY COMPANIES

                           CONSOLIDATED BALANCE SHEETS
         (in thousands except number of shares and par value per share)

<TABLE>
<CAPTION>
                                                                  March 31,        December 31,
                                                                    1997               1996
                                                                  ---------        ------------
                                                                 (unaudited)
<S>                                                               <C>               <C>      
                                     ASSETS
Cash and cash equivalents                                         $   3,226         $   4,550
Receivables                                                           4,325             4,225
Real estate inventories                                             320,924           304,126
Property and equipment, less accumulated
  depreciation of $1,427 and $1,432 at March 31,
  1997 and December 31, 1996, respectively                            3,042             3,047
Deferred loan costs                                                   4,022             4,347
Other assets                                                          7,902            11,320
                                                                  ---------         ---------
                                                                  $ 343,441         $ 331,615
                                                                  =========         =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                                                  $  18,420         $  18,428
Accrued expenses                                                     14,621            20,450
Notes payable                                                        39,761            18,524
12 1/2% Senior Notes due 2001                                       190,000           190,000
                                                                  ---------         ---------
                                                                    262,802           247,402
                                                                  ---------         ---------
Stockholders' equity
  Common stock:
      Series A common stock, par value $.01 per share;
         100,000,000 shares authorized; 17,838,535
         issued and outstanding at March 31, 1997 and
         December 31, 1996, respectively                                178               178

      Series B restricted voting convertible common stock,
         par value $.01 per share; 50,000,000 shares
         authorized; 34,357,143 shares issued and
         outstanding at March 31, 1997 and December 31,
         1996, respectively                                             344               344

  Additional paid-in capital                                        114,599           114,599

  Accumulated deficit from January 1, 1994                          (34,482)          (30,908)
                                                                  ---------         ---------
                                                                     80,639            84,213
                                                                  ---------         ---------
                                                                  $ 343,441         $ 331,615
                                                                  =========         =========
</TABLE>




                                       3


<PAGE>   4
                              THE PRESLEY COMPANIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands except per common share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                           March 31,
                                                    -------------------------
                                                      1997              1996
                                                    --------         --------
<S>                                                 <C>              <C>     
Sales
  Homes                                             $ 67,157         $ 60,612
  Lots, land and other                                   638              459
                                                    --------         --------
                                                      67,795           61,071
                                                    --------         --------
Operating costs
   Cost of sales - homes                             (60,678)         (54,438)
   Cost of sales - lots, land and other                 (647)            (327)
   Sales and marketing                                (5,507)          (4,844)
   General and administrative                         (3,932)          (3,702)
                                                    --------         --------
                                                     (70,764)         (63,311)
                                                    --------         --------

Operating loss                                        (2,969)          (2,240)

Interest expense, net of amounts capitalized          (1,201)            (760)

Other income, net                                        596              679
                                                    --------         --------

Net loss                                            $ (3,574)        $ (2,321)
                                                    ========         ========

Net loss per common share (Note 1)                  $  (0.07)        $  (0.04)
                                                    ========         ========
</TABLE>



                                        4


<PAGE>   5
                              THE PRESLEY COMPANIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        Three Months Ended March 31, 1997
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                 Common Stock                                         Accumulated
                                  -----------------------------------------------                       Deficit
                                       Series A                    Series B            Additional        from
                                  -------------------         -------------------       Paid-In        January 1,
                                  Shares       Amount         Shares       Amount       Capital          1994             Total
                                  ------       ------         ------       ------      ----------     -----------        --------
<S>                               <C>           <C>           <C>           <C>         <C>             <C>              <C>     
Balance - December 31, 1996       17,839        $178          34,357        $344        $114,599        $(30,908)        $ 84,213

Net loss for the three months
    ended March 31, 1997              --          --              --          --              --          (3,574)          (3,574)
                                  -----------------------------------------------------------------------------------------------
Balance - March 31, 1997          17,839        $178          34,357        $344        $114,599        $(34,482)        $ 80,639
                                  ===============================================================================================
</TABLE>





                                        5


<PAGE>   6
                              THE PRESLEY COMPANIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                       March 31,
                                                                              -------------------------
                                                                                1997             1996
                                                                              --------         --------
<S>                                                                           <C>              <C>      
OPERATING ACTIVITIES
  Net loss                                                                    $ (3,574)        $ (2,321)
  Adjustments to reconcile net loss to net cash used in
     operating activities
        Depreciation and amortization                                              154              136
        Net changes in operating assets and liabilities:
           Other receivables                                                      (500)            (619)
           Real estate inventories                                             (16,798)          (1,050)
           Deferred loan costs                                                     325              255
           Other assets                                                          3,418             (956)
           Accounts payable                                                         (8)             633
           Accrued expenses                                                     (5,829)          (6,631)
                                                                              --------         --------
   Net cash used in operating activities                                       (22,812)         (10,553)
                                                                              --------         --------
INVESTING ACTIVITIES
  Principal collections on notes receivable                                        400               31
  Property and equipment, net                                                     (149)            (141)
                                                                              --------         --------
  Net cash provided by (used in) investing activities                              251             (110)
                                                                              --------         --------
FINANCING ACTIVITIES
  Proceeds from borrowing on notes payable                                      45,259           33,835
  Principal payments on notes payable                                          (24,022)         (24,307)
                                                                              --------         --------
  Net cash provided by financing activities                                     21,237            9,528
                                                                              --------         --------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                       (1,324)          (1,135)

CASH AND CASH EQUIVALENTS - beginning of period                                  4,550            4,217
                                                                              --------         --------
CASH AND CASH EQUIVALENTS - end of period                                     $  3,226         $  3,082
                                                                              ========         ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for interest, net of amounts capitalized        $    964         $    984
                                                                              ========         ========
  Cash paid during the period for income taxes                                $     --         $     --
                                                                              ========         ========
</TABLE>






                                       6


<PAGE>   7
                              THE PRESLEY COMPANIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and in accordance with the rules and regulations of the
Securities and Exchange Commission. Effective as of January 1, 1994, the Company
completed a capital restructuring and quasi-reorganization. The
quasi-reorganiztion resulted in the adjustment of assets and liabilities to
estimated fair values and the elimination of an accumulated deficit effective
January 1, 1994. The consolidated financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The consolidated financial statements
included herein should be read in conjunction with the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.

The interim consolidated financial statements have been prepared in accordance
with the Company's customary accounting practices. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a presentation in accordance with generally accepted accounting principles
have been included. Operating results for the three month period ended March 31,
1997 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1997.

The consolidated financial statements include the accounts of the Company and
all majority-owned or controlled subsidiaries and joint ventures. All
significant intercompany accounts and transactions have been eliminated.
Investments in unconsolidated joint ventures in which the Company has less than
a controlling interest are accounted for using the equity method. The accounting
policies of the joint ventures are substantially the same as those of the
Company.

Net loss per common share for the three months ended March 31, 1997 and 1996 is
based on 52,195,678 of Series A and Series B common stock outstanding.

NOTE 2 - SALE AND LEASEBACK OF CERTAIN MODEL HOMES

During the quarter ended March 31, 1996, the Company completed a bulk
transaction in which 57 model homes were sold and leased back to the Company,
resulting in total revenue to the Company of approximately $9,750,000. The
individual leases expire at various dates through 2001, but may be extended
under certain circumstances.




                                        7


<PAGE>   8



                              THE PRESLEY COMPANIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

The following discussion of results of operations and financial condition should
be read in conjunction with the consolidated financial statements and notes
thereto included in Item 1, as well as the information presented in the Annual
Report on Form 10-K for the year ended December 31, 1996.

FINANCIAL CONDITION AND LIQUIDITY

The Company provides for its ongoing cash requirements from internally generated
funds from the sales of real estate and from outside borrowings. The Company
currently maintains the following major credit facilities: 12 1/2% Senior Notes
(the "Senior Notes"), a secured revolving lending facility (the "Working Capital
Facility"), a revolving line of credit relating to Horsethief Canyon Partners,
its wholly-owned joint venture partnership, a revolving line of credit relating
to Carmel Mountain Ranch, its wholly-owned joint venture partnership (the latter
two facilities collectively the "Joint Venture Facilities"), and a revolving
line of credit relating to construction on certain real property located in
Arizona and New Mexico (the "Other Facility"), which are summarized below.

SENIOR NOTES

The Company filed with the Securities and Exchange Commission a Registration
Statement on Form S-1 for the sale of $200,000,000 of Senior Notes which became
effective on June 23, 1994. The offering closed on June 29, 1994 and was fully
subscribed and issued. The following discussion of the Senior Notes should be
read in conjunction with the Registration Statement as filed with the Securities
and Exchange Commission.

The 12 1/2% Senior Notes due 2001 (the "Senior Notes") were offered by The
Presley Companies, a Delaware corporation ("Delaware Presley"), and are
unconditionally guaranteed on a senior basis by Presley Homes (formerly The
Presley Companies), a California corporation and a wholly-owned subsidiary of
Delaware Presley ("California Presley"). However, California Presley has granted
liens on substantially all of its assets as security for its obligations under
the Working Capital Facility and the Other Facility. Because the California
Presley guarantee is not secured, holders of the Senior Notes are effectively
junior to borrowings under the Working Capital Facility and the Other Facility
with respect to such assets. Delaware Presley and its consolidated subsidiaries
are referred to collectively herein as "Presley" or the "Company". Interest on
the Senior Notes is payable on January 1 and July 1 of each year.

Except as set forth in the Indenture Agreement (the "Indenture"), the Senior
Notes are not redeemable by Presley prior to July 1, 1998. Thereafter, the
Senior Notes will be redeemable at the option of Delaware Presley, in whole or
in part, at the redemption prices set forth in the Indenture.





                                        8


<PAGE>   9
                              THE PRESLEY COMPANIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (CONTINUED)

The Senior Notes are senior obligations of Presley and rank pari passu in right
of payment to all existing and future unsecured indebtedness of Presley, and
senior in right of payment to all future indebtedness of the Company which by
its terms is subordinated to the Senior Notes.

Upon a Change of Control as described in the Indenture, Presley must offer to
repurchase Senior Notes at a price equal to 101% of the principal amount plus
accrued and unpaid interest, if any, to the date of repurchase.

Presley is required to offer to repurchase certain Senior Notes at a price equal
to 100% of the principal amount plus any accrued and unpaid interest to the date
of repurchase if Delaware Presley's Consolidated Tangible Net Worth is less than
$60,000,000 for any two consecutive fiscal quarters, and from the proceeds of
certain asset sales.

The Indenture governing the Senior Notes restricts, among other things: (i) the
payment of dividends on and redemptions of capital stock by Presley, (ii) the
incurrence of indebtedness by Presley or the issuance of preferred stock by
Delaware Presley's subsidiaries, (iii) the creation of certain liens, (iv)
Delaware Presley's ability to consolidate or merge with or into, or to transfer
all or substantially all of its assets to, another person, and (v) transactions
with affiliates. These restrictions are subject to a number of important
qualifications and exceptions.

WORKING CAPITAL FACILITY

The collateral for the loans provided by the Working Capital Facility includes
substantially all real estate and other assets of the Company (excluding assets
of partnerships and the portion of the partnership interests in Carmel Mountain
Ranch partnership which are currently pledged to other lenders). The borrowing
base is calculated based on specified percentages of book values of real estate
assets. The borrowing base at March 31, 1997 was approximately $210,000,000;
however, the maximum loan under the Working Capital Facility is limited to
$72,000,000. The principal outstanding under the Working Capital Facility at
March 31, 1997 was $31,000,000.

The Working Capital Facility has a termination date of May 20, 1997, with two
one-year extensions at the Company's option. Upon any extension of the
termination date, the Company would pay an extension fee of 1% of the Working
Capital Facility commitment amount (in addition to the loan fee described below)
for each year extended. On April 18, 1997, the Company exercised its option to
extend the termination date of the Working Capital Facility for one period of
twelve months from May 20, 1997 to May 20, 1998.

Pursuant to the terms of the Working Capital Facility, outstanding advances bear
interest at the prime rate plus 2%. An alternate option provides for interest
based on a specified overseas base rate plus 4.44%, but not less than the prime
rate option in effect at December 31, 1993 (8.00%). In addition, the Company
pays a loan fee of 1% per annum, payable quarterly, on the total Working Capital
Facility commitment amount.




                                        9


<PAGE>   10
                              THE PRESLEY COMPANIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (CONTINUED)

The Working Capital Facility now provides that the Company must maintain a
Tangible Effective Net Worth as of the last day of any fiscal quarter of not
less than $70,000,000. The Working Capital Facility also provides that as of the
last day of any fiscal quarter the ratio of the Company's Total Liabilities
(excluding non-recourse debt) to Tangible Effective Net Worth must not exceed
3.75 to 1 and that the ratio of Adjusted Total Liabilities (the Company's and
its unconsolidated partnerships' Total Liabilities and Letters of Credit)
(excluding non-recourse debt) to Tangible Effective Net Worth must not exceed
4.0 to 1. At March 31, 1997 the Company's Tangible Effective Net Worth was
approximately $76,617,000, the ratio of the Company's Total Liabilities
(excluding non-recourse debt) to Tangible Effective Net Worth was 3.43 to 1, and
the ratio of Adjusted Total Liabilities (excluding non-recourse debt) to
Tangible Effective Net Worth was 3.43 to 1.

The Working Capital Facility requires certain minimum cash flow and pre-tax and
pre-interest tests. The Working Capital Facility also provides for negative
covenants which, among other things, place limitations on the payment of cash
dividends, merger transactions, transactions with affiliates, the incurrence of
additional debt and the acquisition of new land as described in the following
paragraph.

Under the terms of the Working Capital Facility, the Company may acquire new
improved land for development of housing units of no more than 300 lots in any
one location without approval from the lenders if certain conditions are
satisfied. The Company may, however, acquire any new raw land or improved land
provided the Company has obtained the prior written approval of lenders holding
two-thirds of the obligations under the Working Capital Facility.

JOINT VENTURE FACILITIES

Horsethief Canyon Partners ("HCP"), the partnership that owns the Horsethief
Canyon master-planned community, is a California general partnership and is 100%
owned by The Presley Companies and its wholly-owned subsidiary. Effective on
October 4, 1996, HCP executed a master credit agreement with a maximum loan
commitment of $10,000,000 to finance the development of lots for residential
homes and the construction of single-family attached and detached production
homes. At March 31, 1997, the revolving line of credit had an outstanding
balance of $2,581,000. Interest on the outstanding balance is at prime plus
1.00% and the loan matures on March 17, 1998. Availability under the line is
subject to a number of limitations. The outstanding balance under this facility,
together with the outstanding balances under the CMR facility and the Other
facility described below, may not exceed $29,000,000.

Carmel Mountain Ranch ("CMR"), the partnership that owns the Carmel Mountain
Ranch master-planned community, is also a California general partnership and is
100% owned by The Presley Companies and its wholly-owned subsidiary. Effective
in March 1995, the development and construction of the project has been financed
through a revolving line of credit. The revolving line of credit consists of
several components relating to production units, models and residential lots. At
March 31, 1997, the revolving






                                       10


<PAGE>   11


                              THE PRESLEY COMPANIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (CONTINUED)

line of credit had an outstanding balance of $1,169,000. Availability under the
line is subject to a number of limitations, but in any case cannot exceed
$29,000,000, and is subject to further limitations, as described in the
preceding and following paragraphs. Interest on the outstanding balance is at
prime plus 1.00% and the loan matures on March 17, 1998.

OTHER FACILITY

Effective in October 1995, the Company executed a master credit agreement with a
maximum loan commitment of $5,000,000 to finance the development of lots for
residential homes and the construction of single-family attached and detached
production homes on certain real property located in Arizona and New Mexico.
Interest on the outstanding balance is at prime plus 1.00% and the loan matures
on November 30, 1998. The outstanding balance under this facility, together with
the outstanding balance under the HCP facility and the CMR facility described in
the preceding paragraphs, may not exceed $29,000,000. As of March 31, 1997 the
outstanding balance under this agreement was $3,275,000.

ASSESSMENT DISTRICT BONDS AND SELLER FINANCING

In some locations in which the Company develops its projects, assessment
district bonds are issued by municipalities to finance major infrastructure
improvements and fees. Such financing has been an important part of financing
master-planned communities due to the long-term nature of the financing,
favorable interest rates when compared to the Company's other sources of funds
and the fact that the bonds are sold, administered and collected by the relevant
government entity. As a landowner benefited by the improvements, the Company is
responsible for the assessments on its land. When Presley's homes or other
properties are sold, the assessments are either prepaid or the buyers assume the
responsibility for the related assessments.

Another potential source of financing available to the Company is
seller-provided financing for land acquired by the Company. Although the Company
has not used this form of financing significantly in the past few years, it is
possible that such financing may be available and utilized to a greater extent
in the future.




                                       11


<PAGE>   12
                              THE PRESLEY COMPANIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (CONTINUED)

                              RESULTS OF OPERATIONS

OVERVIEW AND RECENT RESULTS

Homes sold, closed and in backlog as of and for the periods presented are as
follows:

<TABLE>
<CAPTION>
                                                              As of and for            
                                                            the Three Months          
                                                             Ended March 31,          
                                                            -----------------          
                                                             1997       1996          
                                                             ----       ----          
<S>                                                          <C>        <C>           
Number of homes sold                                         449        591           
                                                                                      
Number of homes closed                                       362        369           
                                                                                      
Backlog of homes sold but not closed at end of period        369        538           
</TABLE>

The decrease in net new home orders and backlog in the first three months of
1997, as compared with the first three months of 1996, is the result of
decreases in the Company's Southern California, Northern California and Arizona
markets, offset by increases in the Company's Nevada market. However, the number
of net new home orders in the first quarter of 1997 was the second highest of
all first quarter results since the first quarter of 1989. The slight decrease
in closings in the first three months of 1997, as compared with the first three
months of 1996, is the result of decreases in the Company's Southern California
and Arizona markets, offset by increases in the Company's Northern California
and Nevada markets. The number of homes sold and closed for the three months
ended March 31, 1996 includes the sale of 57 model homes as described below.

Closings of homes in backlog generally occur within six months of the date
indicated. The dollar amount of backlog of homes sold but not closed as of March
31, 1997 was $73,360,000, as compared to $90,494,000 as of March 31, 1996 and
$52,660,000 as of December 31, 1996. The cancellation rate of buyers who
contracted to buy a home but did not close escrow at the Company's projects was
approximately 22% during 1996 and approximately 17% during the first three
months of 1997.

The number of homes closed in the first quarter of 1997 was down 2 percent to
362 from 369 in the first quarter of 1996. Net new home orders for the quarter
ended March 31, 1997 decreased 24 percent to 449 units from 591 a year ago. For
the first quarter of 1997, net new orders increased 47 percent to 449 from 306
units in the fourth quarter of 1996. The backlog of homes sold as of March 31,
1997 was 369, down 31 percent from 538 units a year earlier, and up 31 percent
from 282 units at December 31, 1996. The Company's inventory of completed and
unsold homes as of March 31, 1997 increased to 126 units from 122 units as of
December 31, 1996.



                                       12


<PAGE>   13
                              THE PRESLEY COMPANIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (CONTINUED)


Net new home orders and closings for the first quarter of 1996 include 57 model
homes which were sold and leased back to the Company in a bulk transaction
resulting in total revenue to the Company of approximately $9,750,000.

In general, housing demand is adversely affected by increases in interest and
housing costs. Interest rates, the length of time that assets remain in
inventory, and the proportion of inventory that is financed affect the Company's
interest cost. If the Company is unable to raise sales prices sufficiently to
compensate for higher costs, which has generally been the case recently, or if
mortgage interest rates increase significantly, affecting prospective buyers'
ability to adequately finance home purchases, the Company's sales, gross margins
and net results may be adversely impacted. To a limited extent, the Company
hedges against increases in interest costs by acquiring interest rate protection
that locks in or caps interest rates for limited periods of time for mortgage
financing for prospective homebuyers.

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS ENDED MARCH 31,
1996

Sales (which represent recorded revenues from closings) for the three months
ended March 31, 1997 were $67.8 million, an increase of $6.7 million (11%) from
sales of $61.1 million for the three months ended March 31, 1996. Revenue from
sales of homes increased $6.6 million to $67.2 million in the 1997 period from
$60.6 million in the 1996 period. This increase was due primarily to an increase
in the average sales prices of homes to $186,000 in the 1997 period from
$164,000 in the 1996 period, primarily as a result of changes in the mix of
product and, to a lesser extent, some price increases in certain markets.

Total operating loss increased from a loss of $2.2 million in the 1996 period to
$3.0 million in the 1997 period. The excess of revenue from sales of homes over
the related cost of sales increased by $0.3 million, to $6.5 million in the 1997
period from $6.2 million in the 1996 period. This increase was primarily due to
increased sales prices and decreases in buyer incentives. Sales and marketing
expenses increased by $0.7 million to $5.5 million in the 1997 period from $4.8
million in the 1996 period primarily as a result of increased advertising and
direct closings costs (directly related to increased revenue from closings) in
the 1997 period compared to the 1996 period. General and administrative expenses
increased by $0.2 million to $3.9 million in the 1997 period from $3.7 million
in the 1996 period, primarily as a result of start-up operations in Nevada.

Total interest incurred during the 1997 period increased $0.4 million (5.0%)
from the 1996 period as a result of an increase in debt levels and increased
interest rates. Net interest expense increased to $1.2 million in the 1997
period from $0.8 million for the 1996 period. This increase was due primarily to
a reduction in real estate assets which qualify for interest capitalization.




                                       13


<PAGE>   14
                              THE PRESLEY COMPANIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (CONTINUED)



Other (income) expense, net decreased to $0.6 million in the 1997 period from
$0.7 million in the 1996 period primarily as a result of decreased income from
mortgage operations.

CASH FLOWS - COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS
ENDED MARCH 31, 1996

Net cash used in operating activities increased from $10.6 million in the 1996
period to $22.8 million in the 1997 period. This change was primarily as a
result of increased land acquisition and construction activity.

Net cash provided by investing activities increased by $0.4 million in the 1997
period as compared to the 1996 period primarily as a result of increased
principal collections on notes receivable.

Net cash provided by financing activities increased by $11.7 million in the 1997
period as compared to the 1996 period as a result of an increase in net
borrowings activity.





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<PAGE>   15

                              THE PRESLEY COMPANIES

                           PART II. OTHER INFORMATION

ITEMS 1, 2, 3, 4 AND 5. Not applicable.

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

             (A)   EXHIBITS.
                   
                   10.1   Notice of Exercise of Option for Extension of
                          Termination Date dated as of April 18, 1997 under that
                          certain Fourth Amended and Restated Loan Agreement
                          dated as of March 25, 1994 between The Presley
                          Companies, a California corporation, as the Borrower,
                          Foothill Capital Corporation, Mellon Bank, N.A. as
                          Trustee of First Plaza Group Trust, a New York trust,
                          Pearl Street L.P. (c/o Goldman, Sachs & Co.),
                          Internationale Nederlanden (U.S.) Capital Corporation,
                          and Continental Stock & Trust Company, as Trustee for
                          the Whippoorwill/Presley Obligations Trust-1994, as
                          the Lenders, and Foothill Capital Corporation, as the
                          Agent and Lead Bank.

                   27     Financial Data Schedule

             (B)   REPORTS ON FORM 8-K.

                   The Company did not file any reports on Form 8-K during the
                   three months ended March 31, 1997.




                                       15


<PAGE>   16
                              THE PRESLEY COMPANIES

                                   SIGNATURES

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

Date:  May 15, 1997                  By:  /s/ DAVID M. SIEGEL
                                         -------------------------
                                          David M. Siegel
                                          Senior Vice President, 
                                          Chief Financial Officer 
                                          and Treasurer (Principal
                                          Financial Officer)



Date:  May 15, 1997                  By:  /s/ W. DOUGLASS HARRIS
                                         --------------------------
                                          W. Douglass Harris
                                          Vice President, Corporate 
                                          Controller (Principal 
                                          Accounting Officer)





                                       16