<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 September 30, 1996


                                       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                                    
       Newport Beach, California                               92660
----------------------------------------               ----------------------
(Address of principal executive offices)                    (Zip Code)



                                 (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.


                                                       Outstanding at 
   Class of Common Stock                             September 30, 1996 
   ---------------------                             ------------------
   Series A, par value $.01                              17,838,535
   Series B, restricted voting convertible,         
     par value $.01                                      34,357,143


<PAGE>   2
                             THE PRESLEY COMPANIES

                                     INDEX


<TABLE>
<CAPTION>

                                                                                                        Page No.
                                                                                                        ------- 
<S>                                                                                                     <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements:

              Consolidated Balance Sheets - September 30, 1996 and December 31, 1995  . . . . . . . . . .  3

              Consolidated Statements of Operations - Three and Nine Months Ended
                  September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

              Consolidated Statement of Stockholders' Equity - Nine Months
                  Ended September 30, 1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

              Consolidated Statements of Cash Flows - Nine Months Ended
                  September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
</TABLE>



                                       2
<PAGE>   3
                             THE PRESLEY COMPANIES

                          CONSOLIDATED BALANCE SHEETS
         (IN THOUSANDS EXCEPT NUMBER OF SHARES AND PAR VALUE PER SHARE)


<TABLE>
<CAPTION>

                                                                         September 30,         December 31,
                                                                             1996                 1995       
                                                                         -------------         ------------
                                                                          (unaudited)
<S>                                                                       <C>                   <C>
                                              ASSETS
Cash and cash equivalents                                                  $  3,208              $  4,217
Receivables                                                                   7,314                 5,304
Real estate inventories                                                     319,890               315,535
Property and equipment, less accumulated
  depreciation of $1,298 and $850 at September 30,
  1996 and December 31, 1995, respectively                                    2,864                 2,577
Deferred loan costs                                                           4,602                 5,366
Other assets                                                                  8,723                 7,934
                                                                           --------              --------
                                                                           $346,601              $340,933
                                                                           ========              ========

                               LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                                          $  11,565             $  10,551
Accrued expenses                                                             15,281                21,887
Notes payable                                                                46,965                34,434
12 1/2% Senior Notes due 2001                                               190,000               190,000
                                                                           --------              --------
                                                                            263,811               256,872
                                                                           --------              --------
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 September 30, 1996 and
         December 31, 1995, 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 September
         30, 1996 and December 31, 1995, respectively                           344                   344

  Additional paid-in capital                                                114,599               114,599

  Accumulated deficit from January 1, 1994 (Note 1)                         (32,331)              (31,060)
                                                                           --------              --------
                                                                             82,790                84,061
                                                                           --------              --------
                                                                           $346,601              $340,933
                                                                           ========              ========
</TABLE>




                                       3
<PAGE>   4
                             THE PRESLEY COMPANIES

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



<TABLE>
<CAPTION>
                                                             Three Months Ended               Nine Months Ended
                                                                September 30,                   September 30,      
                                                          -----------------------          -----------------------
                                                            1996           1995              1996           1995   
                                                          --------       --------          ---------      ---------
<S>                                                       <C>            <C>               <C>            <C>
Sales
  Homes                                                   $ 79,547       $ 58,503          $ 221,564      $ 165,271
  Lots, land and other                                           3          7,165              1,276         28.533
                                                          --------       --------          ---------      ---------
                                                            79,550         65,668            222,840        193,804
                                                          --------       --------          ---------      ---------
Operating costs
   Cost of sales - homes                                   (69,904)       (52,438)          (195,755)      (151,525)
   Cost of sales - lots, land and other                       (265)        (7,501)            (1,496)       (29,027)
   Reduction of real estate assets to
      estimated net realizable value                             -              -                  -         (9,400)
   Sales and marketing                                      (5,609)        (5,206)           (16,292)       (15,024)
   General and administrative                               (3,467)        (3,149)           (10,621)        (9,592)
                                                          --------       --------          ---------      ---------
                                                           (79,245)       (68,294)          (224,164)      (214,568)
                                                          --------       --------          ---------      ---------

Operating income (loss)                                        305         (2,626)            (1,324)       (20,764)

Interest expense, net of amounts capitalized                  (387)          (555)            (1,666)        (2,052)

Other income, net                                              765            545              1,719          1,444
                                                          --------       --------          ---------      ---------
Income (loss) before income taxes and
   extraordinary item                                          683         (2,636)            (1,271)       (21,372)

Credit (provision) for income taxes                              -          1,365                  -          6,063
                                                          --------       --------          ---------      ---------

Income (loss) before extraordinary item                        683         (1,271)            (1,271)       (15,309)

Extraordinary item - gain from retirement of
   debt, net of applicable income taxes                          -          1,964                  -          2,688
                                                          --------       --------          ---------      ---------

Net income (loss)                                         $    683       $    693          $  (1,271)     $ (12,621)
                                                          ========       ========          =========      ========= 

Net income (loss) per common share - Note 1:
   Before extraordinary item                              $   0.01       $  (0.02)         $   (0.02)     $   (0.29)
   Extraordinary item                                            -           0.03                  -           0.05
                                                          --------       --------          ---------      ---------
   After extraordinary item                               $   0.01       $   0.01          $   (0.02)     $   (0.24)
                                                          ========       ========          =========      ========= 
</TABLE>



                                       4
<PAGE>   5

                             THE PRESLEY COMPANIES
      
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      NINE MONTHS ENDED SEPTEMBER 30, 1996
                                 (in thousands)
                                  (unaudited)





<TABLE>
<CAPTION>
                                                                                              
                                                 Common Stock                                     
                                  -----------------------------------------                    Accumulated                     
                                      Series A                 Series B         Additional     Deficit from
                                  -----------------       -----------------       Paid-In       January 1,                         
                                  Shares     Amount       Shares     Amount       Capital         1994           Total
                                  ------     ------       ------     ------     ----------     ------------     -------
<S>                               <C>        <C>          <C>        <C>         <C>            <C>             <C>
Balance - December 31, 1995       17,839      $178        34,357      $344       $114,599       $(31,060)       $84,061
 
Net loss                               -         -             -         -              -         (1,271)        (1,271)
                                  ------      ----        ------      ----       --------       --------        -------

Balance - September 30, 1996      17,839      $178        34,357      $344       $114,599       $(32,331)       $82,790
                                  ======      ====        ======      ====       ========       ========        =======

</TABLE>




                                       5
<PAGE>   6
                             THE PRESLEY COMPANIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                               Nine Months Ended                              
                                                                                 September 30,                                
                                                                            ------------------------                          
                                                                              1996            1995                            
                                                                            --------        --------                          
<S>                                                                         <C>             <C>                               
OPERATING ACTIVITIES                                                                                                          
  Net loss                                                                  $ (1,271)       $(12,621)                         
  Adjustments to reconcile net loss to net cash (used in)                                                                     
     provided by operating activities                                                                                         
        Depreciation and amortization                                            449             340                          
        Reduction of real estate assets to estimated net                                                                      
            realizable value                                                       -           9,400                          
        Gain on retirement of debt                                                 -          (4,556)                         
        Net changes in operating assets and liabilities:                                                                      
           Other receivables                                                  (2,350)           (324)                         
           Real estate inventories                                            (4,355)         13,383                          
           Deferred loan costs                                                   764             634                          
           Other assets                                                         (789)            414                          
           Accounts payable                                                    1,014             (59)                         
           Accrued expenses                                                   (6,606)         (6,494)                         
           Income taxes                                                            -          (4,195)                         
                                                                            --------        --------                          
   Net cash (used in) provided by operating activities                       (13,144)         (4,078)                         
                                                                            --------        --------                          
                                                                                                                              
INVESTING ACTIVITIES                                                                                                          
  Issuance of notes receivable                                                     -          (2,162)                         
  Principal payments on notes receivable                                         340             262                          
  Property and equipment, net                                                   (736)           (752)                         
                                                                            --------        --------                          
  Net cash used in investing activities                                         (396)         (2,652)                         
                                                                            --------        --------                          
                                                                                                                              
FINANCING ACTIVITIES                                                                                                          
  Proceeds from borrowing on notes payable                                    84,602          65,347                          
  Principal payments on notes payable                                        (72,071)        (46,431)                         
  Retirement of debt                                                               -         (24,215)                         
                                                                            --------        --------                          
  Net cash provided by (used in) financing activities                         12,531          (5,299)                         
                                                                            --------        --------                          
                                                                                                                              
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          (1,009)        (12,029)                         
                                                                                                                              
CASH AND CASH EQUIVALENTS - beginning of period                                4,217          20,643                          
                                                                            --------        --------                          
                                                                                                                              
CASH AND CASH EQUIVALENTS - end of period                                   $  3,208        $  8,614                          
                                                                            ========        ========                          
                                                                                                                              
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                           
                                                  
  Cash paid during the period for interest, net of amounts capitalized      $  2,346        $  1,769                          
                                                                            ========        ========                          
  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-reorganization resulted in the adjustment of assets and liabilities to
estimated fair values and the elimination of an accumulated deficit effective
January 1, 1994.  The net amount of such revaluation adjustments, together with
the accumulated deficit as of the date thereof, was transferred to paid-in
capital in accordance with the accounting principles applicable to
quasi-reorganizations.  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, 1995.

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 nine month
period ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996.

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 income (loss) per common share for the three and nine months ended
September 30, 1996 and 1995 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, 1995.


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 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, certain real estate assets of the Company in Arizona 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 September 30, 1996 was approximately $207,000,000; however,
the maximum loan under the Working Capital Facility is limited to $72,000,000.
The principal outstanding under the Working Capital Facility at September 30,
1996 was $40,000,000.

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.

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 September 30, 1996 the Company's Tangible Effective Net Worth was
approximately $78,188,000, the ratio of the Company's Total Liabilities
(excluding non-recourse debt) to Tangible Effective Net Worth was 3.37 to 1,
and the ratio of Adjusted Total Liabilities (excluding non-recourse debt) to
Tangible Effective Net Worth was 3.38 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.  Prior to
October 4, 1996, the construction of the project was being financed through
intract loans to prepare finished lots for the construction of homes and
construction loans to finance the construction of homes.  At September 30, 1996
a total of $2,109,000 was outstanding under the intract and construction loans
of HCP.  The interest rate on the intract and construction loans was prime plus
1.50%.

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 singe-family attached and detached
production homes.  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 Other
facility described below, may not exceed $29,000,000.





                                       10
<PAGE>   11
                             THE PRESLEY COMPANIES

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


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
as of March 1995, the development and construction of the project is 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 September 30, 1996, the revolving line of credit had an outstanding balance
of $688,000.  Availability under the line is subject to a number of limitations.
The outstanding balance under this facility, together with the outstanding
balance under the HCP facility described above and the outstanding balance under
the Other facility described below, may not exceed $29,000,000.  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
September 30, 1996 the outstanding balance under this agreement was $4,168,000.


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            As of and for         
                                                                the Three Months         the Nine Months        
                                                               Ended September 30,     Ended September 30,        
                                                               -------------------     -------------------      
                                                                 1996      1995          1996      1995            
                                                                 ----      ----          -----     ----            
    <S>                                                          <C>       <C>           <C>       <C>             
    Number of homes sold                                          429       355          1,498     1,099           
                                                                                                                   
    Number of homes closed                                        467       356          1,326     1,020           
                                                                                                                   
    Backlog of homes sold but not closed at end of period         488       332            488       332           
</TABLE>

The increase in net new home orders and backlog in the first nine months of
1996, as compared with the first nine months of 1995, is the result of the
Company's return to the Arizona market from which it had been absent for
approximately three years, the result of the Company's entry into the Nevada
market, and the result of increases in the Company's Southern California,
Northern California and New Mexico markets.  The increase in closings in the
first nine months of 1996, as compared with the first nine months of 1995, is
the result of the Company's return to the Arizona market, the result of the
Company's entry into the Nevada market, the result of increases in the
Company's New Mexico markets, and the sale of 57 model homes described below,
offset by decreases in the Company's Northern California markets.

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
September 30, 1996 was $91,513,000, as compared to $55,280,000 as of September
30, 1995 and $93,791,000 as of June 30, 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 1995 and approximately 20% during the first nine
months of 1996.

The number of homes closed in the third quarter of 1996 was up 31 percent to
467 from 356 in the third quarter of 1995.  Net new home orders for the quarter
ended September 30, 1996 increased 21 percent to 429 units from 355 a year ago.
For the third quarter of 1996, net new orders decreased 10 percent to 429 from
478 units in the second quarter of 1996.  The backlog of homes sold as of
September 30, 1996 was 488, up 47 percent from 332 units a year earlier, and
down 7 percent from 526 units at June 30, 1996.  The Company's inventory of
completed and unsold homes as of September 30, 1996 increased to 83 units from
61 units as of June 30, 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 certain 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 SEPTEMBER 30, 1996 TO THREE MONTHS ENDED
SEPTEMBER 30, 1995

Sales (which represent recorded revenues from closings) for the three months
ended September 30, 1996 were $79.5 million, an increase of $13.8 million (21%)
from sales of $65.7 million for the three months ended September 30, 1995.
Revenue from sales of homes increased $21.0 million to $79.5 million in the
1996 period from $58.5 million in the 1995 period.  This increase was due
primarily to an increase in the number of homes closed to 467 in the 1996
period from 356 in the 1995 period and an increase in the average sales prices
of homes to $170,000 in the 1996 period from $164,000 in the 1995 period.
Revenue from lots, land and other decreased $7.2 million to none in the 1996
period from $7.2 million in the 1995 period.

Total operating income (loss) increased from a loss of  $2.6 million in the
1995 period to income of $0.3 million in the 1996 period.  The excess of
revenue from sales of homes over cost of sales - homes increased by $3.5
million, to $9.6 million in the 1996 period from $6.1 million in the 1995
period.  These increases were primarily due to increased sales prices and an
increase in the number of homes closed as described above and decreases in
buyer incentives.  Sales and marketing expenses increased by $0.4 million to
$5.6 million in the 1996 period from $5.2 million in the 1995 period primarily
as a result of increased advertising and direct closings costs (directly
related to increased revenue from closings) in the 1996 period compared to the
1995 period.  General and administrative expenses increased by $0.4 million to
$3.5 million in the 1996 period from $3.1 million in the 1995 period, primarily
as a result of increased overhead from start-up operations in Arizona and
Nevada.




                                       13
<PAGE>   14
                             THE PRESLEY COMPANIES

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

Total interest incurred during the 1996 period decreased $0.5 million (6.0%)
from the 1995 period as a result of a reduction in debt levels and decreased
interest rates.  Net interest expense decreased to $0.4 million in the 1996
period from $0.6 million for the 1995 period.  This decrease was due primarily
to an increase in development activities in the 1996 period compared to the 1995
period (resulting in increased  interest capitalization) and by decreases in
interest rates.

Other (income) expense, net increased $0.3 million to a net income of $0.8
million in the 1996 period from a net income of $0.5 million in the 1995 period
primarily as a result of (i) decreased income from recreational facilities
offset by (ii) increased income from mortgage operations.


COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 TO NINE MONTHS ENDED
SEPTEMBER 30, 1995

Sales (which represent recorded revenues from closings) for the nine months
ended September 30, 1996 were $222.8 million, an increase of $29.0 million
(15%) from sales of $193.8 million for the nine months ended September 30,
1995.  Revenue from sales of homes increased $56.3 million to $221.6 million in
the 1996 period (which included $9.7 million from the sale of model homes as
described above) from $165.3 million in the 1995 period.  This increase was due
primarily to an increase in the number of homes closed to 1,326 in the 1996
period (which included 57 model units as described above) from 1,020 in the
1995 period and an increase in the average sales prices of homes to $167,000 in
the 1996 period from $162,000 in the 1995 period.  Revenue from lots, land and
other decreased $27.2 million to $1.3 million in the 1996 period from $28.5
million in the 1995 period.

Total operating loss decreased from a loss of $20.8 million in the 1995 period
to a loss of $1.3 million in the 1996 period.  The excess of revenue from sales
of homes over cost of sales - homes increased by $12.0 million, to $25.8
million in the 1996 period from $13.8 million in the 1995 period.  These
increases were primarily due to increased sales prices and an increase in the
number of homes closed as described above and decreases in buyer incentives.
Reductions of real estate assets to estimated net realizable value amounting to
$9.4 million were recorded in the 1995 period, with no corresponding charge in
the comparable period for 1996.  Sales and marketing expenses increased by $1.3
million to $16.3 million in the 1996 period from $15.0 million in the 1995
period primarily as a result of increased closing costs (directly related to
revenue from increased closings) in the 1996 period compared to the 1995
period.  General and administrative expenses increased by $1.0 million to $10.6
million in the 1996 period from $9.6 million in the 1995 period, primarily as a
result of increased overhead from start-up operations in Arizona and Nevada.

Total interest incurred during the 1996 period decreased $2.2 million (8.4%)
from the 1995 period as a result of a reduction in debt levels and decreased
interest rates.  Net interest expense decreased to $1.7 million in the 1996
period from $2.1 million for the 1995 period.  This decrease was due primarily
to an increase in development activities in the 1996 period compared to the
1995 period (resulting in increased interest capitalization) and by decreases
in interest rates.





                                       14
<PAGE>   15
                             THE PRESLEY COMPANIES

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


Other (income) expense, net increased $0.3 million to a net income of $1.7
million in the 1996 period from a net income of $1.4 million in the 1995 period
primarily as a result of (i) increased income from recreational facilities and
(ii) increased income from mortgage operations.


CASH FLOWS - COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 TO NINE MONTHS
ENDED SEPTEMBER 30, 1995

Net cash used in operating activities increased from $4.1 million in the 1995
period to $13.1 million in the 1996 period.  The change was primarily a result
of increased land acquisition and construction activity.

Net cash used in investment activities decreased from $2.7 million in the 1995
period to $0.4 million in the 1996 period.  The change was primarily due to a
decrease in the notes receivable.

Net cash provided by financing activities increased to $12.5 million in the
1996 period from net cash used of $5.3 million in the 1995 period.  The change
was primarily due to an increase in net borrowings activity.





                                       15
<PAGE>   16

                             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     Master Credit Agreement by and between
                                Horsethief Canyon Partners, a California
                                general partnership ("Borrower"), and Bank One,
                                Arizona, NA, a national banking association
                                ("Bank"), dated as of October 4, 1996.

                       10.2     Amendment to Master Credit Agreement and
                                Secured Promissory Note by and between Presley
                                Homes (formerly known as The Presley
                                Companies), a California corporation
                                ("Borrower"), and Bank One, Arizona, NA, a
                                national banking association ("Bank"), dated as
                                of October 4, 1996.

                       10.3     Second Amendment to Master Credit Agreement and
                                Secured Promissory Note by and between Carmel
                                Mountain Ranch, a California general
                                partnership ("Borrower"), and Bank One,
                                Arizona, NA, a national banking association
                                ("Bank"), dated as of October 4, 1996.

                       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 September 30, 1996.





                                       16
<PAGE>   17
                             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:  November 13, 1996              By: /s/ DAVID M. SIEGEL
                                          --------------------------------------
                                          David M. Siegel
                                          Senior Vice President, Chief Financial
                                          Officer and Treasurer (Principal
                                          Financial Officer)



Date:  November 13, 1996              By: /s/ W. DOUGLASS HARRIS
                                          -------------------------------------
                                          W. Douglass Harris
                                          Vice President, Corporate Controller
                                          (Principal Accounting Officer)





                                       17