<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 June 30, 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.

                                                       Outstanding at
           Class of Common Stock                       June 30, 1997
           ---------------------                       --------------
           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 - June 30, 1997 and
                  December 31, 1996.................................................................3

              Consolidated Statements of Operations - Three and Six Months Ended
                  June 30, 1997 and 1996............................................................4

              Consolidated Statement of Stockholders' Equity - Six Months
                  Ended June 30, 1997...............................................................5

              Consolidated Statements of Cash Flows - Six Months Ended
                  June 30, 1997 and 1996............................................................6

              Notes to Consolidated Financial Statements............................................7

Item 2.  Management's Discussion and Analysis of  Financial Condition
                  and Results of Operations.........................................................10


PART II.  OTHER INFORMATION.........................................................................18

SIGNATURES..........................................................................................19

</TABLE>



                                        2



<PAGE>   3



                              THE PRESLEY COMPANIES

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



<TABLE>
<CAPTION>
                                                                              June 30,           December 31,
                                                                                1997                 1996
                                                                             -----------        -------------
                                                                             (unaudited)
                                                      ASSETS
<S>                                                                          <C>                <C>      
Cash and cash equivalents                                                    $   2,546          $   4,550
Receivables                                                                      5,415              4,225
Real estate inventories - Note 2                                               236,816            304,126
Property and equipment, less accumulated
  depreciation of $1,827 and $1,432 at June 30, 1997
  and December 31, 1996, respectively                                            4,017              3,047
Deferred loan costs                                                              4,385              4,347
Other assets                                                                     3,057             11,320
                                                                             ---------          ---------
                                                                             $ 256,236          $ 331,615
                                                                             =========          =========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                                             $   9,435          $  18,428
Accrued expenses                                                                21,237             20,450
Notes payable                                                                   30,379             18,524
12 1/2% Senior Notes due 2001 - Note 3                                         190,000            190,000
                                                                             ---------          ---------
                                                                               251,051            247,402
                                                                             ---------          ---------
Stockholders' equity 
  Common stock - Note 4:
      Series A common stock, par value $.01 per share; 100,000,000 shares
         authorized; 17,838,535 issued and outstanding at June 30, 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 June 30, 1997 and December 31, 1996, respectively          344                344

  Additional paid-in capital                                                   114,599            114,599

  Accumulated deficit from January 1, 1994 - Note 1                           (109,936)           (30,908)
                                                                             ---------          ---------
                                                                                 5,185             84,213
                                                                             ---------          ---------
                                                                             $ 256,236          $ 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                      Six Months Ended
                                                                June 30,                              June 30,
                                                     ----------------------------          ----------------------------
                                                        1997               1996               1997               1996
                                                     ---------          ---------          ---------          ---------
<S>                                                  <C>                <C>               <C>                 <C>
Sales
  Homes                                              $  88,494          $  81,405          $ 155,651          $ 142,017
  Lots, land and other                                   9,072                814              9,711              1,273
                                                     ---------          ---------          ---------          ---------
                                                        97,566             82,219            165,362            143,290
                                                     ---------          ---------          ---------          ---------
Operating costs
   Cost of sales - homes                               (80,263)           (71,413)          (140,942)          (125,851)
   Cost of sales - lots, land and other                 (8,424)              (904)            (9,071)            (1,231)
   Impairment loss on real estate assets -
      Note 2                                           (74,000)                --            (74,000)                --
   Sales and marketing                                  (5,129)            (5,839)           (10,636)           (10,683)
   General and administrative                           (4,428)            (3,452)            (8,361)            (7,154)
                                                     ---------          ---------          ---------          ---------
                                                      (172,244)           (81,608)          (243,010)          (144,919)
                                                     ---------          ---------          ---------          ---------

Operating income (loss)                                (74,678)               611            (77,648)            (1,629)

Interest expense, net of amounts capitalized            (1,562)              (519)            (2,763)            (1,279)

Other income (expense), net                                786                275              1,383                954
                                                     ---------          ---------          ---------          ---------

Net income (loss)                                    $ (75,454)         $     367          $ (79,028)         $  (1,954)
                                                     =========          =========          =========          =========

Net income (loss) per common share - Note 1          $   (1.45)         $    0.01          $   (1.51)         $   (0.04)
                                                     =========          =========          =========          =========


</TABLE>


                                        4

<PAGE>   5

                              THE PRESLEY COMPANIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         SIX MONTHS ENDED JUNE 30, 1997
                                 (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, 1996         17,839        $178       34,357       $344       $114,599       $(30,908)       $84,213

Net loss                                 -           -            -          -              -        (79,028)       (79,028)

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

Balance - June 30, 1997             17,839        $178       34,357       $344       $114,599       $(109,936)      $ 5,185
                                   =========================================================================================

</TABLE>





                                        5

<PAGE>   6



                              THE PRESLEY COMPANIES

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



<TABLE>
<CAPTION>

                                                                                    Six Months Ended
                                                                                        June 30,
                                                                               --------------------------
                                                                                 1997              1996
                                                                               --------          --------
<S>                                                                            <C>               <C>      
OPERATING ACTIVITIES
  Net loss                                                                     $(79,028)         $ (1,954)
  Adjustments to reconcile net loss to net
     cash used in operating activities
        Depreciation and amortization                                               368               291
        Impairment loss on real estate assets                                    74,000                --
        Net changes in operating assets and liabilities:
           Other receivables                                                     (1,956)           (1,693)
           Real estate inventories                                               (6,690)            3,070
           Deferred loan costs                                                      (38)              510
           Other assets                                                           8,263            (1,739)
           Accounts payable                                                      (8,993)             (781)
           Accrued expenses                                                         787              (740)
                                                                               --------           -------
   Net cash used in operating activities                                        (13,287)           (3,036)
                                                                               --------           -------

INVESTING ACTIVITIES
  Principal payments on notes receivable                                            766                44
  Property and equipment, net                                                    (1,338)             (473)
                                                                               --------           -------
  Net cash used in investing activities                                            (572)             (429)
                                                                               --------           -------

FINANCING ACTIVITIES
  Proceeds from borrowing on notes payable                                       71,388            51,639
  Principal payments on notes payable                                           (59,533)          (49,296)
                                                                               --------           -------

  Net cash provided by financing activities                                      11,855             2,343
                                                                               --------           -------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             (2,004)           (1,122)

CASH AND CASH EQUIVALENTS - beginning of period                                   4,550             4,217
                                                                               --------           -------

CASH AND CASH EQUIVALENTS - end of period                                      $  2,546           $ 3,095
                                                                               ========           =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for interest, net of amounts capitalized         $  2,650           $ 1,518
                                                                               ========           =======
  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 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 and six months ended June
30, 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.

The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of the assets and liabilities
as of June 30, 1997 and December 31, 1996 and revenues and expenses for the
periods presented. Accordingly, actual results inevitably will differ from those
estimates in the near-term and such differences may be material to the Company's
financial statements.

Net income (loss) per common share for the three and six months ended June 30,
1997 and 1996 is based on 52,195,678 of Series A and Series B common stock
outstanding.








                                        7

<PAGE>   8



                              THE PRESLEY COMPANIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)
                                   (Continued)




NOTE 2 - IMPAIRMENT OF REAL ESTATE ASSETS

In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," ("Statement No. 121") which requires impairment
losses to be recorded on assets to be held and used by the Company when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets (excluding interest) are less than the carrying
amount of the assets. Statement No. 121 also requires that long-lived assets
that are held for disposal be reported at the lower of the assets' carrying
amount or fair value less cost of disposal. Under this pronouncement, when an
impairment loss is required for assets to be held and used by the Company, the
related assets are adjusted to their estimated fair value which becomes the new
cost basis of the respective asset. Fair value represents the amount at which an
asset could be bought or sold in a current transaction between willing parties,
that is, other than a forced or liquidation sale. The estimation process
involved in determining if assets have been impaired and in the determination of
fair value is inherently uncertain since it requires estimates of current market
yields as well as future events and conditions over a period of many years. Such
future events and conditions include economic and market conditions during the
life of the related project, as well as the availability and cost of suitable
financing to fund development and construction activities. The realization of
the Company's real estate projects is dependent upon future uncertain events and
conditions and, accordingly, the actual timing and amounts realized by the
Company may be materially different from the estimated fair values as described
herein.

The loss for the quarter ended June 30, 1997 includes a non-cash charge of
$74,000,000 as a result of the recognition of impairment losses on certain of
the Company's real estate assets in accordance with Statement No. 121. The fair
values utilized to calculate the impairment losses were estimated based upon
discounted expected future cash flows. The impairment losses are related to
three of the Company's weak performing master-planned communities. The
impairment losses related to two communities located in the Inland Empire area
of Southern California arose primarily due to declines in sales prices in the
last few months due to continued weak economic conditions and competitive
pressures in that area of Southern California. The impairment losses related to
a community located in Contra Costa County in the East San Francisco Bay area of
Northern California are primarily attributable to a deterioration in value of
the non-residential parcels of the project which are now held for sale and to
lower than expected cash flow relating to one high end residential product in
this community.









                                        8

<PAGE>   9
                             THE PRESLEY COMPANIES


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)
                                   (Continued)




NOTE 3 - SENIOR NOTES

In accordance with the bond indenture agreement governing the Company's Senior
Notes, which are due in 2001, if the Company's Consolidated Tangible Net Worth
is less than $60,000,000 as of September 30, 1997, the Company will, effective
on December 4, 1997, be required to make an offer to purchase $20,000,000 of the
Senior Notes at par plus accrued interest. Each six months thereafter, until
such time as the Company's Consolidated Tangible Net Worth is $60,000,000 or
more at the end of a fiscal quarter, the Company would be required to make
similar offers to purchase Senior Notes. At June 30, 1997, the Company's
Consolidated Tangible Net Worth was $800,000. In the next few weeks, the
Company's management intends to initiate discussions with representatives of the
holders of the Senior Notes with respect to eliminating this repurchase
provision from the bond indenture agreement. Any change in the terms or
conditions of the bond indenture agreement requires the affirmative vote of at
least a majority in principal amount of the Senior Notes then outstanding.


NOTE 4 - REGISTRATION OF ADDITIONAL SERIES A COMMON STOCK

In accordance with the Registration Rights Agreement, dated as of May 20, 1994,
among the Company and the holders of the Company's Series B Common Stock, the
holders have requested registration under the Securities Act of 1933 of
18,145,467 shares of the Company's Series A Common Stock into which the Series B
Common Stock may be converted. The Company expects to file such registration
statement with the Securities and Exchange Commission on or about August 29,
1997.


                                        9

<PAGE>   10

                              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.

Effective on June 30, 1997, the Company has executed an amendment to the loan
agreement related to its $72,000,000 revolving line of credit which eliminated
certain financial covenants. Accordingly, the Company is in compliance with this
loan agreement. The Company has reached verbal agreement with its other secured
lender (with outstanding loan balances of approximately $7,271,000 as of June
30, 1997 as described below) to revise certain financial covenants and to repay
approximately $4,500,000 of these outstanding balances. The Company will
therefore be in compliance with all of its secured loan agreements upon
finalizing the documentation relating to the verbal agreement. The following
discussion therefore reflects the revised terms of the Company's loan agreements
with its secured creditors.

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, which are summarized
below: 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").

Management believes the Company's liquidity and projected cash flow as indicated
by the Company's three year business plan should be sufficient to enable the
Company to acquire land in the future and continue to meet any obligations which
might arise in connection with the requirement to repurchase Senior Notes as
described 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



                                       10

<PAGE>   11
                              THE PRESLEY COMPANIES

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


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.

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.

In accordance with the Indenture, if the Company's Consolidated Tangible Net
Worth is less than $60,000,000 as of September 30, 1997, the Company will,
effective on December 4, 1997, be required to make an offer to purchase
$20,000,000 of the Senior Notes at a purchase price equal to 100% of the
principal amount plus accrued interest. Each six months thereafter, until such
time as the Company's Consolidated Tangible Net Worth is $60,000,000 or more at
the end of a fiscal quarter, the Company would be required to make similar
offers to purchase Senior Notes. At June 30, 1997, the Company's Consolidated
Tangible Net Worth was $800,000. In the next few weeks, the Company's management
intends to initiate discussions with representatives of the holders of the
Senior Notes with respect to eliminating this repurchase provision from the
Indenture. Any change in the terms or conditions of the bond indenture agreement
requires the affirmative vote of at least a majority in principal amount of the
Senior Notes outstanding.

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.



                                       11

<PAGE>   12


                              THE PRESLEY COMPANIES

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



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 June 30, 1997 was approximately $151,000,000;
however, the maximum loan under the Working Capital Facility is limited to
$72,000,000. The principal outstanding under the Working Capital Facility at
June 30, 1997 was $19,000,000.

The Working Capital Facility had a termination date of May 20, 1997, with two
one-year extensions at the Company's option. 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. Upon
the extension of the termination date, the Company paid an extension fee of 1%
of the Working Capital Facility commitment amount (in addition to the loan fee
described below). The Company still holds the option to extend the termination
date for an additional twelve (12) months. If the Company elects to exercise
this option in the future, an additional extension fee of 1% of the Working
Capital Facility commitment amount (in addition to the loan fee described below)
would be incurred.

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.

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.



                                       12

<PAGE>   13

                              THE PRESLEY COMPANIES

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



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 June 30, 1997, the revolving line of credit had an outstanding balance
of $1,551,000. 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
June 30, 1997, the revolving line of credit had an outstanding balance of
$2,776,000. 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 June 30, 1997 the
outstanding balance under this agreement was $2,944,000.


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


                                       13


<PAGE>   14
                              THE PRESLEY COMPANIES

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



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. During the quarter
ending June 30, 1997, the Company acquired a parcel of land in Nevada for which
seller financing was provided in the amount of $2,372,000. During the few years
prior to this transaction, the Company had not used this form of financing
significantly.

                              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 Six Months
                                                                  Ended June 30,            Ended June 30,
                                                               ------------------          ------------------
                                                               1997          1996          1997          1996
                                                               ----          ----          ----          ----
<S>                                                             <C>           <C>           <C>         <C>  
Number of homes sold                                            428           478           877         1,069

Number of homes closed                                          467           490           829           859

Backlog of homes sold but not closed at end of period           330           526           330           526

</TABLE>

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 June
30, 1997 was $65,252,000, as compared to $93,791,000 as of June 30, 1996 and
$73,360,000 as of March 31, 1997. 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 18% during the first six months
of 1997.

The number of homes closed in the second quarter of 1997 was down 5 percent to
467 from 490 in the second quarter of 1996. Net new home orders for the quarter
ended June 30, 1997 decreased 10 percent to 428 units from 478 a year ago. For
the second quarter of 1997, net new orders decreased 5 percent to 428 from 449
units in the first quarter of 1997. The backlog of homes sold as of June 30,
1997 was 330, down 37 percent from 526 units a year earlier, and down 11 percent
from 369 units at March 31, 1997. The Company's inventory of completed and
unsold homes as of June 30, 1997 has been reduced by 19 percent to 102 units
from 126 units as of March 31, 1997.



                                       14


<PAGE>   15
                              THE PRESLEY COMPANIES

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



The declines in net new home orders, closings and backlog for the second quarter
are primarily the result of the completion or near completion of certain of the
Company's older master-planned communities which has resulted in less product
available for sale. At June 30, 1997, the Company had 14 sales locations in its
master-planned communities as compared to 26 sales locations in its
master-planned communities at June 30, 1996.

The Company is consolidating certain operating units in order to operate more
efficiently. The Company's operating units in the Inland Empire area and the
Orange/Los Angeles area of Southern California will be consolidated into one
operating unit based in Newport Beach. The Company's operating units in the San
Francisco Bay Area and the Sacramento Area of Northern California will be
consolidated into one operating unit based in the East Bay area of San
Francisco. In addition, the Company's previously announced entry into the
Colorado market place will be postponed to allow the Company to focus its
attention on the existing market places in which it currently operates. The
Company has accrued the costs related to this consolidation in the quarter ended
June 30, 1997.

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 June 30, 1997 to Three Months 
Ended June 30, 1996

Sales (which represent recorded revenues from closings) for the three months
ended June 30, 1997 were $97.6 million, an increase of $15.4 million (18.7%)
from sales of $82.2 million for the three months ended June 30, 1996. Revenue
from sales of homes increased $7.1 million to $88.5 million in the 1997 period
from $81.4 million in the 1996 period. This increase was due primarily to an
increase in the average sales prices of homes to $189,000 in the 1997 period
from $166,000 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,
offset by a reduction in the number of homes closed in the 1997 period compared
to the 1996 period. Revenue from lots, land and other increased $8.3 million to
$9.1 million in the 1997 period from $0.8 million in the 1996 period.

Total operating income (loss), excluding the impairment loss on real estate
assets, changed from an income of $0.6 million in the 1996 period to a loss of
$0.7 million in the 1997 period. The excess of revenue from sales of homes over
the related cost of sales decreased by $1.8 million, to $8.2 million in the 1997



                                       15

<PAGE>   16
                              THE PRESLEY COMPANIES

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




period from $10.0 million in the 1996 period. These decreases were primarily due
to increases in house construction costs and other development costs which could
not be entirely recovered from increased sales prices. Impairment losses on real
estate assets amounting to $74.0 million were recorded in the 1997 period, with
no corresponding charge in the comparable period for 1996. As a result of the
impairment losses, gross margins on the affected projects are expected to be
higher in the future. Sales and marketing expenses decreased by $0.7 million to
$5.1 million in the 1997 period from $5.8 million in the 1996 period primarily
as a result of decreased advertising in the 1997 period compared to the 1996
period, offset by increased direct sales expenses related to the increased sales
volume. General and administrative expenses increased by $0.9 million to $4.4
million in the 1997 period from $3.5 million in the 1996 period, primarily as a
result of start-up operations in Nevada and a charge of approximately $0.7
million for expenses related to the closing and consolidation of certain
operating units.

Total interest incurred increased $0.1 million (1.3%) from $7.9 million in the
1996 period to $8.0 million in the 1997 period as a result of an increase in
interest rates. Net interest expense increased to $1.5 million in the 1997
period from $0.5 million for the 1996 period. This increase was due primarily to
a reduction in real estate assets which qualify for interest capitalization.
Interest expense will increase in the future due to a decrease in real estate
assets which qualify for interest capitalization resulting from the impairment
losses described above.

Other (income) expense, net increased to $0.8 million in the 1997 period from
$0.3 million in the 1996 period primarily as a result of increased income from
design center operations and recreational facilities.


Comparison of Six Months Ended June 30, 1997 to Six Months Ended June 30, 1996

Sales (which represent recorded revenues from closings) for the six months ended
June 30, 1997 were $165.4 million, an increase of $22.1 million (15.4%), from
sales of $143.3 million for the six months ended June 30, 1996. Revenue from
sales of homes increased $13.7 million to $155.7 million in the 1997 period from
$142.0 million in the 1996 period. This increase was due primarily to an
increase in the average sales prices of homes to $188,000 in the 1997 period
from $165,000 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, offset
by a reduction in the number of homes closed in the 1997 period compared to the
1996 period. Revenue from lots, land and other increased $8.4 million to $9.7
million in the 1997 period from $1.3 million in the 1996 period.

Total operating loss, excluding the impairment loss on real estate assets,
increased from a loss of $1.6 million in the 1996 period to a loss of $3.6
million in the 1997 period. The excess of revenue from sales of homes over the
related cost of sales decreased by $1.4 million, to $14.8 million in the 1997
period from $16.2 million in the 1996 period. These decreases were primarily due
to increases in house construction costs and other development costs which could
not be entirely recovered from increased sales prices. 


                                       16

<PAGE>   17
                              THE PRESLEY COMPANIES

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


Impairment losses on real estate assets amounting to $74.0 million were recorded
in the 1997 period, with no corresponding charge in the comparable period for
1996. As a result of the impairment losses, gross margins on the affected
projects are expected to be higher in the future. Sales and marketing expenses
remained consistent from the 1996 period to the 1997 period, which is the result
of decreased advertising in the 1997 period compared to the 1996 period, offset
by increased direct sales expenses related to the increased sales volume.
General and administrative expenses increased by $1.2 million to $8.4 million in
the 1997 period from $7.2 million in the 1996 period, primarily as a result of
increased overhead from start-up operations in Nevada and a charge of
approximately $0.7 million for expenses related to the closing and consolidation
of certain operating units.

Total interest incurred increased $0.5 million (3.2%) from $15.6 million in the
1996 period to $16.1 million in the 1997 period as a result of increased
interest rates. Net interest expense increased to $2.8 million in the 1997
period from $1.3 million for the 1996 period. This increase was due primarily to
a reduction in real estate assets which qualify for interest capitalization.
Interest expense will increase in the future due to a decrease in real estate
assets which qualify for interest capitalization resulting from the impairment
losses described above.

Other (income) expense, net increased $0.4 million to a net income of $1.4
million in the 1997 period from a net income of $1.0 million in the 1996 period
primarily as a result of increased income from design operations.

Cash Flows - Comparison of Six Months Ended June 30, 1997 to Six Months Ended
June 30, 1996

Net cash used in operating activities increased from $3.0 million in the 1996
period to $13.3 million in the 1997 period. This change was primarily as a
result of increased land acquisition and construction activity.

Net cash used in investing activities increased by $0.2 million in the 1997
period as compared to the 1996 period primarily as a result of purchases of
fixed assets, partially offset by increased principal collections on notes
receivable.

Net cash provided by financing activities increased by $9.6 million in the 1997
period as compared to the 1996 period as a result of an increase in net
borrowings activity.

                                    * * * * *

Certain statements contained herein that are not historical information contain
forward-looking statements. The forward-looking statements involve risks and
uncertainties and actual results may differ materially from those projected or
implied. Further, certain forward-looking statements are based on assumptions of
future events which may not prove to be accurate. Factors that may impact such
forward-looking statements include, among others, changes in general economic
conditions and in the markets in which the Company competes, changes in interest
rates and competition.

                                       17

<PAGE>   18
                              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  Sixth Amendment to Fourth Amended and Restated Loan
                   Agreement, dated for reference purposes June 30, 1997, by and
                   among (i) Presley Homes, formerly The Presley Companies, a
                   California corporation, as the Borrower, (ii) Foothill
                   Capital Corporation, First Plaza Group Trust (Mellon Bank,
                   N.A., acting as trustee as directed by General Motors
                   Investment Management Corporation), Internationale
                   Nederlanden (U.S.) Capital Corporation, and
                   Whippoorwill/Presley Obligations Trust-1994 (Continental
                   Stock & Trust Company, as trustee under that certain trust
                   agreement dated as of January 11, 1994), as the Lenders, and
                   Foothill Capital Corporation, as the Agent for the Lenders.

             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 June 30, 1997.








                                       18

<PAGE>   19



                              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: August 14, 1997              By:   /s/  David M. Siegel
                                         --------------------------------------
                                         DAVID M. SIEGEL
                                         Senior Vice President, Chief Financial
                                         Officer and Treasurer (Principal
                                         Financial Officer)



Date: August 14, 1997              By:   /s/  W. Douglass Harris
                                         --------------------------------------
                                         W. DOUGLASS HARRIS
                                         Vice President, Corporate Controller
                                        (Principal Accounting Officer)




                                       19