<PAGE>   1

                                      
                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                                      
                            Washington, D.C. 20549
                                      
                               ----------------
                                      
                                  FORM 10-Q
                                      
                               ----------------
(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934  For the quarterly period ended March 31, 1997 
     OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from ______ to _______

                         Commission file number: 1-9988

                               REXENE CORPORATION
             (Exact name of Registrant as Specified in its Charter)

         DELAWARE                                                 75-2104131
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

         5005 LBJ FREEWAY
          DALLAS, TEXAS                                             75244
(Address of principal executive offices)                          (Zip code)

                                 (972) 450-9000
              (Registrant's telephone number, including area code)

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 
                                              ---    ---

             APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
 Yes  X   No
     ---     ---

At April 23, 1997, 18,843,453 shares of common stock, par value $0.01 per
share, of Rexene Corporation were outstanding.
<PAGE>   2
                      REXENE CORPORATION AND SUBSIDIARIES



<TABLE>
<CAPTION>
                                                                                                                     Page
                                                                                                                     ----
<S>                                                                                                                    <C>

PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Condensed Consolidated Statements of Income for the Three Months
                Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

         Condensed Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 . . . . . . . . . . . . . . . 2

         Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 . . . . . . 3

         Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations  . . . . . . . . . . . . 6

PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

Item 5.  Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

Item 6.  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
</TABLE>
<PAGE>   3
PART I -- FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS.



                      REXENE CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                          1997          1996  
                                                                                        --------      --------
<S>                                                                                    <C>           <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $163,716      $139,687

Operating expenses:
  Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        144,423       113,205
  Marketing, general and administrative . . . . . . . . . . . . . . . . . . . . .         10,156        10,414
  Research and development  . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,957         2,040
  Reversal of environmental accrual . . . . . . . . . . . . . . . . . . . . . . .         (9,000)        --       
                                                                                        --------      --------
                                                                                         147,536       125,659
                                                                                        --------      --------
Operating income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         16,180        14,028
                                                                                        --------      --------
Interest expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (5,464)       (4,367)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            281           769
Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (1,135)          (26)
                                                                                        --------      --------
Income before income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . .          9,862        10,404

Income tax expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,748         3,934
                                                                                        --------      --------
Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $  6,114      $  6,470
                                                                                        ========      ========

Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . .         19,272        19,126
                                                                                        ========      ========
Net income per share  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $   0.32      $   0.34
                                                                                        ========      ========
</TABLE>





           See notes to condensed consolidated financial statements.





                                       1
<PAGE>   4
                     REXENE CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                                      March 31,     December 31,
                                                                                        1997            1996        
                                                                                     --------         --------
<S>                                                                                  <C>            <C>
                                  ASSETS

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 19,671         $    714
Accounts receivable, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . .      85,327           85,340
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      76,083           81,026
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2,912            2,816
Prepaid expenses and other  . . . . . . . . . . . . . . . . . . . . . . . . . . .       2,477              301
                                                                                     --------         --------
  Total current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     186,470          170,197

Property, plant and equipment, net  . . . . . . . . . . . . . . . . . . . . . . .     397,213          383,700
Intangible assets, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      14,970           15,570
Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      27,162           28,075
                                                                                     --------         --------
                                                                                     $625,815         $597,542
                                                                                     ========         ========
                       LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 33,974         $ 55,030
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      13,431           13,772
Accrued interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       7,117            1,889
Income taxes payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1,663              594
Employee benefits payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2,846            6,823
                                                                                     --------         --------
  Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .      59,031           78,108

Long-term debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     283,000          235,000
Other noncurrent liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . .      52,680           62,459
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      57,685           52,924
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . .       --               --

Stockholders' equity:
  Preferred stock, par value $.01 per share; 1 million shares authorized; none 
    issued and outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . .       --               --
  Common stock, par value $.01 per share; 100 million shares authorized;
    18.8 and 18.8 million shares issued and outstanding, respectively . . . . . .         188              188
  Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     111,605          111,553
  Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      60,681           55,320
  Less common shares held in treasury, at cost  . . . . . . . . . . . . . . . . .        (159)             -
  Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . .       1,104            1,990
                                                                                     --------         --------
  Total stockholders' equity  . . . . . . . . . . . . . . . . . . . . . . . . . .     173,419          169,051
                                                                                     --------         --------

                                                                                     $625,815         $597,542
                                                                                     ========         ========
</TABLE>

           See notes to condensed consolidated financial statements.





                                       2
<PAGE>   5
                     REXENE CORPORATION AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                                      Three Months Ended
                                                                                           March 31,
                                                                                      1997             1996   
                                                                                   ---------         --------
<S>                                                                                <C>              <C>
Cash flows from operating activities:
Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   6,114         $  6,470
                                                                                   ---------         -------- 
Adjustments to reconcile net income to net cash provided by (used for) operating
  activities:
  Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . .      7,205            5,682
  Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      4,665               (7)
  Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . .        430              250
  Change in:
    Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (109)          (1,922)
    Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      4,870           (2,641)
    Prepaid expenses and other  . . . . . . . . . . . . . . . . . . . . . . . . .     (2,174)             218
    Income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,069          (26,188)
    Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (21,018)            (296)
    Accrued interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      5,228            5,140
    Employee benefits payable and accrued liabilities . . . . . . . . . . . . . .     (4,316)          (3,343)
    Other noncurrent liabilities  . . . . . . . . . . . . . . . . . . . . . . . .     (8,879)             601
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        931              307
                                                                                   ---------         -------- 
  Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (12,098)         (22,199)
                                                                                   ---------         -------- 
Net cash used for operating activities  . . . . . . . . . . . . . . . . . . . . .     (5,984)         (15,729)
                                                                                   ---------         -------- 
Cash flows from investing activities:
  Capital expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (21,156)         (17,386)
  Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . .      --                (833)
                                                                                   ---------         -------- 
Net cash used for investing activities  . . . . . . . . . . . . . . . . . . . . .    (21,156)         (18,219)
                                                                                   ---------         -------- 

Cash flows from financing activities:
  Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     48,000             --
  Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (144)            --
  Repayment of advance payment from customer  . . . . . . . . . . . . . . . . . .       (900)            (900)
  Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (752)            (750)
  Repurchase of common stock  . . . . . . . . . . . . . . . . . . . . . . . . . .       (159)            --
  Proceeds from issuance of common stock, net . . . . . . . . . . . . . . . . . .         52               73
                                                                                   ---------         -------- 

Net cash provided by (used for)  financing activities . . . . . . . . . . . . . .     46,097           (1,577)
                                                                                   ---------         -------- 

Net increase (decrease) in cash and cash equivalents  . . . . . . . . . . . . . .     18,957          (35,525)
Cash and cash equivalents at beginning of quarter . . . . . . . . . . . . . . . .        714           47,258
                                                                                   ---------         -------- 

Cash and cash equivalents at end of quarter . . . . . . . . . . . . . . . . . . .  $  19,671         $ 11,733
                                                                                   =========         ======== 

Supplemental cash flow information:
  Cash paid for interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   1,448         $     75
                                                                                                              
  Cash paid for income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . .  $     257         $ 30,310
                                                                                                              
</TABLE>

           See notes to condensed consolidated financial statements.





                                       3
<PAGE>   6
                      REXENE CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.      GENERAL

Rexene Corporation manufactures and markets a wide variety of products through
two operating divisions, Rexene Products Company division ("Rexene Products")
and Consolidated  Thermoplastics Company division ("CT Film").  The products
range from value added specialty products, such as customized plastic films, to
commodity petrochemicals, such as styrene.  These products are used in a wide
variety of industrial and consumer-related applications.  The Company's
principal products are plastic film, polyethylene, polypropylene, Rextac(R)
amorphous polyalphaolefin ("Rextac"), REXflex (R) FPO and styrene.  Rexene
Corporation and its subsidiaries are hereinafter sometimes collectively or
separately referred to as the "Company."

The accompanying condensed consolidated financial statements are unaudited;
however, in management's opinion, all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of the results of
operations, financial position and cash flows for the periods shown, have been
made.  Results for interim periods are not necessarily indicative of those to
be expected for the full year.  The interim condensed consolidated financial
statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included in the 1996 Annual Report on Form  10-K.

2.      NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share", which
establishes new standards for computing and presenting earnings per share.
SFAS No. 128 is effective for the periods ending after December 15, 1997 and
requires upon adoption restatement of all prior-period earnings per share 
amounts presented.  If the Company had computed net earnings per share in
accordance with the provisions of SFAS No. 128, the basic and diluted earnings
per share for the three months ended March 31, 1997 and 1996 would have been no
different from the reported primary and fully diluted earnings per share.

3.      INCOME TAXES

<TABLE>
<CAPTION>
Income tax expense consists of the following (in thousands):                          Three Months Ended March 31,
                                                                                         1997            1996  
                                                                                       -------         --------
<S>                                                                                    <C>             <C>
Current:
  Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ($1,153)         $3,420
  State   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          236             521
Deferred  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4,665              (7)
                                                                                       -------          ------

                                                                                       $ 3,748          $3,934
                                                                                       =======          ======
</TABLE>
4.       INVENTORIES

<TABLE>
<CAPTION>
Inventories consist of the following (in thousands):                                 March 31,        December
                                                                                       1997           31, 1996 
                                                                                      -------         --------
<S>                                                                                    <C>             <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $28,916          $30,145
Work in progress  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       8,372            8,561
Finished goods  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      38,795           42,320
                                                                                      -------         --------

                                                                                      $76,083          $81,026
                                                                                      ========         =======
</TABLE>





                                       4
<PAGE>   7

5.       PROPERTY, PLANT AND EQUIPMENT

The cost and accumulated depreciation of property, plant and equipment are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                    March 31,      December 31,
                                                                                       1997            1996 
                                                                                    ----------      ----------
<S>                                                                                <C>               <C>
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 481,696        $ 461,469
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .     (84,483)         (77,769)
                                                                                    ---------        --------- 
                                                                                    $ 397,213        $ 383,700
                                                                                    =========        =========
</TABLE>

6.       INTANGIBLE ASSETS

The cost and accumulated amortization of intangible assets are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                       March 31,     December 31,
                                                                                         1997           1996 
                                                                                       -------        --------
<S>                                                                                    <C>             <C>
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $14,406         $14,333
Less accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . .       (4,649)         (4,288)
                                                                                       -------         ------- 

                                                                                         9,757          10,045
                                                                                       -------         ------- 

Reorganization value in excess of amounts allocable to identifiable assets  . . .        4,298           4,298
Less accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . .       (1,504)         (1,437)
                                                                                       -------         ------- 

                                                                                         2,794           2,861
                                                                                       -------         ------- 

Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        7,409           7,377
Less accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . .       (4,990)         (4,713)
                                                                                       -------         ------- 

                                                                                         2,419           2,664
                                                                                       -------         ------- 

                                                                                       $14,970         $15,570
                                                                                       =======         =======
</TABLE>
7.      CONTINGENCIES

The Company, and the industry in which it competes, is subject to extensive
environmental laws and regulations concerning, for example, emissions to the
air, discharges to surface and subsurface waters and the generation, handling,
storage, transportation, treatment and disposal of waste and other materials.
The Company believes that, in light of its historical expenditures, it will
have adequate resources to conduct its operations in compliance with currently
applicable environmental and health and safety laws and regulations.  However,
in order to comply with changing facility permitting and regulatory standards,
the Company may be required to make additional significant site or operational
modifications.  Further, the Company has incurred and may in the future incur
liability to investigate and clean up waste or contamination at its current or
former facilities, or which it may have disposed of at facilities operated by
third parties.  On the basis of its investigation and analysis, management
believes that the approximately $9.3 million accrued in the March 31, 1997
balance sheet is adequate for the total potential environmental liability with
respect to contaminated sites. Extensive environmental investigation of the
groundwater, soils and solid waste management has been conducted at the Odessa
facility.  Risk assessments have been completed for a number of these
facilities and corrective measures have been defined and conducted.  Approval
of these waste management unit closures required a public notice period that
expired at the end of February 1997.  The Company received approval to allow
closure of five solid waste management units, which permitted a reduction in
the accrual for potential environmental liability of $9.0 million. The Company
currently disposes of wastewater from the Odessa Facility through injection
wells operated under permits from the Texas Natural Resources Conservation
Commission ("TNRCC").  TNRCC has stated that it does not intend to renew the
permits after they expire in December 1997.  The Company has entered into an
agreement with the City of Odessa and the Gulf Coast Waste Disposal Authority
pursuant to which that latter will acquire, modify and operate a publicly-owned
treatment works ("POTW") to dispose of the Company's and a portion of the City
of Odessa's wastewater.  Construction to modify the existing municipal facility
is in progress with a view to having the POTW operational by September 1997.
Although no assurances can be given, the Company believes  that it will be able
to use its existing wells until it develops this alternative wastewater disposal
system.  However, if the Company is forced to cease using its injection wells
before the POTW is operational, such loss of capacity could have a material
adverse effect on the Company's financial condition, results of operations or
cash flows. The Company continually reviews its estimates of potential
environmental liabilities. However, no assurance can be given that all potential
liabilities arising out of the Company's present or past operations have been
identified or fully assessed or that the amounts that might be required to
investigate and remediate such sites will not be significant to the Company.





                                       5
<PAGE>   8
The Company is a party to various litigation arising in the ordinary course of
business and to certain other litigation which are set forth in Note 18 to the
Consolidated Financial Statements included in the Company's 1996 Annual Report
on Form 10-K.  There have been no material changes to the litigation described
in the aforementioned Note 18, except as described in Part II below.

Although there can be no assurance of the final resolution of such litigation,
the Company believes that, based upon its current knowledge of the facts of
each case, it  has meritorious defenses to the various claims made and intends
to defend each lawsuit vigorously, and the Company does not believe that the
outcome of any of these lawsuits will have a material adverse effect on the
Company's financial position, results of operations or cash flows.


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

OVERVIEW

The Company conducts its business through two operating divisions: the Rexene
Products division, which manufactures and sells polyethylene, polypropylene,
REXtac(R) APAO, REXflex(R) FPO and styrene, and the CT Film division, which
manufactures and sells plastic film.  The polyethylene, polypropylene and
styrene markets in which the Company competes are cyclical markets that are
sensitive to relative changes in supply and demand as well as general economic
conditions.  Historically, these products have experienced alternating periods
of tight supply, rising prices and increased profits followed by periods of
large capacity additions resulting in oversupply, lower selling prices and
lower gross profits.  The Company's plastic film and REXtac APAO businesses are
generally less sensitive to economic cycles.

Principal raw materials purchased by the Company consist of ethane and propane
extracted from natural gas liquids ("NGL"), propylene and benzene (all four of
which are referred to as "feedstocks") for the polymer and styrene businesses
and polyethylene resins for the film business.  The feedstock supplies
available in Odessa, Texas are currently adequate for the Company's
requirements.  The percentage of feedstock costs compared to the Company's total
cost of sales decreased from 30% in 1996 to 28% for the first quarter of 1997.
The Company's inability in 1996 and the first quarter of 1997, to pass on the
full amount of the increases in feedstock costs to customers had a significant
impact on operating results.  Lower industry inventory levels of crude oil,
natural gas and NGL feedstocks and unexpected supply disruptions caused
feedstock prices to increase during 1996 and early 1997.  Ethane and propane
prices decreased midway in the first quarter of 1997 to levels comparable to the
first quarter of 1996.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1996

The Company's overall sales were higher in the first quarter of 1997 as
compared to the first quarter of 1996.   Net sales increased $24.0 million (or
17%) from the first quarter of 1996 to the first quarter of 1997 principally
due to higher average sales prices in all product lines partially offset by
lower polyethylene and styrene sales volumes.  Polyethylene sales increased
$6.5 million (or 17%) principally due to an increase in average sales prices of
9 cents per pound, partially offset by a decrease in sales volumes of 4.4
million pounds.  Plastic film sales increased $4.3 million (or 12%) principally
due to an increase in average sales prices of 3 cents per pound and an increase
in sales volumes of 2.8 million pounds.  Polypropylene sales increased $1.0
million (or 4%) principally due to an increase in average sales prices of 1
cent per pound and an increase in sales volumes of 1.0 million pounds.  REXtac
APAO sales increased $0.9 million (or 17%) principally due to an increase in
sales volumes of 2.1 million pounds.  Styrene sales for the first quarter of
1997 were consistent with the first quarter of 1996.  Other sales increased
$11.6 million principally due to an increase in excess feedstock sales.

The Company's gross profit percentage decreased from 19% for the three months
ended March 31, 1996 to 12% for the three months ended March 31, 1997
principally due to significantly higher feedstock costs during the period
November 1996 to January 1997, a substantial portion of which was charged to
cost of sales in the first quarter of 1997. The effect of higher feedstock
costs were partially offset by higher polyethylene sales prices.  Marketing,





                                       6
<PAGE>   9
general and administrative expenses and research and development expenses
decreased $0.3 million from the first quarter of 1996 to the first quarter of
1997 principally due to reimbursements of legal fees offset by a severance
accrual for approximately $0.3 million.  An environmental accrual established
in prior years was reduced by $9.0 million as a result of modifications to the
Company's remedial action plans at the Odessa facility that were approved by
the TNRCC.

Due primarily to the factors discussed above, operating income increased $2.2
million (or 15%) for the three months ended March 31, 1997 as compared to the
corresponding period in 1996.

Net interest expense increased $1.6 million (or 44%) from the first  quarter of
1996 to the first quarter of 1997 principally due to increased bank borrowings
in the first quarter of 1997.

Other, net increased $1.1 million from the first quarter of 1996 to the first
quarter of 1997 principally due to costs of $1.2 million related to proxy
solicitation expenses.

Income tax expense decreased $0.2 million (or 5%) from the first quarter of
1996 to the first quarter of 1997 principally due to the increase in interest
expense discussed above.

Due primarily to the factors discussed above, the Company's net income
decreased $0.4 million (or 6%) from the first quarter of 1996 to the first
quarter of 1997.

LIQUIDITY AND CAPITAL RESOURCES

For the three  months ended March 31, 1997, net cash provided by operating
activities increased $9.7 million as compared to the same period in 1996.  This
increase was principally due to changes in working capital.

On April 24, 1996, the Company executed an amendment to the Credit Agreement
(the "Amended Credit Agreement").  The Amended Credit Agreement provided a new
line of credit in an initial amount of $150 million for a seven year term.  The
primary use of proceeds from the new line of credit was to provide funds to
finance portions of the Company's capital expenditure program at its Odessa,
Texas manufacturing facility.  On August 5, 1996 the Company executed an
agreement with a financial institution for a $10 million uncommitted unsecured
line of credit (the "Unsecured Note) for day to day cash flow requirements.  As
of April 23, 1997, there were no amounts outstanding under the Unsecured Note.

On March 13, 1997 the Amended Credit Agreement was further amended to, among
other things, permit the repurchase of up to $85 million of Common Stock during
a one year period and to use up to $35 million of borrowings under the Amended
Credit Agreement for such repurchases pursuant to a share repurchase program
(the "Share Repurchase Program").  On April 23, 1997 the Company signed a
commitment letter with Scotia Bank to increase the borrowing availability under
the Amended Credit Agreement from $150 million to $225 million (the "New Credit
Agreement").  The primary use of the increased available borrowings from the
New Credit Agreement will be to provide funds to repurchase approximately $35
million of the Company's Common Stock pursuant to the share repurchase program
and to finance portions of the Company's capital expenditure program at its
Odessa, Texas plant over the next two years, including the modernization and
expansion of its olefins plant and the construction of a new linear low density
polyethylene plant.

The New Credit Agreement will contain covenants which limit, among other
things, the incurrence of additional indebtedness by the Company, the creation
of liens on the Company's assets, the making of certain investments by the
Company, certain mergers, sales of certain fixed assets and the prepayment of
the Company's 11 3/4% Senior Notes due 2004 (the "Senior Notes").  As a result
of the New Credit Agreement, the Company anticipates recording a non-cash charge
of approximately $1 million to write-off certain deferred debt issuance costs.
The New Credit Agreement also will contain certain financial covenants relating
to the financial condition of the Company, including covenants relating to
minimum net worth, the ratio of its earnings to debt and interest to earnings.
As of April 23, 1997, the Company had borrowed $93 million under the Amended
Credit Agreement.





                                       7
<PAGE>   10
The Company anticipates that a second part of the share repurchase program will
be funded by the issuance of $50 million in Preferred Stock.  At a special
meeting of the Company's stockholders which has been postponed to May 22, 1997
(the "Special Meeting"), stockholders will be asked to approve the second part
of the Share Repurchase Program.

The Company believes that, based on current levels of operation and anticipated
growth, its cash flow from operations, together with other available sources of
liquidity, including the proceeds from the New Credit Agreement, will be
adequate to make scheduled payments of interest on the Senior Notes and
dividends on the Preferred Stock, to permit anticipated capital expenditures
and to fund working capital requirements.  However, the ability of the Company
to satisfy these obligations depends on a number of significant assumptions,
including but not limited to, the demand for the Company's products, raw
material costs and other factors.

The indenture governing the Senior Notes (the "Indenture") contains certain
covenants that, among other things, limit the ability of the Company to incur
additional indebtedness and to repurchase subordinated indebtedness, incur or
suffer to exist certain liens, pay dividends, make certain investments, sell
significant fixed assets and engage in mergers and consolidations.

Pursuant to Section 10.01 (k) of the Amended Credit Agreement and the proposed
New Credit Agreement, the replacement of a majority of the Company's directors,
if adopted by the stockholders of the Company at the Special Meeting, would
cause a "change of control" as defined in these credit agreements.  Pursuant to
the Amended Credit Agreement, the lenders could cancel their obligations to
make loans to the Company and/or declare the loans then outstanding under the
Credit Agreement due and payable.  The replacement of a majority of the
Company's directors, if successful, also would be a "change of control" under
the Indenture, pursuant to which the Senior Notes were issued.  Each holder of
Senior Notes would then have the right to require the Company to purchase all
or any part of such holder's Senior Notes at a price in cash equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest thereon
to the date of purchase.

A number of potential environmental liabilities exist which relate to certain
contaminated property.  In addition, a number of potential environmental costs
relate to pending or proposed environmental regulations.  No assurance can be
given that all of the potential liabilities arising out of the Company's
present or past operations have been identified or that the amounts that might
be required to investigate and remediate such sites or comply with pending or
proposed environmental regulations can be accurately estimated.  The Company
has approximately $9.3 million accrued in the March 31, 1997 balance sheet as
an estimate of its total potential environmental liability with respect to
investigating and remediating known and assessed site contamination.  Extensive
environmental investigation of the groundwater, soils and solid waste
management has been conducted at the Odessa Facility.  Risk assessments have
been completed for a number of these facilities and corrective measures have
been defined and conducted.  Approval of certain waste management unit closures
required a public notice period that expired at the end of February 1997.  The
Company received approval to close five solid waste management units, which
permitted a reduction in the accrual for potential environmental liability by
$9.0 million.  If, however, additional liabilities with respect to environmental
contamination are identified, there is no assurance that additional amounts that
might be required to investigate and remediate such potential sites would not
have a material adverse effect on the financial position, results of operations
or cash flows of the Company.  In addition, future regulatory developments could
restrict or possibly prohibit existing methods of environmental compliance.  At
this time, the Company is unable to determine the potential consequences such
possible future regulatory developments would have on its financial condition.
Management continually reviews its estimates of potential environmental
liabilities.  The Company does not currently carry environmental impairment
liability insurance to protect it against such contingencies because the Company
has found such coverage is available only at great cost and with broad
exclusions.

The Company currently disposes of wastewater from the Odessa Facility through
injection wells operated under permits from the TNRCC.  TNRCC has stated
that it does not intend to renew the permits after they expire in December
1997.  The Company has entered into an agreement with the City of Odessa and
the Gulf Coast Waste Disposal Authority pursuant to which that latter will
acquire, modify and operate a publicly-owned treatment works





                                       8
<PAGE>   11
("POTW") to dispose of the Company's and a portion of the City of Odessa's
wastewater.  Construction to modify the existing municipal facility is in
progress with a view to having the POTW operational by September 1997.
Although no assurances can be given, the Company believes  that it will be able
to use its existing wells until it develops this alternative wastewater
disposal system.  However, if the Company is forced to cease using its
injection wells before the POTW is operational, such loss of capacity could
have a material adverse effect on the Company's financial condition, results of
operations or cash flows.

OTHER MATTERS

The Company is including the following cautionary statement in this Form 10-Q
to make applicable and take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company.  Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance, and underlying assumptions and other statements which
are other than statements of historical facts.  From time to time, the Company
may publish or otherwise make available forward-looking statements of this
nature.  All such subsequent forward-looking statements, whether written or
oral and whether made by or on behalf of the Company, are also expressly
qualified by these cautionary statements.  Certain statements contained herein
are forward-looking statements and accordingly involve risks and uncertainties
which could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements.  The forward-looking statements
contained herein are based on various assumptions, many of which are based, in
turn, upon further assumptions.  The Company's expectations, beliefs and
projections are expressed by good faith and are believed by the Company to have
a reasonable basis, including without limitation, management's examination of
historical operating trends, data contained in the Company's records and other
data available from third parties, but there can be no assurance that
management's expectations, beliefs or projections will result or be achieved or
accomplished.  In addition to the other factors and matters discussed elsewhere
herein, the following are important factors that, in the view of the Company,
could cause actual results to differ materially from those discussed in the
forward-looking statement:

1.      Changes in economic conditions and weather conditions

2.      Changes in the availability and/or price of feedstocks

3.      Changes in management ownership or control of the Company

4.      Inability to obtain new customers or retain existing ones

5.      Significant changes in competitive factors affecting the Company

6.      Governmental/regulatory actions and initiatives, including those
        affecting financings, and environmental/safety requirements

7.      Significant changes from expectations in actual capital expenditures
        and operating expenses and unanticipated project delays

8.      Occurrences affecting the Company's ability to obtain funds from
        operations, debt or equity to finance needed capital expenditures and
        other investments

9.      Regarding foreign operations - changes in foreign trade and 
        monetary policies, laws and regulations related to foreign operations,
        political and governmental changes, inflation and exchange rates, taxes
        and operating conditions

10.     Significant changes in tax rates or policies or in rates of inflation
        or interest





                                       9
<PAGE>   12
11.     Significant changes in the Company's relationship with its employees
        and the potential adverse effects if labor disputes or grievances were
        to occur

12.     Changes in accounting principles and/or the application of such
        principles to the Company.

The Company disclaims any obligation to update any forward-looking statements
to reflect events or circumstances after the date hereof.


PART II -- OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

Phillips Block Copolymer Litigation

As previously reported in Item 3 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, in March 1984, Phillips Petroleum Company
("Phillips") filed a lawsuit against the Company seeking injunctive relief, an
unspecified amount of compensatory and treble damages.  The complaint alleged
that the Company's copolymer process for polypropylene infringed Phillip's two
"block" copolymer patents, the last of which expired in 1994.  On December 23,
1996, the court entered a final judgment in favor of the Company after granting
the Company's motion for summary judgment.  Phillips has appealed and briefing
is underway.


Odessa Residents' Tort Litigation

As previously reported in Item 3 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, on April 15, 1994, the national and state
chapters of the NAACP and approximately 770 residents of a neighborhood
approximately one mile northwest of the Shell Oil Company ("Shell"), the
Company and Dynagen, Inc. ("Dynagen") plants in Odessa, Texas petitioned the
State District Court in Odessa, Texas to intervene in a previously existing
lawsuit against Dynagen to (a) add as additional defendants the Company, Shell
and General Tire Corporation (the parent company of Dynagen) and (b) have the
litigation certified as a class action.  In late January 1997, the parties and
the trial court agreed to a 30-day moratorium to determine if the case could be
settled and the May 1997 trial date was vacated.  At mediation, the Company
agreed to a settlement, which was approved by the trial court on March 17,
1997.  As of April 23, 1997, releases have been secured from more than 810 of
the 820 plaintiffs covered by the settlement.  Forty-one plaintiffs are not
represented by counsel and the case will remain active until their claims are
dismissed or otherwise resolved.  Although the terms of the settlement are
confidential, the Company believes that the settlement will not have a material
adverse effect on the Company's financial position, results of operations or
cash flows.   Also, late in 1996, plaintiffs' counsel filed a new lawsuit in the
State District Court in Harris County (Houston), Texas for seven similarly
situated plaintiffs.  The settlement also covers this lawsuit and releases have
been obtained from each of the plaintiffs in this case.

Although there can be no assurance of the final resolution of any of these
matters, the Company believes that, based upon its current knowledge of the
facts of each case, it has meritorious defenses to the various claims made and
intends to defend each suit vigorously, and the Company does not believe that
the outcome of any of these lawsuits will have a material adverse effect on the
Company's financial position, results of operations or cash flows.

With respect to certain pending or threatened proceedings involving the
discharge of materials into or protection of the environment, see "Item 1 --
Business -- Environmental and Related Regulation" in the Company's 1996 Annual
Report on Form 10-K.  The Company is also a party to various lawsuits arising
in the ordinary course of business and does not believe that the outcome of any
of these lawsuits will have a material adverse effect on the Company's
financial position, results of operations or cash flows.





                                       10
<PAGE>   13


ITEM 5.  OTHER INFORMATION

On April 25, 1997, the Company received a letter from Huntsman
Corporation ("Huntsman") in which Huntsman reiterated its interest in pursuing
a negotiated merger transaction by which it would acquire the Company for $16
per share in cash.  Huntsman's interest was stated to be conditional upon a
satisfactory due diligence review of the Company by Huntsman.  On April 28, 
1997, the Company announced that it has entered into a confidentiality agreement
with Huntsman to allow Huntsman to conduct its due diligence review of the
Company.  In order to allow shareholders an opportunity to assess these
developments, the Company announced that it will adjourn its special meeting
scheduled for April 30, 1997 to May 22, 1997.  In addition, the Company has
extended the expiration date of its previously announced "Dutch auction" self
tender offer for up to 2,156,250 shares of its Common Stock from May 5, 1997 to
May 29, 1997.

ITEM 6.  EXHIBIT AND REPORTS ON FORM 8-K

(a)      Exhibits:

         27 -- Financial Data Schedule

(b)      Reports Submitted on Form 8-K:

         Current Report on Form 8-K dated March 26, 1997 (Date of event:
         March 20, 1997), as amended on March 27, 1997, which reported the
         resignation of Arthur L. Goeschel from the Company's Board of
         Directors.

                                   SIGNATURE

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

                                               REXENE CORPORATION
                                               Registrant




Date:    April 29, 1997                        By: /s/ Geff Perera      
                                                  -----------------------------
                                               Geff Perera
                                               Executive Vice President and
                                                 Chief Financial Officer





                                       11

<PAGE>   14

                              INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
NUMBER       EXHIBIT
-------      -------
<S>         <C>
 27          Financial Data Schedule
</TABLE>