diff --git a/compiler/cli/src/org/jetbrains/jet/cli/KotlinCompiler.java b/compiler/cli/src/org/jetbrains/jet/cli/KotlinCompiler.java
index a07fdba3fa9..8237a99cffa 100644
--- a/compiler/cli/src/org/jetbrains/jet/cli/KotlinCompiler.java
+++ b/compiler/cli/src/org/jetbrains/jet/cli/KotlinCompiler.java
@@ -147,15 +147,15 @@ public class KotlinCompiler {
                 environment.addToClasspath(arguments.classpath);
             }
 
-            boolean ok;
+            boolean noErrors;
             if (arguments.module != null) {
-                ok = environment.compileModuleScript(arguments.module, arguments.jar, arguments.outputDir, arguments.includeRuntime);
+                noErrors = environment.compileModuleScript(arguments.module, arguments.jar, arguments.outputDir, arguments.includeRuntime);
             }
             else {
-                ok = environment.compileBunchOfSources(arguments.src, arguments.jar, arguments.outputDir, arguments.includeRuntime);
+                noErrors = environment.compileBunchOfSources(arguments.src, arguments.jar, arguments.outputDir, arguments.includeRuntime);
             }
 
-            return ok ? 0 : 1;
+            return noErrors ? 0 : 1;
         }
         catch (Throwable t) {
             errStream.println(messageRenderer.renderException(t));
diff --git a/compiler/cli/src/org/jetbrains/jet/compiler/CompileEnvironment.java b/compiler/cli/src/org/jetbrains/jet/compiler/CompileEnvironment.java
index d0caf14f664..b90876deeff 100644
--- a/compiler/cli/src/org/jetbrains/jet/compiler/CompileEnvironment.java
+++ b/compiler/cli/src/org/jetbrains/jet/compiler/CompileEnvironment.java
@@ -181,6 +181,8 @@ public class CompileEnvironment {
         final String directory = new File(moduleScriptFile).getParent();
         for (Module moduleBuilder : modules) {
             CompileEnvironment compileEnvironment = new CompileEnvironment(myFileNameTransformer, myMessageRenderer);
+            compileEnvironment.setIgnoreErrors(ignoreErrors);
+            compileEnvironment.setErrorStream(myErrorStream);
             // copy across any compiler plugins
             compileEnvironment.getMyEnvironment().getCompilerPlugins().addAll(myEnvironment.getCompilerPlugins());
             ClassFileFactory moduleFactory = compileEnvironment.compileModule(moduleBuilder, directory);
diff --git a/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java b/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java
index a3e518033a8..e950daeedab 100644
--- a/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java
+++ b/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java
@@ -517,8 +517,10 @@ public class JetCompiler implements TranslatingCompiler {
             if (firstUnprocessedIndex < output.length()) {
                 handleSkippedOutput(output.substring(firstUnprocessedIndex).trim());
             }
-            if (event.getExitCode() != 0) {
-                compileContext.addMessage(ERROR, "Compiler terminated with exit code: " + event.getExitCode(), "", -1, -1);
+            int exitCode = event.getExitCode();
+            // 0 is normal, 1 is "errors found" — handled by the messages above
+            if (exitCode != 0 && exitCode != 1) {
+                compileContext.addMessage(ERROR, "Compiler terminated with exit code: " + exitCode, "", -1, -1);
             }
         }