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Defendant Gertrude Jordan, Director of the Department ofEmployment Security of the State of Illinois (the Department),appeals the trial court's decision reversing a decision by theDepartment to increase the contribution rate of plaintiffAmbassadors Travel Service, Inc., for the state's unemploymenttrust fund. We affirm the trial court's decision and hold thatwhen the business of one employer is sold to another employer, theunemployment experience rating record of the predecessor does nottransfer to the successor if the successor does not purchase thesame entity on which the predecessor's experience rate was based.

FACTS

The facts of this case are not in dispute. In 1997, PeoriaTravel Bureau (PTB), a travel agency, had three offices located inPeoria, Illinois, and one office located in Normal, Illinois.Caterpillar, Inc., provided 70% to 75% of PTB's business. In thefall of that year, Caterpillar informed PTB that it would bechanging agencies. Within the next few months, PTB consolidatedtwo of its Peoria offices, closed the office that handled themajority of the Caterpillar accounts, and discharged 43 employees. PTB's office in Normal was closed shortly afterwards. Because ofthe loss of business, PTB's revenues fell from approximately $30million in 1997 to $6 million in 1998. While approximately 90% ofPTB's business was commercial and 10% was leisure in 1997, thefollowing year PTB's leisure operations represented 80% of thebusiness and its commercial operations represented 20%.

Ambassadors was a travel company that started in business in1989. On November 30, 1998, it purchased PTB for $250,000. Thesale included PTB's office equipment, office furniture, andcustomer list. As part of the bargain, the president and owner ofPTB agreed not to compete with Ambassadors for a specified period. Eight of PTB's twelve remaining employees were hired byAmbassadors.

In September of 1999, Ambassadors submitted a report to theDepartment for the purpose of determining whether Ambassadorsshould be considered PTB's successor under the UnemploymentInsurance Act (Act) (820 ILCS 405/100 et seq. (West 2000)). Afterreceiving the report, the Department notified Ambassadors that itwould be considered PTB's successor and that its contribution ratefor the unemployment trust fund for 1999 would increase from 0.6%to 4.0% accordingly.

Ambassadors filed an application with the Director requestingreview of the rate determination. That application was denied. Ambassadors filed a written protest and a petition for a hearing. In response, the Director's representative issued a writtenrecommendation to the Director suggesting that the revisedcontribution rate be upheld. Ambassadors filed an objection anddemanded a hearing. After a hearing, the Director's representativeagain recommended to uphold the higher contribution rate. Ambassadors filed a written objection with the Director.

On April 4, 2000, the Director issued a final decision thatupheld the revised contribution rate. Thereafter, Ambassadorsfiled a complaint for administrative review with the circuit courtof Peoria County, Illinois. The circuit court reversed,determining that the Director's decision was clearly erroneous. The Director appealed.

ANALYSIS

The sole issue on appeal is whether Ambassadors succeeded tosubstantially all of the employing enterprises of PTB.

Because this issue involves an examination of the legal effectof a given set of facts, this court applies the clear errorstandard of review. See City of Belvidere v. Illinois State LaborRelations Board, 181 Ill. 2d 191, 692 N.E.2d 295 (1998).

The Director argues that Ambassadors succeeded tosubstantially all of the employing enterprises of PTB's ongoingbusiness because it acquired all of PTB's assets, customers, andgoodwill, and because Ambassadors hired eight PTB employees. Thus,the Director contends that PTB's unemployment experience ratingrecord should be transferred to Ambassadors for purposes ofdetermining its contribution rate for the unemployment trust fund. Ambassadors responds that it succeeded to only a part of PTB'songoing business and that it did not acquire the part of PTB'sbusiness that formed the basis for the higher contribution rating.

Section 1507(A) of the Act states:

"Whenever any employing unit succeeds tosubstantially all of the employing enterprisesof another employing unit, then in determiningcontribution rates for any calendar year, theexperience rating record of the predecessorprior to the succession shall be transferredto the successor ***." 820 ILCS 405/1507(A)(West 2000).

The legislative intent in enacting section 1507(A) was to permit atransfer of the predecessor's experience rating record to asuccessor only when there has been a succession to substantiallyall the predecessor's business as a going business. Robert Snyder& Associates, Inc. v. Cullerton, 75 Ill. App. 2d 1, 221 N.E.2d 148(1966).

In Winakor v. Annunzio, 409 Ill. 236, 99 N.E.2d 191 (1951),the court examined whether a corporation and a trustee of a willwere entitled to the unemployment compensation experience rating oftheir common predecessor, a dissolved corporation that had ownedand operated five retail stores. Based on the fact that thesuccessor corporation acquired approximately 65% of thepredecessor's assets and the trustee acquired the remaining 35%,the court found that the successors did not substantially succeedto the business of their predecessor. Winakor, 409 Ill. at 239, 99N.E.2d at 192.

By contrast, after examining all the facts, the court in EkcoProducts Co. v. Cummins, 5 Ill. 2d 307, 125 N.E.2d 526 (1955),concluded that a manufacturer of cleaning products succeeded tosubstantially all of the employing enterprises of its predecessor. The new company had purchased machinery, equipment, and suppliesfrom the predecessor company, which were used to manufacture itemsthat accounted for over 97% of the predecessor's gross sales. Ekco, 5 Ill. 2d at 315-16, 125 N.E.2d at 531. In addition, the newcompany hired more than 93% of the predecessor company's employees,leased its manufacturing plant and warehouse space, and acquiredits patent rights, licenses, customer lists, corporate name,trademarks, and goodwill. Ekco, 5 Ill. 2d at 315-16, 125 N.E.2d at531.

Based on the standards set forth in Winakor and Ekco, we holdthat PTB's experience rating record should not have beentransferred to Ambassadors because Ambassadors did not purchase thesame entity on which PTB's experience rate was based. The entitieswere not the same because PTB lost between 70% and 75% of itsrevenue prior to its sale due to the loss of Caterpillar'sbusiness. While PTB's business was primarily commercial in 1997,it became primarily leisure after the downsizing. Although thesale included PTB's office equipment, office furniture, customerlist, and goodwill, Ambassadors did not acquire any of the assetsof PTB's office that handled the majority of the Caterpillaraccounts. Ambassadors did not purchase PTB's corporate name ortrademarks and did not acquire three of PTB's four officelocations. See Ekco, 5 Ill. 2d at 315, 125 N.E.2d at 531 (findingthat a succession to a going business needs to exist for a transferof employment experience). Despite the fact that 8 employees ofPTB were hired by Ambassadors, 43 employees were discharged priorto the downsizing and the discharge of those employees should notbe the basis for Ambassador's experience rating. See Blair v.Department of Employment Security, 168 Ill. App. 3d 537, 522 N.E.2d834 (1988) (determining that the infliction of a financial burdenof an increased employment experience rate on a new employer thathired unemployed workers of a defunct similar business woulddiscourage new employers from hiring individuals who lost theirjobs when their former employers went out of business).

In reaching our conclusion, we recognize the Director'sargument that PTB was still a going business although it wasdownsized from its former self. Nevertheless, we disagree with theDirector's position, because the transfer of one employer'sexperience rating to another should not occur where the successoremployer was not performing substantially the same work with thesame work force as its predecessor. See Blair, 168 Ill. App. 3d at540, 522 N.E.2d at 836 (finding that a new business did not succeedto a going business and the increased risk of involuntaryunemployment that was meant to be alleviated by the Act was notpresent). Because we determine that Ambassadors did notsubstantially succeed to all of the employing enterprises of PTB'sbusiness, we affirm.

For the foregoing reasons, the judgment of the circuit courtof Peoria County is affirmed.

Affirmed.

HOLDRIDGE, and SLATER, JJ., concur.