LONG-TERM INVESTMENTS

Long-term investments consist of the following investments accounted for at cost:



	December 31, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Investment partnerships	$	4,776	$	6,199	$	45,134	$	70,966
Real estate partnership	899		1,293		899		1,136
	$	5,675	$	7,492	$	46,033	$	72,102

The principal business of these investment partnerships is investing in investment securities and real estate. The estimated fair value of the investment partnerships was provided by the partnerships based on the indicated market values of the underlying assets or investment portfolio. The investments in these investment partnerships are illiquid and the ultimate realization of these investments is subject to the performance of the underlying partnership and its management by the general partners. In the future, the Company may invest in other investments, including limited partnerships, real estate investments, equity securities, debt securities, derivatives and certificates of deposit, depending on risk factors and potential rates of return.

If it is determined that an other-than-temporary decline in fair value exists in long-term investments, the Company records an impairment charge with respect to such investment in its consolidated statements of operations. The Company will continue to perform additional assessments to determine the impact, if any, on the Company’s consolidated financial statements. Thus, future impairment charges may occur.

Except for two partnerships accounted for on the equity method, the Company’s investments constituted less than 5% of the invested funds in each of the partnerships at December 31, 2011 and 2010. In accordance with authoritative guidance for accounting for limited partnership investments, the Company has accounted for such investments using the cost method of accounting.

The Company had invested $50,000 in Icahn Partners, LP, a privately managed investment partnership, of which Carl Icahn was the portfolio manager and the controlling person of the general partner, and manager of the partnership. In 2011, Icahn Partners, LP was liquidated. The investment had a carrying value of $35,000 as of December 31, 2010. The Company received liquidating distributions of $55,500 in 2011 and recognized a gain of $20,500 on this investment for the year ended December 31, 2011. Based on information available in public filings, affiliates of Mr. Icahn were the beneficial owners of more than 5% of Vector’s common stock prior to November 2011, but had no interest in Vector's common stock as of December 31, 2011.

The Company received cash distributions of $608, $1,002 and $847 from one limited partnership in 2011, 2010 and 2009, respectively.

Another of the Company’s long-term investments was liquidated in 2011. This investment had a carrying value of $4,750 as of December 31, 2010 . The Company received liquidating distributions of $10,082 in 2011 and recognized a gain of $5,332 for the year ended December 31, 2011.

The long-term investments are carried on the consolidated balance sheet at cost. The fair value determination disclosed above would be classified as Level 3 under fair value hierarchy disclosed in Note 15 if such assets were recorded on the consolidated balance sheet at fair value. The fair values were determined based on unobservable inputs and were based on company assumptions, and information obtained from the partnerships based on the indicated market values of the underlying assets of the investment portfolio.

The changes in the fair value of these investments were as follows:



	2011			2010
Balance as of January 1	$	72,102		$	69,940
Contributions	—			62
Distributions	(66,190		)	(1,002		)
Revision for partnership now accounted for under the equity method	—			(5,790		)
Realized gain on liquidation of long-term investments	25,832			—

Unrealized gains reclassified into net income	(25,832		)	—
Unrealized gain on long-term investments	1,580			8,892
Net unrealized (loss) gain on long-term investments	(24,252		)	8,892
Balance as of December 31	$	7,492		$	72,102

Long-term investments consist of the following investments accounted for under the equity method:



	December 31, 2011		December 31, 2010
Investment partnerships	$	16,499	$	10,954

The changes in the fair value of these investments were as follows:



	2011			2010
Balance as of January 1	$	10,954		$	—
Contributions	10,000			5,000
Distributions	—			—
Revision for partnership now accounted for under the equity method	—			3,350
Equity (loss) income on long-term investments accounted for under the equity method	(859		)	1,489

Unrealized gains reclassified into net income	—			—
Unrealized (loss) gain on long-term investments	(3,596		)	1,115
Net unrealized (loss) gain on long-term investments	(3,596		)	1,115
Balance as of December 31	$	16,499		$	10,954

The principal business of these investment partnerships is investing in investment securities. The estimated fair value of the investment partnerships was provided by the partnerships based on the indicated market values of the underlying assets or investment portfolio. The investments in these investment partnerships are illiquid and the ultimate realization of these investments is subject to the performance of the underlying partnership and its management by the general partners. In the future, the Company may invest in other investments, including limited partnerships, real estate investments, equity securities, debt securities, derivatives and certificates of deposit, depending on risk factors and potential rates of return.

Equity income of $1,489 related to a limited partnership for the year ended December 31, 2010, included the impact of an error identified by the Company, which resulted in an out-of-period adjustment of approximately $1,650 (approximately $980 after taxes) for the year ended December 31, 2010. The error occurred because the Company’s ownership in the limited partnership increased from a nominal percentage to more than 10% during the fourth quarter of 2008 (due to significant withdrawals from other partners); thus, the Company’s investment should have been accounted for under the equity method for all previous periods in which the investment was held. The Company assessed the materiality of this error on all previously issued financial statements in accordance with the ASC 250-10-S99-1 and concluded that the error was immaterial to all previously issued financial statements. The impact of correcting this error in the current year was not material to the Company’s 2010 consolidated financial statements. This adjustment was recognized within other income in the consolidated statements of operations.