ManageMent’s Discussion anDanalysis of financial conDition anD Results of opeRations Investing activities used cash of $508.0 million in 2011 after using cash of $152.9 million in 2010 as a result of an increase in acquisitions  of $269.5 million and an increase in capital expenditures of $89.5 million. The increase in acquisitions related to the purchase of  Philadelphia Gear, which was completed in July 2011, and the purchase of Drives, which was completed in October 2011. The net cash used by financing activities was $106.6 million in 2011 after using cash of $32.9 million in 2010. The increase in cash used  for financing activities was primarily due to a $26.6 million reduction in proceeds from stock option exercises, a $24.7 million increase in  cash dividends paid to shareholders and a $14.6 million increase in the Company’s repurchases of its common stock in 2011 compared  to 2010. The Company purchased one million shares of its common stock for an aggregate of $43.8 million in 2011 after purchasing one  million shares of its common stock for an aggregate of $29.2 million in 2010. 34 THE TIMKEN COMPANY shaREhOlDERs’ EquITy: December 31, 2011 2010 $ Change % Change  Common stock  $ 942.3 $ 934.8 $ 7.5 0.8 %  Earnings invested in the business   2,004.7   1,626.4   378.3  23.3 %  Accumulated other comprehensive loss   (889.5)  (624.7)  (264.8) (42.4)% Treasury shares   (29.2)  (11.5)  (17.7) (153.9)% Noncontrolling interest  14.2   16.8   (2.6) (15.5)% Total equity  $ 2,042.5  $ 1,941.8  $ 100.7 5.2 % Earnings invested in the business increased in 2011 by net income of $454.3 million, partially offset by dividends declared of  $76.0 million. The increase in the accumulated other comprehensive loss was primarily due to a $218.2 million net after-tax pension  and postretirement liability adjustment and a $48.5 million decrease in foreign currency translation. The pension and postretirement  liability adjustment was primarily due the realization of an actuarial loss in 2011 due to a decrease in the discount rates for defined  benefit pension and postretirement plans, as well as lower than expected returns on plan assets, partially offset by the amortization  of prior-year service costs and actuarial losses for these plans. The decrease in the foreign currency translation adjustment was due to  the U.S, dollar strengthening relative to other currencies, such as the Indian rupee, the South African rand, the Polish zloty, the Brazilian  real, Canadian dollar and the Euro. Treasury shares increased during 2011 as a result of the Company repurchasing stock under its 2006  common stock purchase plan. cash FlOws: 2011 2010 $   Change  Net cash provided by operating activities  $ 211.7 $ 312.7 $ (101.0) Net cash used by investing activities   (508.0)  (152.9)  (355.1) Net cash used by financing activities   (106.6)  (32.9)  (73.7) Effect of exchange rate changes on cash  (9.4)  (5.3)  (4.1) (Decrease) Increase in cash and cash equivalents  $ (412.3) $ 121.6 $ (533.9) Operating activities provided net cash of $211.7 million in 2011 compared to $312.7 million in 2010. This change was primarily due to  higher pension and other postretirement benefit contributions and payments as well as higher cash used by working capital items,  partially offset by higher net income. Pension and other postretirement benefit contributions and payments were $456.0 million in 2011,  compared to $337.0 million in 2010. Net income attributable to The Timken Company increased $179.5 million in 2011 compared to 2010. The following chart displays the impact of working capital items on cash during 2011 and 2010: 2011 2010 Cash Provided (Used): Accounts receivable $ (111.6) $ (104.8) Inventories  (125.6)  (150.0) Trade accounts payable  14.9  105.4 Other accrued expenses 29.1 68.3