(5) INCOME TAXES

Income tax expense and the effective tax rate for the first quarter 2014 and 2013 were as follows (in thousands, except the effective tax rate):

The tax provision for the three months ended March 31, 2014 and 2013 was computed using the estimated effective tax rates applicable to each of the domestic and international taxable jurisdictions for the full year. The Company estimates its ongoing effective annual tax rate in 2014 to be between 25% and 28%, which is subject to management’s ongoing review and revision, if necessary.

For the three months ended March 31, 2014, the increase in the effective tax rate was primarily attributable to higher Federal research and development tax credits recognized during the same period in the prior year which significantly lowered the effective tax rate for the period.

The Company’s provision for income tax expense and effective income tax rate are significantly impacted by the mix of the Company’s domestic and foreign earnings (loss) before income taxes. In the foreign jurisdictions in which the Company has operations, the applicable statutory rates are generally significantly lower than in the U.S., ranging from 0% to 34%. The effective tax rate for the three months ended March 31, 2014 is lower than the U.S. federal and state combined statutory rate of approximately 39% which is primarily attributable to the impact of our foreign earnings in lower tax rate jurisdictions.

As of March 31, 2014, the Company had approximately $329.4 million in cash and cash equivalents, of which $156.2 million, or 47.4%, was held outside the U.S. Of the $156.2 million held by the Company’s foreign subsidiaries, approximately $71.3 million is available for repatriation to the U.S. without incurring U.S. income taxes and applicable foreign income and withholding taxes in excess of the amounts accrued in the Company’s condensed consolidated financial statements as of March 31, 2014. The Company does not expect to repatriate any of the funds presently designated as indefinitely reinvested outside the U.S. Under current applicable tax laws, if the Company chooses to repatriate some or all of the funds designated as indefinitely reinvested outside the U.S., the amount repatriated would be subject to U.S. income taxes and applicable foreign income and withholding taxes. As such, the Company did not provide for deferred income taxes on its accumulated undistributed earnings of the Company’s foreign subsidiaries.