Verilog HDL: Synchronous State Machine

This is a Verilog example that shows the implementation of a state machine. 
The first CASE statement defines the outputs that are dependent on the value of the state machine variable state. 
The second CASE statement defines the transitions of state machine and the conditions that control them.
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statem.v 

module statem(clk, in, reset, out);

input clk, in, reset;
output [3:0] out;

reg [3:0] out;
reg [1:0] state;

parameter zero=0, one=1, two=2, three=3;

always @(state) 
     begin
          case (state)
               zero:
                    out = 4'b0000;
               one:
                    out = 4'b0001;
               two:
                    out = 4'b0010;
               three:
                    out = 4'b0100;
               default:
                    out = 4'b0000;
          endcase
     end

always @(posedge clk or posedge reset)
     begin
          if (reset)
               state = zero;
          else
               case (state)
                    zero:
                         state = one;
                    one:
                         if (in)
                              state = zero;
                         else
                              state = two;
                    two:
                         state = three;
                    three:
                         state = zero;
               endcase
     end

endmodule