The Steak n Shake Company (NYSE: SNS) today reported revenues and earnings for fiscal year 2002 ended September 25, 2002 and for the fiscal fourth quarter.

Financial highlights:

Annual diluted earnings per share increased 13.2% to $0.86 which matches the upwardly revised management estimate. Fourth quarter diluted earnings per share increased 15% to $0.23.

Net earnings for the year increased 10.6% to $24,108,793 and net earnings for the quarter increased 7.2% to $6,197,512.

Operating margins increased 140 basis points in the quarter and 160 basis points for the year.

Revenues for the fiscal year increased 2.9% to $460,812,398 and revenues for the fourth quarter increased .9% to a record $110,040,744.

Systemwide sales in fiscal 2002 were $547,779,894.

Same store sales were down 0.7% for the year and down 3.2% for the quarter.

Steak ‘n Shake said that margin improvement resulted from strong operating controls and a reduction of coupon activity during the year. While this reduction improved earnings, it caused sales comparisons with the prior year to be lower. Same store sales declined at a higher rate in the fourth quarter due, in part, to a pull back in consumer spending. A difficult economic environment has been evident in same store sales declines across most retail categories. Management anticipated that the same store sales decline seen in third quarter would ease due to the new television creative advertising campaign, but these efforts did not offset the cautious consumer spending environment and reduced retail traffic patterns. The company said a comprehensive strategic plan is being formulated by newly appointed President Peter Dunn with a major focus on increasing same store sales and improving trends in underperforming restaurants.

While the long-term and mid-term elements of the plan are being formulated, several key short-term initiatives are being executed now to address the trend of same store sales. After a successful test in 27 stores of accepting credit cards, Steak n Shake will expand the acceptance of credit cards to all of its restaurants on a market by market basis. Secondly, television advertising will begin airing in the Cleveland and Kansas City markets and television advertising weight will be increased in the Tampa, St. Louis and Indianapolis markets utilizing cable television.

The uncertainties of the current economic environment and consumer spending habits make a fiscal 2003 earnings advisory difficult, the company said. Management is deferring a fiscal 2003 earnings advisory, but expects first quarter 2003 will meet the prior year first quarter earnings per share of $.15.

To date, the company has purchased over 3,200,000 shares of its common stock authorized by its 4,000,000 share stock repurchase program. The company plans to continue to repurchase shares.

Five new units opened in the fourth quarter and fifteen new restaurants opened during the fiscal year. As of September 25, 2002 there were 404 Steak n Shake restaurants of which 56 were franchised.