Since e-books first became a meaningful part of a publisher’s business in 2009, results at Simon & Schuster have followed a familiar pattern—a decline in revenue but an increase in earnings. Between 2009 and 2011, total sales at S&S dipped 0.7%, but adjusted operating income has jumped 84%. Margins at the company improved from 5.8% in 2009 to 10.8% last year. And despite revenue falling by almost $100 million since 2007, S&S’s earnings and operating margins are almost the same as they were five years ago.

While earnings have benefited from S&S CEO Carolyn Reidy’s cost-cutting initiatives, the higher sales of e-books have also been an important contributing factor to better profits. Both CBS, parent company of S&S, and Reidy said last week that the gain in e-book sales was a key factor in driving up profits and in driving down revenue. Total digital sales accounted for 17% of total sales last year, generating about $134 million, with sales of digital audio helping to make the audio group the fastest growing division in S&S’s domestic operations. The increase in digital sales was not enough, however, to offset the decline in sales of print books in the year.

S&S’s digital sales doubled in 2011 (after doubling in 2010), but Reidy said she doesn’t expect the growth rate to continue at the same pace in 2012, noting that while sales of e-books in January had solid gains, the increase was not as dramatic as in January 2011 and was in fact below expectations. “One thing Christmas showed us,” Reidy said, “is that there is a devoted market for physical books.” She believes that most of the sales that had been made through Borders have drifted to other outlets, and while there are still plenty of difficulties, the current market seems more stable than it has been in recent years.