The Times 100 : The Best Performing Companies in California : THE BOTTOM LINE : ‘Rocky Road’ at Dreyer’s Is Now Paved With Gold : After an expensive but successful expansion cut profits, the ice cream maker is back on track with new products and a joint venture in Japan.

Take one bowl of Rocky Road, add a hot summer’s day, and you’ll get some idea of what the profits of Dreyer’s Grand Ice Cream looked like in 1986 and 1987.

But as the Oakland-based company celebrates the 60th birthday of the chocolaty-marshmallowy-nutty flavor that William Dreyer created shortly after the stock market crash of 1929 and named after the spirit of the times, things could not look better for Dreyer’s.

Coming off a year of record sales and profits, Dreyer’s has new products to peddle and, analysts say, could serve up double-digit sales growth in the next few years. Dreyer’s rebound earned it the 32nd spot on The Times 100 list of California’s most profitable companies, based on a two-year average return on shareholder’s equity of 26.8%.

Dreyer’s, it seems, got healthy by being healthy: The company, which for years has specialized in selling premium ice cream to supermarkets, is licking the competition with new offerings that are lower in fat, cholesterol and calories.

“We’ve demonstrated that we’re clearly back on track,” said T. Gary Rogers, chairman and chief executive, who bought Dreyer’s in 1977 with his University of California fraternity brother William F. Cronk III, now Dreyer’s president.

Back in 1977, Dreyer’s sold 2 million gallons of ice cream and posted sales of $6 million. Last year, those figures had climbed to 27 million gallons and sales of $227.3 million. Net income reached $10.4 million.

But in between fell 1986 and 1987, when income slumped 25.7% and 53%, respectively, despite increasing sales. That followed the mini-meltdown in 1984 and 1985 by Dreyer’s now-discontinued Tres Chocolat line, a somewhat late foray into the field of super-premium ice cream, which has more butterfat than premium brands.

Part of the problem in 1986-87, Rogers said, was heavy company spending to expand beyond the West and to develop products that would appeal to consumers’ best nutritional intentions. Expansion is expensive because Dreyer’s delivers its own products directly to grocery store freezers, Rogers said, to ensure the best quality and display.

In 1986, a major distribution contract with Popsicle was canceled when Sara Lee sold Popsicle. Dreyer’s, which had doubled its staff to handle the new business, sued and last year received a $10-million cash settlement, resulting in a $1.9-million net extraordinary gain.

Dreyer’s products are now in 35 states and are available to a little more than half of the nation’s population. In the Midwest and East, Dreyer’s products are known as Edy’s, named after company co-founder Joseph Edy, to avoid confusion with a major competitor, the Breyers brand manufactured by Kraft.

(Dreyer was active in the company until his death in 1975. Edy, trained as a candy maker, moved on to other ventures in 1947.)

Dreyer’s has become the country’s second- or third-largest ice cream company, depending on whether the measuring stick is dollar sales or gallons of ice cream sold, a company spokeswoman said. The West’s leading premium brand, it has more butterfat (at least 14%) than regular ice cream.

But much of its growth has come from newer, lighter products.

“We perceived in about the 1986-87 time frame that consumers were increasingly looking for better and better nutrition in their diets in general, and the time had come to position a true light ice cream,” Rogers said.

In 1987, the company introduced Dreyer’s Grand Light, which is actually ice milk because it does not contain at least 10% butterfat as required by the Food and Drug Administration if a product is to be called ice cream. (Dreyer’s for years has manufactured a frozen dietary dessert for diabetics and others who must restrict the amount of sugar they eat.)

Dreyer’s last year launched a frozen yogurt line called Inspirations, which is 96% fat free, and is introducing a frozen dairy dessert called American Dream, which has no cholesterol and is 99% fat free. Also in 1989, the company moved outside the ice cream carton with a product called Fruitola!, a frozen fruit and granola dairy snack. The company develops new ice cream flavors every year but distributes only a limited number at any time because of scarce supermarket freezer space.

Dreyer’s also distributes the products of other companies, including Ben & Jerry’s Homemade super-premium ice cream and Dove ice cream bars. Dreyer’s will distribute Simple Pleasures, the much anticipated frozen dairy dessert made with Simplesse, a fat substitute developed by Monsanto’s NutraSweet subsidiary that was recently approved by the FDA.

Rogers said there is plenty of growth ahead for Dreyer’s. The company just signed a joint venture agreement that will put its products in Japan. And several major U.S. markets have yet to be tapped, he added.