By BridgeNews An internal probe of ConAgra Foods Inc.'s accounts turned up fictitious sales and other accounting violations that are forcing the company to restate three years of earnings. Analysts say the trouble may force the company, which recently reported its first quarterly decline in profit from a year earlier in a generation, to make badly needed organizational changes. "The uglier ConAgra gets, the more potential there is for change," said Jeff Kanter, an analyst at Prudential Securities. Other analysts say ConAgra should consider splitting its consumer food lines, producer of brands such as Chef Boyardee, Banquet frozen dinners. and Orville Redenbacher popcorn, from its commodity and farm-side operations. Analysts have called the commodity and farm-side business, the one behind the accounting problems, a drag on growth. Some argue that ConAgra's stock is valued as a commodity company and not a food business, even though the food lines generate most of the company's revenue. ConAgra is the United States' second-biggest food company, with nearly $27 billion in annual sales. The United Agri Products subsidiary, a unit that generates about 9% of ConAgra's operating profits by selling products such as seed and fertilizer, brought on the latest problems. "Our preliminary findings indicate that certain conduct at UAP circumvented generally accepted accounting principles and violated ConAgra Foods' corporate policy," Bruce Rohde, chief executive, said in a statement released late Wednesday. "Those actions will not be tolerated. I have directed the control systems at UAP be strengthened and that we take additional actions, as appropriate, including personnel changes to deal with circumstances requiring corrective measures." The investigation, launched in November, discovered violations ranging from fictitious sales contracts to the premature recognition of rebates due to be paid to UAP. Among other accounting problems, the agricultural products unit also recognized revenues for sales that were not considered binding on the customer. The Securities and Exchange Commission is also investigating. Revenues over the three-year period will be lowered by a total of almost $350 million, the company said. ConAgra expects to restate fiscal 1998 profits to $1.32 per share from $1.35; 1999 profits to $1.41 per share from $1.46; and fiscal 2000 profits to $1.60 per share from $1.67. The changes will reduce pretax profits for fiscal 1998 through 2000 by about $123 million. For fiscal 2001, the company said revenues would increase $350 million, profit before tax will increase $127 million and earnings per share will increase 15 cents.