In text processing systems German words require special treatment because of the possibility to form compound words as a combination of existing words. To this end, a universal word analysis system will be introduced which allows an analysis of all words in German texts according to their atomic components. A recursive decomposition algorithm, following the rules for word flexion, derivation, and compound generation in the German language, splits words into their smallest relevant parts (= atoms), which are stored in an atom table. The system is based on the foundations described in this article, and is being used for reliable, sense-conveying hyphenation, as well as for sense-conveying full text search, and in limited form also as a spelling checker.