Abstract: A method of determining the component words of a compound word is disclosed. The method identifies the component words, by comparing the word with a list of words found in a lexicon. If the word is not found in the lexicon the method proceeds to analyze the word on a character-by-character basis. After each character the method identifies any potential matches to the selected characters in the lexicon. If a match is found, it is added to a hypothesis trace in a lattice. Next, the method checks to see whether the remaining characters form a valid entry in the lexicon, and whether the entry is allowed to be a final segment.