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Utilization of the fast Fourier transform to detect and classify signals generated in the underwater acoustic channel is considered. A quadrature sampling technique is developed that permits efficient coefficient representation of narrow-band signals. A spatially distributed target composed of Gaussian scatterers is used to derive optimum detection and classification techniques. The optimum detector for spatially distributed targets is presented. In addition, cepstrum analysis is employed to extract significant classification clues such as target size and highlight structure. Typical experimental results of target echo, envelope, spectrum, and cepstrum are presented.