The Sonics exercised Hill's contract option for the 2006-07 season Monday, 3½ months after they promoted him to replace the fired Bob Weiss.

"I'm grateful to the Sonics organization for this opportunity," Hill said in a team statement. "I am impressed with the attitude of this team and I'm truly excited about the clubs direction heading into next season."

Seattle is 21-29 since Hill took over after a few months as Weiss' assistant. The Sonics will miss the postseason for the third time in four seasons.

The 2004-05 Northwest Division champions were 13-17 in the brief tenure of Weiss, a former longtime Sonics assistant who had been promoted at the players' behest last offseason after Nate McMillan left to coach Portland.

"Based on the progress we've made as a team over the last third of the season, Bob is the best candidate to get the Sonics back to the playoffs next year," general manager Rick Sund said.

Sund said Hill earned the early announcement. The team had told Hill when they promoted him on Jan. 3 that they would wait until after the season to discuss whether the eight-year veteran coach would return next season.

Then came sweeping changes at the trading deadline.

Chris Wilcox, a part-time player for the Clippers, has become a Sonics cornerstone. Earl Watson arrived from Denver to become a key guard to complement All-Star Ray Allen. The Sonics are 13-8 when both Wilcox and Watson have played.

As those two arrived, out went unhappy Vladimir Radmanovic, Reggie Evans, Ronald Murray and Vitaly Potapenko.

Hill has also extensively used his two, young, 7-footers, Johan Petro and Robert Swift. Both played sparingly under Weiss; Swift was close to a demotion into the developmental league in November.

Allen said Hill is "building in the right direction ... nurturing the youth of this team, unlike anybody in the past."

Sund, speaking from Sacramento where the Sonics were preparing for their penultimate game of their season on Tuesday against the Kings, said: "The biggest thing is, the belief in each other is there among the players. And the players believe in their coach."

All are under contract for next season except for Wilcox. The team cannot begin negotiating to retain him until July.

Hill's overall head-coaching record is 278-241 (.536). He led the San Antonio Spurs (1995-97), Indiana Pacers (1991-93) and New York Knicks (1987) before Seattle.

Before this season, Hill was most recently head coach at Fordham from 1999 through 2002.

Sund said he, Hill and team chief executive Wally Walker will discuss the futures of assistants Jack Sikma, Dwight Daub, Walt Rock and Ralph Lewis in the next couple of weeks. All are under contract for next season.