INSERT wooden pop sticks (from bag of caramels) into stem ends of apples. Cover large plate with waxed paper; grease paper with butter.

COOK caramels and water in large saucepan on medium-low heat until caramels are completely melted, stirring constantly.

DIP apples in caramel; spoon additional caramel over apples if necessary to evenly coat apples. Let excess caramel drip off. Scrape bottoms of apples; place on prepared plate. Refrigerate 1 hour. Remove from refrigerator 15 min. before serving; let stand at room temperature to soften slightly. Refrigerate leftovers.