PREPARATION:

1. Line 13X9-inch baking pan with waxed paper; set aside. To prepare apples, wash and dry completely. Remove stems. Insert craft sticks into centers of apples.
2. Combine caramels and water in small saucepan. Simmer over low heat until caramels melt and mixture is smooth, stirring frequently.
3. Immediately dip apples, one at a time, into caramel to cover completely. Scrape excess caramel from bottom of apple onto side of saucepan, letting excess drip back into saucepan.
4. Immediately roll apples in nuts to lightly coat, pressing nuts lightly with fingers so they stick to caramel. Place apples, stick-side up, on prepared baking sheet. Let stand 20 minutes or until caramel is set.
5. Place chocolate in small resealable food storage bag; seal bag. Microwave on MEDIUM (50%) 1 minute. Turn bag over; microwave on MEDIUM 1 minute or until melted. Knead bag until chocolate is smooth. Cut off very tiny corner of bag; pipe or drizzle chocolate decoratively onto apples.
6. Let apples stand 30 minutes or until chocolate is set. Store loosely covered in refrigerator up to 3 days. Let stand at room temperature 15 minutes before serving.