INSERT 1 wooden pop stick into stem end of each apple; set aside.

PLACE caramels in medium saucepan. Add water; cook on medium-low heat until caramels are completely melted and mixture is well blended, stirring constantly.

DIP apples in caramel mixture. Immediately roll bottoms of dipped apples in crackers, then in sprinkles. Place on wax paper-covered baking sheet; let stand 30 min. or until caramel is set. Store in refrigerator up to 2 days.