Preheat oven to 250°.
Microwave caramels with water in 2-cup measure or medium bowl on high 1 1/2 minutes; stir.
Continue microwaving on high 30 seconds to 1 minute or until sauce is smooth, stirring every 30 seconds.
Pour immediately over popped corn; toss until well coated.
Spread onto greased cookie sheet to form single layer.
Bake 20 to 25 minutes; break apart.