Preheat oven to 375 degrees. Roll pastry to 12-inch circle. Place in 9-inch pie pan. Flute edges.
In microwave-safe bowl, melt caramels with water in microwave oven until melted (medium temperature for about 1 to 2 minutes or until liquified). Be careful not to overcook.
Spoon sliced apples into unbaked pie shell. Drizzle caramels over top of apples.
Mix flour, sugar and cinnamon. Cut margarine or butter in until mixture resembles coarse crumbs. Stir in walnuts. Sprinkle this mixture over apples in pie crust.
Bake at 375 degrees for 40 to 45 minutes until apples are tender. Serves 8.