Melt caramels with water in a covered double boiler or in a saucepan over low heat. Stir occasionally until sauce is smooth. Place bread cubes in greased 12x8 inch baking dish. Top with apple slices. Combine eggs, milk, sugar, vanilla, salt and cinnamon; pour over apples. Cover with caramel sauce. Set dish in large pan on oven rack; pour in boiling water to 1/2 inch depth. Bake at 325~ for 1 hour and 20 minutes or until knife inserted halfway between center and outside edge comes out clean. Serve hot or cold.
