California flan

1. Place sugar in skillet and cook, stirring, over moderate heat until melted and golden brown.
2. Pour into 1-quart casserole and swirl to coat sides and bottom evenly with caramel.
3. Beat eggs.
4. Add milk and beat until blended.
5. Beat in water and vanilla.
6. Turn into prepared baking dish and place in pan containing 1 inch hot water.
7. Bakei at 325f 1 hour 40 minutes, or until knife inserted in center comes out clean.
8. Cool completely, then turn out on serving plate.