Between December 1992 and November 30, 1992, we refined our atom interferometer and started to perform experiments with spatially separated beams. The interferometer is now operating with smaller period gratings, providing greater beam separation. The experiments were performed with the aid of an interaction region that inserts a thin metal foil between the beams. This allowed us to manipulate the atomic wave function in only one arm of the interferometer. The key component of our interferometer is the set of three matched transmission diffraction gratings which we constructed at the National Nanofabrication Facility (NNF) at Cornell University. The process allows fabrication of precisely positioned openings in thin silicon nitride membranes mounted in silicon frames. The pattern created in the membrane is determined by an electron beam writer, making the process quite versatile.