Allied-Signal Inc. reported 1987 net income of $656 million, up 8% from the year before. The Morris Township, N.J.-based company noted that earnings reflected improved sales of aircraft equipment and gains in worldwide after-market sales. Automotive income was down slightly while earnings from the company's engineered materials businesses improved. Capital spending for the year was $609 million, down from $708 million in 1986. Allied-Signal is an advanced technology company focused on aerospace, automotive products and engineered materials.