That filter looks OLD.. not only that, but it looks like it was left exposed to the elements for an extended period of time - possibly years. Either it was on the car MUCH longer than was represented to you, or it was in extremely poor condition before it was ever mounted to the car.
One additional observation - That filter says it was made in Mexico.. Now I could be wrong, but I don't think K&N has made filters in Mexico for some time.
One additional observation - That filter says it was made in Mexico.. Now I could be wrong, but I don't think K&N has made filters in Mexico for some time.